[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4905 Introduced in House (IH)]
<DOC>
116th CONGRESS
1st Session
H. R. 4905
To direct the Secretary of Transportation to carry out a program to
provide secured loans to private entities to carry out projects for the
transportation of anthropogenic carbon dioxide, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
October 29, 2019
Mrs. Bustos introduced the following bill; which was referred to the
Committee on Transportation and Infrastructure
_______________________________________________________________________
A BILL
To direct the Secretary of Transportation to carry out a program to
provide secured loans to private entities to carry out projects for the
transportation of anthropogenic carbon dioxide, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Investing in Energy Systems for the
Transport of CO2 Act of 2019''.
SEC. 2. SENSE OF CONGRESS.
It is the sense of Congress that each State should consider--
(1) qualifying all anthropogenic carbon dioxide pipelines
as pollution control devices under the laws and regulations of
such State; and
(2) the establishment of a minimum of a 10-year waiver of
ad valorem and property taxes for such pipelines.
SEC. 3. CARBON TRANSPORT INFRASTRUCTURE FINANCING PROGRAM.
(a) In General.--The Secretary of Transportation shall carry out a
program to provide Federal credit instruments to private entities to
carry out projects for the construction of common carrier pipelines for
the transportation of anthropogenic carbon dioxide as a supercritical
fluid.
(b) Applications.--To be eligible to receive assistance under this
section, an entity shall submit to the Secretary an application at such
time, in such manner, and containing such information as the Secretary
may require.
(c) Projects Eligible for Assistance.--The following projects may
be carried out with amounts made available under this section:
(1) A project to construct, or increase the diameter of, a
common carrier trunk pipeline for the transportation of
anthropogenic carbon dioxide as a supercritical fluid between
one or more--
(A) carbon dioxide capture or production
facilities;
(B) carbon dioxide pipelines;
(C) carbon dioxide storage facilities; or
(D) carbon dioxide utilization facilities.
(2) A project to construct common carrier feeder pipelines
for the transportation of anthropogenic carbon dioxide as a
supercritical fluid between capture, production, refining, or
manufacturing facilities or qualified facilities and a trunk
pipeline described in paragraph (1).
(d) Determination of Eligibility and Project Selection.--To be
eligible to receive financial assistance under this section, an entity
shall meet the following criteria, as determined by the Secretary:
(1) Credit worthiness.--
(A) In general.--The entity shall be creditworthy,
as determined by the Secretary.
(B) Considerations.--In determining the
creditworthiness of an entity, the Secretary shall take
into consideration relevant factors, including--
(i) the terms, conditions, financial
structure, and security features of the
proposed financing;
(ii) the dedicated revenue sources that
will secure or fund the project obligations;
(iii) the financial assumptions upon which
the project is based; and
(iv) the financial soundness and credit
history of the entity.
(C) Security features.--The Secretary shall ensure
that any financing for the project has appropriate
security features, such as a rate covenant, supporting
the project obligations to ensure repayment.
(D) Rating opinion letters.--
(i) Preliminary rating opinion letter.--The
Secretary shall require each entity to provide,
at the time of application, a preliminary
rating opinion letter from at least 1 rating
agency indicating that the senior obligations
of the project (which may be the Federal credit
instrument) have the potential to achieve an
investment-grade rating.
(ii) Final rating opinion letter.--The
Secretary shall require each entity to provide,
prior to final acceptance and financing of the
project, final rating opinion letters from at
least 2 rating agencies indicating that the
senior obligations of the project have an
investment-grade rating.
(2) Proposed project.--The Secretary shall ensure that any
common carrier trunk pipeline constructed or increased under
this section has, or is increased to, an external diameter of
not less than 30 inches.
(e) Selection of Projects.--
(1) In general.--In carrying out the program under
subsection (a), the Secretary may not provide a secured loan to
finance more than one common carrier trunk pipeline project the
majority of the pipeline length of which will be constructed in
a single census region.
(2) Census region defined.--For purposes of this section,
the term ``census region'' means 1 of the 4 census regions
(northeast, south, midwest, and west) that are designated as
census regions by the Bureau of the Census as of the date of
enactment of this Act.
(3) Priority.--In carrying out the program under subsection
(a) for projects described in (c)(1), the Secretary shall give
priority to applications that propose construction of a common
carrier trunk pipeline project in an area where pipelines or
other linear infrastructure already exist.
(f) Secured Loans.--
(1) Agreements.--
(A) In general.--Subject to paragraphs (2) and (3),
the Secretary may enter into agreements with 1 or more
entities to make secured loans, the proceeds of which
shall be used to finance project costs of any project
selected under this section.
(B) Financial risk assessment.--Before entering
into an agreement under this subsection for a secured
loan, the Secretary, in consultation with the Director
of the Office of Management and Budget and each rating
agency providing a rating opinion letter under this
section, shall determine an appropriate capital reserve
subsidy amount for the secured loan, taking into
account each such rating opinion letter.
(C) Investment-grade rating requirement.--The
execution of a secured loan under this section shall be
contingent on receipt by the senior obligations of the
project of an investment-grade rating.
(2) Terms and limitations.--
(A) In general.--A secured loan provided for a
project under this section shall be subject to such
terms and conditions, and contain such covenants,
representations, warranties, and requirements
(including requirements for audits), as the Secretary
determines to be appropriate.
(B) Maximum amount.--The amount of a secured loan
under this section shall not exceed 80 percent of the
reasonably anticipated project costs.
(C) Payment.--A secured loan under this section--
(i) shall be payable, in whole or in part,
from user fees or other dedicated revenue
sources that also secure the senior project
obligations of the relevant project;
(ii) shall include a rate covenant,
coverage requirement, or similar security
feature supporting the project obligations; and
(iii) may have a lien on revenues described
in subparagraph (A), subject to any lien
securing project obligations.
(D) Interest rate.--The interest rate on a secured
loan under this section shall be not less than the
yield on United States Treasury securities of a similar
maturity to the maturity of the secured loan on the
date of execution of the loan agreement.
(E) Maturity date.--The final maturity date of a
secured loan under this section shall be the earlier
of--
(i) the date that is 35 years after the
date of substantial completion of the relevant
project (as determined by the Secretary); or
(ii) if the useful life of the project (as
determined by the Secretary) is less than 35
years, the useful life the project.
(F) Nonsubordination.--A secured loan under this
section shall not be subordinated to the claims of any
holder of project obligations in the event of
bankruptcy, insolvency, or liquidation of the entity
carrying out the project.
(G) Financing fees.--On request of an entity, any
fees to be paid by the entity under this section shall
be financed as part of the loan.
(3) Repayment.--
(A) Schedule.--The Secretary shall establish a
repayment schedule for each secured loan provided under
this section, based on the projected cash flow from
project revenues and other repayment sources.
(B) Commencement.--Scheduled loan repayments of
principal or interest on a secured loan under this
section shall commence not later than 5 years after the
date of substantial completion of the project (as
determined by the Secretary).
(C) Deferred payments.--
(i) Authorization.--If, at any time after
the date of substantial completion of a project
for which a secured loan is provided under this
section, the project is unable to generate
sufficient revenues to pay the scheduled loan
repayments of principal and interest on the
secured loan, the Secretary subject to clause
(iii), may allow the entity to add unpaid
principal and interest to the outstanding
balance of the secured loan.
(ii) Interest.--Any payment deferred under
clause (i) shall--
(I) continue to accrue interest in
accordance with paragraph (2)(D) until
fully repaid; and
(II) be scheduled to be amortized
over the remaining term of the secured
loan.
(iii) Criteria.--
(I) In general.--Any payment
deferral under clause (i) shall be
contingent on the project meeting such
criteria as the Secretary may
establish.
(II) Repayment standards.--The
criteria established under subclause
(I) shall include standards for
reasonable assurance of repayment.
(iv) Prepayment.--
(I) Use of excess revenues.--Any
excess revenues that remain after
satisfying scheduled debt service
requirements on the project obligations
and secured loan and all deposit
requirements under the terms of any
trust agreement, bond resolution, or
similar agreement securing project
obligations may be applied annually to
prepay a secured loan under this
section without penalty.
(II) Use of proceeds of
refinancing.--A secured loan under this
section may be prepaid at any time
without penalty from the proceeds of
refinancing from non-Federal funding
sources.
(4) Sale of secured loans.--
(A) In general.--Subject to subparagraph (B), as
soon as practicable after the date of substantial
completion of a project and after providing a notice to
the entity, the Secretary may sell to another entity or
reoffer into the capital markets a secured loan for a
project under this section, if the Secretary determines
that the sale or reoffering can be made on favorable
terms.
(B) Consent of entity.--In making a sale or
reoffering under subparagraph (A), the Secretary may
not change the original terms and conditions of the
secured loan without the written consent of the entity.
(5) Loan guarantees.--
(A) In general.--The Secretary may provide a loan
guarantee to a lender in lieu of making a secured loan
under this section, if the Secretary determines that
the budgetary cost of the loan guarantee is
substantially the same as that of a secured loan.
(B) Terms.--The terms of a loan guarantee provided
under this paragraph shall be consistent with the terms
established in this section for a secured loan, except
that the rate on the guaranteed loan and any prepayment
features shall be negotiated between the entity and the
lender, with the consent of the Secretary.
(6) Limitation.--No project receiving Federal credit
assistance under this section may be financed (directly or
indirectly), in whole or in part, with proceeds of any
obligation--
(A) the interest on which is exempt from the tax
imposed under chapter 1 of the Internal Revenue Code of
1986; or
(B) with respect to which credit is allowable under
subpart I or J of part IV of subchapter A of chapter 1
of such Code.
(g) Program Administration.--
(1) Requirement.--The Secretary shall establish a uniform
system to service the Federal credit instruments made available
under this section.
(2) Fees.--The Secretary may collect and spend fees,
contingent on authority being provided in appropriations Acts,
at a level that is sufficient to cover--
(A) the costs of expert firms retained under
paragraph (4); and
(B) all or a portion of the costs to the Federal
Government of servicing the Federal credit instruments
provided under this section.
(3) Servicer.--
(A) In general.--The Secretary may appoint a
financial entity to assist the Secretary in servicing
the Federal credit instruments provided under this
section.
(B) Duties.--A servicer appointed under
subparagraph (A) shall act as the agent for the
Secretary.
(C) Fee.--A servicer appointed under subparagraph
(A) shall receive a servicing fee, subject to approval
by the Secretary.
(4) Assistance from experts.--The Secretary may retain the
services, including counsel, of organizations and entities with
expertise in the field of project finance to assist in the
underwriting and servicing of Federal credit instruments
provided under this section.
(h) Statutory Construction.--Nothing in this section shall be
construed to--
(1) supersede the applicability of other requirements of
Federal law (including regulations);
(2) relieve any recipient of financial assistance under
this section of any obligation to obtain any required State,
local, or tribal permit or approval with respect to the
project;
(3) limit the right of any unit of State, local, or tribal
government to approve or regulate any rate of return on private
equity invested in the project; or
(4) otherwise supersede any State, local, or tribal law
(including any regulation) applicable to the construction or
operation of the project.
(i) Prevailing Rate of Wage.--
(1) In general.--The Secretary shall ensure that laborers
and mechanics employed by contractors and subcontractors on a
project financed in whole or in part by a Federal credit
instrument made available under this section will be paid wages
at rates not less than those prevailing on similar construction
in the locality, as determined by the Secretary of Labor under
subchapter IV of chapter 31 of title 40.
(2) Authority of secretary of labor.--With respect to the
labor standards specified in paragraph (1), the Secretary of
Labor shall have, with respect to the labor standards specified
in this subsection, the authority and functions set forth in
Reorganization Plan Numbered 14 of 1950 (15 F.R. 3176) and
section 3145 of title 40, United States Code.
(j) Regulations.--The Secretary may issue such regulations as the
Secretary determines appropriate to carry out this section.
(k) Use of American Iron, Steel, and Manufactured Goods.--
(1) In general.--Except as provided by paragraph (2), the
Secretary shall make available a Federal credit instrument for
a project under this section only if all of the iron, steel,
and manufactured goods used in the project are produced in the
United States.
(2) Exception.--Upon the submission of a request for a
waiver of the requirements under paragraph (1) by an entity,
the Secretary may waive paragraph (1) if the Secretary finds
that--
(A) applying paragraph (1) would be inconsistent
with the public interest;
(B) iron, steel, and the relevant manufactured
goods are not produced in the United States in
sufficient and reasonably available quantities and of a
satisfactory quality; or
(C) inclusion of iron, steel, and manufactured
goods produced in the United States will increase the
cost of the overall project by more than 25 percent.
(3) Written waiver determination and annual report.--
(A) In general.--If the Secretary receives a
request for a waiver under this subsection, the
Secretary shall--
(i) make available to the public on an
informal basis a copy of the request and
information available to the Secretary
concerning the request; and
(ii) allow for informal public input on the
request for at least 15 days prior to making a
finding based on the request.
(B) Requirement.--The Secretary shall make the
request and accompanying information required under
subparagraph (A) available by electronic means,
including on website of the Department of Energy.
(4) Consistent with obligations.--This subsection shall be
applied in a manner consistent with the United States
obligations under international agreements.
(l) Definitions.--In this section:
(1) Federal credit instrument.--The term ``Federal credit
instrument'' means a secured loan or loan guarantee authorized
to be made available under this section with respect to a
project.
(2) Qualified facility.--The term ``qualified facility''
has the meaning given the term in section 45Q of the Internal
Revenue Code of 1986 (26 U.S.C. 45Q).
(3) Investment-grade rating.--The term ``investment-grade
rating'' means a rating of BBB minus, Baa3, bbb minus, BBB
(low) or higher assigned by a rating agency to project
obligations.
(4) Lender.--
(A) In general.--The term ``lender'' means any non-
Federal qualified institutional buyer (as defined in
section 230.144A(a) of title 17, Code of Federal
Regulations (or a successor regulation), known as Rule
144A(a) of the Securities and Exchange Commission and
issued under the Securities Act of 1933 (15 U.S.C. 77a
et seq.)).
(B) Inclusion.--The term ``lender'' includes--
(i) a qualified retirement plan (as defined
in section 4974(c) of the Internal Revenue Code
of 1986 (26 U.S.C. 4974(c))) that is a
qualified institutional buyer; and
(ii) a governmental plan (as defined in
section 414(d) of the Internal Revenue Code of
1986 (26 U.S.C. 414(d))) that is a qualified
institutional buyer.
(5) Loan guarantee.--The term ``loan guarantee'' means any
guarantee or other pledge by the Secretary to pay all or part
of the principal of, and interest on, a loan or other debt
obligation issued by an entity and funded by a lender.
(6) Produced in the united states.--The term ``produced in
the United States'' means, in the case of iron or steel, that
all manufacturing processes, including the application of a
coating, must occur in the United States.
(7) Project obligation.--
(A) In general.--The term ``project obligation''
means any note, bond, debenture, or other debt
obligation issued by an entity in connection with the
financing of a project.
(B) Exclusion.--Such term does not include a
Federal credit instrument.
(8) Rating agency.--The term ``rating agency'' means a
credit rating agency registered with the Securities and
Exchange Commission as a nationally recognized statistical
rating organization (as defined in section 3(a) of the
Securities Exchange Act of 1934 (15 U.S.C. 78c(a))).
(9) Secured loan.--The term ``secured loan'' means a direct
loan or other debt obligation issued by an entity and funded by
the Secretary in connection with the financing of a project
under this section.
(10) State.--The term ``State'' means--
(A) a State;
(B) the District of Columbia;
(C) the Commonwealth of Puerto Rico; and
(D) any other territory or possession of the United
States.
(11) Subsidy amount.--The term ``subsidy amount'' means the
amount of budget authority sufficient to cover the estimated
long-term cost to the Federal Government of a Federal credit
instrument, as calculated on a net present value basis,
excluding administrative costs and any incidental effects on
governmental receipts or outlays in accordance with the Federal
Credit Reform Act of 1990 (2 U.S.C. 661 et seq.).
(12) Substantial completion.--The term ``substantial
completion'', with respect to a project, means the earliest
date on which a project is considered to perform the functions
for which the project is designed.
(m) Authorization of Appropriations.--
(1) In general.--There are authorized to be appropriated--
(A) $400,000,000 to carry out projects described in
subsection (c)(1); and
(B) $100,000,000 to carry out projects described in
subsection (c)(2).
(2) Available until expended.--Any funds appropriated
pursuant to paragraph (1) are authorized to remain available
until expended.
(3) Administrative costs.--Of the funds made available to
carry out this section, the Secretary may use for the
administration of this section, including for the provision of
technical assistance to aid project sponsors in obtaining the
necessary approvals for the project, not more than $2,000,000
for each fiscal year.
<all>
Investing in Energy Systems for the Transport of CO2 Act of 2019
#4905 | HR Congress #116
Policy Area: Transportation and Public Works
Last Action: Referred to the Subcommittee on Coast Guard and Maritime Transportation. (10/30/2019)
Bill Text Source: Congress.gov
Summary and Impacts
Original Text