116th CONGRESS 1st Session |
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.
October 29, 2019
Mrs. Bustos introduced the following bill; which was referred to the Committee on Transportation and Infrastructure
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,
This Act may be cited as the “Investing in Energy Systems for the Transport of CO2 Act of 2019”.
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:
(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.
(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.
(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.
(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.
(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.
(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).
(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.
(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.
(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.
(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.
(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.
(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.
(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.
(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.
(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.
(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.