I 

110TH CONGRESS 

1ST SESSION H. R. 2208 

To provide for a standby loan program for certain coal-to-liquid projects. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 8, 2007 

Mr. BOUCHER (for himself, Mr. SHIMKUS, Mr. MATHESON, Mr. HASTERT, 

Mr. DOYLE, Mr. PICKERING, Mr. HILL, Mr. UPTON, Mr. ROSS, and Mr. 

WHITFIELD) introduced the following bill; which was referred to the Committee on Energy and Commerce, and in addition to the Committee on 

Science and Technology, for a period to be subsequently determined by 

the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned 

A BILL 

To provide for a standby loan program for certain coalto-liquid projects. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Coal Liquid Fuel Act’’. 


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1 SEC. 2. STANDBY LOANS FOR QUALIFYING COAL-TO-LIQ2 UIDS PROJECTS. 

3 Section 1702 of the Energy Policy Act of 2005 (42 

4 U.S.C. 16512) is amended by adding at the end the fol5 lowing new subsection: 

6 ‘‘(k) STANDBY LOANS FOR QUALIFYING CTL 

7 PROJECTS.— 

8 ‘‘(1) DEFINITIONS.—For purposes of this sub9 section: 

10 ‘‘(A) CAP PRICE.—The term ‘cap price’ 

11 means a market price specified in the standby 

12 loan agreement above which the project is re13 quired to make payments to the United States. 

14 ‘‘(B) FULL TERM.—The term ‘full term’ 

15 means the full term of a standby loan agree16 ment, as specified in the agreement, which shall 

17 not exceed the lesser of 30 years or 90 percent 

18 of the projected useful life of the project (as de19 termined by the Secretary). 

20 ‘‘(C) MARKET PRICE.—The term ‘market 

21 price’ means the average quarterly price of a 

22 petroleum price index specified in the standby 

23 loan agreement. 

24 ‘‘(D) MINIMUM PRICE.—The term ‘min25 imum price’ means a market price specified in 

26 the standby loan agreement below which the 


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1 United States is obligated to make disburse2 ments to the project. 

3 ‘‘(E) OUTPUT.—The term ‘output’ means 

4 some or all of the liquid or gaseous transpor5 tation fuels produced from the project, as speci6 fied in the loan agreement. 

7 ‘‘(F) PRIMARY TERM.—The term ‘primary 

8 term’ means the initial term of a standby loan 

9 agreement, as specified in the agreement, which 

10 shall not exceed the lesser of 20 years or 75 

11 percent of the projected useful life of the 

12 project (as determined by the Secretary). 

13 ‘‘(G) QUALIFYING CTL PROJECT.—The 

14 term ‘qualifying CTL project’ means— 

15 ‘‘(i) a commercial-scale project that 

16 converts coal to one or more liquid or gas17 eous transportation fuels; or 

18 ‘‘(ii) not more than one project at a 

19 facility that converts petroleum refinery 

20 waste products, including petroleum coke, 

21 into one or more liquids or gaseous trans22 portation fuels, 

23 that demonstrates the capture, and sequestra24 tion or disposal or use of, the carbon dioxide 

25 produced in the conversion process, and that, 


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1 on the basis of a carbon dioxide sequestration 

2 plan prepared by the applicant, is certified by 

3 the Administrator of the Environmental Protec4 tion Agency, in consultation with the Secretary, 

5 as producing fuel with life cycle carbon dioxide 

6 emissions at or below the average life cycle car7 bon dioxide emissions for the same type of fuel 

8 produced at traditional petroleum based facili9 ties with similar annual capacities. 

10 ‘‘(H) STANDBY LOAN AGREEMENT.—The 

11 term ‘standby loan agreement’ means a loan 

12 agreement entered into under paragraph (2). 

13 ‘‘(2) STANDBY LOANS.— 

14 ‘‘(A) LOAN AUTHORITY.—The Secretary 

15 may enter into standby loan agreements with 

16 not more than six qualifying CTL projects, at 

17 least one of which shall be a project jointly or 

18 in part owned by two or more small coal pro19 ducers. Such an agreement— 

20 ‘‘(i) shall provide that the Secretary 

21 will make a direct loan (within the mean22 ing of section 502(1) of the Federal Credit 

23 Reform Act of 1990) to the qualifying 

24 CTL project; and 


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1 ‘‘(ii) shall set a cap price and a min2 imum price for the primary term of the 

3 agreement. 

4 ‘‘(B) LOAN DISBURSEMENTS.—Such a loan 

5 shall be disbursed during the primary term of 

6 such agreement whenever the market price falls 

7 below the minimum price. The amount of such 

8 disbursements in any calendar quarter shall be 

9 equal to the excess of the minimum price over 

10 the market price, times the output of the 

11 project (but not more than a total level of dis12 bursements specified in the agreement). 

13 ‘‘(C) LOAN REPAYMENTS.—The Secretary 

14 shall establish terms and conditions, including 

15 interest rates and amortization schedules, for 

16 the repayment of such loan within the full term 

17 of the agreement, subject to the following limi18 tations: 

19 ‘‘(i) If in any calendar quarter during 

20 the primary term of the agreement the 

21 market price is less than the cap price, the 

22 project may elect to defer some or all of its 

23 repayment obligations due in that quarter. 

24 Any unpaid obligations will continue to ac25 crue interest. 


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1 ‘‘(ii) If in any calendar quarter during 

2 the primary term of the agreement the 

3 market price is greater than the cap price, 

4 the project shall meet its scheduled repay5 ment obligation plus deferred repayment 

6 obligations, but shall not be required to 

7 pay in that quarter an amount that is 

8 more than the excess of the market price 

9 over the cap price, times the output of the 

10 project. 

11 ‘‘(iii) At the end of the primary term 

12 of the agreement, the cumulative amount 

13 of any deferred repayment obligations, to14 gether with accrued interest, shall be am15 ortized (with interest) over the remainder 

16 of the full term of the agreement. 

17 ‘‘(3) PROFIT-SHARING.—The Secretary is au18 thorized to enter into a profit-sharing agreement 

19 with the project at the time the standby loan agree20 ment is executed. Under such an agreement, if the 

21 market price exceeds the cap price in a calendar 

22 quarter, a profit-sharing payment shall be made for 

23 that quarter, in an amount equal to— 


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1 ‘‘(A) the excess of the market price over 

2 the cap price, times the output of the project; 

3 less 

4 ‘‘(B) any loan repayments made for the 

5 calendar quarter. 

6 ‘‘(4) COMPLIANCE WITH FEDERAL CREDIT RE7 FORM ACT.— 

8 ‘‘(A) UPFRONT PAYMENT OF COST OF

9 LOAN.—No standby loan agreement may be en10 tered into under this subsection unless the 

11 project makes a payment to the United States 

12 that the Office of Management and Budget de13 termines is equal to the cost of such loan (de14 termined under 502(5)(B) of the Federal Credit 

15 Reform Act of 1990). Such payment shall be 

16 made at the time the standby loan agreement is 

17 executed. 

18 ‘‘(B) MINIMIZATION OF RISK TO THE GOV19 ERNMENT.—In making the determination of the 

20 cost of the loan for purposes of setting the pay21 ment for a standby loan under subparagraph 

22 (A), the Secretary and the Office of Manage23 ment and Budget shall take into consideration 

24 the extent to which the minimum price and the 

25 cap price reflect historical patterns of volatility 


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1 in actual oil prices relative to projections of fu2 ture oil prices, based upon publicly available 

3 data from the Energy Information Administra4 tion, and employing statistical methods and 

5 analyses that are appropriate for the analysis of 

6 volatility in energy prices. 

7 ‘‘(C) TREATMENT OF PAYMENTS.—The 

8 value to the United States of a payment under 

9 subparagraph (A) and any profit-sharing pay10 ments under paragraph (3) shall be taken into 

11 account for purposes of section 502(5)(B)(iii) of 

12 the Federal Credit Reform Act of 1990 in de13 termining the cost to the Federal Government 

14 of a standby loan made under this subsection. 

15 If a standby loan has no cost to the Federal 

16 Government, the requirements of section 504(b) 

17 of such Act shall be deemed to be satisfied. 

18 ‘‘(5) OTHER PROVISIONS.— 

19 ‘‘(A) NO DOUBLE BENEFIT.—A project re20 ceiving a loan under this subsection may not, 

21 during the primary term of the loan agreement, 

22 receive a Federal loan guarantee under sub23 section (a) of this section, or under other laws. 

24 ‘‘(B) SUBROGATION, ETC.—Subsections 

25 (g)(2) (relating to subrogation), (h) (relating to 


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1 fees), and (j) (relating to full faith and credit) 

2 shall apply to standby loans under this sub3 section to the same extent they apply to loan 

4 guarantees.’’. 

Æ 


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