---
kind: "section"
citation: "42 U.S.C. § 16512"
title: "42"
title_heading: "The Public Health and Welfare"
number: "16512"
heading: "Terms and conditions"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/42/16512"
units:
  - "Chapter 149 — National Energy Policy and Programs"
  - "Subchapter XV — Incentives for Innovative Technologies"
---

# §16512. Terms and conditions

- (a) **In general—** Except for division C of Public Law 108–324 [[15 U.S.C. 720](/usc/15/720.md) et seq.], the [Secretary](/usc/42/15801.md?p=4) shall make [guarantees](/usc/42/16511.md?p=4-A) under this or any other Act for [projects](/usc/42/16371.md?p=12), including [projects](/usc/42/16371.md?p=12) receiving financial support or credit enhancements from a [State energy financing institution](/usc/42/16511.md?p=7-A), on such terms and conditions as the [Secretary](/usc/42/15801.md?p=4) determines, after consultation with the [Secretary](/usc/42/15801.md?p=4) of the Treasury, only in accordance with this section.
- (b) **Specific appropriation or contribution—**
  - (1) **In general—** Except as provided in [paragraph (2)](#b-2), the cost of a [guarantee](/usc/42/16511.md?p=4-A) shall be paid by the [Secretary](/usc/42/15801.md?p=4) using an appropriation made for the cost of the [guarantee](/usc/42/16511.md?p=4-A), subject to the availability of such an appropriation.
  - (2) **Insufficient appropriations—** If sufficient appropriated funds to pay the cost of a [guarantee](/usc/42/16511.md?p=4-A) are not available, then the [guarantee](/usc/42/16511.md?p=4-A) shall not be made unless—
    - (A) the [Secretary](/usc/42/15801.md?p=4) has received from the borrower a payment in full for the cost of the [guarantee](/usc/42/16511.md?p=4-A) and deposited the payment into the Treasury; or
    - (B) a combination of one or more appropriations and one or more payments from the borrower under this subsection has been made that is sufficient to cover the cost of the [guarantee](/usc/42/16511.md?p=4-A).
  - (3) **Source of payments—** The source of a payment received from a borrower under subparagraph [(A)](#b-2-A) or [(B)](#b-2-B) of paragraph (2) may not be a loan or other debt [obligation](/usc/42/16511.md?p=5) that is made or guaranteed by the Federal Government.
- (c) **Amount—** Unless otherwise provided by law, a [guarantee](/usc/42/16511.md?p=4-A) by the [Secretary](/usc/42/15801.md?p=4) shall not exceed an amount equal to 80 percent of the [project](/usc/42/16371.md?p=12) cost of the facility that is the subject of the [guarantee](/usc/42/16511.md?p=4-A), as estimated at the time at which the [guarantee](/usc/42/16511.md?p=4-A) is issued.
- (d) **Repayment—**
  - (1) **Requirement—**
    - (A) **In general—** No [guarantee](/usc/42/16511.md?p=4-A), including a [guarantee](/usc/42/16511.md?p=4-A) for a [project](/usc/42/16371.md?p=12) receiving financial support or credit enhancements from a [State energy financing institution](/usc/42/16511.md?p=7-A), shall be made unless the [Secretary](/usc/42/15801.md?p=4) determines that there is reasonable prospect of repayment of the principal and interest on the [obligation](/usc/42/16511.md?p=5) by the borrower.
    - (B) **Reasonable prospect of repayment—** The [Secretary](/usc/42/15801.md?p=4) shall base a determination of whether there is reasonable prospect of repayment under [subparagraph (A)](#d-1-A) on a comprehensive evaluation of whether the borrower has a reasonable prospect of repaying the guaranteed [obligation](/usc/42/16511.md?p=5) for the [eligible project](/usc/42/16511.md?p=3), including, as applicable, an evaluation of—
      - (i) the strength of the contractual terms of the [eligible project](/usc/42/16511.md?p=3) (if commercially reasonably available);
      - (ii) the forecast of noncontractual cash flows supported by market projections from reputable sources, as determined by the [Secretary](/usc/42/15801.md?p=4);
      - (iii) cash sweeps and other structure enhancements;
      - (iv) the projected financial strength of the borrower—
        - (I) at the time of loan close; and
        - (II) throughout the loan term after the [project](/usc/42/16371.md?p=12) is completed;
      - (v) the financial strength of the investors and strategic partners of the borrower, if applicable; and
      - (vi) other financial metrics and analyses that are relied on by the private lending community and nationally recognized credit rating [agencies](/usc/42/8262.md?p=1), as determined appropriate by the [Secretary](/usc/42/15801.md?p=4).
  - (2) **Amount—** No [guarantee](/usc/42/16511.md?p=4-A) shall be made unless the [Secretary](/usc/42/15801.md?p=4) determines that the amount of the [obligation](/usc/42/16511.md?p=5) (when combined with amounts available to the borrower from other sources) will be sufficient to carry out the [project](/usc/42/16371.md?p=12).
  - (3) **Subordination—** The [obligation](/usc/42/16511.md?p=5) shall be subject to the condition that the [obligation](/usc/42/16511.md?p=5), including any reorganization, restructuring, or termination thereof, shall not at any time be subordinate to other financing.
- (e) **Interest rate—** An [obligation](/usc/42/16511.md?p=5) shall bear interest at a rate that does not exceed a level that the [Secretary](/usc/42/15801.md?p=4) determines appropriate, taking into account the prevailing rate of interest in the private sector for similar loans and risks.
- (f) **Term—** The term of an [obligation](/usc/42/16511.md?p=5) shall require full repayment over a period not to exceed the lesser of—
  - (1) 30 years; or
  - (2) 90 percent of the projected useful life of the physical asset to be financed by the [obligation](/usc/42/16511.md?p=5) (as determined by the [Secretary](/usc/42/15801.md?p=4)).
- (g) **Defaults—**
  - (1) **Payment by Secretary—**
    - (A) **In general—** If a borrower defaults on the [obligation](/usc/42/16511.md?p=5) (as defined in regulations promulgated by the [Secretary](/usc/42/15801.md?p=4) and specified in the [guarantee](/usc/42/16511.md?p=4-A) contract), the holder of the [guarantee](/usc/42/16511.md?p=4-A) shall have the right to demand payment of the unpaid amount from the [Secretary](/usc/42/15801.md?p=4).
    - (B) **Payment required—** Within such period as may be specified in the [guarantee](/usc/42/16511.md?p=4-A) or related agreements, the [Secretary](/usc/42/15801.md?p=4) shall pay to the holder of the [guarantee](/usc/42/16511.md?p=4-A) the unpaid interest on, and unpaid principal of the [obligation](/usc/42/16511.md?p=5) as to which the borrower has defaulted, unless the [Secretary](/usc/42/15801.md?p=4) finds that there was no default by the borrower in the payment of interest or principal or that the default has been remedied.
    - (C) **Forbearance—** Nothing in this subsection precludes any forbearance by the holder of the [obligation](/usc/42/16511.md?p=5) for the benefit of the borrower which may be agreed upon by the parties to the [obligation](/usc/42/16511.md?p=5) and approved by the [Secretary](/usc/42/15801.md?p=4).
  - (2) **Subrogation—**
    - (A) **In general—** If the [Secretary](/usc/42/15801.md?p=4) makes a payment under [paragraph (1)](#g-1), the [Secretary](/usc/42/15801.md?p=4) shall be subrogated to the rights of the recipient of the payment as specified in the [guarantee](/usc/42/16511.md?p=4-A) or related agreements including, where appropriate, the authority (notwithstanding any other provision of law) to—
      - (i) complete, maintain, operate, lease, or otherwise dispose of any property acquired pursuant to such [guarantee](/usc/42/16511.md?p=4-A) or related agreements; or
      - (ii) permit the borrower, pursuant to an agreement with the [Secretary](/usc/42/15801.md?p=4), to continue to pursue the purposes of the [project](/usc/42/16371.md?p=12) if the [Secretary](/usc/42/15801.md?p=4) determines this to be in the public interest.
    - (B) **Superiority of rights—** The rights of the [Secretary](/usc/42/15801.md?p=4), with respect to any property acquired pursuant to a [guarantee](/usc/42/16511.md?p=4-A) or related agreements, shall be superior to the rights of any other [person](/usc/42/16451.md?p=12) with respect to the property.
    - (C) **Terms and conditions—** A [guarantee](/usc/42/16511.md?p=4-A) agreement shall include such detailed terms and conditions as the [Secretary](/usc/42/15801.md?p=4) determines appropriate to—
      - (i) protect the interests of the United States in the case of default; and
      - (ii) have available all the patents and technology necessary for any [person](/usc/42/16451.md?p=12) selected, including the [Secretary](/usc/42/15801.md?p=4), to complete and operate the [project](/usc/42/16371.md?p=12).
  - (3) **Payment of principal and interest by Secretary—** With respect to any [obligation](/usc/42/16511.md?p=5) guaranteed under this section, the [Secretary](/usc/42/15801.md?p=4) may enter into a contract to pay, and pay, holders of the [obligation](/usc/42/16511.md?p=5), for and on behalf of the borrower, from funds appropriated for that purpose, the principal and interest payments which become due and payable on the unpaid balance of the [obligation](/usc/42/16511.md?p=5) if the [Secretary](/usc/42/15801.md?p=4) finds that—
    - (A)
      - (i) the borrower is unable to meet the payments and is not in default;
      - (ii) it is in the public interest to permit the borrower to continue to pursue the purposes of the [project](/usc/42/16371.md?p=12); and
      - (iii) the probable net benefit to the Federal Government in paying the principal and interest will be greater than that which would result in the event of a default;
    - (B) the amount of the payment that the [Secretary](/usc/42/15801.md?p=4) is authorized to pay shall be no greater than the amount of principal and interest that the borrower is obligated to pay under the agreement being guaranteed; and
    - (C) the borrower agrees to reimburse the [Secretary](/usc/42/15801.md?p=4) for the payment (including interest) on terms and conditions that are satisfactory to the [Secretary](/usc/42/15801.md?p=4).
  - (4) **Action by Attorney General—**
    - (A) **Notification—** If the borrower defaults on an [obligation](/usc/42/16511.md?p=5), the [Secretary](/usc/42/15801.md?p=4) shall notify the Attorney General of the default.
    - (B) **Recovery—** On notification, the Attorney General shall take such action as is appropriate to recover the unpaid principal and interest due from—
      - (i) such assets of the defaulting borrower as are associated with the [obligation](/usc/42/16511.md?p=5); or
      - (ii) any other security pledged to secure the [obligation](/usc/42/16511.md?p=5).
- (h) **Fees—**
  - (1) **In general—** The [Secretary](/usc/42/15801.md?p=4) shall charge, and collect on or after the date of the financial close of an [obligation](/usc/42/16511.md?p=5), a fee for a [guarantee](/usc/42/16511.md?p=4-A) in an amount that the [Secretary](/usc/42/15801.md?p=4) determines is sufficient to cover applicable administrative expenses (including any costs associated with third-party consultants engaged by the [Secretary](/usc/42/15801.md?p=4)).
  - (2) **Availability—** Fees collected under this subsection shall—
    - (A) be deposited by the [Secretary](/usc/42/15801.md?p=4) into the Treasury; and
    - (B) remain available until expended, subject to such other conditions as are contained in annual appropriations Acts.
  - (3) **Reduction in fee amount—** Notwithstanding [paragraph (1)](#h-1) and subject to the availability of appropriations, the [Secretary](/usc/42/15801.md?p=4) may reduce the amount of a fee for a [guarantee](/usc/42/16511.md?p=4-A) under this subsection.
- (i) **Records; audits—**
  - (1) **In general—** A recipient of a [guarantee](/usc/42/16511.md?p=4-A) shall keep such records and other pertinent documents as the [Secretary](/usc/42/15801.md?p=4) shall prescribe by regulation, including such records as the [Secretary](/usc/42/15801.md?p=4) may require to facilitate an effective audit.
  - (2) **Access—** The [Secretary](/usc/42/15801.md?p=4) and the Comptroller General of the United States, or their duly authorized representatives, shall have access, for the purpose of audit, to the records and other pertinent documents.
- (j) **Full faith and credit—** The full faith and credit of the United States is pledged to the payment of all [guarantees](/usc/42/16511.md?p=4-A) issued under this section with respect to principal and interest.
- (k) **Wage rate requirements—** All laborers and mechanics employed by contractors and subcontractors in the performance of [construction](/usc/42/300s–3.md?p=7) work financed in whole or in part by a loan guaranteed under this subchapter shall be paid wages at rates not less than those prevailing on [projects](/usc/42/16371.md?p=12) of a character similar in the locality as determined by the [Secretary](/usc/42/15801.md?p=4) of Labor in accordance with subchapter IV of chapter 31 of title 40. With respect to the labor standards in this subsection, the [Secretary](/usc/42/15801.md?p=4) of Labor shall have the authority and functions set forth in Reorganization Plan Numbered 14 of 1950 (64 Stat. 1267; 5 U.S.C. App.) and [section 3145 of title 40](/usc/40/3145.md).
- (l) **Restructuring of loan guarantees—** The [Secretary](/usc/42/15801.md?p=4) shall consult with the [Secretary](/usc/42/15801.md?p=4) of the Treasury regarding any restructuring of the terms or conditions of a [guarantee](/usc/42/16511.md?p=4-A) issued pursuant to this subchapter, including with respect to any deviations from the financial terms of the [guarantee](/usc/42/16511.md?p=4-A).
- (m) **Written analysis—**
  - (1) **Requirement—** The [Secretary](/usc/42/15801.md?p=4) may not make a [guarantee](/usc/42/16511.md?p=4-A) under this subchapter until the [Secretary](/usc/42/15801.md?p=4) of the Treasury has transmitted to the [Secretary](/usc/42/15801.md?p=4), and the [Secretary](/usc/42/15801.md?p=4) has taken into consideration, a written analysis of the financial terms and conditions of the proposed [guarantee](/usc/42/16511.md?p=4-A).
  - (2) **Transmission—** Not later than 30 days after receiving information on a proposed [guarantee](/usc/42/16511.md?p=4-A) from the [Secretary](/usc/42/15801.md?p=4), the [Secretary](/usc/42/15801.md?p=4) of the Treasury shall transmit the written analysis of the financial terms and conditions of the proposed [guarantee](/usc/42/16511.md?p=4-A) required under [paragraph (1)](#m-1) to the [Secretary](/usc/42/15801.md?p=4).
  - (3) **Explanation—** If the [Secretary](/usc/42/15801.md?p=4) makes a [guarantee](/usc/42/16511.md?p=4-A) the financial terms and conditions of which are not consistent with the written analysis required under this subsection, not later than 30 days after making such [guarantee](/usc/42/16511.md?p=4-A), the [Secretary](/usc/42/15801.md?p=4) shall submit to the Committee on Energy and Commerce and the Committee on Science, Space, and Technology of the House of Representatives, and the Committee on Energy and Natural Resources of the Senate, a written explanation of any material inconsistencies.
- (n) **Application status—**
  - (1) **Request—** If the [Secretary](/usc/42/15801.md?p=4) does not make a final decision on an application for a [guarantee](/usc/42/16511.md?p=4-A) under this subchapter by the date that is 180 days after receipt of the application by the [Secretary](/usc/42/15801.md?p=4), the applicant may request, on or after that date and not more than once every 60 days thereafter until a final decision is made, that the [Secretary](/usc/42/15801.md?p=4) provide to the applicant a response described in [paragraph (2)](#n-2).
  - (2) **Response—** Not later than 10 days after receiving a request from an applicant under [paragraph (1)](#n-1), the [Secretary](/usc/42/15801.md?p=4) shall provide to the applicant a response that includes—
    - (A) a description of the current status of review of the application;
    - (B) a summary of any factors that are delaying a final decision on the application, a list of what items are required in order to reach a final decision, citations to authorities stating the reasons why such items are required, and a list of actions the applicant can take to expedite the process; and
    - (C) an estimate of when a final decision on the application will be made.
- (o) **Outreach—** In carrying out this subchapter, the [Secretary](/usc/42/15801.md?p=4) shall—
  - (1) provide assistance with the completion of applications for a [guarantee](/usc/42/16511.md?p=4-A) under this subchapter;
  - (2) conduct outreach, including through conferences and online programs, to disseminate information to potential applicants;
  - (3) conduct outreach to encourage participation of supporting finance institutions and private [lenders](/usc/42/16371.md?p=6) in [eligible projects](/usc/42/16511.md?p=3) and [projects](/usc/42/16371.md?p=12) described in [section 16517(a) of this title](/usc/42/16517.md?p=a).
- (p) **Coordination—** In carrying out this subchapter, the [Secretary](/usc/42/15801.md?p=4) shall coordinate activities under this subchapter with activities of other relevant offices with the [Department](/usc/42/15801.md?p=1).
- (q) **Report—** Not later than 2 years after December 27, 2020, and every 3 years thereafter, the [Secretary](/usc/42/15801.md?p=4) shall submit to Congress a report on the status of applications for, and [projects](/usc/42/16371.md?p=12) receiving, [guarantees](/usc/42/16511.md?p=4-A) under this title, including—
  - (1) a list of such [projects](/usc/42/16371.md?p=12), including the [guarantee](/usc/42/16511.md?p=4-A) amount, [construction](/usc/42/300s–3.md?p=7) status, and financing partners of each such [project](/usc/42/16371.md?p=12);
  - (2) the status of each such [project](/usc/42/16371.md?p=12)’s loan repayment, including interest paid and future repayment projections;
  - (3) an estimate of the air pollutant or greenhouse gas emissions avoided or reduced from each such [project](/usc/42/16371.md?p=12);
  - (4) data regarding the number of direct and indirect jobs retained, restored, or created by such [projects](/usc/42/16371.md?p=12);
  - (5) identification of—
    - (A) technologies deployed by [projects](/usc/42/16371.md?p=12) that have received [guarantees](/usc/42/16511.md?p=4-A) that have subsequently been deployed commercially without [guarantees](/usc/42/16511.md?p=4-A); and
    - (B) novel technologies that have been deployed by such [projects](/usc/42/16371.md?p=12) and deployed in the commercial energy market;
  - (6) the number of new [projects](/usc/42/16371.md?p=12) projected to receive a [guarantee](/usc/42/16511.md?p=4-A) under this subchapter during the next 2 years and the aggregate [guarantee](/usc/42/16511.md?p=4-A) amount;
  - (7) the number of outreach engagements conducted with potential applicants;
  - (8) the number of applications received and currently pending for each open solicitation; and
  - (9) any other metrics the [Secretary](/usc/42/15801.md?p=4) finds appropriate.
- (r) **1 Conflicts of interest—** For each [project](/usc/42/16371.md?p=12) selected for a [guarantee](/usc/42/16511.md?p=4-A) under this subchapter, the [Secretary](/usc/42/15801.md?p=4) shall certify that political influence did not impact the selection of the [project](/usc/42/16371.md?p=12).
- (r) **1 State energy financing institutions—**
  - (1) **Eligibility—** To be eligible for a [guarantee](/usc/42/16511.md?p=4-A) under this subchapter, a [project](/usc/42/16371.md?p=12) receiving financial support or credit enhancements from a [State energy financing institution](/usc/42/16511.md?p=7-A)—
    - (A) shall meet the requirements of [section 16513(a)(1) of this title](/usc/42/16513.md?p=a-1); and
    - (B) shall not be required to meet the requirements of [section 16513(a)(2) of this title](/usc/42/16513.md?p=a-2).
  - (2) **Partnerships authorized—** In carrying out a [project](/usc/42/16371.md?p=12) receiving a [loan guarantee](/usc/42/16511.md?p=4-A) under this subchapter, [State energy financing institutions](/usc/42/16511.md?p=7-A) may enter into partnerships with private entities, Tribal entities, and Alaska Native [corporations](/usc/42/2297h.md?p=2).

## Footnotes

[^1]: So in original. Two subsecs. (r) have been enacted.

## Source credit

(Pub. L. 109–58, title XVII, § 1702, Aug. 8, 2005, 119 Stat. 1117; Pub. L. 111–85, title III, § 310, Oct. 28, 2009, 123 Stat. 2873; Pub. L. 112–74, div. B, title III, § 305(1), Dec. 23, 2011, 125 Stat. 877; Pub. L. 116–260, div. Z, title IX, § 9010(a), Dec. 27, 2020, 134 Stat. 2603; Pub. L. 117–58, div. D, title IV, § 40401(a)(1), (3), (c)(2), Nov. 15, 2021, 135 Stat. 1033, 1034, 1037; Pub. L. 117–169, title V, §§ 50141(f), 50144(d), Aug. 16, 2022, 136 Stat. 2044, 2045; Pub. L. 117–328, div. D, title III, § 308, Dec. 29, 2022, 136 Stat. 4645.)

## Notes

### Editorial Notes

### References in Text

Division C of Public Law 108–324, referred to in subsec. (a), is division C of Pub. L. 108–324, Oct. 13, 2004, 118 Stat. 1255, known as the Alaska Natural Gas Pipeline Act, which is classified principally to chapter 15D (§ 720 et seq.) of Title 15, Commerce and Trade. For complete classification of division C to the Code, see Short Title note set out under section 720 of Title 15 and Tables.

Reorganization Plan Numbered 14 of 1950, referred to in subsec. (k), is set out in the Appendix to Title 5, Government Organization and Employees.

### Amendments

2022—Subsec. (b)(3). Pub. L. 117–169, § 50141(f), added par. (3).

Subsec. (o)(3). Pub. L. 117–169, § 50144(d), inserted “and projects described in section 16517(a) of this title” before period at end.

Subsec. (r)(3). Pub. L. 117–328 struck out par. (3). Text read as follows: “Amounts appropriated to the Department of Energy before November 15, 2021, shall not be available to be used for the cost of loan guarantees for projects receiving financing support or credit enhancements under this subsection.”

2021—Subsec. (a). Pub. L. 117–58, § 40401(c)(2)(A), inserted “, including projects receiving financial support or credit enhancements from a State energy financing institution,” after “for projects”.

Subsec. (d)(1). Pub. L. 117–58, § 40401(a)(1), substituted “Requirement” for “In general” in par. heading, designated existing provisions as subpar. (A), inserted subpar. heading, and added subpar. (B).

Subsec. (d)(1)(A). Pub. L. 117–58, § 40401(c)(2)(B), inserted “, including a guarantee for a project receiving financial support or credit enhancements from a State energy financing institution,” after “No guarantee”.

Subsec. (r). Pub. L. 117–58, § 40401(c)(2)(C), added subsec. (r) relating to State energy financing institutions.

Pub. L. 117–58, § 40401(a)(3), added subsec. (r) relating to conflicts of interest.

2020—Subsec. (b). Pub. L. 116–260, § 9010(a)(1), amended subsec. (b) generally. Prior to amendment, text read as follows: “No guarantee shall be made unless—

“(A) an appropriation for the cost of the guarantee has been made;

“(B) the Secretary has received from the borrower a payment in full for the cost of the guarantee and deposited the payment into the Treasury; or

“(C) a combination of one or more appropriations under subparagraph (A) and one or more payments from the borrower under subparagraph (B) has been made that is sufficient to cover the cost of the guarantee.”

Subsec. (d)(3). Pub. L. 116–260, § 9010(a)(2), substituted “, including any reorganization, restructuring, or termination thereof, shall not at any time be subordinate” for “is not subordinate”.

Subsec. (h)(1). Pub. L. 116–260, § 9010(a)(3)(A), amended par. (1) generally. Prior to amendment, text read as follows: “The Secretary shall charge and collect fees for guarantees in amounts the Secretary determines are sufficient to cover applicable administrative expenses.”

Subsec. (h)(3). Pub. L. 116–260, § 9010(a)(3)(B), added par. (3).

Subsecs. (l) to (q). Pub. L. 116–260, § 9010(a)(4), added subsecs. (l) to (q).

2011—Subsec. (b). Pub. L. 112–74 added subsec. (b) and struck out former subsec. (b). Prior to amendment, text read as follows: “No guarantee shall be made unless—

“(1) an appropriation for the cost has been made; or

“(2) the Secretary has received from the borrower a payment in full for the cost of the obligation and deposited the payment into the Treasury.”

2009—Subsec. (k). Pub. L. 111–85 added subsec. (k).

### Statutory Notes and Related Subsidiaries

### Wage Rate Requirements

For provisions relating to rates of wages to be paid to laborers and mechanics on projects for construction, alteration, or repair work funded under div. D or an amendment by div. D of Pub. L. 117–58, including authority of Secretary of Labor, see section 18851 of this title.