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.