1.This Act may be cited as
the National Transitional Fuel
Security Act of 2006
.
2.
(a)Congress
finds that, as of the date of enactment of this Act—
(1)fossil fuels
provide more than 85 percent of all energy consumed in the United States, with
energy consumption projected to increase for at least the next 2
decades;
(2)United States oil
production is at a 50-year low and continues to decline;
(3)there has not
been a new oil refinery built in the United States since 1976;
(4)oil has reached
prices of over $70 per barrel and is likely to remain high;
(5)the United States
relies on foreign sources of oil for approximately 60 percent of oil consumed
in the United States;
(6)recent world
events and natural disasters have shown the vulnerability of the energy supply
chain in the United States;
(7)the
Fischer-Tropsch technology can produce synthetic fuels that burn cleaner than
traditionally-produced fuels, by using abundant domestic coal resources;
(8)the coal reserves
of the United States are estimated to be capable of producing more than
800,000,000,000 barrels of oil;
(9)the demand of the
United States military for fuel products makes up 2 percent of total
consumption in the United States;
(10)increases in oil
costs disproportionately impact the military;
(11)as a matter of
national security, agencies of the Federal Government are eager to form
partnerships with the energy industry and academia to create more sources of
domestic energy and lessen the dependence of the United States on foreign
sources of oil;
(12)private industry
is ready to commercialize the Fischer-Tropsch coal-to-fuel process, but is
unable to generate necessary initial capital investment; and
(13)it is in the
best public interest of the United States that industry in the United States
begin transformation from largely foreign petroleum-based energy resources to
domestic coal-based resources, which are abundant.
(b)The
purposes of this Act are—
(1)to establish a
Federal pilot program that will encourage private investment and a commitment
by businesses in the United States to begin the transition to a coal-to-fuel
based industry relying upon Fischer-Tropsch technology; and
(2)at the conclusion
of the pilot program, to achieve the transition in a manner that is
cost-neutral to the Treasury.
3.In this Act:
(1)The
term byproduct means any residual product or secondary product of
the Fischer-Tropsch process that may have a commercial value, including carbon
dioxide, fertilizer, hydrogen, and electricity.
(2)The
term coal-to-fuel means—
(A)with respect to a
process or technology, the use of a feedstock, the majority of which is derived
from the coal resources of the United States, using the class of chemical
reactions known as Fischer-Tropsch, to produce synthetic fuel; and
(B)with respect to a
facility, the portion of a facility that supplies inputs for the
Fischer-Tropsch process, Fischer-Tropsch finished fuel production, or the
capture, transportation, or sequestration of byproducts of the use of coal at
the facility, including carbon emissions.
(3)The
term facility means a coal-to-fuel demonstration facility
constructed under the Plan.
(4)The
term investor means a nongovernmental entity that, in accordance
with a contractual arrangement with the Secretary—
(A)invests in and
holds a minority non-controlling interest in 1 or more facilities; and
(B)shares in the
revenues of the facilities.
(5)The
term Plan means the plan developed by the Secretary and submitted
to Congress under section 4.
(6)The
term Reserve means the Strategic Petroleum Reserve established
under section 154 of the Energy Policy and Conservation Act (42 U.S.C.
6234).
(7)The
term Secretary means the Secretary of Energy.
(8)The term synthetic fuel means—
(A)synthetic
petroleum; or
(B)synthetic refined
fuel products (including jet fuel, gasoline, diesel, and motor oil) suitable
for transportation that are produced through a coal-to-fuel process.
4.Construction of
coal-to-fuel demonstration facilities
(a)Not later than 180
days after the date of enactment of this Act, the Secretary shall submit to
Congress a plan for the construction of not more than 5 coal-to-fuel
demonstration facilities in accordance with this Act, including the
requirements described in subsection (b).
(b)The
Secretary shall—
(1)provide the
Federal share of the cost of the construction of the facilities through a
5-year phased sale of petroleum products from the Reserve that corresponds to
the phases of construction of the facilities;
(2)in accordance
with applicable law, including section 603.105 of title 10, Code of Federal
Regulations (or a successor regulation)), offer to enter into contracts or
cooperative agreements with investors;
(3)enter into 1 or
more multiyear contracts with the Secretary of Defense under which the
Department of Defense will procure substantial quantities of jet fuel and
diesel produced at the facilities;
(4)enter into
contracts or promulgate regulations if necessary—
(A)to resupply the
Reserve at no cost with sufficient synthetic petroleum, synthetic refined fuel
products, or nonsynthetic crude oil purchased with proceeds derived from the
sale of synthetic fuel (whichever is determined by the Secretary to be more
advantageous to the Federal Government) to compensate for petroleum products
sold in accordance with paragraph (3); and
(B)as soon as
practicable, if advantageous, as determined by the Secretary, to require that
all petroleum requirements of the Reserve be met with synthetic fuel;
(5)produce and offer
for public sale synthetic fuel products and byproducts from the
facilities;
(6)in accordance
with section 6, divest ownership of the facilities through public sale to
nongovernmental entities; and
(7)ensure that after
the Secretary has carried out the Plan, all costs and expenditures by the
Federal Government under the Plan shall be fully reimbursed to the Treasury
through—
(A)net revenues
generated by the sale of petroleum products;
(B)resupply of the
Reserve; and
(C)final divestiture
and sale of all of the assets of the Federal Government under the Plan to
nongovernmental entities.
(c)
(1)Except as provided in section 5(b), any revenue raised
from the activities described in subsection (b) shall be used—
(A)to pay operating
expenses; and
(B)to distribute
profit shares to any commercial investors in accordance with contractual
terms.
(2)Remaining revenue shall be deposited in the general fund
of the Treasury.
(d)In
submitting the Plan to Congress, the Secretary shall include—
(1)a description of
not more than 5 proposed locations for the construction of facilities;
(2)estimated
construction costs for the facilities;
(3)estimated
production goals for each facility, which shall be—
(A)for at least 3 of
the facilities, not less than 30,000 barrels of synthetic fuel per day;
and
(B)for the remaining
facilities, not less than 5,000 barrels of synthetic fuel per day;
(4)a sequestration
plan for any carbon dioxide byproduct;
(5)a proposed
marketing plan for all byproducts;
(6)coal procurement
plans;
(7)product
contracting and coordination plans with the Secretary of Defense;
(8)a phased
construction plan;
(9)a plan for the
phased withdrawal of petroleum products from the Reserve to finance the phased
construction and operation of the facilities;
(10)proposed
management plans, including the participation of investors; and
(11)a proposed plan
to divest ownership of the facilities and recoup remaining expenses.
5.
(a)The Federal share of the cost of construction of each
facility under the Plan shall be not less than 51 percent.
(b)After recoupment of the Federal share of the
construction and operation of a facility, the Secretary shall distribute
profits realized from the operation of the facility to investors in an amount
that is proportional to their investment.
6.
(a)The Secretary shall
divest ownership of the facilities not earlier than the date on which the
Secretary determines that—
(1)the total
production goal of 100,000 barrels of synthetic fuel per day has been
met;
(2)an amount equal
to or greater than the total Federal share for the construction and operation
of the facilities has been deposited in the general fund of the Treasury;
and
(3)a quantity of
fuel equal to the quantity of petroleum products withdrawn from the Reserve
under section 7(a) has been deposited in the Reserve.
(b)The
Secretary shall manage each facility until the Secretary divests ownership of
the facility.
(c)A contract described in section 4(b)(3) shall be
transferable to a subsequent owner of a facility the synthetic fuel production
of which is the subject of the contract.
(d)Prohibition on
purchase to closeNo nongovernmental entity shall assume
ownership and control of a facility for purposes of removing the facility from
operation.
7.
(a)
(1)Notwithstanding section 161 of the Energy Policy and
Conservation Act (42 U.S.C. 6241) and subject to paragraphs (2) and (3), the
Secretary may sell petroleum products withdrawn from the Reserve at a public
sale to finance the construction of facilities.
(2)In
carrying out paragraph (1), the Secretary may sell not more than 20,000,000
barrels of petroleum products withdrawn from the Reserve each year for a period
of 5 years.
(3)The
Secretary may sell a total of not more than 100,000,000 barrels of petroleum
under this subsection.
(b)Procurement of
real estate
(1)In selecting sites for the construction of a facility,
the Secretary shall give priority to sites on Federal land.
(2)If
Federal land is not available, the Secretary may procure non-Federal
land.