Title: Investing in Energy Systems for the Transport of CO2 Act of 2019
Policy area: Transportation and Public Works

Summary:
Investing in Energy Systems for the Transport of CO2 Act of 2019
This bill directs the Department of Transportation (DOT) to provide secured loans or loan guarantees to private entities for the construction of common carrier pipelines that transport anthropogenic carbon dioxide as a supercritical fluid.
The bill prohibits DOT from providing loans to finance more than one common carrier trunk pipeline project of which the majority of the pipeline will be constructed in a single census region.
DOT must give priority to projects that propose construction of a common carrier trunk pipeline project in an area where pipelines or other linear infrastructure already exist.
DOT may provide loans only if all of the iron, steel, and manufactured goods used in the project are produced in the United States, with specified exceptions.

[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.
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