United States: Ever-Elusive Bipartisanship In Congress Provides New Direction On Clean Energy

Taite R McDonald is a Partner in Holland & Knight's Washington D.C. office.

Michael Obeiter is a Public Affairs Advisor in Holland & Knight's Washington D.C. office.

HIGHLIGHTS:

  • In passing the U.S. Department of Energy (DOE) budget for Fiscal Year (FY) 2019, as well as the Nuclear Energy Innovation Capabilities Act, Congress took meaningful steps to proactively develop and deploy cleaner and more resilient energy solutions.
  • Importantly, the FY 2019 bill also supports DOE's loan guarantee programs, including the Title XVII Innovative Technology Loan Guarantee Program and the Advanced Technology Vehicle Manufacturing (ATVM) Program.
  • The strong, bipartisan support for clean energy programs at DOE – and the loan programs in particular – in the face of staunch opposition from the Trump Administration is evidence that these programs appeal to a broad range of ideologies and geographies.

With Hurricane Florence approaching last week, Congress took two key actions with regard to clean energy. While many would argue that the timing of these two actions is purely coincidental, it's very possible that the federal government's continued role in extreme weather preparedness and response continues to give Congress the nudges it needs to pass more expansive clean energy legislation. In passing the U.S. Department of Energy (DOE) budget for next fiscal year, as well as the Nuclear Energy Innovation Capabilities Act, Congress took meaningful steps to proactively develop and deploy cleaner and more resilient energy solutions.

On Sept. 10, 2018, the Fiscal Year (FY) 2019 Energy and Water appropriations bill was filed as part of the first "minibus" appropriations package. The final bill is the result of negotiations between Democrats and Republicans from both the House and Senate, and continues the recent tradition of bipartisan support for clean energy and energy innovation programs at DOE. Also noteworthy is the Energy and Water bill's inclusion in the first minibus package, along with the appropriations bills for the Legislative Branch as well as for Military Construction and Veterans Affairs. Because the committee tends to leave the thorniest bills for last, this suggests that there is finally little political controversy around the Energy and Water legislation, after years of that not being the case.

This development is noteworthy for another reason: There is a chance that both chambers could pass all 12 appropriations bills before the end of the fiscal year (Sept. 30), for the first time since 1994. While that remains unlikely, it would be especially important for companies seeking financial support from DOE grant-making programs, as the funding cycles for DOE are much more predictable and less compressed when the budget is signed into law in alignment with the government's fiscal year.

Funding Overview

In total, energy programs at DOE would receive $13.5 billion for FY 2019, an increase of more than $550 million from this year. Despite recommended cuts from the Trump Administration, the following programs will see even more funding and direction in FY 2019 than FY 2018.

  • Energy Efficiency and Renewable Energy: Increase of $57 million, or 2.5 percent
    • Trump Administration proposed a 70 percent cut
  • Energy Storage: Increase of $5 million, or 12 percent
    • Trump Administration proposed an 80 percent cut
  • Advanced Research Projects Agency-Energy (ARPA-E): Increase of $13 million, or 4 percent
    • Trump Administration proposed eliminating ARPA-E
  • Nuclear Reactor Concepts Research and Development: Increase of $86 million, or 36 percent
    • Includes $100 million for Advanced Small Modular Reactor research and development, and $65 million for a versatile fast test reactor
    • Trump Administration proposed a 31 percent cut

Importantly, the FY 2019 bill also supports DOE's loan guarantee programs, including the Title XVII Innovative Technology Loan Guarantee Program and the Advanced Technology Vehicle Manufacturing (ATVM) Program. The Title XVII program has more than $25 billion in loan guarantee authority available for renewable energy, energy efficiency, advanced nuclear and advanced fossil projects, while the ATVM program has $16 billion in direct loan authority to "support U.S. manufacturing of fuel-efficient, advanced technology vehicles and qualifying components," per the agency. Not only did the House and Senate Appropriations Committees protect the funding necessary to administer these programs, they also included language prohibiting the use of funds to "plan, develop, implement, or pursue the elimination of the Title 17 Innovative Technology Loan Guarantee Program," in defiance of the Trump Administration.

Takeaways and Considerations

This is yet another signal from Congress regarding its appetite for the DOE grant-making and loan-making programs to continue to advance credible transactions to ensure that new technology has the support and mechanisms necessary to commercialize in the U.S. Further, the strong, bipartisan support for clean energy programs at DOE – and the loan programs in particular – in the face of staunch opposition from the administration is evidence that these programs appeal to a broad range of ideologies and geographies. There is recognition that DOE's loan programs create jobs and support the rapidly growing American clean energy economy. And by providing federal government support for critical infrastructure project development, these loan programs reduce the need for American companies to turn to foreign direct investment to close any funding gaps, mitigating potential national security concerns.

Clean energy companies shouldn't be complacent, as those who are set on reducing or eliminating funding for these programs will continue their efforts. As many have seen, there are continually a multitude of obstacles between project conception and funding that can be insurmountable without experienced assistance throughout the process – especially for the DOE loan programs. Holland & Knight's team of attorneys and advisors has extensive experience navigating the nexus between DOE's often Byzantine loan application process and promoting these programs on Capitol Hill. For additional information or assistance, please contact Taite McDonald or Michael Obeiter.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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