
From the U.S. Code Online via GPO Access
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[Laws in effect as of January 23, 2000]
[Document not affected by Public Laws enacted between
  January 23, 2000 and December 4, 2001]
[CITE: 42USC8814]

 
                 TITLE 42--THE PUBLIC HEALTH AND WELFARE
 
              CHAPTER 96--BIOMASS ENERGY AND ALCOHOL FUELS
 
            SUBCHAPTER I--GENERAL BIOMASS ENERGY DEVELOPMENT
 
Sec. 8814. Loan guarantees


(a) Authority of Secretary concerned

    Subject to sections 8812 and 8817 of this title, the Secretary 
concerned may commit to guarantee, and guarantee, against loss of 
principal and interest, loans which are made to provide funds for the 
construction of biomass energy projects.

(b) Estimated project construction costs as determinative of initial and 
        revised amount of guarantee

    (1) Any guarantee of a loan under this section may not exceed 90 per 
centum of the cost of the construction of the biomass energy project 
involved, as estimated by the Secretary on the date of the guarantee or 
commitment to guarantee.
    (2) In the event the construction costs of the project are 
thereafter estimated by the Secretary concerned to exceed the 
construction costs initially estimated by the Secretary, the Secretary 
may in addition, upon application therefor, guarantee, against loss of 
principal and interest, a loan for up to 60 per centum of the difference 
between the construction costs then estimated and the construction costs 
initially estimated.

(c) Debt obligation; ineligibility for purchase, etc., by Federal 
        Financing Bank or any Federal agency

    Notwithstanding the provisions of the Federal Financing Bank Act of 
1973 (12 U.S.C. 2281 et seq.) or any other provision of law (except as 
may be specifically provided by reference to this subsection in any Act 
enacted after June 30, 1980), no debt obligation which is guaranteed or 
committed to be guaranteed by the Secretary of Agriculture or the 
Secretary of Energy under this section shall be eligible for purchase 
by, or commitment to purchase by, or sale or issuance to, the Federal 
Financing Bank or any Federal agency.

(d) Terms and conditions

    The terms and conditions of loan guarantees under this section shall 
provide that, if the Secretary concerned makes a payment of principal or 
interest upon the default by a borrower, the Secretary shall be 
subrogated to the rights of the recipient of such payment (and such 
subrogation shall be expressly set forth in the loan guarantee or 
related agreements).

(e) Termination, cancellation, or revocation, and conclusive nature of 
        guarantee

    Any loan guarantee under this section shall not be terminated, 
canceled, or otherwise revoked, except in accordance with the terms 
thereof and shall be conclusive evidence that such guarantee complies 
fully with the provisions of this chapter and of the approval and 
legality of the principal amount, interest rate, and all other terms of 
the securities, obligations, or loans and of the guarantee.

(f) Payment to lender

    If the Secretary concerned determines that--
        (1) the borrower is unable to meet payments and is not in 
    default,
        (2) it is in the public interest to permit the borrower to 
    continue with such project, and
        (3) the probable net benefit to the United States in paying the 
    principal and interest due under the loan will be greater than that 
    which would result in the event of a default,

then the Secretary may pay to the lender under a loan guarantee 
agreement an amount not greater than the principal and interest which 
the borrower is obligated to pay to such lender, if the borrower agrees 
to reimburse the Secretary for such payment on terms and conditions, 
including interest, which the Secretary determines are sufficient to 
protect the financial interests of the United States.

(g) Preconditions

    (1) A loan may not be guaranteed under this section unless the 
applicant for such loan has established to the satisfaction of the 
Secretary concerned that the lender is not willing without such a 
guarantee to extend credit to the applicant at reasonable rates and 
terms, taking into consideration prevailing rates and terms for loans 
for similar purposes and periods of time, to finance the construction of 
the biomass energy project for which such loan is sought.
    (2) The Secretary concerned shall ensure that the lender bears a 
reasonable degree of risk in the financing of such project.

(Pub. L. 96-294, title II Sec. 214, June 30, 1980, 94 Stat. 690.)

                       References in Text

    The Federal Financing Bank Act of 1973, referred to in subsec. (c), 
is Pub. L. 93-224, Dec. 29, 1973, 87 Stat. 937, as amended, which is 
classified generally to chapter 24 (Sec. 2281 et seq.) of Title 12, 
Banks and Banking. For complete classification of this Act to the Code, 
see Short Title note set out under section 2281 of Title 12 and Tables.


Defaulted Loans Under Department of Energy Alcohol Fuels Loan Guarantee 
               Program; Sale of Assets; Unobligated Funds

    Pub. L. 101-121, title II, Oct. 23, 1989, 103 Stat. 732, provided 
that:
    ``Notwithstanding 31 U.S.C. 3302, funds derived from the sale of 
assets as a result of defaulted loans made under the Department of 
Energy Alcohol Fuels Loan Guarantee program, or any other funds received 
in connection with this program, shall hereafter be credited to the 
Biomass Energy Development account, and shall be available solely for 
payment of the guaranteed portion of defaulted loans and associated 
costs of the Department of Energy Alcohol Fuels Loan Guarantee program 
for loans guaranteed prior to January 1, 1987.
    ``Unobligated balances available in the `Alternative fuels 
production' account may hereafter be used for payment of the guaranteed 
portion of defaulted loans and associated costs of the Department of 
Energy Alcohol Fuels Loan Guarantee program, subject to the 
determination by the Secretary of Energy that such unobligated funds are 
not needed for carrying out the purposes of the Alternative Fuels 
Production program: Provided, That the use of these unobligated funds 
for payment of defaulted loans and associated costs shall be available 
only for loans guaranteed prior to January 1, 1987: Provided further, 
That such funds shall be used only after the unobligated balance in the 
Department of Energy Alcohol Fuel Loan Guarantee reserve has been 
exhausted.''
