As the Loan Programs Office (LPO) implements key programmatic changes resulting from the Inflation Reduction Act (IRA) and Bipartisan Infrastructure Law (BIL)—for example, see recent blogs on the Energy Infrastructure Reinvestment Program, the Carbon Dioxide Transportation Infrastructure Finance and Innovation (CIFIA) Program, and expanded eligibilities within the Advanced Technology Vehicles Manufacturing Program—LPO stays focused on effectively stewarding taxpayer resources. These good governance efforts are consistent with and adhere to recently enacted changes from both the Energy Act of 2020 and BIL related to how LPO evaluates risk, ensures proper oversight of its programs, and promotes transparency with regards to its portfolio.
The Energy Act of 2020 was passed as part of the Fiscal Year 2021 omnibus government funding bill. This piece of bipartisan legislation included a series of reforms to the Title 17 program (Sec. 9010). Months later, in November 2021, President Biden signed the BIL. Taken together, these two laws help improve and clarify the process for and evaluation of LPO applications. The legislation also adds reporting requirements and transparency guidelines that help to bolster LPO’s good governance practices.
Consistent with the intent of the Energy Act of 2020, LPO has implemented reforms, including deferring collection of certain fees for Title 17 applicants; widening eligibility requirements for projects that may employ bits of commercial technology; and making clear the types of nuclear supply chain, carbon management, and storage projects that can partner with LPO. The Act also directed LPO to work with the U.S. Department of Treasury (Treasury) to obtain a written analysis of the financial terms and conditions of any proposed Title 17 loan. As a result, LPO executed an updated Memorandum of Understanding with Treasury memorializing this process. Since 2020, this analysis has been provided for both Title 17 conditional commitments—the Advanced Clean Energy Storage project in Utah and the Monolith project in Nebraska.
While the BIL expanded the role of existing loan programs that LPO administers and authorized the new CIFIA Program, BIL also clarified and codified certain loan evaluation processes. For example, BIL put into statute the evaluation elements for the reasonable prospect of repayment as a condition of loan approval. This is fully consistent with LPO’s continued practice of assuring that each project proposed to be financed can repay the loan even after LPO weighs the risks inherent in the mandate to finance first-of-a-kind manufacturing and energy technologies, as well as other risks associated with the project. BIL also aligns statute with LPO’s current practice of ensuring political influence does not impact project selection.
Lastly, both the Energy Act of 2020 and the BIL included reporting requirements on metrics, such as types of technologies supported by our projects, jobs created associated with projects, an estimate of avoided pollution or emissions, and other factors. Most of these statistics are tracked in our Annual Portfolio Status Report; and they continue to demonstrate the value of LPO to the taxpayer, to industry, and to this Administration's climate goals.