SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Coal Liquid Fuel Act''.

SEC. 2. STANDBY LOANS FOR QUALIFYING COAL-TO-LIQUIDS PROJECTS.

    Section 1702 of the Energy Policy Act of 2005 (42 U.S.C. 16512) is 
amended by adding at the end the following new subsection:
    ``(k) Standby Loans for Qualifying CTL Projects.--
            ``(1) Definitions.--For purposes of this subsection:
                    ``(A) Cap price.--The term `cap price' means a 
                market price specified in the standby loan agreement 
                above which the project is required to make payments to 
                the United States.
                    ``(B) Full term.--The term `full term' means the 
                full term of a standby loan agreement, as specified in 
                the agreement, which shall not exceed the lesser of 30 
                years or 90 percent of the projected useful life of the 
                project (as determined by the Secretary).
                    ``(C) Market price.--The term `market price' means 
                the average quarterly price of a petroleum price index 
                specified in the standby loan agreement.
                    ``(D) Minimum price.--The term `minimum price' 
                means a market price specified in the standby loan 
                agreement below which the United States is obligated to 
                make disbursements to the project.
                    ``(E) Output.--The term `output' means some or all 
                of the liquid or gaseous transportation fuels produced 
                from the project, as specified in the loan agreement.
                    ``(F) Primary term.--The term `primary term' means 
                the initial term of a standby loan agreement, as 
                specified in the agreement, which shall not exceed the 
                lesser of 20 years or 75 percent of the projected 
                useful life of the project (as determined by the 
                Secretary).
                    ``(G) Qualifying ctl project.--The term `qualifying 
                CTL project' means--
                            ``(i) a commercial-scale project that 
                        converts coal to one or more liquid or gaseous 
                        transportation fuels; or
                            ``(ii) not more than one project at a 
                        facility that converts petroleum refinery waste 
                        products, including petroleum coke, into one or 
                        more liquids or gaseous transportation fuels,
                that demonstrates the capture, and sequestration or 
                disposal or use of, the carbon dioxide produced in the 
                conversion process, and that, on the basis of a carbon 
                dioxide sequestration plan prepared by the applicant, 
                is certified by the Administrator of the Environmental 
                Protection Agency, in consultation with the Secretary, 
                as producing fuel with life cycle carbon dioxide 
                emissions at or below the average life cycle carbon 
                dioxide emissions for the same type of fuel produced at 
                traditional petroleum based facilities with similar 
                annual capacities.
                    ``(H) Standby loan agreement.--The term `standby 
                loan agreement' means a loan agreement entered into 
                under paragraph (2).
            ``(2) Standby loans.--
                    ``(A) Loan authority.--The Secretary may enter into 
                standby loan agreements with not more than six 
                qualifying CTL projects, at least one of which shall be 
                a project jointly or in part owned by two or more small 
                coal producers. Such an agreement--
                            ``(i) shall provide that the Secretary will 
                        make a direct loan (within the meaning of 
                        section 502(1) of the Federal Credit Reform Act 
                        of 1990) to the qualifying CTL project; and
                            ``(ii) shall set a cap price and a minimum 
                        price for the primary term of the agreement.
                    ``(B) Loan disbursements.--Such a loan shall be 
                disbursed during the primary term of such agreement 
                whenever the market price falls below the minimum 
                price. The amount of such disbursements in any calendar 
                quarter shall be equal to the excess of the minimum 
                price over the market price, times the output of the 
                project (but not more than a total level of 
                disbursements specified in the agreement).
                    ``(C) Loan repayments.--The Secretary shall 
                establish terms and conditions, including interest 
                rates and amortization schedules, for the repayment of 
                such loan within the full term of the agreement, 
                subject to the following limitations:
                            ``(i) If in any calendar quarter during the 
                        primary term of the agreement the market price 
                        is less than the cap price, the project may 
                        elect to defer some or all of its repayment 
                        obligations due in that quarter. Any unpaid 
                        obligations will continue to accrue interest.
                            ``(ii) If in any calendar quarter during 
                        the primary term of the agreement the market 
                        price is greater than the cap price, the 
                        project shall meet its scheduled repayment 
                        obligation plus deferred repayment obligations, 
                        but shall not be required to pay in that 
                        quarter an amount that is more than the excess 
                        of the market price over the cap price, times 
                        the output of the project.
                            ``(iii) At the end of the primary term of 
                        the agreement, the cumulative amount of any 
                        deferred repayment obligations, together with 
                        accrued interest, shall be amortized (with 
                        interest) over the remainder of the full term 
                        of the agreement.
            ``(3) Profit-sharing.--The Secretary is authorized to enter 
        into a profit-sharing agreement with the project at the time 
        the standby loan agreement is executed. Under such an 
        agreement, if the market price exceeds the cap price in a 
        calendar quarter, a profit-sharing payment shall be made for 
        that quarter, in an amount equal to--
                    ``(A) the excess of the market price over the cap 
                price, times the output of the project; less
                    ``(B) any loan repayments made for the calendar 
                quarter.
            ``(4) Compliance with federal credit reform act.--
                    ``(A) Upfront payment of cost of loan.--No standby 
                loan agreement may be entered into under this 
                subsection unless the project makes a payment to the 
                United States that the Office of Management and Budget 
                determines is equal to the cost of such loan 
                (determined under 502(5)(B) of the Federal Credit 
                Reform Act of 1990). Such payment shall be made at the 
                time the standby loan agreement is executed.
                    ``(B) Minimization of risk to the government.--In 
                making the determination of the cost of the loan for 
                purposes of setting the payment for a standby loan 
                under subparagraph (A), the Secretary and the Office of 
                Management and Budget shall take into consideration the 
                extent to which the minimum price and the cap price 
                reflect historical patterns of volatility in actual oil 
                prices relative to projections of future oil prices, 
                based upon publicly available data from the Energy 
                Information Administration, and employing statistical 
                methods and analyses that are appropriate for the 
                analysis of volatility in energy prices.
                    ``(C) Treatment of payments.--The value to the 
                United States of a payment under subparagraph (A) and 
                any profit-sharing payments under paragraph (3) shall 
                be taken into account for purposes of section 
                502(5)(B)(iii) of the Federal Credit Reform Act of 1990 
                in determining the cost to the Federal Government of a 
                standby loan made under this subsection. If a standby 
                loan has no cost to the Federal Government, the 
                requirements of section 504(b) of such Act shall be 
                deemed to be satisfied.
            ``(5) Other provisions.--
                    ``(A) No double benefit.--A project receiving a 
                loan under this subsection may not, during the primary 
                term of the loan agreement, receive a Federal loan 
                guarantee under subsection (a) of this section, or 
                under other laws.
                    ``(B) Subrogation, etc.--Subsections (g)(2) 
                (relating to subrogation), (h) (relating to fees), and 
                (j) (relating to full faith and credit) shall apply to 
                standby loans under this subsection to the same extent 
                they apply to loan guarantees.''.
Coal Liquid Fuel Act - Amends the Energy Policy Act of 2005 to authorize the Secretary of Energy to enter into: (1) standby loan agreements with up to six qualifying CTL projects, at least one of which shall be owned by two or more small coal producers; and (2) a profit-sharing agreement with the project at the time the standby loan agreement is executed.

Defines "qualifying CTL project" as: (1) a commercial-scale project that converts coal to liquid or gaseous transportation fuels; or (2) not more than one project at a facility that converts petroleum refinery waste products, including petroleum coke, into liquids or gaseous transportation fuels, and demonstrates the capture, sequestration, or disposition of carbon dioxide produced in the conversion process.
To provide for a standby loan program for certain coal-to-liquid projects.