Department of Energy Loan Programs: Tribal Energy Loan Guarantee

Department of Energy Loan Programs: Tribal Energy Loan Guarantee

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INSIGHTi

Department of Energy Loan Programs:
Tribal Energy Loan Guarantee
July 8, 2020
The Department of Energy’s (DOE’s) Loan Programs Office (LPO) manages two loan guarantee
programs: (1) Tribal Energy Loan Guarantee Program (TELGP), the focus of this Insight; and (2) Title
XVII Innovative Technology Loan Guarantee Program, the focus of a companion CRS Insight. Table 1
provides a high-level comparison of these programs. LPO also manages the Advanced Technology
Vehicles Manufacturing (ATVM) direct loan program.
A loan guarantee is designed to reduce the financial risk of a project to a lender. As with all federal credit
programs, TELGP requires that credit subsidy costs be paid for—through appropriations, payment by the
borrower, or a combination thereof—prior to finalizing a loan guarantee agreement. The Federal Credit
Reform Act of 1990 (FCRA; Section 13201 of P.L. 101-508) requires that estimated lifetime net costs of
new loans and loan guarantees be recorded in the budget year in which the loans are disbursed (2 U.S.C
§661c). The costs of these credit programs, referred to as subsidy costs, are measured on a net present
value (NPV) basis—the value of expected future cash receipts, less expenditures adjusted, or discounted,
over time using an interest rate that is based on Treasury securities.
Table 1. Department of Energy Loan Guarantee Programs
Tribal Energy Program
Innovative Technology Loan Guarantee Program

(Title XXVI)
(Title XVII)

Section 503a
Section 1703
Section 1705
Establishment Year 2005
2005
2009
Program Authority
Ongoing
Ongoing
Expired September 30,
2011
Existing Loan
$2 Bil ion
$23.9 Bil ion
N/A
Guarantee
Authority
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Tribal Energy Program
Innovative Technology Loan Guarantee Program

(Title XXVI)
(Title XVII)
Eligibility Criteria
Projects must be for energy
Projects must: (1) avoid,
Projects were limited to:
development by a federally
reduce, or sequester air
(1) renewable energy
recognized Indian tribe, Alaska
pol utants or anthropogenic
systems; (2) electricity
Native Corporation, or tribal energy
greenhouse gas emissions;
transmission; and (3)
development organizationb
and (2) employ new or
leading edge biofuel
significantly improved
projects, but could
technologies
employ commercial
technology
Appropriations for
$8.5 mil ion, available until expended
$161 mil ion, available until
$2.5 bil ion (no longer
Subsidy Costs
expended, for a portion of
available)
subsidy costs for Renewable
Energy and Efficient Energy
projects
Loan Guarantee
None
One project commitment
28 project commitments
Commitments
Source: Congressional Research Service.
Notes: Section 1703 also includes eligible project types (42 U.S.C. §16513). Generally, the borrower pays §1703 subsidy
costs. Under §1705, appropriations covered these costs.
a. P.L. 102-486, Title XXVI, § 2602, as amended by P.L. 109-58, Title V, § 503(a), and P.L. 115-325, Title I, §101; 25
U.S.C. §§3501 et seq.
b. For the definition of “Indian tribe,” see 25 U.S.C. §450b. For the definition of “tribal energy development
organization,” see 25 U.S.C. §3501(12).

Tribal Energy Loan Guarantee Program
TELGP was authorized by section 503 of the Energy Policy Act of 2005 (EPACT05, P.L. 109-58), which
amended Title XXVI of the Energy Policy Act of 1992 (EPACT92, P.L. 102-486, 25 U.S.C. §3501 et
seq.). Under TELGP, DOE is authorized to provide loan guarantees for up to 90% of the unpaid principal
and interest due on any loan made to a federally recognized Indian tribe (tribe), Alaska Native
Corporation, or tribal energy development organization for energy development, up to a maximum of $2
billion in loans at any time. DOE first requested funding to establish the program in FY2016. Congress
first appropriated $9 million in funding in FY2017 with $8.5 million to be available for loan guarantee
subsidy costs.
DOE announced its first loan guarantee solicitation for the Tribal Energy Loan Guarantee Program in July
2018. According to a DOE press release, this solicitation would provide as much as $2 billion in partial
loan guarantees to support economic opportunities for eligible borrowers. Since the TELGP solicitation
was first issued, there have been no loan guarantee commitments. The $8.5 million that has been
appropriated for subsidy costs could leverage several times that amount in loan guarantees, although it is
unclear whether the appropriated amount would be sufficient to cover the subsidy cost for the entire $2
billion loan guarantee authority. For example, Congress appropriated $2.5 billion in subsidy costs (after
rescissions and transfers) for loan guarantees under the Title XVII §1705 temporary authority; DOE
provided loan guarantee commitments for more than $14 billion under that temporary authority.
Beginning with the FY2019 congressional budget request, DOE has proposed to eliminate the program
and cancel $8.5 million in unobligated balances in each fiscal year budget request. However, in FY2019
and FY2020, Congress did not agree with eliminating the program; for administrative expenses, Congress
appropriated $1.0 million and $2.0 million for the program in FY2019 and FY2020, respectively.

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Considerations for Congress
To date, no loan guarantees have been made under TELGP. As DOE announced the program in 2018,
some have wondered whether DOE is conducting sufficient outreach to eligible parties. Tribes instead
may be more familiar with grants and technical assistance administered through the Office of Indian
Energy Policy and Programs at DOE, which invested nearly $85 million in more than 180 tribal energy
projects from FY2010 through FY2019. In addition, the Office of Indian Energy and Economic
Development under the Department of the Interior’s (DOI’s) Assistant Secretary of Indian Affairs
administers the Indian Loan Guarantee, Insurance, and Interest Subsidy Program, which has existed since
1974. The Indian Loan Guarantee Program provides partial loan guarantees up to 90% to help Indian
tribes and individuals establish and expand Indian-owned businesses. Loan guarantees under the DOI
program average $3 million.
Proposals to reform the TELGP range from eliminating the remaining loan authority and rescinding some
appropriations—as in the Trump Administration’s fiscal year 2021 budget proposal—to expanding
eligibility and authorizing appropriations through 2030—as in the Tribal Energy Reauthorization Act (S.
2610). Other proposals in the 116th Congress would not make changes to TELGP but would instead
modify the Title XVII loan guarantee program to include tribes and Alaska Native Corporations. For
example, the American Energy Innovation Act (S. 2657) would expand eligibility of the Title XVII loan
guarantee program to “State Energy Financing Institutions,” which according to the bill would include
tribes and Alaska Native Corporations.

Author Information

Corrie E. Clark
Phillip Brown
Analyst in Energy Policy
Specialist in Energy Policy

Mark Holt
Raj Gnanarajah
Specialist in Energy Policy
Analyst in Financial Economics

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