42 U.S.C. § 8834 — Price support loans and price guarantees

Page 7660 TITLE 42—THE PUBLIC HEALTH AND WELFARE § 8834 1 So in original. No subpar. (B) has been enacted. retary for such payment on terms and condi- tions, including interest, which the Secretary determines are sufficient to protect the finan- cial interests of the United States. (f) Preconditions A loan may not be guaranteed under this sec- tion unless the applicant for such loan has es- tablished to the satisfaction of the Secretary of Energy that the lender is not willing without such a guarantee to extend credit to the appli- cant at reasonable rates and terms, taking into consideration prevailing market rates and terms for loans for similar periods of time, to finance the construction of the project for which such loan is sought. (g) Payment of interest; tax consequences (1) With respect to any loan or debt obligation which is— (A) issued after June 30, 1980, by, or on be- half of, any State or any political subdivision or governmental entity thereof, (B) guaranteed by the Secretary of Energy under this section, and (C) not supported by the full faith and credit of the issuer as a general obligation of the issuer, the interest paid on such obligation and received by the purchaser thereof (or the purchaser’s suc- cessors in interest) shall be included in gross in- come for the purposes of chapter 1 of title 26. (2) With respect to the amount of obligations described in paragraph (1) that the issuer would have been able to issue as tax exempt obliga- tions (other than obligations secured by the full faith and credit of the issuer as a general obliga- tion of the issuer), the Secretary of Energy is authorized to pay only to the issuer any portion of the interest on such obligations, as deter- mined by the Secretary of the Treasury after taking into account the interest rate which would have been paid on the obligations had they been issued as tax exempt obligations with- out being so guaranteed by the Secretary of En- ergy and the interest rate actually paid on the obligations when issued as taxable obligations. Such payments shall be made in amounts deter- mined by the Secretary of Energy, and in ac- cordance with such terms and conditions as the Secretary of the Treasury shall require. (h) Fees (1) A fee or fees may be charged and collected by the Secretary of Energy for any loan guar- antee under this section. (2) The amount of such fee shall be based on the estimated administrative costs and risk of loss, except that such fee may not exceed 1 per centum of the maximum of the guarantee. (Pub. L. 96–294, title II, § 233, June 30, 1980, 94 Stat. 698; Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095.) Editorial Notes REFERENCES IN TEXT This chapter, referred to in subsec. (d), was in the original ‘‘this title’’, meaning title II of Pub. L. 96–294, June 30, 1980, 94 Stat. 683, known as the Biomass Energy and Alcohol Fuels Act of 1980, which enacted this chap- ter, sections 1435 and 3129 of Title 7, Agriculture, and section 3391a of Title 15, Commerce and Trade, and amended sections 341, 342, 3104, and 3154 of Title 7, sec- tion 753 of Title 15, and sections 590h and 1642 of Title 16, Conservation. For complete classification of title II to the Code, see Short Title note set out under section 8801 of this title and Tables. AMENDMENTS 1986—Subsec. (g)(1). Pub. L. 99–514 substituted ‘‘Inter- nal Revenue Code of 1986’’ for ‘‘Internal Revenue Code of 1954’’, which for purposes of codification was trans- lated as ‘‘title 26’’ thus requiring no change in text. § 8834. Price support loans and price guarantees (a) Authority of Secretary of Energy with respect to loans for existing projects; disbursements, etc. (1) In the case of any existing municipal waste energy project which produces and sells biomass energy, the Secretary of Energy may commit to make, and make, a price support loan in amounts determined under paragraph (3) for the operation of such project. Payments under any such loan shall be disbursed on an annual basis, as determined (in accordance with paragraph (3)) on the basis of the amount of biomass energy produced and sold by that project during the 12- month period involved and the type and cost of fuel displaced by the biomass energy sold. (2)(A) 1 In the case of any support loan under this section for an existing municipal waste en- ergy project— (i) disbursements under such loan may not be made for more than 5 consecutive 12-month periods; (ii) the amount of the disbursement for the second and any subsequent 12-month period for which disbursements are to be made under the support loan shall be reduced by an amount determined by multiplying the amount cal- culated under paragraph (3) by a factor deter- mined by dividing the number of 12-month pe- riods for which disbursements are made under the support loan into the number of such peri- ods which have elapsed; (iii) commencing at the end of the last of such 12-month periods, the support loan shall be repayable over a period equal to the then remaining useful life of the project (as deter- mined by the Secretary) or 10 years, whichever is shorter; and (iv) commencing at the end of such last 12- month period, such loan shall bear interest at a rate determined by the Secretary of Energy (taking into consideration the current average market yield on outstanding marketable obli- gations of the United States with remaining periods to maturity comparable to the average maturities of such loans) plus not to exceed one per centum, as determined by the Sec- retary of Energy, and adjusted to the nearest one-eighth of one per centum. (3) The amount of the loan payment to be dis- bursed under this subsection for any year with respect to each type of biomass energy produced and sold by an existing municipal waste energy project shall be equal to— (A)(i) the standard support price reduced by the cost of the fuel displaced by the biomass Page 7661 TITLE 42—THE PUBLIC HEALTH AND WELFARE § 8835 energy sold, or (ii) $2.00, whichever is lower, multiplied by (B) the amount of such biomass energy sold (in millions of Btu’s). (b) Authority of Secretary of Energy with respect to loans for new projects; disbursements, etc. (1) In the case of any new municipal waste en- ergy project which produces and sells biomass energy, the Secretary of Energy may commit to make, and make, a price support loan in amounts determined in accordance with the pro- visions of subsection (a), except as provided in paragraph (2). (2) In the case of any loan under this sub- section for a new municipal waste energy project— (A) disbursements under such loan may not be made for more than 7 consecutive 12-month periods (with reductions as provided in sub- section (a)(2)(A)(ii)); (B) such loan shall bear interest at a rate not in excess of the rate prescribed under sub- section (a); and (C) the principal of or interest on such loan shall, in accordance with the support loan agreement, be repayable, commencing at the end of the last 12-month period covered by the support loan, over a period not in excess of the period equal to the then remaining useful life of the project (as determined by the Sec- retary) or 15 years, whichever is shorter. (c) Authority of Secretary of Energy with respect to guarantees for new projects; pricing deter- minations, etc. (1) In the case of any new municipal waste en- ergy project which produces and sells biomass energy, the Secretary of Energy may commit to make, and make, a price guarantee for the oper- ation of such project which guarantees that the price the owner or operator will receive for all or part of the production from that project shall not be less than a specified sales price deter- mined as of the date of execution of the guar- antee agreement. (2)(A) No price guarantee under this section may be based upon a cost-plus arrangement, or variant thereof, which guarantees a profit to the owner or operator involved. (B) The use of a cost-of-service pricing mecha- nism by a person pursuant to law, or by a regu- latory body establishing rates for a regulated person, shall not be deemed to be a cost-plus ar- rangement, or variant thereof, for purposes of subparagraph (A). (3) In the case of any price guarantee under this subsection for a new municipal waste en- ergy project— (A) disbursements under such guarantee may not be made for more than 7 consecutive 12- month periods; and (B) amounts paid under this subsection may be required to be repaid to the Secretary of Energy under such terms and conditions as the Secretary may prescribe, including interest at a rate not in excess of the rate prescribed under subsection (a). (d) Definitions; sale price of retained fuel; rules relating to fuel displacement For purposes of this section— (1) The term ‘‘new municipal waste energy project’’ means any municipal waste energy project which— (A) is initially placed in service after June 30, 1980; or (B) if initially placed in service before June 30, 1980, has an increased capacity by reason of additional construction, and as such is placed in service after such date. (2) The term ‘‘existing municipal waste en- ergy project’’ means any municipal waste en- ergy project which is not a new municipal waste project. (3) The term ‘‘placed in service’’ means oper- ated at more than 50 percent of the estimated operational capacity. (4)(A) Except as provided in subparagraphs (B) and (C), the term ‘‘standard support price’’ means the average price (per million Btu’s) for No. 6 fuel oil imported into the United States on June 30, 1980, as determined, by rule, by the Secretary of Energy not later than 90 days after June 30, 1980. (B) In any case in which the fuel displaced is No. 6 fuel oil or any higher grade of petroleum (as determined by the Secretary of Energy), the term ‘‘standard support price’’ means 125 per centum of the price determined by rule under subparagraph (A). (C) In any case in which biomass energy pro- duced and sold by a project is steam or elec- tricity, the term ‘‘standard support price’’ means the price determined by rule under sub- paragraph (A), subject to such adjustments as the Secretary of Energy may authorize by rule. (5) The term ‘‘cost of the fuel displaced’’ means the cost of the fuel (per million Btu’s) which the purchaser of biomass energy would have purchased if the biomass energy had not been available for sale to that purchaser. (6) Any biomass energy produced by a mu- nicipal waste energy project which may be re- tained for use by the owner or operator of such project shall be considered to be sold at such price as the Secretary of Energy determines. (7) Not later than 90 days after June 30, 1980, the Secretary of Energy shall prescribe, by rule, the manner of determining the fuel dis- placed by the sale of any biomass energy, and the price of the fuel displaced. (Pub. L. 96–294, title II, § 234, June 30, 1980, 94 Stat. 699.) § 8835. General requirements regarding financial assistance (a) Priorities, terms, availability, etc. (1) Priority for financial assistance under the provisions of sections 8832, 8833, and 8834 of this title and the most favorable financial terms available, shall be provided for any municipal waste energy project that will— (A) produce a liquid fuel from municipal waste; or (B) will displace petroleum or natural gas as a fuel. (2)(A) With respect to projects producing bio- mass energy other than biomass fuel, financial assistance under the provisions of sections 8832,