
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: 42USC8833]

 
                 TITLE 42--THE PUBLIC HEALTH AND WELFARE
 
              CHAPTER 96--BIOMASS ENERGY AND ALCOHOL FUELS
 
              SUBCHAPTER II--MUNICIPAL WASTE BIOMASS ENERGY
 
Sec. 8833. Guaranteed construction loans


(a) Authority of Secretary of Energy

    Subject to sections 8835 and 8836 of this title, the Secretary of 
Energy may commit to guarantee, and guarantee, against loss on up to 90 
per centum of the principal and interest, any loan which is made solely 
to provide funds for the construction of a municipal waste energy 
project and which does not exceed 90 per centum of the cost of the 
construction of the project involved, as estimated by the Secretary on 
the date of the guarantee or commitment to guarantee.

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

    In the event the total estimated costs of construction of the 
project thereafter exceed the total estimated costs initially determined 
by the Secretary of Energy, the Secretary may in addition, upon 
application therefor, guarantee, against loss on up to 90 per centum of 
the principal and interest, a loan for so much of the additional 
estimated total costs as does not exceed 10 per centum of the total 
estimated costs.

(c) Terms and conditions

    The terms and conditions of loan guarantees under this section shall 
provide that, if the Secretary of Energy 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).

(d) 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.

(e) Payment to lender

    If the Secretary of Energy 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 to pursue the purposes of such project, and
        (3) the probable net benefit to the United States in paying the 
    principal and interest due under a loan guarantee agreement 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.

(f) Preconditions

    A loan may not be guaranteed under this section unless the applicant 
for such loan has established to the satisfaction of the Secretary of 
Energy 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 market rates and terms for loans for similar 
periods of time, to finance the construction of the project for which 
such loan is sought.

(g) Payment of interest; tax consequences

    (1) With respect to any loan or debt obligation which is--
        (A) issued after June 30, 1980, by, or on behalf of, any State 
    or any political subdivision or governmental entity thereof,
        (B) guaranteed by the Secretary of Energy under this section, 
    and
        (C) not supported by the full faith and credit of the issuer as 
    a general obligation of the issuer,

the interest paid on such obligation and received by the purchaser 
thereof (or the purchaser's successors in interest) shall be included in 
gross income for the purposes of chapter 1 of title 26.
    (2) With respect to the amount of obligations described in paragraph 
(1) that the issuer would have been able to issue as tax exempt 
obligations (other than obligations secured by the full faith and credit 
of the issuer as a general obligation of the issuer), the Secretary of 
Energy is authorized to pay only to the issuer any portion of the 
interest on such obligations, as determined by the Secretary of the 
Treasury after taking into account the interest rate which would have 
been paid on the obligations had they been issued as tax exempt 
obligations without being so guaranteed by the Secretary of Energy and 
the interest rate actually paid on the obligations when issued as 
taxable obligations. Such payments shall be made in amounts determined 
by the Secretary of Energy, and in accordance with such terms and 
conditions as the Secretary of the Treasury shall require.

(h) Fees

    (1) A fee or fees may be charged and collected by the Secretary of 
Energy for any loan guarantee under this section.
    (2) The amount of such fee shall be based on the estimated 
administrative costs and risk of loss, except that such fee may not 
exceed 1 per centum of the maximum of the guarantee.

(Pub. L. 96-294, title II, Sec. 233, June 30, 1980, 94 Stat. 698; Pub. 
L. 99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095.)

                       References in Text

    This chapter, referred to in subsec. (d), was in the original ``this 
title'', meaning title II of Pub. L. 96-294, June 30, 1980, 94 Stat. 
683, as amended, known as the Biomass Energy and Alcohol Fuels Act of 
1980, which enacted this chapter, sections 1435 and 3129 of Title 7, 
Agriculture, and section 3391a of Title 15, Commerce and Trade, and 
amended sections 341, 342, 427, and 3154 of Title 7, section 753 of 
Title 15, and sections 590h and 1642 of Title 16, Conservation. For 
complete classification of title II to the Code, see Short Title note 
set out under section 8801 of this title and Tables.


                               Amendments

    1986--Subsec. (g)(1). Pub. L. 99-514 substituted ``Internal Revenue 
Code of 1986'' for ``Internal Revenue Code of 1954'', which for purposes 
of codification was translated as ``title 26'' thus requiring no change 
in text.

                  Section Referred to in Other Sections

    This section is referred to in sections 8835, 8836 of this title.
