Hydrogen Infrastructure Finance and Innovation Act

Subjects: Energy, Alternative and renewable resources, Business records, Climate change and greenhouse gases, Economic performance and conditions, Energy research, Energy storage, supplies, demand, Environmental assessment, monitoring, research, Government lending and loan guarantees, Government studies and investigations, Infrastructure development, Interest, dividends, interest rates, Motor carriers, Oil and gas, Pipelines, Research and development, Transportation programs funding


<html><body><pre>[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 649 Introduced in Senate (IS)]

&lt;DOC&gt;






118th CONGRESS
  1st Session
                                 S. 649

      To require the Secretary of Energy to establish a hydrogen 
  infrastructure finance and innovation pilot program, and for other 
                               purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             March 2, 2023

  Mr. Cornyn (for himself, Mr. Coons, Mr. Cassidy, Mr. Heinrich, Ms. 
Murkowski, and Mr. Lujan) introduced the following bill; which was read 
  twice and referred to the Committee on Energy and Natural Resources

_______________________________________________________________________

                                 A BILL


 
      To require the Secretary of Energy to establish a hydrogen 
  infrastructure finance and innovation pilot program, 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 ``Hydrogen Infrastructure Finance and 
Innovation Act''.

SEC. 2. STUDY.

    Not later than 18 months after the date of enactment of this Act, 
the Secretary of Energy, in coordination with the Administrator of the 
Environmental Protection Agency, the Chair of the Council on 
Environmental Quality, the Administrator of the Energy Information 
Administration, and the heads of other relevant Federal agencies, shall 
conduct a study subject to notice and public comment--
            (1) to fully assess and report the potential layout of 
        pipeline corridors, including existing and new infrastructure, 
        that--
                    (A) are robust against a range of projected 
                hydrogen demand futures; and
                    (B) reflect the potential to site within, or 
                adjacent to, existing pipeline or other linear 
                infrastructure corridors;
            (2) to assess the costs associated with each infrastructure 
        scenario described in paragraph (1);
            (3) to synthesize the results from research, development, 
        and demonstration projects on materials and metallurgy for 
        transporting and storing hydrogen and hydrogen-based fuels, 
        such as ammonia;
            (4) to determine outstanding questions with regard to 
        research, development, and demonstration of infrastructure for 
        transporting and storing hydrogen and hydrogen-based fuels, 
        such as ammonia;
            (5) to investigate the behavior and environmental impact of 
        hydrogen leakage in pipelines and from geologic storage sites 
        and nongeologic storage equipment;
            (6) to determine best practices for the construction and 
        maintenance of hydrogen pipelines;
            (7) to determine the reduction in carbon intensity at 
        various levels of hydrogen blending into the natural gas 
        network; and
            (8) to establish a framework for the measurement, 
        reporting, and management of hydrogen leaks.

SEC. 3. SUPPORTING HYDROGEN INFRASTRUCTURE AND REGIONAL DEVELOPMENT OF 
              HYDROGEN.

    (a) Definitions.--In this section:
            (1) Board-regulated rates.--The term ``Board-regulated 
        rates'' means rates regulated by the Surface Transportation 
        Board.
            (2) Commission-regulated rates.--The term ``Commission-
        regulated rates'' means rates regulated by the Federal Energy 
        Regulatory Commission.
            (3) Common carrier.--The term ``common carrier'' means a 
        transportation infrastructure operator or owner that--
                    (A) publishes a publicly available tariff 
                containing the just and reasonable rates, terms, and 
                conditions of nondiscriminatory service; and
                    (B) holds itself out to provide transportation 
                services to the public for a fee.
            (4) Eligible activity.--The term ``eligible activity'' 
        means an activity described in subsection (g)(2) relating to, 
        or carried out in connection with, an eligible project.
            (5) Eligible entity.--The term ``eligible entity'' means a 
        corporation, partnership, joint venture, trust, non-Federal 
        governmental entity, agency, or instrumentality, or other 
        entity.
            (6) Eligible project.--
                    (A) In general.--Subject to subparagraph (B), the 
                term ``eligible project'' means an infrastructure 
                project for hydrogen transportation, storage, or 
                delivery, including pipeline, shipping, rail, 
                refueling, or other infrastructure, or associated 
                equipment, as the Secretary determines to be 
                appropriate.
                    (B) Inclusion of pipeline projects.--The term 
                ``eligible project'' includes a pipeline project only 
                if the project is for--
                            (i) the construction of 1 or more new 
                        pipelines that are capable of handling pure 
                        hydrogen; or
                            (ii) the retrofitting of 1 or more existing 
                        natural gas pipelines--
                                    (I) to transport a blend of 
                                hydrogen and natural gas; and
                                    (II) in a manner that will 
                                significantly increase the capacity of 
                                the pipelines to transport hydrogen, as 
                                determined by the Secretary.
            (7) Eligible project cost.--
                    (A) In general.--The term ``eligible project 
                costs'' means--
                            (i) the costs of carrying out an eligible 
                        activity; and
                            (ii) any costs described in subparagraph 
                        (B) relating to, or incurred in connection 
                        with, an eligible project.
                    (B) Costs described.--The costs referred to in 
                subparagraph (A)(ii) are--
                            (i) the costs of capitalized interest 
                        necessary to meet market requirements, the 
                        costs of reasonably required reserve funds, 
                        capital issuance expenses, and any other 
                        carrying costs during construction of the 
                        applicable infrastructure; and
                            (ii) transaction costs associated with 
                        financing an eligible project, including the 
                        cost of legal counsel and technical 
                        consultants.
            (8) HIFIA pilot program.--The term ``HIFIA pilot program'' 
        means the hydrogen infrastructure finance and innovation pilot 
        program established under subsection (b)(1).
            (9) Letter of interest.--The term ``letter of interest'' 
        means a letter submitted by a potential applicant prior to an 
        application for a grant or a loan under the HIFIA pilot program 
        that--
                    (A) is in a format prescribed by the Secretary on 
                the website of the HIFIA pilot program;
                    (B) describes the project and the location, 
                purpose, and cost of the project;
                    (C) outlines the proposed financial plan, 
                including--
                            (i) the requested grant or loan assistance; 
                        and
                            (ii) the proposed obligor, if applicable;
                    (D) provides a status of environmental review; and
                    (E) provides information regarding satisfaction of 
                other eligibility requirements of the HIFIA pilot 
                program.
            (10) Low-income or disadvantaged community.--The term 
        ``low-income or disadvantaged community'' means a community 
        (including a city, a town, a county, and any reasonably 
        isolated and divisible segment of a larger municipality) with 
        an annual median household income that is less than 100 percent 
        of the statewide annual median household income for the State 
        in which the community is located, according to the most recent 
        decennial census.
            (11) Obligor.--The term ``obligor'' means an eligible 
        entity that is liable for payment of the principal of, or 
        interest on, a loan under the HIFIA pilot program.
            (12) Secretary.--The term ``Secretary'' means the Secretary 
        of Energy.
    (b) Establishment.--
            (1) In general.--Not later than 1 year after the date of 
        enactment of this Act, the Secretary, in consultation with the 
        Federal Energy Regulatory Commission, the Surface 
        Transportation Board, and the Administrator of the Pipeline and 
        Hazardous Materials Safety Administration, shall establish a 
        hydrogen infrastructure finance and innovation pilot program 
        under which the Secretary shall provide--
                    (A) financial assistance to eligible entities for 
                eligible projects through--
                            (i) grants; or
                            (ii) long-term, low-cost supplemental 
                        loans; and
                    (B) technical assistance in accordance with 
                subsection (l).
            (2) Coordination with hydrogen hubs.--
                    (A) In general.--To ensure that the HIFIA pilot 
                program is compatible with, and complementary to, any 
                hydrogen hubs developed under any other law, the 
                Secretary, to the maximum extent practicable and 
                subject to subparagraph (B), shall coordinate the 
                establishment of the HIFIA pilot program with--
                            (i) any program to support the development 
                        of hydrogen hubs that is required to be 
                        established under any other law; and
                            (ii) the development of those hydrogen 
                        hubs.
                    (B) Treatment.--Coordination with a hydrogen hub 
                under subparagraph (A) shall not--
                            (i) be considered to be a priority 
                        criterion in determining whether to provide 
                        assistance for an eligible project under the 
                        HIFIA pilot program; or
                            (ii) preclude the provision of assistance 
                        under the HIFIA pilot program for another 
                        eligible project that--
                                    (I) meets the criteria described in 
                                subsections (d) and (e); and
                                    (II) is an objectively superior 
                                project, as determined by the 
                                Secretary.
    (c) Eligibility.--
            (1) In general.--The Secretary may provide financial 
        assistance for an eligible project under the HIFIA pilot 
        program if--
                    (A) the eligible entity proposing to carry out the 
                project submits a letter of interest prior to 
                submission of an application under paragraph (2) with 
                respect to the project; and
                    (B) the eligible entity and the eligible project 
                meet all applicable requirements of this section.
            (2) Applications.--
                    (A) In general.--To be eligible for a grant or a 
                loan under the HIFIA pilot program, an eligible entity 
                shall submit to the Secretary an application at such 
                time, in such manner, and containing such information 
                as the Secretary determines to be appropriate.
                    (B) Election.--
                            (i) In general.--An eligible entity may 
                        elect to apply for a grant, a loan, or both 
                        under the HIFIA pilot program.
                            (ii) Decision.--The Secretary shall have 
                        discretion to award any mix of grants and loans 
                        under the HIFIA pilot program as the Secretary 
                        determines to be appropriate, including with 
                        respect to each eligible entity that applies 
                        for both a grant and a loan.
                    (C) Application processing procedures.--
                            (i) Notice of complete application.--Not 
                        later than 30 days after the date of receipt of 
                        an application under this paragraph, the 
                        Secretary shall provide to the applicant a 
                        written notice describing whether--
                                    (I) the application is complete; or
                                    (II) additional information or 
                                materials are needed to complete the 
                                application.
                            (ii) Approval or denial of application.--
                        Not later than 90 days after the date of 
                        issuance of a written notice under clause (i), 
                        the Secretary shall provide to the applicant a 
                        written notice informing the applicant whether 
                        the Secretary has approved or disapproved the 
                        application.
    (d) Priority.--In selecting eligible projects to receive a grant or 
a loan under the HIFIA pilot program, the Secretary shall give priority 
to eligible projects that--
            (1) will provide greater net impact in avoiding or reducing 
        emissions of greenhouse gases; and
            (2) are sited in a manner that minimizes environmental 
        disturbance and other siting concerns, including by being sited 
        within, or adjacent to, existing pipeline or other linear 
        infrastructure corridors.
    (e) Considerations.--In selecting eligible projects to receive a 
grant or a loan under the HIFIA pilot program, the Secretary, to the 
maximum extent practicable, shall select projects that--
            (1) are large-capacity, common carrier infrastructure;
            (2) enable geographical diversity in associated projects 
        and supply chains to produce, use, or store hydrogen, with the 
        goal of enabling projects in all major regions of the United 
        States with current hydrogen demand and potential future 
        hydrogen demand;
            (3) aid in creating economies of scale for hydrogen uptake 
        in applications requiring an affordable solution to reduce 
        greenhouse gas emissions;
            (4) will generate the greatest benefit to low-income or 
        disadvantaged communities; and
            (5) will--
                    (A) maximize creation or retention of jobs in the 
                United States; and
                    (B) provide the highest job quality.
    (f) Loans.--
            (1) In general.--In carrying out the HIFIA pilot program, 
        the Secretary shall make loans to eligible entities, the 
        proceeds of which shall be used to finance eligible projects.
            (2) Interest rate.--The interest rate of a loan under the 
        HIFIA pilot program shall be not less than the interest rate on 
        United States Treasury securities of a similar maturity to the 
        maturity of the loan on the date of closing on the loan.
            (3) Maturity date.--The final maturity date of a loan 
        provided under the HIFIA pilot program shall be the date that 
        is 30 years after the date of substantial completion of the 
        applicable eligible project.
            (4) Repayment.--
                    (A) In general.--The Secretary shall establish a 
                repayment schedule for each loan provided under the 
                HIFIA pilot program.
                    (B) Commencement.--Repayment of a loan provided 
                under the HIFIA pilot program shall commence on the 
                date of substantial completion of the applicable 
                eligible project for which the loan was provided.
                    (C) Deferral of repayment.--If, at any time during 
                the 5-year period beginning on the date of substantial 
                completion of an eligible project, the project is 
                unable to generate sufficient revenues in excess of 
                reasonable and necessary operating expenses to pay the 
                scheduled loan repayments of principal and interest on 
                the loan, the Secretary may allow the borrower to defer 
                repayment of the loan until the end of that 5-year 
                period.
            (5) Requirements.--
                    (A) Creditworthiness.--
                            (i) In general.--Each obligor with respect 
                        to a loan provided for an eligible project 
                        under the HIFIA pilot program shall be 
                        creditworthy, such that there exists a 
                        reasonable prospect of repayment of the 
                        principal and interest on the loan, as 
                        determined by the Secretary under clause (ii).
                            (ii) Reasonable prospect of repayment.--The 
                        Secretary shall base a determination of whether 
                        there is a reasonable prospect of repayment 
                        under clause (i) on a comprehensive evaluation 
                        of whether the obligor has a reasonable 
                        prospect of repaying the loan for the eligible 
                        project, including evaluation of--
                                    (I) the forecast of noncontractual 
                                cash flows supported by market 
                                projections from reputable sources, as 
                                determined by the Secretary, and cash 
                                sweeps or other structural 
                                enhancements;
                                    (II) the strength of the 
                                contractual terms of an eligible 
                                project (if available for the 
                                applicable market segment);
                                    (III) the projected financial 
                                strength of the obligor--
                                            (aa) at the time of loan 
                                        close; and
                                            (bb) throughout the loan 
                                        term, including after the 
                                        project is completed;
                                    (IV) the financial strength of the 
                                investors and strategic partners of the 
                                obligor, if applicable; and
                                    (V) other financial metrics and 
                                analyses that are relied on by the 
                                private lending community and 
                                nationally recognized credit rating 
                                agencies, as determined to be 
                                appropriate by the Secretary.
                    (B) Dedicated source of revenue.--An eligible 
                project for which a loan is provided under the HIFIA 
                pilot program shall have a dedicated source of revenue 
                separate from any financial assistance received under 
                the HIFIA pilot program.
    (g) Use of Financial Assistance.--
            (1) In general.--A grant or loan provided under the HIFIA 
        pilot program may be used for any eligible project costs.
            (2) Eligible activities.--A grant or loan provided under 
        the HIFIA pilot program may be used to carry out any of the 
        following activities with respect to an eligible project:
                    (A) Development phase activities, including--
                            (i) planning;
                            (ii) preliminary engineering;
                            (iii) design;
                            (iv) environmental review;
                            (v) revenue forecasting; and
                            (vi) other preconstruction activities.
                    (B) Construction, reconstruction, rehabilitation, 
                and replacement activities, including the training of 
                construction personnel in handling and safety.
                    (C) Acquisition of--
                            (i) real property or an interest in real 
                        property; or
                            (ii) equipment.
                    (D) Environmental mitigation activities.
                    (E) Activities relating to construction 
                contingencies.
    (h) Federal Requirements.--
            (1) In general.--Nothing in this section supersedes the 
        applicability of any other requirement under Federal law 
        (including regulations).
            (2) NEPA.--Federal assistance may only be provided under 
        the HIFIA pilot program for a project that has received an 
        environmental categorical exclusion, a finding of no 
        significant impact, or a record of decision under the National 
        Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.).
    (i) Leak Detection.--Each eligible entity that receives a loan or 
grant under the HIFIA pilot program shall conduct--
            (1) a hydrogen leakage monitoring, reporting, and 
        verification (also known as ``MRV'') program; and
            (2) a hydrogen leak detection and repair (also known as 
        ``LDAR'') program.
    (j) Maximum Federal Involvement.--The maximum Federal share of an 
eligible project for which a loan is provided under the HIFIA pilot 
program shall not exceed 80 percent of the eligible costs of the 
project.
    (k) Amendment.--Section 1703(b)(3) of the Energy Policy Act of 2005 
(42 U.S.C. 16513(b)(3)) is amended by striking ``Hydrogen fuel'' and 
inserting ``Hydrogen technologies applicable to 1 or more end-use 
sectors, such as power generation, transportation, aviation, storage, 
industrial, and chemicals, including hydrogen fuel''.
    (l) Technical Assistance.--
            (1) In general.--The Secretary and the National 
        Laboratories may provide technical assistance under the HIFIA 
        pilot program to assess the grading and readiness of existing 
        infrastructure to transport, store, or deliver hydrogen with 
        respect to informal State and regional planning for investments 
        in that grading and readiness.
            (2) Priority.--In providing technical assistance under 
        paragraph (1), the Secretary and the National Laboratories 
        shall prioritize--
                    (A) preexisting infrastructure corridors;
                    (B) geologic storage potential for hydrogen; and
                    (C) industrial clusters.
    (m) Regulatory Assessment To Encourage Hydrogen Transportation 
Infrastructure Deployment.--Not later than 270 days after the date of 
enactment of this Act, each of the Federal Energy Regulatory 
Commission, the Surface Transportation Board, and the Administrator of 
the Pipeline and Hazardous Materials Safety Administration, in 
coordination with the Secretary, shall--
            (1) assess jurisdiction over the siting, construction, 
        safety, and regulation of hydrogen transportation 
        infrastructure, including, at a minimum, the blending of 
        hydrogen in natural gas pipelines;
            (2) if that assessment indicates that additional authority 
        is needed to support the deployment of hydrogen transportation 
        infrastructure, submit to Congress a report describing the 
        needed authority; and
            (3) identify the eligibility of, and process for, hydrogen 
        transportation infrastructure to receive cost recovery under 
        the HIFIA pilot program through Commission-regulated rates, 
        Board-regulated rates, or other applicable regulated rates, as 
        appropriate, for the transportation of hydrogen in interstate 
        commerce.
    (n) Authorization of Appropriations.--There is authorized to be 
appropriated to the Secretary to carry out the HIFIA pilot program 
$100,000,000 for each of fiscal years 2024 through 2028.
                                 &lt;all&gt;
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