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May 30 -- The Department of Energy (“DOE”) issues this interim final rule (“IFR”) amending the regulations implementing the loan guarantee provisions in Title XVII of the Energy Policy Act of 2005 (“Title XVII”) to implement provisions of the Inflation Reduction Act of 2022 (“IRA”) that expand or modify the authorities applicable to the Title XVII Loan Guarantee Program. Specifically, this IFR: establishes regulations necessary to implement the Energy Implementation Reinvestment (“EIR”) Program and other categories of projects authorized by the IRA for Title XVII loan guarantees; revises provisions directly related to DOE's implementation of the Title XVII Loan Guarantee Program as expanded by the IRA; amends provisions to conform with the broader changes to the Title XVII Loan Guarantee Program; and revises certain sections for clarity and organization. DOE is issuing an IFR due to the urgency to implement an additional potential $290 billion of loan authority for loan guarantees prior to the loan guarantee authority expiration in 2026 and to provide the opportunity for all eligible projects to seek loan guarantees under the new IRA provisions. The amendments in this IFR also facilitate the increased volume of applications resulting from the new authorities and funding in the IRA and provide efficiencies in the loan processing. This IFR is effective May 30, 2023. DOE will accept comments, data, and information regarding this IFR no later than July 31, 2023.

The Inflation Reduction Act of 2022 (“IRA”) makes the single largest investment in climate and energy in American history, enabling the United States to tackle the climate crisis, advancing environmental justice, securing the nation's position as a world leader in domestic clean energy manufacturing, and putting the United States on a pathway to achieving the President's climate goals, including a net-zero economy by 2050. Within its energy and climate provisions, the IRA appropriates approximately $8.6 billion in credit subsidy and provides loan authority of up to $290 billion in total principal total for the Department of Energy's (“DOE”) Loan Programs Office (“LPO”) programs administered under Title XVII of the Energy Policy Act of 2005 (“Title XVII”).

The IRA provisions increase the authority to guarantee loans under section 1703 of Title XVII (“section 1703”) by $40 billion in total principal. The IRA also added a new loan guarantee program, the Energy Infrastructure Reinvestment (“EIR”) Program, under section 1706 of Title XVII (“section 1706”), to help retool, repower, repurpose, or replace energy infrastructure that has ceased operations or to enable operating energy infrastructure to avoid, reduce, utilize, or sequester air pollutants or anthropogenic emissions of greenhouse gases. The IRA authorizes the Secretary of Energy (“Secretary”) to guarantee loans up to a total principal amount of $250 billion for the EIR Program. The Infrastructure Investment and Jobs Act (“IIJA”) amended Title XVII to authorize the Secretary to issue loan guarantees for new categories of projects under section 1703, including projects involving critical minerals processing, manufacturing, or recycling, as well as projects that do not fulfill the innovation requirement but are receiving financial support or credit enhancements from a State energy financing institution. The loan authority and appropriations for section 1703 projects contained in the IRA enabled the Secretary to offer loan guarantees for these types of projects for the first time, as the IIJA provisions prohibited the use of previously appropriated funds for those types of loan guarantees.

The loan authority and related appropriations for the credit subsidy costs of loan guarantees under sections 1703 and 1706 made available under the IRA are available through September 30, 2026. In order to fully implement the Title XVII Loan Guarantee Program as modified by the IRA and IIJA in a timely manner, DOE is revising 10 CFR part 609 (“part 609”) through this interim final rule (“IFR”). The IFR facilitates the submission of applications to DOE for the broader array of projects eligible for Title XVII loan guarantees following the enactment of the IRA and improves the application process for parties considering applying for loan guarantees. The impact of the IRA on the interest in DOE's loan programs, including the Title XVII program, has been substantial. DOE has seen an increase from 61 to 111 active applications for loans and loan guarantees to the Loan Programs Office for Title XVII loan guarantees from August 1, 2022, through April 30, 2023, representing an increase in approximately $30.1 billion of new loan requests.

This IFR establishes regulations necessary to implement the EIR Program authorized under section 1706 and other categories of projects made eligible for Title XVII loan guarantees by the IRA and revises provisions directly related to DOE's implementation of the Title XVII Loan Guarantee Program as expanded by the IRA and IIJA. The IFR retains those provisions of part 609 that are not impacted by DOE's plans for implementing the expanded Title XVII Loan Guarantee Program, which remain in full force and effect. In addition, the IFR makes other associated amendments to conform with the broader changes to part 609 to address the IRA, IIJA, and Energy Act of 2020 amendments.

Through publication of this IFR, DOE is also providing a comment period until July 31, 2023. Comments submitted during this period will be reviewed, and a final rule, responding to those comments as well as reflecting the experience DOE gains in implementing this IFR, will be issued at a later date.
 
Topics:
 
A. Expansion of Eligible Projects
   1. Section 1703 Clean Energy Projects
   2. Energy Infrastructure Reinvestment Program
B. Approach to Title XVII Applications and Program Guidance
C. Conditional Commitments & Credit Subsidy Cost
D. Fees
E. Transaction Costs
F. Project Costs
 
DOE Loan Programs Office https://www.energy.gov/lpo/loan-programs-office
FRN: https://www.federalregister.gov/d/2023-11104 [19 pages]

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