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

(a) In general: Except for one specific law, division C of Public Law 108–324, the Secretary may only make guarantees, under this section or any other Act, for projects (including ones getting help from a State energy financing institution) on terms the Secretary sets after consulting the Secretary of the Treasury, and only under this section's rules. (b) Specific appropriation or contribution: (1) In general: Unless (2) applies, the Secretary must pay a guarantee's cost using money Congress appropriated for that cost, if that money is available. (2) Insufficient appropriations: If there is not enough appropriated money, the guarantee cannot be made unless: (A) the borrower has paid the Secretary the full cost of the guarantee, which the Secretary deposits in the Treasury; or (B) a combination of appropriations and borrower payments together covers the cost. (3) Source of payments: A borrower's payment under (A) or (B) may not come from a loan or other debt the federal government made or guaranteed. (c) Amount: Unless another law says otherwise, a guarantee cannot exceed 80 percent of the project's estimated cost, as measured when the guarantee is issued. (d) Repayment: (1) Requirement: (A) In general: No guarantee, including one for a project backed by a State energy financing institution, may be made unless the Secretary decides there is a reasonable prospect the borrower will repay the principal and interest. (B) Reasonable prospect of repayment: The Secretary must base that decision on a full evaluation, including, as applicable: (i) the strength of the project's contracts, if reasonably available; (ii) forecasts of non-contract cash flow from reputable market sources; (iii) cash sweeps and other structural safeguards; (iv) the borrower's projected financial strength at loan closing and throughout the loan term after the project is done; (v) the financial strength of the borrower's investors and partners, if relevant; and (vi) other financial measures relied on by private lenders and credit-rating agencies. (2) Amount: No guarantee may be made unless the guaranteed amount, combined with money from other sources, will be enough to complete the project. (3) Subordination: The guaranteed debt, even if reorganized, restructured, or ended, may never be subordinate to other financing. (e) Interest rate: The loan's interest rate cannot exceed a level the Secretary sets, based on the typical private-sector rate for similar loans and risks. (f) Term: The loan must be fully repaid within the shorter of: (1) 30 years; or (2) 90 percent of the useful life of the physical asset being financed, as the Secretary determines. (g) Defaults: (1) Payment by Secretary: (A) In general: If a borrower defaults, as defined by the Secretary's rules and the guarantee contract, the guarantee holder may demand payment of the unpaid amount from the Secretary. (B) Payment required: Within the time set by the guarantee, the Secretary must pay the holder the unpaid interest and principal, unless the Secretary finds there was no real default or that it has already been fixed. (C) Forbearance: This does not stop the loan holder from agreeing, with the Secretary's approval, to give the borrower more time or flexibility. (2) Subrogation: (A) In general: If the Secretary pays under (1), the Secretary takes over the paid party's rights under the guarantee, including, where appropriate, the power to: (i) complete, maintain, operate, lease, or otherwise deal with property acquired under the guarantee; or (ii) let the borrower, under an agreement with the Secretary, keep pursuing the project if that serves the public interest. (B) Superiority of rights: The Secretary's rights to that property then outrank anyone else's claim to it. (C) Terms and conditions: The guarantee agreement must include detailed terms to: (i) protect U.S. interests in case of default; and (ii) make sure needed patents and technology stay available to finish and run the project, including for the Secretary. (3) Payment of principal and interest by Secretary: The Secretary may agree to pay, using appropriated funds, principal and interest due on the borrower's behalf if the Secretary finds that: (A)(i) the borrower cannot make the payments but is not in default; (ii) letting the borrower keep pursuing the project serves the public interest; and (iii) paying now will likely benefit the federal government more than a default would; (B) the payment is no more than what the borrower actually owes; and (C) the borrower agrees to reimburse the Secretary, with interest, on acceptable terms. (4) Action by Attorney General: (A) Notification: If a borrower defaults, the Secretary must notify the Attorney General. (B) Recovery: The Attorney General must then act to recover the unpaid principal and interest from either: (i) the defaulting borrower's assets tied to the loan; or (ii) any other collateral pledged for the loan. (h) Fees: (1) In general: On or after a loan's closing date, the Secretary must charge and collect a fee large enough to cover administrative costs, including outside consultants. (2) Availability: These fees must: (A) be deposited in the Treasury; and (B) stay available to spend until used, subject to conditions in yearly appropriations laws. (3) Reduction in fee amount: If funds are available, the Secretary may still lower a guarantee's fee. (i) Records; audits: (1) In general: A guarantee recipient must keep records the Secretary requires by regulation, including records needed for an effective audit. (2) Access: The Secretary and the Comptroller General, or their representatives, may access these records to conduct audits. (j) Full faith and credit: The full faith and credit of the United States backs the principal and interest payments on every guarantee made under this section. (k) Wage rate requirements: Workers building a project financed by one of these guaranteed loans must be paid at least the locally prevailing wage for similar work, as the Secretary of Labor determines under subchapter IV of chapter 31 of title 40. The Secretary of Labor has the same authority here as under Reorganization Plan Numbered 14 of 1950 and section 3145 of title 40. (l) Restructuring of loan guarantees: Before restructuring the terms or conditions of a guarantee under this subchapter, including any change from its original financial terms, the Secretary must consult the Secretary of the Treasury. (m) Written analysis: (1) Requirement: The Secretary cannot issue a guarantee until the Secretary of the Treasury has sent a written analysis of its financial terms and conditions, and the Secretary has considered it. (2) Transmission: The Treasury must send that analysis within 30 days after receiving the proposed guarantee's information from the Secretary. (3) Explanation: If the Secretary issues a guarantee whose terms are not consistent with Treasury's analysis, the Secretary must, within 30 days, send a written explanation of the differences to the House Committees on Energy and Commerce and on Science, Space, and Technology, and the Senate Committee on Energy and Natural Resources. (n) Application status: (1) Request: If the Secretary has not made a final decision on a guarantee application within 180 days after receiving it, the applicant may ask, starting on that date and no more than once every 60 days after, for the status update described in (2). (2) Response: Within 10 days of that request, the Secretary must give the applicant: (A) the application's current review status; (B) what is delaying a final decision, what is still needed, why it is required, with citations, and what the applicant can do to speed things up; and (C) an estimate of when a final decision will come. (o) Outreach: The Secretary must: (1) help applicants complete guarantee applications; (2) run outreach, including conferences and online programs, to inform potential applicants; and (3) reach out to encourage financing institutions and private lenders to take part in eligible projects and projects described in section 16517(a) of this title. (p) Coordination: The Secretary must coordinate this subchapter's activities with other relevant Department offices. (q) Report: Within 2 years after December 27, 2020, and every 3 years after, the Secretary must send Congress a report on the status of applications for, and projects receiving, guarantees, including: (1) a list of such projects, with guarantee amount, construction status, and financing partners; (2) each project's loan-repayment status, including interest paid and future repayment projections; (3) an estimate of air pollution or greenhouse gas emissions avoided or reduced by each project; (4) data on direct and indirect jobs retained, restored, or created by these projects; (5) which technologies that received guarantees have since been deployed commercially without a guarantee, and which novel technologies have entered the commercial energy market; (6) how many new projects are projected to get a guarantee in the next 2 years, and the total guarantee amount; (7) how many outreach engagements were conducted with potential applicants; (8) how many applications were received and are still pending for each open solicitation; and (9) any other measures the Secretary finds appropriate. (r) Conflicts of interest: For every project selected for a guarantee under this subchapter, the Secretary must certify that political influence did not affect the project's selection. (The statutory text labels this subsection and the following one both as "(r)".) (r) State energy financing institutions: (1) Eligibility: For a project backed by a State energy financing institution to qualify for a guarantee: (A) it must meet the requirement in section 16513(a)(1) of this title; and (B) it does not have to meet the requirement in section 16513(a)(2) of this title. (2) Partnerships authorized: While carrying out a project with a loan guarantee under this subchapter, State energy financing institutions may partner with private entities, Tribal entities, and Alaska Native corporations.