II 110th CONGRESS 1st Session S. 1443 IN THE SENATE OF THE UNITED STATES May 21, 2007 Mr. Thomas (for himself and Mr. Bunning) introduced the following bill; which was read twice and referred to the Committee on Energy and Natural Resources A BILL To provide standards for renewable fuels and coal-derived fuels.
1.
Short title
This Act may be cited as the Clean, Affordable, and Domestic Fuels for Energy Security Act of 2007.
2.
Definitions
In this Act: (1)
Advanced biofuel
(A)
In general
The term advanced biofuel means fuel derived from renewable biomass other than corn starch. (B)
Inclusions
The term advanced biofuel includes— (i)ethanol derived from cellulose, hemicellulose, or lignin; (ii)ethanol derived from sugar or starch, other than ethanol derived from corn starch; (iii)ethanol derived from waste material, including crop residue, other vegetative waste material, animal waste, and food waste and yard waste; (iv)diesel-equivalent fuel derived from renewable biomass, including vegetable oil and animal fat; (v)biogas produced through the conversion of organic matter from renewable biomass; and (vi)butanol or higher alcohols produced through the conversion of organic matter from renewable biomass. (2)
Coal-derived fuel
The term coal-derived fuel means fuel derived from coal that is— (A)extracted by mining or in-situ methods in the United States; and (B)refined or otherwise processed at facilities located in the United States that are capable of capturing carbon dioxide emissions. (3)
Conventional biofuel
The term conventional biofuel means ethanol derived from corn starch. (4)
Covered fuel
The term covered fuel means— (A)aviation fuel; (B)motor vehicle fuel; (C)home heating oil; and (D)boiler fuel. (5)
Greenhouse gas
The term greenhouse gas means any of— (A)carbon dioxide; (B)methane; (C)nitrous oxide; (D)hydrofluorocarbons; (E)perfluorocarbons; and (F)sulfur hexafluoride. (6)
Greenhouse gas emission standard
The term greenhouse gas emission standard means a comprehensive measurement of the level of greenhouse gases emitted by a fuel, as calculated during the period beginning with the acquisition of feedstock by a refinery, blender, or importer of the fuel and continuing through manufacture, transportation, and use of the fuel in a motor vehicle, aircraft, boiler, or furnace. (7)
Renewable biomass
The term renewable biomass means— (A)biomass (as defined by section 210 of the Energy Policy Act of 2005 (42 U.S.C. 15855)) that is harvested where permitted by law and in accordance with applicable land management plans from— (i)National Forest System land; or (ii)public lands (as defined in section 103 of the Federal Land Policy and Management Act of 1976 (43 U.S.C. 1702)); or (B)any organic matter that is available on a renewable or recurring basis from non-Federal land or from land belonging to an Indian tribe, or an Indian individual, that is held in trust by the United States or subject to a restriction against alienation imposed by the United States, including— (i)renewable plant material, including— (I)feed grains; (II)other agricultural commodities; (III)other plants and trees; and (IV)algae; and (ii)waste material, including— (I)crop residue; (II)other vegetative waste material (including wood waste and wood residues); (III)animal waste and byproducts (including fats, oils, greases, and manure); and (IV)food waste and yard waste. (8)
Renewable fuel
(A)
In general
The term renewable fuel means motor vehicle fuel, boiler fuel, or home heating fuel that is— (i)produced from renewable biomass; and (ii)used to replace or reduce the quantity of fossil fuel present in a fuel or fuel mixture used to operate a motor vehicle, boiler, or furnace. (B)
Inclusion
The term renewable fuel includes— (i)conventional biofuel; and (ii)advanced biofuel. (9)
Secretary
The term Secretary means the Secretary of Energy. (10)
Small refinery
The term small refinery means a refinery for which the average aggregate daily crude oil throughput for a calendar year (as determined by dividing the aggregate throughput for the calendar year by the number of days in the calendar year) does not exceed 75,000 barrels.
3.
Clean, affordable, and domestic fuel program
(a)
Program
(1)
In general
Not later than 1 year after the date of enactment of this Act, the President shall promulgate regulations to ensure that covered fuel sold or introduced into commerce in the United States (except in noncontiguous States or territories), on an annual average basis, contains the applicable volume of coal-derived fuel determined in accordance with paragraph (4). (2)
Provisions of regulations
Regardless of the date of promulgation, the regulations promulgated under paragraph (1)— (A)shall contain compliance provisions applicable to refineries, blenders, distributors, and importers, as appropriate, to ensure that the requirements of this subsection are met; but (B)shall not— (i)restrict geographic areas in the contiguous United States in which coal-derived fuel may be used; or (ii)impose any per-gallon obligation for the use of coal-derived fuel. (3)
Greenhouse gas emission standard
(A)
Limitation
No coal-derived fuel shall be included in the applicable volume established under paragraph (4), or satisfy the coal-derived fuel obligation for refineries, blenders, and importers under subsection (b)(2)(B), unless the coal-derived fuel meets the greenhouse gas emissions level requirement for coal-derived fuel under subparagraph (C). (B)
Reduction of greenhouse gas emissions level
The greenhouse gas emissions level shall be reduced by the sum of, as applicable— (i)the quantity of greenhouse gases absorbed in the production of any renewable biomass used in the production of the coal-derived fuel; and (ii)the quantity of greenhouse gases produced during the production of the coal-derived fuel that are sequestered. (C)
Greenhouse gas emissions level of coal-derived fuel
(i)
In general
The greenhouse gas emissions level for coal-derived fuel, as adjusted under clause (ii), shall not exceed the greenhouse gas emissions level for the same quantity of covered fuel, as applicable. (ii)
Adjustment
The greenhouse gas emissions level for coal-derived fuel shall be adjusted by the product of— (I)the greenhouse gas emissions level; and (II)the ratio that— (aa)the number of British thermal units of energy produced by the combustion of 1 gallon of covered fuel, as applicable (as measured under conditions determined by the Secretary); bears to (bb)the number of British thermal units of energy produced by the combustion of 1 gallon of the coal-derived fuel (as measured under conditions determined by the Secretary to be comparable to conditions for measuring the energy produced by covered fuel, as applicable). (D)
Fuel production emissions level of covered fuels
The greenhouse gas emissions level of covered fuel, as applicable, shall be based on fuels that do not contain renewable fuels. (4)
Applicable volume
(A)
Calendar years 2016 through 2022
For the purpose of this subsection, the applicable volume for any of calendar years 2016 through 2022 shall be determined in accordance with the following table: Applicable volume of coal-derived fuels Calendar year:(in billions of gallons): 20163.0 20176.0 20189.0 201912.0 202015.0 202118.0 202221.0.
(B)
Calendar year 2023 and thereafter
Subject to subparagraph (C), for the purposes of this subsection, the applicable volume for calendar year 2023 and each calendar year thereafter shall be determined by the President, in coordination with the Secretary and the Administrator of the Environmental Protection Agency, based on a review of the implementation of the program during calendar years 2016 through 2022, including a review of— (i)the impact of coal-derived fuels on the energy security of the United States; (ii)the expected annual rate of future production of coal-derived fuels; and (iii)the impact of the use of coal-derived fuels on other factors, including job creation, rural economic development, and the environment. (C)
Minimum applicable volume
For the purpose of this subsection, the applicable volume for calendar year 2023 and each calendar year thereafter shall be equal to the product obtained by multiplying— (i)the number of gallons of covered fuel that the President estimates will be sold or introduced into commerce in the calendar year; and (ii)the ratio that— (I)21,000,000,000 gallons of coal-derived fuel; bears to (II)the number of gallons of covered fuel sold or introduced into commerce in calendar year 2022. (b)
Applicable percentages
(1)
Provision of estimate of volumes of certain fuel sales
Not later than October 31 of each of calendar years 2016 through 2021, the Administrator of the Energy Information Administration shall provide to the President an estimate, with respect to the following calendar year, of the volumes of covered fuel projected to be sold or introduced into commerce in the United States. (2)
Determination of applicable percentages
(A)
In general
Not later than November 30 of each of calendar years 2016 through 2022, based on the estimate provided under paragraph (1), the President shall determine and publish in the Federal Register, with respect to the following calendar year, the coal-derived fuel obligation that ensures that the requirements of subsection (a) are met. (B)
Required elements
The coal-derived fuel obligation determined for a calendar year under subparagraph (A) shall— (i)be applicable to refineries, blenders, and importers, as appropriate; (ii)be expressed in terms of a volume percentage of covered fuel sold or introduced into commerce in the United States; and (iii)subject to paragraph (3)(A), consist of a single applicable percentage that applies to all categories of persons specified in clause (i). (3)
Adjustments
In determining the applicable percentage for a calendar year, the President shall make adjustments— (A)to prevent the imposition of redundant obligations on any person specified in paragraph (2)(B)(i); and (B)to account for the use of coal-derived fuel during the previous calendar year by small refineries that are exempt under subsection (f). (c)
Volume conversion factors for coal-derived fuels based on energy content
(1)
In general
For the purpose of subsection (a), the President shall assign values to specific types of coal-derived fuel for the purpose of satisfying the fuel volume requirements of subsection (a)(4) in accordance with this subsection. (2)
Energy content relative to diesel fuel
For coal-derived fuels, 1 gallon of the coal-derived fuel shall be considered to be the equivalent of 1 gallon of diesel fuel multiplied by the ratio that— (A)the number of British thermal units of energy produced by the combustion of 1 gallon of the coal-derived fuel (as measured under conditions determined by the Secretary); bears to (B)the number of British thermal units of energy produced by the combustion of 1 gallon of diesel fuel (as measured under conditions determined by the Secretary to be comparable to conditions described in subparagraph (A)). (d)
Credit program
(1)
In general
The President, in consultation with the Secretary and the Administrator of the Environmental Protection Agency, shall implement a credit program to manage the coal-derived fuel requirement of this section. (2)
Market transparency
In carrying out the credit program under this subsection, the President shall facilitate price transparency in markets for the sale and trade of credits, with due regard for the public interest, the integrity of those markets, fair competition, and the protection of consumers. (e)
Waivers
(1)
In general
The President, in consultation with the Secretary and the Administrator of the Environmental Protection Agency, may waive the requirements of subsection (a) in whole or in part on petition by 1 or more States by reducing the national quantity of coal-derived fuel required under subsection (a), based on a determination by the President (after public notice and opportunity for comment), that— (A)implementation of the requirement would severely harm the economy or environment of a State, a region, or the United States; or (B)extreme and unusual circumstances exist that prevent distribution of an adequate supply of domestically-produced coal-derived fuel to consumers in the United States. (2)
Petitions for waivers
The President, in consultation with the Secretary and the Administrator of the Environmental Protection Agency, shall approve or disapprove a State petition for a waiver of the requirements of subsection (a) within 90 days after the date on which the petition is received by the President. (3)
Termination of waivers
A waiver granted under paragraph (1) shall terminate after 1 year, but may be renewed by the President after consultation with the Secretary and the Administrator of the Environmental Protection Agency. (f)
Small refineries
(1)
Temporary exemption
(A)
In general
The requirements of subsection (a) shall not apply to small refineries until calendar year 2018. (B)
Extension of exemption
(i)
Study by Secretary
Not later than December 31, 2013, the Secretary shall submit to the President and Congress a report describing the results of a study to determine whether compliance with the requirements of subsection (a) would impose a disproportionate economic hardship on small refineries. (ii)
Extension of exemption
In the case of a small refinery that the Secretary determines under clause (i) would be subject to a disproportionate economic hardship if required to comply with subsection (a), the President shall extend the exemption under subparagraph (A) for the small refinery for a period of not less than 2 additional years. (2)
Petitions based on disproportionate economic hardship
(A)
Extension of exemption
A small refinery may at any time petition the President for an extension of the exemption under paragraph (1) for the reason of disproportionate economic hardship. (B)
Evaluation of petitions
In evaluating a petition under subparagraph (A), the President, in consultation with the Secretary, shall consider the findings of the study under paragraph (1)(B) and other economic factors. (C)
Deadline for action on petitions
The President shall act on any petition submitted by a small refinery for a hardship exemption not later than 90 days after the date of receipt of the petition. (3)
Opt-in for small refineries
A small refinery shall be subject to the requirements of subsection (a) if the small refinery notifies the President that the small refinery waives the exemption under paragraph (1). (g)
Penalties and enforcement
(1)
Civil penalties
(A)
In general
Any person that violates a regulation promulgated under subsection (a), or that fails to furnish any information required under such a regulation, shall be liable to the United States for a civil penalty of not more than the total of— (i)$25,000 for each day of the violation; and (ii)the amount of economic benefit or savings received by the person resulting from the violation, as determined by the President. (B)
Collection
Civil penalties under subparagraph (A) shall be assessed by, and collected in a civil action brought by, the Secretary or such other officer of the United States as is designated by the President. (2)
Injunctive authority
(A)
In general
The district courts of the United States shall have jurisdiction to— (i)restrain a violation of a regulation promulgated under subsection (a); (ii)award other appropriate relief; and (iii)compel the furnishing of information required under the regulation. (B)
Actions
An action to restrain such violations and compel such actions shall be brought by and in the name of the United States. (C)
Subpoenas
In the action, a subpoena for a witness who is required to attend a district court in any district may apply in any other district. (h)
Effective date
Except as otherwise specifically provided in this section, this section takes effect on January 1, 2016.
4.
Loan guarantees for coal-derived fuel facilities
(a)
In general
Section 1703 of the Energy Policy Act of 2005 (42 U.S.C. 16513) is amended by adding at the end the following: (f)
Coal-derived fuel facilities
(1)
In general
The Secretary may make guarantees under this title for projects that produce coal-derived fuel (as defined in section 2 of the Clean, Affordable, and Domestic Fuels for Energy Security Act of 2007). (2)
Requirements
A project under this subsection shall employ new or significantly improved technologies for the production of coal-derived fuels as compared to commercial technologies in service in the United States at the time that the guarantee is issued. (3)
Issuance of first loan guarantees
Section 20320(b) of division B of the Continuing Appropriations Resolution, 2007 (42 U.S.C. 16515(b)) shall not apply to the first 6 guarantees issued under this subsection. (4)
Maximum guaranteed principal
The total principal amount of a loan guaranteed under this subsection may not exceed $250,000,000 for a single facility. (5)
Amount of guarantee
The Secretary shall guarantee 100 percent of the principal and interest due on 1 or more loans made for a facility that is the subject of the guarantee under this subsection. (6)
Deadline
The Secretary shall approve or disapprove an application for a guarantee under this subsection not later than 90 days after the date of receipt of the application. (7)
Report
Not later than 30 days after approving or disapproving an application under this subsection, the Secretary shall submit to Congress a report on the approval or disapproval (including the reasons for the action). . (b)
Improvements to underlying loan guarantee authority
(1)
Definition of commercial technology
Section 1701(1) of the Energy Policy Act of 2005 (42 U.S.C. 16511(1)) is amended by striking subparagraph (B) and inserting the following: (B)
Exclusion
The term commercial technology does not include a technology if the sole use of the technology is in connection with— (i)a demonstration plant; or (ii)a project for which the Secretary approved a loan guarantee. . (2)
Specific appropriation or contribution
Section 1702 of the Energy Policy Act of 2005 (42 U.S.C. 16512) is amended by striking subsection (b) and inserting the following: (b)
Specific appropriation or contribution
(1)
In general
No guarantee shall be made unless— (A)an appropriation for the cost has been made; or (B)the Secretary has received from the borrower a payment in full for the cost of the obligation and deposited the payment into the Treasury. (2)
Limitation
The source of payments received from a borrower under paragraph (1)(B) shall not be a loan or other debt obligation that is made or guaranteed by the Federal Government. (3)
Relation to other laws
Section 504(b) of the Federal Credit Reform Act of 1990 (2 U.S.C. 661c(b)) shall not apply to a loan or loan guarantee made in accordance with paragraph (1)(B). . (3)
Amount
Section 1702 of the Energy Policy Act of 2005 (42 U.S.C. 16512) is amended by striking subsection (c) and inserting the following: (c)
Amount
(1)
In general
Subject to paragraph (2), the Secretary shall guarantee up to 100 percent of the principal and interest due on 1 or more loans for a facility that are the subject of the guarantee. (2)
Limitation
The total amount of loans guaranteed for a facility by the Secretary shall not exceed 80 percent of the total cost of the facility, as estimated at the time at which the guarantee is issued. . (4)
Subrogation
Section 1702(g)(2) of the Energy Policy Act of 2005 (42 U.S.C. 16512(g)(2)) is amended— (A)by striking subparagraph (B); and (B)by redesignating subparagraph (C) as subparagraph (B). (5)
Fees
Section 1702(h) of the Energy Policy Act of 2005 (42 U.S.C. 16512(h)) is amended by striking paragraph (2) and inserting the following: (2)
Availability
Fees collected under this subsection shall— (A)be deposited by the Secretary into a special fund in the Treasury to be known as the Incentives For Innovative Technologies Fund; and (B)remain available to the Secretary for expenditure, without further appropriation or fiscal year limitation, for administrative expenses incurred in carrying out this title. .
5.
Coal research and development
Section 961 of the Energy Policy Act of 2005 (42 U.S.C. 16291) is amended— (1)in subsection (b)— (A)in paragraph (2), by striking $626,000,000 and inserting $627,000,000; and (B)in paragraph (3), by striking $641,000,000 and inserting $645,000,000; and (2)in subsection (c)(1)— (A)in subparagraph (B), by striking $376,000,000 and inserting $377,000,000; and (B)in subparagraph (C), by striking $394,000,000 and inserting $398,000,000.
6.
Coal centers for transportation sector research
Section 962 of the Energy Policy Act of 2005 (42 U.S.C. 16292) is amended by adding at the end the following: (e)
Coal research centers
(1)
Establishment
The Secretary shall establish at least 7 coal research centers to conduct research on transportation fuels, with an emphasis on research on the technologies and procedures described in paragraphs (2), (5), (6), (7), (9), (10), and (11) of subsection (a). (2)
Location
At least 1 coal research center authorized under paragraph (1) shall be established in each of the following States: (A)Colorado. (B)Kentucky. (C)Montana. (D)North Dakota. (E)Pennsylvania. (F)West Virginia. (G)Wyoming. .
7.
Study of defense department procurement of coal-derived fuels
(a)
In general
The Secretary, in consultation with the Secretary of Defense and private sector stakeholders, shall conduct a comprehensive feasibility study of developing a domestic coal-derived fuels industry, including an analysis of the national security benefits. (b)
Factors for consideration
In conducting the study under subsection (a), the Secretary shall take into consideration— (1)the existing authority of the Secretary of Defense to procure coal-derived fuels; and (2)the estimated future authority of the Secretary of Defense to enter into long-term contracts with private entities or other entities to purchase coal-derived fuel or to develop or operate coal-derived fuel facilities on or near military installations, based on— (A)(i)the availability of land and testing opportunities; and (ii)the proximity to raw materials; (B)a contract term of not more than 25 years; (C)the authority to purchase coal-derived fuels at fixed prices above, at, or below comparable market prices of fuel during the term of the contract; (D)(i)the corresponding budgetary impact of the long-term contracts; and (ii)alternative methods for accounting for the contracts; and (E)any legislative, administrative, or other actions that could decrease obstacles to the use of long-term contracts. (c)
Report
Not later than 90 days after the date of enactment of this Act, the Secretary, in consultation with the Secretary of Defense and private sector stakeholders, shall submit to Congress a report describing the results of the study conducted under subsection (a).