Investing in Energy Systems for the Transport of CO2 Act of 2019

I 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 transpor- tation 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 Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Investing in Energy 4 Systems for the Transport of CO2 Act of 2019’’. 5 SEC. 2. SENSE OF CONGRESS. 6 It is the sense of Congress that each State should 7 consider— 8 VerDate Sep 11 2014 01:09 Nov 05, 2019 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H4905.IH H4905 dlhill on DSKBBY8HB2PROD with BILLS 2 •HR 4905 IH (1) qualifying all anthropogenic carbon dioxide 1 pipelines as pollution control devices under the laws 2 and regulations of such State; and 3 (2) the establishment of a minimum of a 10- 4 year waiver of ad valorem and property taxes for 5 such pipelines. 6 SEC. 3. CARBON TRANSPORT INFRASTRUCTURE FINANC- 7 ING PROGRAM. 8 (a) IN GENERAL.—The Secretary of Transportation 9 shall carry out a program to provide Federal credit instru- 10 ments to private entities to carry out projects for the con- 11 struction of common carrier pipelines for the transpor- 12 tation of anthropogenic carbon dioxide as a supercritical 13 fluid. 14 (b) APPLICATIONS.—To be eligible to receive assist- 15 ance under this section, an entity shall submit to the Sec- 16 retary an application at such time, in such manner, and 17 containing such information as the Secretary may require. 18 (c) PROJECTS ELIGIBLE FOR ASSISTANCE.—The fol- 19 lowing projects may be carried out with amounts made 20 available under this section: 21 (1) A project to construct, or increase the di- 22 ameter of, a common carrier trunk pipeline for the 23 transportation of anthropogenic carbon dioxide as a 24 supercritical fluid between one or more— 25 VerDate Sep 11 2014 01:09 Nov 05, 2019 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H4905.IH H4905 dlhill on DSKBBY8HB2PROD with BILLS 3 •HR 4905 IH (A) carbon dioxide capture or production 1 facilities; 2 (B) carbon dioxide pipelines; 3 (C) carbon dioxide storage facilities; or 4 (D) carbon dioxide utilization facilities. 5 (2) A project to construct common carrier feed- 6 er pipelines for the transportation of anthropogenic 7 carbon dioxide as a supercritical fluid between cap- 8 ture, production, refining, or manufacturing facilities 9 or qualified facilities and a trunk pipeline described 10 in paragraph (1). 11 (d) DETERMINATION OF ELIGIBILITY AND PROJECT 12 SELECTION.—To be eligible to receive financial assistance 13 under this section, an entity shall meet the following cri- 14 teria, as determined by the Secretary: 15 (1) CREDIT WORTHINESS.— 16 (A) IN GENERAL.—The entity shall be 17 creditworthy, as determined by the Secretary. 18 (B) CONSIDERATIONS.—In determining 19 the creditworthiness of an entity, the Secretary 20 shall take into consideration relevant factors, 21 including— 22 (i) the terms, conditions, financial 23 structure, and security features of the pro- 24 posed financing; 25 VerDate Sep 11 2014 01:09 Nov 05, 2019 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H4905.IH H4905 dlhill on DSKBBY8HB2PROD with BILLS 4 •HR 4905 IH (ii) the dedicated revenue sources that 1 will secure or fund the project obligations; 2 (iii) the financial assumptions upon 3 which the project is based; and 4 (iv) the financial soundness and credit 5 history of the entity. 6 (C) SECURITY FEATURES.—The Secretary 7 shall ensure that any financing for the project 8 has appropriate security features, such as a 9 rate covenant, supporting the project obliga- 10 tions to ensure repayment. 11 (D) RATING OPINION LETTERS.— 12 (i) PRELIMINARY RATING OPINION 13 LETTER.—The Secretary shall require each 14 entity to provide, at the time of applica- 15 tion, a preliminary rating opinion letter 16 from at least 1 rating agency indicating 17 that the senior obligations of the project 18 (which may be the Federal credit instru- 19 ment) have the potential to achieve an in- 20 vestment-grade rating. 21 (ii) FINAL RATING OPINION LET- 22 TER.—The Secretary shall require each en- 23 tity to provide, prior to final acceptance 24 and financing of the project, final rating 25 VerDate Sep 11 2014 01:09 Nov 05, 2019 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H4905.IH H4905 dlhill on DSKBBY8HB2PROD with BILLS 5 •HR 4905 IH opinion letters from at least 2 rating agen- 1 cies indicating that the senior obligations 2 of the project have an investment-grade 3 rating. 4 (2) PROPOSED PROJECT.—The Secretary shall 5 ensure that any common carrier trunk pipeline con- 6 structed or increased under this section has, or is in- 7 creased to, an external diameter of not less than 30 8 inches. 9 (e) SELECTION OF PROJECTS.— 10 (1) IN GENERAL.—In carrying out the program 11 under subsection (a), the Secretary may not provide 12 a secured loan to finance more than one common 13 carrier trunk pipeline project the majority of the 14 pipeline length of which will be constructed in a sin- 15 gle census region. 16 (2) CENSUS REGION DEFINED.—For purposes 17 of this section, the term ‘‘census region’’ means 1 of 18 the 4 census regions (northeast, south, midwest, and 19 west) that are designated as census regions by the 20 Bureau of the Census as of the date of enactment 21 of this Act. 22 (3) PRIORITY.—In carrying out the program 23 under subsection (a) for projects described in (c)(1), 24 the Secretary shall give priority to applications that 25 VerDate Sep 11 2014 01:09 Nov 05, 2019 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H4905.IH H4905 dlhill on DSKBBY8HB2PROD with BILLS 6 •HR 4905 IH propose construction of a common carrier trunk 1 pipeline project in an area where pipelines or other 2 linear infrastructure already exist. 3 (f) SECURED LOANS.— 4 (1) AGREEMENTS.— 5 (A) IN GENERAL.—Subject to paragraphs 6 (2) and (3), the Secretary may enter into agree- 7 ments with 1 or more entities to make secured 8 loans, the proceeds of which shall be used to fi- 9 nance project costs of any project selected 10 under this section. 11 (B) FINANCIAL RISK ASSESSMENT.—Be- 12 fore entering into an agreement under this sub- 13 section for a secured loan, the Secretary, in 14 consultation with the Director of the Office of 15 Management and Budget and each rating agen- 16 cy providing a rating opinion letter under this 17 section, shall determine an appropriate capital 18 reserve subsidy amount for the secured loan, 19 taking into account each such rating opinion 20 letter. 21 (C) INVESTMENT-GRADE RATING REQUIRE- 22 MENT.—The execution of a secured loan under 23 this section shall be contingent on receipt by 24 VerDate Sep 11 2014 01:09 Nov 05, 2019 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H4905.IH H4905 dlhill on DSKBBY8HB2PROD with BILLS 7 •HR 4905 IH the senior obligations of the project of an in- 1 vestment-grade rating. 2 (2) TERMS AND LIMITATIONS.— 3 (A) IN GENERAL.—A secured loan pro- 4 vided for a project under this section shall be 5 subject to such terms and conditions, and con- 6 tain such covenants, representations, warran- 7 ties, and requirements (including requirements 8 for audits), as the Secretary determines to be 9 appropriate. 10 (B) MAXIMUM AMOUNT.—The amount of a 11 secured loan under this section shall not exceed 12 80 percent of the reasonably anticipated project 13 costs. 14 (C) PAYMENT.—A secured loan under this 15 section— 16 (i) shall be payable, in whole or in 17 part, from user fees or other dedicated rev- 18 enue sources that also secure the senior 19 project obligations of the relevant project; 20 (ii) shall include a rate covenant, cov- 21 erage requirement, or similar security fea- 22 ture supporting the project obligations; 23 and 24 VerDate Sep 11 2014 01:09 Nov 05, 2019 Jkt 099200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H4905.IH H4905 dlhill on DSKBBY8HB2PROD with BILLS 8 •HR 4905 IH (iii) may have a lien on revenues de- 1 scribed in subparagraph (A), subject to 2 any lien securing project obligations. 3 (D) INTEREST RATE.—The interest rate 4 on a secured loan under this section shall be 5 not less than the yield on United States Treas- 6 ury securities of a similar maturity to the ma- 7 turity of the secured loan on the date of execu- 8 tion of the loan agreement. 9 (E) MATURITY DATE.—The final maturity 10 date of a secured loan under this section shall 11 be the earlier of— 12 (i) the date that is 35 years after the 13 date of substantial completion of the rel- 14 evant project (as determined by the Sec- 15 retary); or 16 (ii) if the useful life of the project (as 17 determined by the Secretary) is less than 18 35 years, the useful life the project. 19 (F) NONSUBORDINATION.—A secured loan 20 under this section shall not be subordinated to 21 the claims of any holder of project obligations 22 in the event of bankruptcy, insolvency, or liq- 23 uidation of the entity carrying out the project. 24 VerDate Sep 11 2014 01:09 Nov 05, 2019 Jkt 099200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H4905.IH H4905 dlhill on DSKBBY8HB2PROD with BILLS 9 •HR 4905 IH (G) FINANCING FEES.—On request of an 1 entity, any fees to be paid by the entity under 2 this section shall be financed as part of the 3 loan. 4 (3) REPAYMENT.— 5 (A) SCHEDULE.—The Secretary shall es- 6 tablish a repayment schedule for each secured 7 loan provided under this section, based on the 8 projected cash flow from project revenues and 9 other repayment sources. 10 (B) COMMENCEMENT.—Scheduled loan re- 11 payments of principal or interest on a secured 12 loan under this section shall commence not 13 later than 5 years after the date of substantial 14 completion of the project (as determined by the 15 Secretary). 16 (C) DEFERRED PAYMENTS.— 17 (i) AUTHORIZATION.—If, at any time 18 after the date of substantial completion of 19 a project for which a secured loan is pro- 20 vided under this section, the project is un- 21 able to generate sufficient revenues to pay 22 the scheduled loan repayments of principal 23 and interest on the secured loan, the Sec- 24 retary subject to clause (iii), may allow the 25 VerDate Sep 11 2014 01:09 Nov 05, 2019 Jkt 099200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H4905.IH H4905 dlhill on DSKBBY8HB2PROD with BILLS 10 •HR 4905 IH entity to add unpaid principal and interest 1 to the outstanding balance of the secured 2 loan. 3 (ii) INTEREST.—Any payment de- 4 ferred under clause (i) shall— 5 (I) continue to accrue interest in 6 accordance with paragraph (2)(D) 7 until fully repaid; and 8 (II) be scheduled to be amortized 9 over the remaining term of the se- 10 cured loan. 11 (iii) CRITERIA.— 12 (I) IN GENERAL.—Any payment 13 deferral under clause (i) shall be con- 14 tingent on the project meeting such 15 criteria as the Secretary may estab- 16 lish. 17 (II) REPAYMENT STANDARDS.— 18 The criteria established under sub- 19 clause (I) shall include standards for 20 reasonable assurance of repayment. 21 (iv) PREPAYMENT.— 22 (I) USE OF EXCESS REVE- 23 NUES.—Any excess revenues that re- 24 main after satisfying scheduled debt 25 VerDate Sep 11 2014 01:09 Nov 05, 2019 Jkt 099200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H4905.IH H4905 dlhill on DSKBBY8HB2PROD with BILLS 11 •HR 4905 IH service requirements on the project 1 obligations and secured loan and all 2 deposit requirements under the terms 3 of any trust agreement, bond resolu- 4 tion, or similar agreement securing 5 project obligations may be applied an- 6 nually to prepay a secured loan under 7 this section without penalty. 8 (II) USE OF PROCEEDS OF REFI- 9 NANCING.—A secured loan under this 10 section may be prepaid at any time 11 without penalty from the proceeds of 12 refinancing from non-Federal funding 13 sources. 14 (4) SALE OF SECURED LOANS.— 15 (A) IN GENERAL.—Subject to subpara- 16 graph (B), as soon as practicable after the date 17 of substantial completion of a project and after 18 providing a notice to the entity, the Secretary 19 may sell to another entity or reoffer into the 20 capital markets a secured loan for a project 21 under this section, if the Secretary determines 22 that the sale or reoffering can be made on fa- 23 vorable terms. 24 VerDate Sep 11 2014 01:09 Nov 05, 2019 Jkt 099200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H4905.IH H4905 dlhill on DSKBBY8HB2PROD with BILLS 12 •HR 4905 IH (B) CONSENT OF ENTITY.—In making a 1 sale or reoffering under subparagraph (A), the 2 Secretary may not change the original terms 3 and conditions of the secured loan without the 4 written consent of the entity. 5 (5) LOAN GUARANTEES.— 6 (A) IN GENERAL.—The Secretary may 7 provide a loan guarantee to a lender in lieu of 8 making a secured loan under this section, if the 9 Secretary determines that the budgetary cost of 10 the loan guarantee is substantially the same as 11 that of a secured loan. 12 (B) TERMS.—The terms of a loan guar- 13 antee provided under this paragraph shall be 14 consistent with the terms established in this 15 section for a secured loan, except that the rate 16 on the guaranteed loan and any prepayment 17 features shall be negotiated between the entity 18 and the lender, with the consent of the Sec- 19 retary. 20 (6) LIMITATION.—No project receiving Federal 21 credit assistance under this section may be financed 22 (directly or indirectly), in whole or in part, with pro- 23 ceeds of any obligation— 24 VerDate Sep 11 2014 01:09 Nov 05, 2019 Jkt 099200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\H4905.IH H4905 dlhill on DSKBBY8HB2PROD with BILLS 13 •HR 4905 IH (A) the interest on which is exempt from 1 the tax imposed under chapter 1 of the Internal 2 Revenue Code of 1986; or 3 (B) with respect to which credit is allow- 4 able under subpart I or J of part IV of sub- 5 chapter A of chapter 1 of such Code. 6 (g) PROGRAM ADMINISTRATION.— 7 (1) REQUIREMENT.—The Secretary shall estab- 8 lish a uniform system to service the Federal credit 9 instruments made available under this section. 10 (2) FEES.—The Secretary may collect and 11 spend fees, contingent on authority being provided in 12 appropriations Acts, at a level that is suf [Text truncated for display. 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