42 U.S.C. § 16512 — Terms and conditions

Page 8910 TITLE 42—THE PUBLIC HEALTH AND WELFARE § 16512 § 16512. Terms and conditions (a) In general Except for division C of Public Law 108–324 [15 U.S.C. 720 et seq.], the Secretary shall make guarantees under this or any other Act for projects, including projects receiving financial support or credit enhancements from a State en- ergy financing institution, on such terms and conditions as the Secretary determines, after consultation with the Secretary of the Treasury, only in accordance with this section. (b) Specific appropriation or contribution (1) In general Except as provided in paragraph (2), the cost of a guarantee shall be paid by the Secretary using an appropriation made for the cost of the guarantee, subject to the availability of such an appropriation. (2) Insufficient appropriations If sufficient appropriated funds to pay the cost of a guarantee are not available, then the guarantee shall not be made unless— (A) the Secretary has received from the borrower a payment in full for the cost of the guarantee and deposited the payment into the Treasury; or (B) a combination of one or more appro- priations and one or more payments from the borrower under this subsection has been made that is sufficient to cover the cost of the guarantee. (3) Source of payments The source of a payment received from a borrower under subparagraph (A) or (B) of paragraph (2) may not be a loan or other debt obligation that is made or guaranteed by the Federal Government. (c) Amount Unless otherwise provided by law, a guarantee by the Secretary shall not exceed an amount equal to 80 percent of the project cost of the fa- cility that is the subject of the guarantee, as es- timated at the time at which the guarantee is issued. (d) Repayment (1) Requirement (A) In general No guarantee, including a guarantee for a project receiving financial support or credit enhancements from a State energy financing institution, shall be made unless the Sec- retary determines that there is reasonable prospect of repayment of the principal and interest on the obligation by the borrower. (B) Reasonable prospect of repayment The Secretary shall base a determination of whether there is reasonable prospect of repayment under subparagraph (A) on a comprehensive evaluation of whether the borrower has a reasonable prospect of repay- ing the guaranteed obligation for the eligi- ble project, including, as applicable, an eval- uation of— (i) the strength of the contractual terms of the eligible project (if commercially reasonably available); (ii) the forecast of noncontractual cash flows supported by market projections from reputable sources, as determined by the Secretary; (iii) cash sweeps and other structure en- hancements; (iv) the projected financial strength of the borrower— (I) at the time of loan close; and (II) throughout the loan term after the project is completed; (v) the financial strength of the inves- tors and strategic partners of the bor- rower, if applicable; and (vi) other financial metrics and analyses that are relied on by the private lending community and nationally recognized credit rating agencies, as determined ap- propriate by the Secretary. (2) Amount No guarantee shall be made unless the Sec- retary determines that the amount of the obli- gation (when combined with amounts avail- able to the borrower from other sources) will be sufficient to carry out the project. (3) Subordination The obligation shall be subject to the condi- tion that the obligation, including any reorga- nization, restructuring, or termination there- of, shall not at any time be subordinate to other financing. (e) Interest rate An obligation shall bear interest at a rate that does not exceed a level that the Secretary deter- mines appropriate, taking into account the pre- vailing rate of interest in the private sector for similar loans and risks. (f) Term The term of an obligation shall require full re- payment over a period not to exceed the lesser of— (1) 30 years; or (2) 90 percent of the projected useful life of the physical asset to be financed by the obli- gation (as determined by the Secretary). (g) Defaults (1) Payment by Secretary (A) In general If a borrower defaults on the obligation (as defined in regulations promulgated by the Secretary and specified in the guarantee contract), the holder of the guarantee shall have the right to demand payment of the un- paid amount from the Secretary. (B) Payment required Within such period as may be specified in the guarantee or related agreements, the Secretary shall pay to the holder of the guarantee the unpaid interest on, and unpaid principal of the obligation as to which the borrower has defaulted, unless the Secretary finds that there was no default by the bor- rower in the payment of interest or principal or that the default has been remedied. (C) Forbearance Nothing in this subsection precludes any forbearance by the holder of the obligation Page 8911 TITLE 42—THE PUBLIC HEALTH AND WELFARE § 16512 for the benefit of the borrower which may be agreed upon by the parties to the obligation and approved by the Secretary. (2) Subrogation (A) In general If the Secretary makes a payment under paragraph (1), the Secretary shall be sub- rogated to the rights of the recipient of the payment as specified in the guarantee or re- lated agreements including, where appro- priate, the authority (notwithstanding any other provision of law) to— (i) complete, maintain, operate, lease, or otherwise dispose of any property acquired pursuant to such guarantee or related agreements; or (ii) permit the borrower, pursuant to an agreement with the Secretary, to continue to pursue the purposes of the project if the Secretary determines this to be in the pub- lic interest. (B) Superiority of rights The rights of the Secretary, with respect to any property acquired pursuant to a guar- antee or related agreements, shall be supe- rior to the rights of any other person with respect to the property. (C) Terms and conditions A guarantee agreement shall include such detailed terms and conditions as the Sec- retary determines appropriate to— (i) protect the interests of the United States in the case of default; and (ii) have available all the patents and technology necessary for any person se- lected, including the Secretary, to com- plete and operate the project. (3) Payment of principal and interest by Sec- retary With respect to any obligation guaranteed under this section, the Secretary may enter into a contract to pay, and pay, holders of the obligation, for and on behalf of the borrower, from funds appropriated for that purpose, the principal and interest payments which become due and payable on the unpaid balance of the obligation if the Secretary finds that— (A)(i) the borrower is unable to meet the payments and is not in default; (ii) it is in the public interest to permit the borrower to continue to pursue the pur- poses of the project; and (iii) the probable net benefit to the Federal Government in paying the principal and in- terest will be greater than that which would result in the event of a default; (B) the amount of the payment that the Secretary is authorized to pay shall be no greater than the amount of principal and in- terest that the borrower is obligated to pay under the agreement being guaranteed; and (C) the borrower agrees to reimburse the Secretary for the payment (including inter- est) on terms and conditions that are satis- factory to the Secretary. (4) Action by Attorney General (A) Notification If the borrower defaults on an obligation, the Secretary shall notify the Attorney Gen- eral of the default. (B) Recovery On notification, the Attorney General shall take such action as is appropriate to recover the unpaid principal and interest due from— (i) such assets of the defaulting borrower as are associated with the obligation; or (ii) any other security pledged to secure the obligation. (h) Fees (1) In general The Secretary shall charge, and collect on or after the date of the financial close of an obli- gation, a fee for a guarantee in an amount that the Secretary determines is sufficient to cover applicable administrative expenses (in- cluding any costs associated with third-party consultants engaged by the Secretary). (2) Availability Fees collected under this subsection shall— (A) be deposited by the Secretary into the Treasury; and (B) remain available until expended, sub- ject to such other conditions as are con- tained in annual appropriations Acts. (3) Reduction in fee amount Notwithstanding paragraph (1) and subject to the availability of appropriations, the Sec- retary may reduce the amount of a fee for a guarantee under this subsection. (i) Records; audits (1) In general A recipient of a guarantee shall keep such records and other pertinent documents as the Secretary shall prescribe by regulation, in- cluding such records as the Secretary may re- quire to facilitate an effective audit. (2) Access The Secretary and the Comptroller General of the United States, or their duly authorized representatives, shall have access, for the pur- pose of audit, to the records and other perti- nent documents. (j) Full faith and credit The full faith and credit of the United States is pledged to the payment of all guarantees issued under this section with respect to prin- cipal and interest. (k) Wage rate requirements All laborers and mechanics employed by con- tractors and subcontractors in the performance of construction work financed in whole or in part by a loan guaranteed under this subchapter shall be paid wages at rates not less than those prevailing on projects of a character similar in the locality as determined by the Secretary of Labor in accordance with subchapter IV of chap- ter 31 of title 40. With respect to the labor stand- ards in this subsection, the Secretary of Labor shall have the authority and functions set forth in Reorganization Plan Numbered 14 of 1950 (64 Stat. 1267; 5 U.S.C. App.) and section 3145 of title 40. (l) Restructuring of loan guarantees The Secretary shall consult with the Sec- retary of the Treasury regarding any restruc- Page 8912 TITLE 42—THE PUBLIC HEALTH AND WELFARE § 16512 1 So in original. Two subsecs. (r) have been enacted. turing of the terms or conditions of a guarantee issued pursuant to this subchapter, including with respect to any deviations from the finan- cial terms of the guarantee. (m) Written analysis (1) Requirement The Secretary may not make a guarantee under this subchapter until the Secretary of the Treasury has transmitted to the Sec- retary, and the Secretary has taken into con- sideration, a written analysis of the financial terms and conditions of the proposed guar- antee. (2) Transmission Not later than 30 days after receiving infor- mation on a proposed guarantee from the Sec- retary, the Secretary of the Treasury shall transmit the written analysis of the financial terms and conditions of the proposed guar- antee required under paragraph (1) to the Sec- retary. (3) Explanation If the Secretary makes a guarantee the fi- nancial terms and conditions of which are not consistent with the written analysis required under this subsection, not later than 30 days after making such guarantee, the Secretary shall submit to the Committee on Energy and Commerce and the Committee on Science, Space, and Technology of the House of Rep- resentatives, and the Committee on Energy and Natural Resources of the Senate, a writ- ten explanation of any material inconsist- encies. (n) Application status (1) Request If the Secretary does not make a final deci- sion on an application for a guarantee under this subchapter by the date that is 180 days after receipt of the application by the Sec- retary, the applicant may request, on or after that date and not more than once every 60 days thereafter until a final decision is made, that the Secretary provide to the applicant a response described in paragraph (2). (2) Response Not later than 10 days after receiving a re- quest from an applicant under paragraph (1), the Secretary shall provide to the applicant a response that includes— (A) a description of the current status of review of the application; (B) a summary of any factors that are de- laying a final decision on the application, a list of what items are required in order to reach a final decision, citations to authori- ties stating the reasons why such items are required, and a list of actions the applicant can take to expedite the process; and (C) an estimate of when a final decision on the application will be made. (o) Outreach In carrying out this subchapter, the Secretary shall— (1) provide assistance with the completion of applications for a guarantee under this sub- chapter; (2) conduct outreach, including through con- ferences and online programs, to disseminate information to potential applicants; (3) conduct outreach to encourage participa- tion of supporting finance institutions and pri- vate lenders in eligible projects and projects described in section 16517(a) of this title. (p) Coordination In carrying out this subchapter, the Secretary shall coordinate activities under this subchapter with activities of other relevant offices with the Department. (q) Report Not later than 2 years after December 27, 2020, and every 3 years thereafter, the Secretary shall submit to Congress a report on the status of ap- plications for, and projects receiving, guaran- tees under this title, including— (1) a list of such projects, including the guar- antee amount, construction status, and fi- nancing partners of each such project; (2) the status of each such project’s loan re- payment, including interest paid and future repayment projections; (3) an estimate of the air pollutant or green- house gas emissions avoided or reduced from each such project; (4) data regarding the number of direct and indirect jobs retained, restored, or created by such projects; (5) identification of— (A) technologies deployed by projects that have received guarantees that have subse- quently been deployed commercially with- out guarantees; and (B) novel technologies that have been de- ployed by such projects and deployed in the commercial energy market; (6) the number of new projects projected to receive a guarantee under this subchapter dur- ing the next 2 years and the aggregate guar- antee amount; (7) the number of outreach engagements con- ducted with potential applicants; (8) the number of applications received and currently pending for each open solicitation; and (9) any other metrics the Secretary finds ap- propriate. (r) 1 Conflicts of interest For each project selected for a guarantee under this subchapter, the Secretary shall cer- tify that political influence did not impact the selection of the project. (r) 1 State energy financing institutions (1) Eligibility To be eligible for a guarantee under this sub- chapter, a project receiving financial support or credit enhancements from a State energy financing institution— (A) shall meet the requirements of section 16513(a)(1) of this title; and (B) shall not be required to meet the re- quirements of section 16513(a)(2) of this title. (2) Partnerships authorized In carrying out a project receiving a loan guarantee under this subchapter, State energy Page 8913 TITLE 42—THE PUBLIC HEALTH AND WELFARE § 16513 financing institutions may enter into partner- ships with private entities, Tribal entities, and Alaska Native corporations. (Pub. L. 109–58, title XVII, § 1702, Aug. 8, 2005, 119 Stat. 1117; Pub. L. 111–85, title III, § 310, Oct. 28, 2009, 123 Stat. 2873; Pub. L. 112–74, div. B, title III, § 305(1), Dec. 23, 2011, 125 Stat. 877; Pub. L. 116–260, div. Z, title IX, § 9010(a), Dec. 27, 2020, 134 Stat. 2603; Pub. L. 117–58, div. D, title IV, § 40401(a)(1), (3), (c)(2), Nov. 15, 2021, 135 Stat. 1033, 1034, 1037; Pub. L. 117–169, title V, §§ 50141(f), 50144(d), Aug. 16, 2022, 136 Stat. 2044, 2045; Pub. L. 117–328, div. D, title III, § 308, Dec. 29, 2022, 136 Stat. 4645.) Editorial Notes REFERENCES IN TEXT Division C of Public Law 108–324, referred to in sub- sec. (a), is division C of Pub. L. 108–324, Oct. 13, 2004, 118 Stat. 1255, known as the Alaska Natural Gas Pipeline Act, which is classified principally to chapter 15D (§ 720 et seq.) of Title 15, Commerce and Trade. For complete classification of division C to the Code, see Short Title note set out under section 720 of Title 15 and Tables. Reorganization Plan Numbered 14 of 1950, referred to in subsec. (k), is set out in the Appendix to Title 5, Government Organization and Employees. AMENDMENTS 2022—Subsec. (b)(3). Pub. L. 117–169, § 50141(f), added par. (3). Subsec. (o)(3). Pub. L. 117–169, § 50144(d), inserted ‘‘and projects described in section 16517(a) of this title’’ be- fore period at end. Subsec. (r)(3). Pub. L. 117–328 struck out par. (3). Text read as follows: ‘‘Amounts appropriated to the Depart- ment of Energy before November 15, 2021, shall not be available to be used for the cost of loan guarantees for projects receiving financing support or credit enhance- ments under this subsection.’’ 2021—Subsec. (a). Pub. L. 117–58, § 40401(c)(2)(A), in- serted ‘‘, including projects receiving financial support or credit enhancements from a State energy financing institution,’’ after ‘‘for projects’’. Subsec. (d)(1). Pub. L. 117–58, § 40401(a)(1), substituted ‘‘Requirement’’ for ‘‘In general’’ in par. heading, des- ignated existing provisions as subpar. (A), inserted sub- par. heading, and added subpar. (B). Subsec. (d)(1)(A). Pub. L. 117–58, § 40401(c)(2)(B), in- serted ‘‘, including a guarantee for a project receiving financial support or credit enhancements from a State energy financing institution,’’ after ‘‘No guarantee’’. Subsec. (r). Pub. L. 117–58, § 40401(c)(2)(C), added sub- sec. (r) relating to State energy financing institutions. Pub. L. 117–58, § 40401(a)(3), added subsec. (r) relating to conflicts of interest. 2020—Subsec. (b). Pub. L. 116–260, § 9010(a)(1), amended subsec. (b) generally. Prior to amendment, text read as follows: ‘‘No guarantee shall be made unless— ‘‘(A) an appropriation for the cost of the guarantee has been made; ‘‘(B) the Secretary has received from the borrower a payment in full for the cost of the guarantee and deposited the payment into the Treasury; or ‘‘(C) a combination of one or more appropriations under subparagraph (A) and one or more payments from the borrower under subparagraph (B) has been made that is sufficient to cover the cost of the guar- antee.’’ Subsec. (d)(3). Pub. L. 116–260, § 9010(a)(2), substituted ‘‘, including any reorganization, restructuring, or ter- mination thereof, shall not at any time be subordi- nate’’ for ‘‘is not subordinate’’. Subsec. (h)(1). Pub. L. 116–260, § 9010(a)(3)(A), amended par. (1) generally. Prior to amendment, text read as fol- lows: ‘‘The Secretary shall charge and collect fees for guarantees in amounts the Secretary determines are sufficient to cover applicable administrative expenses.’’ Subsec. (h)(3). Pub. L. 116–260, § 9010(a)(3)(B), added par. (3). Subsecs. (l) to (q). Pub. L. 116–260, § 9010(a)(4), added subsecs. (l) to (q). 2011—Subsec. (b). Pub. L. 112–74 added subsec. (b) and struck out former subsec. (b). Prior to amendment, text read as follows: ‘‘No guarantee shall be made unless— ‘‘(1) an appropriation for the cost has been made; or ‘‘(2) the Secretary has received from the borrower a payment in full for the cost of the obligation and de- posited the payment into the Treasury.’’ 2009—Subsec. (k). Pub. L. 111–85 added subsec. (k). Statutory Notes and Related Subsidiaries WAGE RATE REQUIREMENTS For provisions relating to rates of wages to be paid to laborers and mechanics on projects for construction, alteration, or repair work funded under div. D or an amendment by div. D of Pub. L. 117–58, including au- thority of Secretary of Labor, see section 18851 of this title. § 16513. Eligible projects (a) In general The Secretary may make guarantees under this section only for projects that— (1) avoid, reduce, utilize, or sequester air pollutants or anthropogenic emissions of greenhouse gases; and (2) employ new or significantly improved technologies as compared to commercial tech- nologies in service in the United States at the time the guarantee is issued, including projects that employ elements of commercial technologies in combination with new or sig- nificantly improved technologies. (b) Categories Projects from the following categories shall be eligible for a guarantee under this section: (1) Renewable energy systems. (2) Advanced fossil energy technology (in- cluding coal gasification meeting the criteria in subsection (d)). (3) Hydrogen fuel cell technology for residen- tial, industrial, or transportation applica- tions. (4) Advanced nuclear energy facilities, in- cluding manufacturing of nuclear supply com- ponents for advanced nuclear reactors. (5) Carbon capture, utilization, and seques- tration practices and technologies, including— (A) agricultural and forestry practices that store and sequester carbon; and (B) synthetic technologies to remove car- bon from the air and oceans. (6) Efficient electrical generation, trans- mission, and distribution technologies. (7) Efficient end-use energy technologies. (8) Production facilities for the manufacture of fuel efficient vehicles or parts of those vehi- cles, including electric drive vehicles and ad- vanced diesel vehicles. (9) Pollution control equipment. (10) Refineries, meaning facilities at which crude oil is refined into gasoline. (11) Energy storage technologies for residen- tial, industrial, transportation, and power gen- eration applications.