On December 7, 2009, Energy Secretary Steven Chu announced the issuance of a final rule amending the October, 2007 Final Regulations implementing the Loan Guarantee Program under Section 1703 of Title XVII of the Energy Policy Act of 2005 (the "Section 1703 Program"). The amendments implemented through the final rule were first identified in a Notice of Proposed Rulemaking and Opportunity for Comment issued by the Department of Energy ("DOE") on August 7, 2009. The comment period for the proposed amendments ended on September 22, 2009; the comments received by the DOE from the industry and other interested parties were largely supportive of the proposed amendments.
In a nutshell, the amendments to the regulations outlined in the final rule are designed to:
- provide flexibility in the determination of an appropriate collateral package to secure the guaranteed loan obligations;
- eliminate the requirement that the Secretary receive a first priority lien on all project assets as a condition for obtaining the loan guarantee;
- facilitate collateral sharing and related intercreditor arrangements with other project lenders; and
- provide a more workable interpretation of certain statutory provisions regarding DOE’s treatment of collateral that is more consistent with the intent and purposes of Title XVII.