Green Bank

Title 31, United States Code, is amended by adding the following new chapter at the end thereof:

Green Bank

Sec.

9801. Green Bank.

9801.

Green Bank

(a)

Short title

This section may be cited as the

Green Bank Act of 2014

. (b)

Purposes

The purposes of this section are as follows: (1)To evaluate and coordinate financing for qualified clean energy projects and qualified energy efficiency projects. (2)To provide loans, loan guarantees, debt securitization, insurance, portfolio insurance, and other forms of financing support or risk management to qualified clean energy projects and qualified energy efficiency projects. (3)To facilitate— (A)efficient tax equity markets for qualified clean energy projects; and (B)the financing of long-term clean energy purchasing by governmental and non-governmental not-for-profit entities. (4)To foster— (A)the development and consistent application of transparent underwriting standards, standard contractual terms, and measurement and verification protocols for qualified clean energy projects and qualified energy efficiency projects; (B)the creation of performance data that enables effective underwriting, risk management, and pro forma modeling of financial performance of qualified clean energy projects and qualified energy efficiency projects to support primary financing markets and stimulate development of secondary investment markets for clean energy projects and energy efficiency projects; and (C)the level of financing support for qualified clean energy projects and qualified energy efficiency projects necessary to advance vital national objectives, including— (i)achieving energy independence from foreign energy sources; (ii)abating climate change by increasing zero or low carbon electricity generation and transportation capabilities; (iii)realizing energy efficiency potential in existing infrastructure; (iv)easing the economic effects of transitioning from a carbon-based economy to a clean energy economy; (v)achieving job creation through the construction and operation of qualified clean energy projects and qualified energy efficiency projects; (vi)fostering long-term domestic manufacturing capacity in the clean energy and energy efficiency industries; and (vii)complementing and supplementing other clean energy and energy efficiency legislation at the Federal or State level. (c)

Definitions

In this section: (1)

Bank

The term Bank means the Green Bank established under subsection (d). (2)

Board

The term Board means the Board of Directors of the Bank. (3)

Clean Energy project

The term clean energy project means any electricity generation, transmission, storage, heating, cooling, transportation, distribution, industrial process, or manufacturing project whose primary purpose is the deployment, development, or production of an energy system or technology that avoids, reduces, or sequesters air pollutants or anthropogenic greenhouse gases, including the following: (A)Solar. (B)Wind. (C)Geothermal. (D)Biomass. (E)Hydropower. (F)Ocean and hydrokinetic. (G)Fuel cell. (H)Advanced battery. (I)Carbon capture and sequestration. (J)Next generation biofuels from nonfood feedstocks. (K)Alternative vehicle fuel infrastructure. (L)Nuclear. (4)

Energy Efficiency project

The term energy efficiency project means any project, technology, function, or measure that results in the reduction of energy use required to achieve the same level of service or output prior to the application of such project, technology, function, or measure, or substantially reduces greenhouse gas emissions relative to emissions that would have occurred prior to the application of such project, technology, function, or measure. (5)

Green Bond

The term Green Bond means a bond issued pursuant to section 3102A of this title. (6)

Qualified Clean Energy Project

The term qualified clean energy project means a clean energy project that— (A)is carried out domestically within the territorial borders of the United States; (B)stays current on interest and debt payment obligations; (C)pays wages in accordance with subchapter IV of chapter 31 of title 40, United States Code (commonly referred to as the Davis-Bacon Act); (D)if for nuclear power, is funded by the Bank only after all other existing Federal financial support has been expended; and (E)satisfies any other conditions established by the Bank and published in the Federal Register. (7)

Qualified Energy Efficiency Project

The term qualified energy efficiency project means an energy efficiency project, including smart grid technologies and functions characterized in section 1301 of the Energy Independence and Security Act of 2007 and end-use technologies for efficiency gains in new construction and across existing infrastructure that— (A)is carried out domestically within the territorial borders of the United States; (B)stays current on interest and debt payment obligations; (C)pays wages in accordance with subchapter IV of chapter 31 of title 40, United States Code (commonly referred to as the Davis-Bacon Act); and (D)satisfies any other conditions established by the Bank and published in the Federal Register. (8)

State clean energy financing institution

The term State clean energy financing institution means an independent entity, quasi-independent entity, or an entity within a State agency or financing authority established by a State to— (A)provide low-cost or long-term financing support or credit enhancements, including loan guarantees and loan loss reserves, for qualified clean energy projects or qualified energy efficiency projects; and (B)create liquid markets for these projects including warehousing and securitization, or take other steps to reduce financial barriers to the deployment of existing and innovative clean energy and energy efficiency projects. State clean energy financing institutions may enter into partnerships with private entities. (d)

Green Bank

(1)

Establishment of Corporation

There is established a corporation to be known as the Green Bank that shall be wholly owned by the United States. (2)

Independent corporation

The Bank shall be an independent corporation. Neither the Bank nor any of its functions, powers, or duties shall be transferred to or consolidated with any other department, agency, or corporation of the Government unless the Congress provides otherwise. (3)

Charter

The Bank shall be chartered for 20 years from the date of enactment of this section. (4)

Governance

(A)

Board of Directors of the Bank

(i)

In general

The Bank shall be under the direction of a Board of Directors. (ii)

Membership

The Board shall consist of 11 members, as follows: (I)The Secretary of Energy or the Secretary's designee. (II)The Secretary of the Treasury or the Secretary's designee. (III)The Secretary of the Interior or the Secretary's designee. (IV)The Secretary of Agriculture or the Secretary's designee. (V)The Secretary of Transportation or the Secretary's designee. (VI)6 members appointed by the President of the United States including a Chief Executive Officer, 1 member with expertise regarding renewable energy, 1 member with expertise regarding energy efficiency, 1 member with expertise regarding electric utilities, 1 member with expertise regarding consumer affairs, and 1 member with expertise regarding sustainable transportation. (iii)

Quorum

6 members of the Board shall constitute a quorum. (iv)

Bylaws

The Board shall adopt, and may amend, such bylaws as are necessary for the proper management and functioning of the Bank, and shall, in such bylaws, designate the vice presidents and other officers of the Bank and prescribe their duties. (v)

Terms

The initial terms of the members of the Board shall be 4 years. For terms beginning after the first 4 years following the date of the enactment of this section, the Board shall create staggered terms of 2, 3, and 4 years for members of the Board. (vi)

Vacancies

Any vacancy on the Board shall be filled in the same manner in which the original appointment was made. (vii)

Interim appointments

Any member appointed to fill a vacancy occurring before the expiration of the term for which such member’s predecessor was appointed shall be appointed only for the remainder of such term. (viii)

Reappointment

Members of the Board may be reappointed for additional terms of service as members of the Board. (ix)

Continuation of service

Any member of the Board whose term has expired may continue to serve on the Board until the earlier of— (I)the date on which such member’s successor is appointed; or (II)the end of the 6-month period beginning on the date such member’s term expires. (x)

Chairman

The Board shall select a Chairman from among its members. (B)

Executive Vice President

The Chief Executive Officer shall appoint an Executive Vice President who— (i)shall serve as Chief Executive Officer of the Bank during the absence or disability of, or in the event of a vacancy in the office, of Chief Executive Officer; and (ii)shall at other times perform such functions as the Chief Executive Officer may prescribe. (C)

Policies and Procedures

At the request of any 2 members of the Board, the Chairman shall place an item pertaining to the policies or procedures of the Bank on the agenda for discussion by the Board. Not later than 30 days after the date such a request is made, the Chairman shall hold a meeting of the Board at which such item shall be discussed. (D)

Conflicts of interest

No director, officer, attorney, agent, or employee of the Bank shall in any manner, directly or indirectly, participate in the deliberation upon, or the determination of, any question affecting such individual’s personal interests, or the interests of any corporation, partnership, or association in which such individual is directly or indirectly personally interested. (5)

Hiring and Contracting authority

(A)

Contracting

The Bank may employ or otherwise contract with banks, credit agencies, attorneys, and other third parties at customary commercial rates. (B)

Hiring

Notwithstanding any otherwise applicable Federal rules and regulations, the Bank may employ and otherwise contract with employees and provide compensation to such employees at prevailing rates for compensation for similar positions in private industry. (6)

Sunset

(A)

Expiration of charter

The Bank shall continue to exercise its functions until all obligations and commitments of the Bank are discharged, even after its charter has expired. (B)

Prior obligations

No provisions of this subsection shall be construed as preventing the Bank from— (i)acquiring obligations prior to the date of the expiration of its charter which mature subsequent to such date; (ii)assuming, prior to the date of the expiration of its charter, liability as guarantor, endorser, or acceptor of obligations which mature subsequent to such date; (iii)issuing, prior or subsequent to the date of the expiration of its charter, for purchase by the Secretary of the Treasury or any other purchasers, its notes, debentures, bonds, or other obligations which mature subsequent to such date; or (iv)continuing as a corporation and exercising any of its functions subsequent to the date of the expiration of its charter for purposes of orderly liquidation, including the administration of its assets and the collection of any obligations held by the Bank. (e)

Lending, Financing, Expenditures

(1)

In general

The Bank shall establish a program to provide on a competitive basis loans, loan guarantees, debt securitization, insurance, portfolio insurance, and other forms of financing support or risk management, as the Bank determines appropriate, for any qualifying clean energy project or qualifying energy efficiency project. (2)

Requirements

The Bank may only provide financing support (including loans, loan guarantees, debt securitization, insurance, portfolio insurance, and other forms of financing support or risk management under paragraph (1)) if— (A)such support is commercially reasonable and does not exceed 80 percent of the capitalization of the qualified clean energy project or qualified energy efficiency project; (B)is secured by the underlying project or such other collateral as the Chief Executive Officer of the Bank determines appropriate; and (C)in the judgment of the Chief Executive Officer— (i)the private credit market is not providing adequately low-priced financing to enable otherwise credit worthy entities to carry out qualified clean energy projects and qualified energy efficiency projects; (ii)such financing support would facilitate construction or expansion of a qualified clean energy project or qualified energy efficiency project at an accelerated rate; or (iii)such financing support would stimulate, aid, or otherwise support domestic manufacturing of finished products or component parts used in clean energy projects or energy efficiency projects. (3)

State clean energy financing institutions

(A)

Co-funding

The Bank may co-fund a qualified clean energy project or qualified energy efficiency project with a State clean energy financing institution. (B)

Establishment

The Bank may make up to $500,000,000 available through a low-interest loan for the establishment of a State clean energy financing institution if the clean energy financing institution— (i)provides at least an equal amount for establishing such institution; and (ii)uses funding from the Bank only for the purposes described in this section. (4)

Financing activities

(A)

In general

The Bank may facilitate financing transactions in tax equity markets and long-term purchasing of clean energy by governmental and non-governmental not-for-profit entities, to the degree and extent that the Bank determines such financing activity is appropriate and consistent with carrying out the terms of this section. (B)

Securitization

(i)

Authority

The Bank may, upon such terms and conditions as the Bank considers appropriate, guarantee the timely payment of principal of and interest on securities that are— (I)issued by any issuer approved for the purposes of this subparagraph by the Bank; and (II)based on and backed by a trust or pool composed of loans made pursuant to this section. (ii)

Fees

The Bank may collect from the issuer of a security guaranteed under this subparagraph a reasonable fee for the guarantee under this subparagraph. (iii)

Payments

If an issuer fails to make any payment of principal of or interest on any security guaranteed under this subparagraph, the Bank shall make such payment as and when due, and upon such payment shall be subrogated fully to the rights satisfied by such payment. (iv)

Default

The Bank may, in connection with any guaranty under this subparagraph, whether before or after any default, provide by contract with the issuer for the extinguishment, upon default by the issuer, of any redemption, equitable, legal, or other right, title, or interest of the issuer in any loan or loans constituting the trust or pool against which the guaranteed securities are issued, and with respect to any issue of guaranteed securities, in the event of default and pursuant otherwise to the terms of the contract, the loans that constitute such trust or pool shall become the absolute property of the Bank subject only to the unsatisfied rights of the holders of the securities based on and backed by such trust or pool. (v)

Effect of other laws

No State or local law, and no Federal law (except Federal law enacted expressly in limitation of this subparagraph after the effective date of this subparagraph), shall preclude or limit the exercise by the Bank of— (I)its power to contract with the issuer on the terms stated in clause (iv); (II)its rights to enforce any such contract with the issuer; or (III)its ownership rights, as provided in clause (iv), in the loans constituting the trust or pool against which the guaranteed securities are issued. (5)

Trusts

The Bank is authorized to create, accept, execute, and otherwise administer in all respects trusts, receiverships, conservatorships, liquidating or other agencies, or other fiduciary and representative undertakings and activities, as appropriate for financing purposes. Instruments issued by the Bank pursuant to this section are, to the same extent as securities which are direct obligations of or obligations guaranteed as to principal or interest by the United States, exempt securities within the meaning of laws administered by the Securities and Exchange Commission. (6)

Fees

In addition to fees authorized under paragraph (4)(B)(ii), the Bank shall assess reasonable fees on its activities, including loans, loan guarantees, insurance, portfolio insurance, and other forms of financing support or risk management it provides so as to cover its reasonable costs and expenses, consistent with the Federal Credit Reform Act of 1990 (2 U.S.C. 661 et seq.), provided the Bank operates as a not-for-profit entity. (7)

Appropriations and retention of receipts

For purposes of the Federal Credit Reform Act, funds made available to the Green Bank pursuant to section 3102A for carrying out this section are appropriated to the Green Bank for the purposes described in the section. Receipts collected by the Green Bank, consistent with the Federal Credit Reform Act, shall be considered to have been provided in advance in an appropriations act, and shall remain available to the Green Bank until expended. (8)

Environmental review

In providing any financing support under this section, the Bank may, with the concurrence of the Council on Environmental Quality, adopt by reference and rely on any applicable categorical exclusion or environmental review promulgated by any other Federal Agency pursuant to the National Environmental Policy Act of 1969 (Public Law 91–190). (9)

Immunity from impairment, limitation, or restriction

(A)

In general

All rights and remedies of the Bank shall be immune from impairment, limitation, or restrictions by or under— (i)any law (other than a law enacted by Congress expressly in limitation of this paragraph) that becomes effective after the acquisition by the Bank of the subject or property on, under, or with respect to which the right or remedy arises or exists or would so arise or exist in the absence of the law; or (ii)any administrative or other action that becomes effective after the acquisition. (B)

State Law

The Bank may conduct its business without regard to any qualification or law of any State relating to incorporation. (10)

Taxation

(A)

In general

Subject to subparagraph (B), the Bank (including its activities, capital, reserves, surplus and income) shall be exempt from all taxation imposed by any State or local political subdivision of a State. (B)

Real Property

Any real property of the Bank shall be subject to taxation by a State or political subdivision of a State to the same extent according to the value of the real property as other real property is taxed. (11)

Power to remove; jurisdiction

Notwithstanding any other provision of law, any civil action, suit, or proceeding to which the Bank is a party shall be deemed to arise under the laws of the United States, and the United States district courts shall have original jurisdiction. The Bank may, without bond or security, remove any such action, suit, or proceeding from a State court to a United States district court or to the United States District Court for the District of Columbia. (12)

Spending safeguards

(A)

In general

The Chief Executive Officer of the Bank— (i)shall require any entity receiving financing support (including a loan, loan guarantee, debt securitization, insurance, portfolio insurance, and other forms of financing support or risk management) pursuant to this section to report quarterly, in a format specified by the Chief Executive Officer, on such entity’s use of such support and its progress fulfilling the objectives for which such support was granted, and the Chief Executive Officer shall make these reports available to the public; (ii)may establish additional reporting and information requirements for any recipient of financing support made available pursuant to this section; (iii)shall establish appropriate mechanisms to ensure appropriate use and compliance with all terms of any financing support made available pursuant to this section; (iv)may, in addition to and consistent with any other authority under applicable law, deobligate financing support made available pursuant to this section to entities that demonstrate an insufficient level of performance, or wasteful or fraudulent spending, as defined in advance by the Chief Executive Officer, and award these funds competitively to new or existing applicants consistent with this section; (v)shall create and maintain a fully searchable database, accessible on the Internet (or successor protocol) at no cost to the public, that contains at least— (I)a list of each entity that has applied for a loan, loan guarantee, insurance, portfolio insurance, or other forms of financing support or risk management under this section; (II)a description of each application; (III)the status of each such application; (IV)the name of each entity receiving funds made available pursuant to this section; (V)the purpose for which such entity is receiving such funds; (VI)each quarterly report submitted by the entity pursuant to this section; and (VII)such other information sufficient to allow the public to understand and monitor loans, loan guarantees, insurance, portfolio insurance, and other forms of financing support or risk management provided under this section; (vi)to the extent practicable, data maintained under clause (v) shall be used to inform private capital markets, including the development of underwriting standards for the financing of clean energy projects and energy efficiency projects; (vii)shall make all financing transactions available for public inspection, including formal annual reviews by both a private auditor and the Comptroller General; and (viii)shall at all times be available to receive public comment in writing on the activities of the Bank. (B)

Protection of confidential business information

To the extent necessary and appropriate, the Chief Executive Officer may redact any information regarding applicants and borrowers to protect confidential business information. (13)

Guarantee

Except as provided in section 3102A(e) with respect to Green Bonds, financial support provided by the Bank shall not be fully and unconditionally guaranteed by the United States.

Defer deduction of interest expense related to deferred income

(a)

In general

Section 163 of the Internal Revenue Code of 1986 (relating to deductions for interest expense) is amended by redesignating subsection (n) as subsection (o) and by inserting after subsection (m) the following new subsection:

(n)

Deferral of deduction for interest expense related to deferred income

(1)

General rule

In the case of any taxpayer, the amount of foreign-related interest expense allowed as a deduction under this chapter for any taxable year shall not exceed an amount that bears the same ratio to the sum of the foreign-related interest expense for such year and the deferred foreign-related interest expense as the current inclusion ratio. (2)

Treatment of deferred deductions

If, for any taxable year— (A)the amount that bears the same ratio to the sum of the foreign-related interest expense for such year and the deferred foreign-related interest expense as the current inclusion ratio, exceeds (B)the foreign-related interest expense for such year, there shall be allowed as a deduction for such year an amount equal to the lesser of such excess and the deferred foreign-related interest expense. (3)

Definitions and special rule

For purposes of this subsection— (A)

Foreign-related interest expense

The term foreign-related interest expense means, for any taxable year, an amount of interest expense for such taxable year allocated and apportioned under sections 861 and 864(e) to income from sources outside the United States which bears the same proportion to such interest expense as the value of all stock held by the taxpayer in all section 902 corporations (as defined in section 909(d)(5)) with respect to which the taxpayer meets the ownership requirements of subsection (a) or (b) of section 902 bears to the value of all assets of the taxpayer which generate gross income from sources outside the United States. (B)

Deferred foreign-related interest expense

The term deferred foreign-related interest expense means the excess, if any, of the aggregate foreign-related interest expense for all prior taxable years, over the aggregate amount allowed as a deduction under paragraphs (1) and (2) for all prior taxable years. (C)

Value of assets

Except as otherwise provided by the Secretary, for purposes of paragraph (3)(A)(i), the value of any asset shall be the amount with respect to such asset used as determined for purposes of allocating and apportioning interest expense under sections 861 and 864(e). (D)

Current inclusion ratio

The term current inclusion ratio means, with respect to any domestic corporation which meets the ownership requirements of subsection (a) or (b) of section 902 with respect to one or more section 902 corporations for any taxable year, the ratio (expressed as a percentage) of— (i)the sum of all dividends received by the domestic corporation from a section 902 corporation during the taxable year plus amounts includible in gross income under section 951(a) from such section 902 corporation, in each case computed without regard to section 78, divided by (ii)the aggregate amount of post-1986 undistributed earnings for the taxable year. (E)

Aggregate amount of post-1986 undistributed earnings

The term aggregate amount of post-1986 undistributed earnings means, with respect to any domestic corporation which meets the ownership requirements of subsection (a) or (b) of section 902 with respect to one or more section 902 corporations, the domestic corporation’s pro rata share of the post-1986 undistributed earnings (as defined in section 902(c)(1)) of all such section 902 corporations. (F)

Foreign currency conversion

For purposes of determining the current inclusion ratio, and except as otherwise provided by the Secretary, the aggregate amount of post-1986 undistributed earnings for the taxable year shall be determined by translating each section 902 corporation’s post-1986 undistributed earnings into dollars using the average exchange rate for such year. (4)

Treatment of affiliated groups

The current inclusion ratio of each member of an affiliated group (as defined in section 864(e)(5)(A)) shall be determined as if all members of such group were a single corporation. (5)

Application to separate categories of income

This subsection shall be applied separately with respect to the categories of income specified in section 904(d)(1). (6)

Regulations

The Secretary may prescribe such regulations or other guidance as is necessary or appropriate to carry out the purposes of this subsection, including regulations or other guidance providing— (A)for the proper application of this subsection with respect to changes in ownership of a section 902 corporation, (B)that certain corporations that otherwise would not be members of the affiliated group will be treated as members of the affiliated group for purposes of this subsection, (C)for the proper application of this subsection with respect to the taxpayer’s share of a deficit in earnings and profits of a section 902 corporation, (D)for appropriate adjustments to the determination of the value of stock in any section 902 corporation for purposes of this subsection or to the foreign-related interest expense to account for income that is subject to tax under section 882(a)(1), and (E)for the proper application of this subsection with respect to interest expense that is directly allocable to income with respect to certain assets.

(b)

Effective date

The amendments made by this section shall apply to taxable years beginning on or after January 1, 2015.