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