Department of Energy--Title XVII Loan Guarantee Program
Highlights
Section 1702(b)(2) of the Energy Policy Act of 2005, Pub. L. No. 109-58, 119 Stat. 594, 1117-18 (Aug. 8, 2005), confers upon the Department of Energy independent authority to make loan guarantees, notwithstanding the requirements imposed by the Federal Credit Reform Act of 1990 (FCRA), Pub. L. No. 101-508, title XIII, subtitle B, sect. 13201, 104 Stat 1388, 1388-610 (Nov. 5, 1990), codified at 2 U.S.C. sect. 661c.
B-308715, Department of Energy--Title XVII Loan Guarantee Program, April 20, 2007
The Honorable
Chairman
Subcommittee on Energy and Water Development
Committee on Appropriations
House of Representatives
The Honorable David L. Hobson
Ranking Minority Member
Subcommittee on Energy and Water Development
Committee on Appropriations
House of Representatives
Subject: Department of Energy—Title XVII Loan Guarantee Program
In February 2007, GAO responded to a number of questions you asked concerning the Department of Energy's (DOE) loan guarantee authority under title XVII (Incentives for Innovative Technologies) of the Energy Policy Act of 2005, Pub. L. No. 109-58, 119 Stat. 594, 1117–22 (
1) Does the loan guarantee authority in EPACT section 1702(b)(2) constitute authority for DOE to make loan guarantees notwithstanding the requirements of the Federal Credit Reform Act of 1990[1] (FCRA)? Or does section 1702(b)(2) constitute new budget authority for FCRA purposes?
2) Was DOE authorized to engage in activities such as issuing and publishing in the Federal Register program guidelines and a solicitation announcement inviting pre-application proposals for guaranteed loans in advance of the enactment of appropriations to make loans under EPACT's title XVII program?[2]
As explained further below, we conclude as follows:
1) EPACT section 1702(b)(2) confers upon DOE independent authority to make loan guarantees, notwithstanding the FCRA requirements. Given our answer to the first part of this question, we did not address the second part concerning whether, in the alternative, section 1702(b)(2) constitutes new budget authority for the purposes of FCRA.
2) DOE engaged in preparatory activities to implement the granting of guaranteed loans under EPACT title XVII during a period when DOE was affirmatively prohibited from implementing that title by 42 U.S.C. sect. 7278, a statutory prohibition applicable to DOE guaranteed loan programs.[3] These activities violated section 7278; the purpose statute, 31 U.S.C. sect. 1301(a); and the Antideficiency Act, 31 U.S.C. sect. 1341(a).
Consistent with our practice in rendering opinions, we contacted DOE to establish the factual record and elicit the agency's legal position on the subject matter of the request.[4] Letter from Susan A. Poling, Managing Associate General Counsel, GAO, to David R. Hill, General Counsel, DOE, Jan. 12, 2007. In this instance, we received the views of DOE's General Counsel. Letter from David R. Hill, General Counsel, DOE, to Susan A. Poling, Managing Associate General Counsel, GAO, Feb. 9, 2007 (Hill Letter).
BACKGROUND
Congress enacted title XVII (Incentives for Innovative Technologies) as part of the Energy Policy Act of 2005, Pub. L. No. 109-58, 119 Stat. 594, 1117–22 (
Since the enactment of title XVII, DOE has undertaken what it describes as preparatory activities reasonably necessary for [DOE] to be in a position to make guarantees authorized by Title XVII. Hill Letter, at 3. DOE informed us that these activities included establishing and maintaining a Web site for the program;[6] developing policies and guidelines for the program and publishing them in the Federal Register;[7] and issuing a solicitation announcement inviting interested parties to submit pre-applications for title XVII guaranteed loans.[8] See GAO-07-339R, at 13, 20. In response to its solicitation, DOE received over 100 pre-applications.
To facilitate work on these and other activities, DOE established the Loan Guarantee Program Office. Implementation of the Provisions of the Energy Policy Act of 2005: Hearing before the Senate Committee on Energy and Natural Resources, 109th Cong. 50 (2006) (statement by DOE Under Secretary David K. Garman), available at www.ne.doe.gov/pdfFiles/garmanTestimony050106.pdf (last visited Apr. 16, 2007). See also GAO-07-339R, at 2. From March through October 2006, DOE staffed that office with three employees detailed from different DOE organizations.
On
DISCUSSION
This opinion addresses two questions. We answer them below.
FCRA and Section 1702(b)(2)
First, we address whether the loan guarantee authority in EPACT section 1702(b)(2) constitutes authority for DOE to make loan guarantees notwithstanding the requirements of FCRA, or whether section 1702(b)(2) constitutes new budget authority for FCRA purposes. FCRA provides, with certain exceptions not relevant here, that notwithstanding any other provision of law, new loan guarantee commitments may be made only to the extent that—
(1) new budget authority to cover their costs is provided in advance in an appropriations Act;
(2) a limitation on the use of funds otherwise available for the cost of a direct loan or loan guarantee program has been provided in advance in an appropriations Act; or
(3) authority is otherwise provided in appropriation Acts.
2 U.S.C. sect. 661c(b) (emphasis added). EPACT section 1702(b) says that no loan guarantees 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.
EPACT, sect. 1702(b) (emphasis added). In February 2007, Congress appropriated amounts to cover the costs of loan guarantees. Pub. L. No. 110-5, sections 20315, 20320.
At the time of your request, however, DOE did not have an appropriation for this purpose, raising the question of whether subsection (b)(2) provides DOE authority independent of FCRA and subsection (b)(1) to make loan guarantees. We think it does.
The language of section 1702(b) makes clear that Congress contemplated two possible paths for making loan guarantees under title XVII. DOE, consistent with FCRA (2 U.S.C. sect. 661c(b)), could issue loan guarantees pursuant to appropriations for that purpose (EPACT, sect. 1702(b)(1)); or DOE could issue loan guarantees if it receives payments by borrowers of the full cost of the obligation (EPACT, sect. 1702(b)(2)). To read section 1702(b) as subjecting title XVII loan guarantees to the requirements of FCRA would read subsection (b)(2) out of the law, and we cannot do that; we have to give meaning to all of the enacted language. E.g., 70 Comp. Gen. 351, 354 (1991); 29 Comp. Gen. 124, 126 (1949). See also 2A
Given our answer to the first part of this question, we need not address the second part which asks whether, in the alternative, section 1702(b)(2) constitutes new budget authority for the purposes of FCRA. Suffice it to say that section 1702(b)(2) provides DOE authority to make loan guarantees independent of FCRA.
DOE's Title XVII Activities and Statutory Restrictions
The second question to be addressed is whether DOE was authorized to engage in activities such as issuing and publishing in the Federal Register program guidelines and a solicitation announcement inviting pre-application proposals for guaranteed loans in advance of the enactment of appropriations to make loans under EPACT's title XVII program. By law, [n]one of the funds made available to the Department of Energy under . . . Energy and Water Development Appropriations Acts shall be used to implement or finance authorized . . . loan guarantee programs unless specific provision is made for such programs in an appropriation Act. 42 U.S.C. sect. 7278 (emphasis added). The crux of this question is the meaning of the phrase, implement or finance, as used in section 7278. In the absence of indications to the contrary, Congress is deemed to use words in their common, ordinary sense. E.g., Mallard v. United States District Court for Southern District of Iowa, 490
We think DOE's preparatory activities fall squarely within this definition of implement. In support of the title XVII loan guarantee program, DOE established and maintained a Web site, developed and published policies and guidelines, issued a solicitation announcement inviting pre-applications, staffed and operated a program office, prepared a notice of proposed rulemaking, drafted and perfected a charter for the Credit Review Board, drafted regulations, reviewed pre-applications for completeness, and procured task order support services. DOE spent more than $503,000 on these preparatory activities. These activities constituted concrete measures designed to give practical effect to and ensure the actual fulfillment of the title XVII loan guarantee program (i.e., awarding of loan guarantees) once appropriations were made available for that purpose. DOE acknowledged undertaking these actions in preparation for making loan guarantees. Hill Letter, at 3 (quoted above). To fund these activities, DOE used appropriations provided by Energy and Water Development Appropriation Acts for fiscal years 2006 and 2007.
DOE defends these activities by noting that none of them actually obligated the federal government to guarantee any loans. Hill Letter, at 3. DOE told us that it understands the [section 7278] constraint to apply to 'implement[ing]' . . . those authorized loan guarantees by making them, . . . [not] conducting preparatory activities reasonably necessary for the Department to be in a position to make guarantees.
In the past, this Office has agreed in a number of cases that when Congress assigns new duties to an agency, the agency, under certain circumstances, may use an existing appropriation to defray the expenses of carrying out the new duties. E.g., B'290011,
In addition, DOE's actions violated two fundamental appropriations laws: the so-called purpose statute and the Antideficiency Act. Under the purpose statute (31 U.S.C. sect. 1301(a)), appropriations shall be applied only to the objects for which the appropriations were made. See B'302973,
CONCLUSIONS
This opinion addresses two questions. First, we conclude that EPACT section 1702(b)(2) confers upon DOE independent authority to make loan guarantees, notwithstanding the FCRA requirements. In view of this conclusion, we did not address the second part of your question concerning whether, in the alternative, section 1702(b)(2) constitutes new budget authority for the purposes of FCRA.
Second, we conclude that DOE engaged in activities to implement a loan guarantee program under EPACT title XVII during a period when DOE was affirmatively prohibited from implementing that title by 42 U.S.C. sect. 7278. These activities violated section 7278; the purpose statute, 31 U.S.C. sect. 1301(a); and the Antideficiency Act, 31 U.S.C. sect. 1341(a). DOE must report the violations of the Antideficiency Act to the Congress and the President, and submit a copy of that report to the Comptroller General under 31 U.S.C. sect. 1351, as amended.[15] B-304335,
If you have any questions regarding this matter, please contact Susan A. Poling, Managing Associate General Counsel, at 202-512-2667, or Thomas H. Armstrong, Assistant General Counsel, at 202-512-8257.
General Counsel
DIGESTS
1. Section 1702(b)(2) of the Energy Policy Act of 2005, Pub. L. No. 109-58, 119 Stat. 594, 1117–18 (Aug. 8, 2005), confers upon the Department of Energy independent authority to make loan guarantees, notwithstanding the requirements imposed by the Federal Credit Reform Act of 1990 (FCRA), Pub. L. No. 101-508, title XIII, subtitle B, sect. 13201, 104 Stat 1388, 1388–610 (Nov. 5, 1990), codified at 2 U.S.C. sect. 661c.
2. The Department of Energy violated 42 U.S.C. sect. 7278 by expending appropriated funds to implement a new loan guarantee program authorized by title XVII of the Energy Policy Act of 2005, Pub. L. No. 109-58, 119 Stat. 594, 1117–22 (
[1] Pub. L. No. 101-508, title XIII, subtitle B, sect. 13201, 104 Stat 1388, 1388–610 (Nov. 5, 1990), codified at 2 U.S.C. sect. 661c.
[2] You also asked whether EPACT section 1702(h), which authorizes DOE to collect fees for administrative expenses, appropriates those fees for use in the title XVII program. In the course of this opinion, we learned that DOE believes section 1702(h) does not appropriate those fees, and that DOE has not yet assessed any fees under it. Letter from David R. Hill, General Counsel, DOE, to Susan A. Poling, Managing Associate General Counsel, GAO, Feb. 9, 2007, at 2; DOE, Loan Guarantees for Projects that Employ Innovative Technologies; Guidelines for Proposals Submitted in Response to the First Solicitation, 71 Fed. Reg. 46,451, 46,452–53 (
[3] In pertinent part, section 7278 states: None of the funds made available to the Department of Energy under . . . Energy and Water Development Appropriations Acts shall be used to implement or finance authorized . . . loan guarantee programs unless specific provision is made for such programs in an appropriation Act. This provision was originally enacted as section 301 of the Energy and Water Development Appropriations Act, 1993, Pub. L. No. 102-377, title III, 106 Stat. 1315, 1338 (
[4] GAO, Procedures and Practices for Legal Decisions and Opinions, GAO-06-1064SP (
[5] Section 1702(b) requires an appropriation for the cost, which section 1701(2) defines as the cost of a loan guarantee. EPACT, sections 1701(2), 1702(b).
[6] See DOE, Loan Guarantee Program, available at www.lgprogram.energy.gov/index.html (last visited
[7] DOE, Loan Guarantees for Projects That Employ Innovative Technologies; Guidelines for Proposals Submitted in Response to the First Solicitation, 71 Fed. Reg. 46,451 (
[8] DOE, Solicitation No. DE-PS01-06LG00001, Federal Loan Guarantees for Projects that Employ Innovative Technologies in Support of the Advanced Energy Initiative, (
[9] Energy and Water Development Appropriations Act, 2006, Pub. L. No. 109-103, title III, 119 Stat. 2247, 2273–74 (
[10] Pub. L. No. 109-103, title III (For Department of Energy expenses . . . necessary for science activities); Pub. L. No. 110-5, sections 101(a)(2), 20313.
[11] Pub. L. No. 109-103, title III (For Department of Energy expenses . . . necessary for energy supply and energy conservation activities); Pub. L. No. 110'5, sections 101(a)(2), 20314.
[12] See note 10, supra.
[13] See note 9, supra.
[14] See note 11, supra.
[15] Office of Management and Budget Circular No. A-11 provides guidance on the information to include in Antideficiency Act reports. Agencies must report violations found by GAO, even if they disagree with the finding. OMB advises agencies, If the agency does not agree that a violation has occurred, the report to the President, Congress, and the Comptroller General will explain the agency's position. OMB Cir. No. A'11, Preparation, Submission, and Execution of the Budget, sect. 145.8 (June 2006).