[Federal Register Volume 87, Number 105 (Wednesday, June 1, 2022)]
[Notices]
[Pages 33141-33144]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-11734]


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DEPARTMENT OF ENERGY


Innovative Technologies Loan Guarantee Program

AGENCY: Loan Programs Office, Department of Energy.

ACTION: Request for information (``RFI'').

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SUMMARY: The Loan Programs Office (``LPO'') of the Department of Energy 
(``DOE'') is seeking information to understand how it could improve its 
Title XVII Innovative Technologies Loan Guarantee Program (the ``Title 
XVII Loan Guarantee Program'') and implement provisions of the Energy 
Act of 2020 and the Infrastructure Investment and Jobs Act (the 
``IIJA'') that expand or modify the authorities applicable to the Title 
XVII Loan Guarantee Program.

DATES: Comments must be received on or before July 1, 2022. If you 
anticipate difficulty in submitting comments within that period, 
contact the person listed in FOR FURTHER INFORMATION CONTACT as soon as 
possible.

ADDRESSES: Interested persons are encouraged to submit comments, 
identified by ``Title XVII Loan Guarantee Program RFI,'' by any of the 
following methods:
    Email: [email protected]. Include ``Title XVII 
Loan Guarantee Program RFI'' in the subject line of the message. Email 
attachments can be provided in PDF (preferred), Microsoft Word or 
Excel, WordPerfect, or text (ASCII) file format, prepared in accordance 
with the detailed instructions in section III of this document.
    Postal Mail: Loan Programs Office, Attn: LPO Legal Department, U.S. 
Department of Energy, 1000 Independence Avenue SW, Washington, DC 
20585-0121. Please submit one signed original paper copy. Due to 
potential delays in DOE's receipt and processing of mail sent through 
the U.S. Postal Service, we encourage respondents to submit comments 
electronically to ensure timely receipt.

FOR FURTHER INFORMATION CONTACT: Steven Westhoff, Attorney-Adviser, 
Loan Programs Office, email: [email protected], or 
phone: (240) 220-4994.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Introduction
    A. Background
    B. Energy Act of 2020
    C. IIJA
II. Request for Information
    A. Energy Act of 2020
    B. IIJA
    C. Title XVII Financing Structures
    D. Title XVII Loan Guarantee Program Improvements
III. Submission of Comments

I. Introduction

A. Background

    LPO administers certain DOE lending programs, including under Title 
XVII of the Energy Policy Act of 2005, as amended (``Title XVII'').\1\ 
Title XVII authorizes the Secretary of Energy (the ``Secretary'') to 
make loan guarantees for projects that ``avoid, reduce, utilize, or 
sequester air pollutants or anthropogenic emissions of greenhouse 
gases'' and ``employ new or significantly improved technologies as 
compared to commercial technologies in service in the United States.'' 
\2\ LPO has administered the Title XVII Loan Guarantee Program pursuant 
to its regulations set forth at 10 CFR part 609 (the ``Title XVII 
Rule''), as required by the authorizing statute.\3\ LPO provides 
additional guidance to applicants and establishes requirements in the 
solicitations for loan guarantee applications, which are issued and 
updated from time to time.
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    \1\ Public Law 109-58, title XVII (2005); 42 U.S.C. 16511 et 
seq.
    \2\ 42 U.S.C. 16513(a).
    \3\ 42 U.S.C. 16515(b), (d).
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    The Title XVII Rule sets forth the policies and procedures that DOE 
uses for the application process, which includes receiving, evaluating, 
and approving applications for loan guarantees to support eligible 
projects under Title XVII. The rule establishes the process by which 
DOE issues solicitations for applications for loan guarantees for 
eligible projects. The rule applies to all applications, conditional 
commitments, and loan guarantee agreements under the Title XVII Loan 
Guarantee Program and provides specific guidance to program applicants 
regarding eligibility for the program, the loan guarantee application 
process and requirements, criteria for DOE's evaluation of 
applications, and the process for negotiation and execution of a loan 
guarantee agreement term sheet, conditional commitment, and loan 
guarantee agreement. The Title XVII

[[Page 33142]]

Rule also describes the terms applicable to the loan guarantee. DOE is 
in the process of evaluating how it can improve the Title XVII Rule, in 
line with its statutory authority, including recent amendments.

B. Energy Act of 2020

    The Energy Act of 2020 was enacted in December 2020, as Division Z 
of the Consolidated Appropriations Act, 2021.\4\ Section 9010 of the 
Energy Act of 2020 is entitled ``Loan Program Office Title XVII 
Reform'' and sets forth several modifications to the Title XVII Loan 
Guarantee Program through amendments to Sections 1702, 1703, and 1704 
of the Energy Policy Act of 2005. The modifications include, but are 
not limited to, clarifying that the Secretary shall pay the cost of a 
guarantee, subject to availability of appropriations; specifying the 
time period for collection of fees for projects that reach financial 
closing; providing the Secretary the authority to reduce the fee for a 
guarantee; providing for certain interagency consultation requirements 
in connection with loan guarantees; requiring that the Secretary 
respond to certain applicant requests regarding the status of its 
applications under the program; and expanding and clarifying project 
eligibility under the program.
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    \4\ Public Law 116-260, Div. Z (2020).
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C. IIJA

    The IIJA \5\ was enacted in November 2021, as a historic investment 
in the Nation's infrastructure. The IIJA gives DOE express authority to 
support projects that increase the domestically produced supply of 
critical minerals \6\ and to provide loan guarantees to projects 
receiving financial support or credit enhancements from a State energy 
financing institution.\7\
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    \5\ Public Law 117-58 (2021).
    \6\ 42 U.S.C. 16513(b)(13), as added by Public Law 117-58, sec. 
40401(a)(2)(A) (2021). Although projects that increase the 
domestically produced supply of critical minerals are eligible under 
Title XVII, additional congressional appropriation is required 
before DOE may provide loan guarantees for this category of 
projects. Public Law 117-58, sec. 40401(a)(2)(B)-(C) (2021). 
Domestic projects related to critical minerals may, however, also 
separately qualify under preexisting categories of eligible projects 
under Title XVII. See 10 CFR 609.2(a). See also Executive Order 
14017, ``America's Supply Chains,'' 86 FR 11849 (March 1, 2021); 
DOE, America's Strategy to Secure the Supply Chain for a Robust 
Clean Energy Transition (Feb. 24, 2022), available at https://www.energy.gov/policy/articles/americas-strategy-secure-supply-chain-robust-clean-energy-transition.
    \7\ 42 U.S.C. 16512(a), as amended through Public Law 117-58, 
sec. 40401(c)(2)(A) (2021).
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II. Request for Information

    The purpose of this RFI is to solicit feedback from project 
developers and sponsors, industry members, investors, developers, 
academia, research laboratories, government agencies, potentially 
impacted communities and other stakeholders on potential changes to 
DOE's Title XVII Rule. Specifically, DOE is seeking input on how it 
could revise the Title XVII Rule to (i) improve its Title XVII Loan 
Guarantee Program and (ii) implement certain provisions of the Energy 
Act of 2020 and the IIJA that expand or modify the authorities 
applicable to the Title XVII Loan Guarantee Program.
    DOE seeks public input on the following questions regarding LPO's 
administration of the Title XVII Loan Guarantee Program:

A. Energy Act of 2020

    Section 9010(a)(3)(A) of the Energy Act of 2020 amended Section 
1703(h) of the Energy Policy Act of 2005 to require that the Secretary 
charge and collect a guarantee fee sufficient to cover applicable 
administrative expenses (including costs associated with third-party 
consultants) only on or after the transaction's financial closing.\8\ 
This amendment to Title XVII changed the way that DOE engaged and 
contracted with applicants and third-party advisors to DOE. Prior to 
the Energy Act of 2020, DOE required applicants to the Title XVII Loan 
Guarantee Program to enter into a ``Borrower Support Letter'' with 
third-party advisors, requiring that applicants directly pay the costs 
and expenses of DOE's third-party advisors on a monthly basis and as 
soon as advisors were engaged. DOE also charged an application fee for 
each of Part I and Part II of its application process and a portion of 
a ``facility fee'' upon execution of a Conditional Commitment. The 
borrower's responsibility for these fees and costs resulted in the 
borrower bearing a portion of the costs of the significant resources 
required to evaluate an application to the Title XVII Loan Guarantee 
Program at earlier stages of the application process. The fee and cost 
structure mimicked those typical of private sector debt markets.
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    \8\ 42 U.S.C. 16512(h)(1), as amended by Public Law 116-260, 
sec. 9010(a)(3)(A) (2020).
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    Following the Energy Act of 2020, DOE modified its practices to 
eliminate application fees and to defer collection of the costs of 
DOE's third-party advisors until financial closing of a loan guarantee. 
These modifications require DOE to obligate funds appropriated for the 
administration of the Title XVII Loan Guarantee Program to support the 
potential costs of DOE's third-party advisors for each application.
    (A-1) With respect to costs incurred for DOE's use of its third-
party advisors, should DOE consider other applicant fee structures or 
arrangements not currently contemplated by the Title XVII Rule that are 
consistent with the provisions of the Energy Act of 2020?
    i. What fee structures should DOE consider to ensure both equitable 
access to the Title XVII Loan Guarantee Program and responsible use of 
agency resources, and enable LPO to retain sufficient funds to advance 
the purposes of Title XVII?
    ii. Should DOE consider entering into arrangements with applicants 
to require them to pay a fee to cover the costs of third-party advisors 
or otherwise require an applicant to reimburse DOE for its third-party 
costs and expenses if the applicant's project does not result in 
financial closing of a loan guarantee?
    iii. Should DOE offer to enter into arrangements with applicants to 
allow them, solely at their discretion, to reimburse DOE's third-party 
costs before financial closing?
    iv. What additional factors and criteria should DOE consider 
regarding recouping its costs incurred on applications that are denied, 
are withdrawn, or otherwise do not result in financial closing?
    Section 9010(b) of the Energy Act of 2020 amends Section 1703 of 
the Energy Policy Act of 2005 to provide flexibility to the Secretary 
to, if regional variation significantly affects deployment, guarantee 
up to 6 projects deploying the same or similar technology as another 
project so long as no more than 2 guaranteed projects that use the same 
or similar technology are located in the same region of the United 
States.\9\ The Energy Act of 2020 does not provide guidance to the 
Secretary regarding how to define ``regions'' or ``regional variation'' 
for the purposes of implementing this provision under Title XVII.
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    \9\ 42 U.S.C. 16513(f), as added by Public Law 116-260, sec. 
9010(b)(3) (2020).
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    (A-2) What criteria should the Secretary consider when identifying 
specific regions of the United States and the effect of regional 
variation on technology deployment for the purposes of implementing 
this provision of the Energy Act of 2020?
    i. Are there certain categories of projects or technologies that 
would not be eligible for the Title XVII Loan Guarantee Program unless 
DOE utilized particular criteria to evaluate ``regions'' or ``regional 
variation'' under this provision? If so, what criteria should LPO 
consider? Are there other examples from governmental programs with

[[Page 33143]]

region-based requirements or criteria that DOE should consider?
    ii. What additional factors and criteria should DOE consider when 
reviewing and evaluating multiple applications for projects that use 
the same or similar technology?
    Section 9010(b) of the Energy Act of 2020 amends Section 1703 of 
the Energy Policy Act of 2005 to clarify that eligible projects under 
Title XVII may include ``projects that employ elements of commercial 
technologies in combination with new or significantly improved 
technologies.'' \10\
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    \10\ 42 U.S.C. 16513(a), as amended by Public Law 116-260, sec. 
9010(b)(1) (2020).
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    (A-3) How should DOE consider innovative software, information 
technology applications, or control system technology under Title XVII, 
including DOE's determination of eligible project costs?

B. IIJA

    Section 40401(c) of the IIJA amends Section 1702 of the Energy 
Policy Act of 2005 to allow the Secretary to issue loan guarantees to 
projects receiving financial support or credit enhancements from a 
State energy financing institution.\11\ ``State energy financing 
institution'' is defined by the statute as:
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    \11\ 42 U.S.C. 16512(a), as amended through Public Law 117-58, 
sec. 40401(c)(2)(A) (2021). Projects receiving financial support or 
credit enhancements from a State energy financing institution need 
not employ new or significantly improved technologies to be 
eligible, but additional congressional appropriation is required 
before DOE may provide loan guarantees for such projects. 42 U.S.C. 
16512(r), as added by Public Law 117-58, sec. 40401(c)(2)(C).

A quasi-independent entity or an entity within a State agency or 
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financing authority established by a State:

    (i) To provide financing support or credit enhancements, 
including loan guarantees and loan loss reserves, for eligible 
projects; and
    (ii) to create liquid markets for eligible projects, including 
warehousing and securitization, or take other steps to reduce 
financial barriers to the deployment of existing and new eligible 
projects.\12\
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    \12\ 42 U.S.C. 16511, as amended through Public Law 117-58, sec. 
40401(c)(1) (2021).

    ``State'' is defined as any state, the District of Columbia, and 
any territory or possession of the United States.\13\ State energy 
financing institutions may enter into partnerships with private 
entities, Tribal entities, and Alaska Native corporations in carrying 
out a project receiving a loan guarantee under Title XVII.\14\
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    \13\ Id.; 42 U.S.C. 6802.
    \14\ 42 U.S.C. 16512(r)(2), as added by Public Law 117-58, sec. 
40401(c)(2)(C) (2021).
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    (B-1) What types of entities should be considered ``State energy 
financing institutions'' for the purposes of implementing these 
amendments to the Title XVII Loan Guarantee Program?
    i. What are some examples of ``quasi-independent'' entities?
    ii. Could a private entity formed for the above purposes be 
considered a ``State energy financing institution''? If so, what other 
requirements should apply to such entities?
    iii. Should there be minimum ownership requirements or governance 
requirements for an entity to be considered an eligible State energy 
financing institution?
    (B-2) What types of financial support or credit enhancements from 
State energy financing institutions should DOE consider in evaluating 
projects under this authority? How can the loan or loan guarantee be 
applied in conjunction with the financial support or credit 
enhancements to most effectively achieve the objectives of the program?
    (B-3) How can DOE facilitate a nationwide program for partnering 
with State energy financing institutions? Is it feasible for DOE to 
establish a single program for State energy financing institutions, 
with uniform terms and requirements?

C. Title XVII Financing Structures

    LPO is evaluating the types of financing structures that will best 
allow it to achieve its objective of utilizing its authorities to 
accelerate the deployment and commercialization of new and innovative 
technologies that are the key to achieving its greenhouse gas reduction 
goals. DOE wants to ensure that its Title XVII Rule facilitates 
applications for loan guarantees in support of each of the categories 
of eligible projects under Title XVII, including projects for critical 
minerals and supply chain projects.
    (C-1) Are there projects or financing structures, such as co-
lending, funding a warehouse financing vehicle, or guaranteeing capital 
market instruments, that may be eligible under Title XVII but that are 
not contemplated by the existing Title XVII Rule?
    (C-2) For any such projects or structures proposed under C-1, how 
might DOE address or facilitate those projects or structures under a 
revised Title XVII Rule?
    (C-3) Should DOE enhance its support of eligible supply chain 
projects by allowing borrowers the ability to provide additional types 
of collateral security, such as security interests in purchase orders, 
and if so what types of collateral security should DOE consider? How 
should DOE evaluate such projects?
    (C-4) Should DOE enhance its support of eligible projects that 
employ innovative software, information technology applications, 
control system technology, or other such technologies by allowing the 
borrowers the ability to provide additional types of collateral 
security, such as security interests in or rights to future cash flows 
from intellectual property? How should DOE evaluate such projects?

D. Title XVII Loan Guarantee Program Improvements

    The Title XVII Rule has been largely the same since its original 
issuance pursuant to DOE's rulemaking at the onset of the program.\15\ 
LPO has received a significantly higher volume of applications to its 
Title XVII Loan Guarantee Program in the past twelve months than in 
recent years. Considering this increased volume of applications and its 
new authorities, DOE is seeking to ensure that the Title XVII Rule 
establishes clear requirements and procedures for potential applicants 
and implements its statutory authority under Title XVII as intended by 
Congress and in line with the Administration's policies.
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    \15\ 72 FR 60116 (October 23, 2007).
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    (D-1) Should DOE consider alternatives to its current practice of 
issuing separate solicitations for applications for Title XVII loan 
guarantees based on particular eligibility or funding categories? For 
example, similar to other federal loan programs, should LPO issue an 
open solicitation for all applications for loan guarantees for eligible 
projects under Title XVII? If so, how should DOE use programmatic, 
technical, financial, and other factors to evaluate each application on 
a rolling basis?
    (D-2) Should the Title XVII Rule clarify what DOE considers a 
``project'' for purposes of Title XVII applications? Should the rule 
provide criteria regarding the eligibility of distributed energy 
resources as a single project? If so, could DOE then improve the 
definition of ``project cost''?
    (D-3) Would applicants be prejudiced or disadvantaged if the 
application process were to not include the negotiation of a 
preliminary term sheet with DOE?
    (D-4) How else can DOE modify its application process or 
requirements in a manner that improves its implementation of the Title 
XVII Loan Guarantee Program?

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III. Submission of Comments

    DOE invites all interested parties to submit in writing by July 1, 
2022, comments and information on matters addressed in this RFI.
    Submitting comments via email or postal mail. If you do not want 
your personal contact information to be publicly viewable, do not 
include it in your comment or any accompanying documents. Instead, 
provide your contact information on a cover letter. Include your first 
and last names, email address, telephone number, and optional mailing 
address. The cover letter will not be publicly viewable as long as it 
does not include any comments.
    Include contact information each time you submit comments, data, 
documents, and other information to DOE.
    Comments, data, and other information submitted to DOE 
electronically should be provided in PDF (preferred), Microsoft Word or 
Excel, WordPerfect, or text (ASCII) file format. Provide documents that 
are not secured, that are written in English, and that are free of any 
defects or viruses. Documents should not contain special characters or 
any form of encryption and, if possible, they should carry the 
electronic signature of the author. Attachments should be limited to no 
more than 10 megabytes (MB) in size.
    Campaign form letters. Please submit campaign form letters by the 
originating organization in batches of between 50 to 500 form letters 
per PDF or as one form letter with a list of supporters' names compiled 
into one or more PDFs. This reduces comment processing and posting 
time.
    Confidential Business Information. According to 10 CFR 1004.11, any 
person submitting information that he or she believes to be 
confidential and exempt by law from public disclosure should submit via 
email two well-marked copies: One copy of the document marked 
``confidential'' including all the information believed to be 
confidential, and one copy of the document marked ``non-confidential'' 
with the information believed to be confidential deleted. Submit these 
documents via email. DOE will make its own determination about the 
confidential status of the information and treat it according to its 
determination.

Signing Authority

    This document of the Department of Energy was signed on May 26, 
2022, by Dong Kim, Deputy Director, Loan Programs Office, pursuant to 
delegated authority from the Secretary of Energy. That document with 
the original signature and date is maintained by DOE. For 
administrative purposes only, and in compliance with requirements of 
the Office of the Federal Register, the undersigned DOE Federal 
Register Liaison Officer has been authorized to sign and submit the 
document in electronic format for publication, as an official document 
of the Department of Energy. This administrative process in no way 
alters the legal effect of this document upon publication in the 
Federal Register.

    Signed in Washington, DC, on May 26, 2022.
Treena V. Garrett,
Federal Register Liaison Officer, U.S. Department of Energy.
[FR Doc. 2022-11734 Filed 5-31-22; 8:45 am]
BILLING CODE 6450-01-P