Senators Object To DOE's Loan Guarantee Rules

Aug 13: U.S. Senator Pete Domenici (R-NM), Ranking Member of the Senate Energy and Natural Resources Committee, led a bipartisan group of eighteen Senators in urging President Bush to ensure that his Administration fulfills the Department of Energy’s (DOE) loan guarantee provisions in a manner consistent with Congressional intent. Following commitments to strengthen the program gained by Domenici during negotiations with Office of Management and Budget (OMB) officials earlier this month, the lawmakers drafted a letter to President Bush asking his Administration to work toward the common goal of a robust loan guarantee program. As Chairman of the Energy Committee in 2005, Domenici played a leading role in creating the program in the Energy Policy Act of 2005. DOE issued draft loan guarantee regulations that once final, will enable DOE to begin issuing loan guarantees for clean energy projects. A public meeting was held on the draft regulations on Friday, June 15, 2007 [See WIMS 5/10/07].

DOE proposed a broad portfolio of large and small projects, from a wide variety of technologies. Within DOE’s FY’08 budget request to guarantee up to $9 billion in loans, DOE has proposed to guarantee $4 billion in loans for central power generation facilities such as nuclear facilities or carbon sequestration optimized coal power plants; $4 billion in loans for projects that promote biofuels and clean transportation fuels; and $1 billion in loans for projects using new technologies for electric transmission facilities or renewable power generation systems. However, according to Domenici, many believe the program as proposed by DOE would not accomplish those goals.

The Senators indicated in their letter, "...we have become exceedingly frustrated by the Administration’s failure to interpret properly the provisions of Title XVII—Incentives for Innovative Technologies… As we examine ways to strengthen our energy security, increase our global competitiveness, and reduce our nation’s greenhouse gas emissions, it is essential that we enhance the federal assistance to the development of the clean energy technologies within the United States."

The specific concerns of the lawmakers centered on the provision authorizing DOE to grant guarantees for up to 80% of the project cost. DOE has issued a proposed rule for the loan guarantee program that limits guarantees to 90% of the face value of the loan, a limitation not required by EPACT. Equally frustrating for the lawmakers is the Administration’s cap on the total face amount of loans that can be guaranteed, which they say will limit assistance to only a few projects in small sectors of the energy industry.

Among the Senators who joined Domenici on the letter are Senators Arlen Specter (R-PA), Richard Lugar (R-IN), Mary Landrieu (D-LA), Larry Craig (R-ID, Lisa Murkowski (R-AK), Ken Salazar (D-CO), Benjamin Cardin (D-MD), Mark Pryor (D-AR), James Inhofe (R-OK), Richard Burr (R-NC), Chuck Hagel (R-NB), John Barrasso (R-WY), Thad Cochran (R-MS), Elizabeth Dole (R-NC), George Voinovich (R-OH), Norm Coleman (R-MN) and Gordon Smith (R-OR).

Access a release from Senator Domenici (click here). Access complete information on DOE's Loan Guarantee Program (click here). [*Energy]