Title 42, The Public Health and WelfareRelease 119-110

§8834 Price Support Loans and Price Guarantees

Title 42 › CHAPTER 96 — BIOMASS ENERGY AND ALCOHOL FUELS › SUBCHAPTER II — MUNICIPAL WASTE BIOMASS ENERGY › § 8834

Last updated Sep 23, 2026|Official source

Summary

The Secretary of Energy may give price-support loans and price guarantees to municipal waste energy projects that make and sell biomass energy. For existing projects, the Secretary can make annual loan payments for up to 5 consecutive 12-month periods. Payments are based on how much biomass (in millions of Btu’s) is sold and the cost of the fuel it replaces. Each year after the first, the yearly payment is cut by a fraction that reflects how many years of payments have already been made. After the last yearly payment, the loan must be paid back over the project’s remaining useful life or 10 years, whichever is shorter. The interest rate is set by the Secretary using comparable U.S. market yields plus no more than 1 percent, rounded to the nearest one-eighth of one percent. The yearly payment amount equals (the standard support price minus the cost of the displaced fuel, or $2.00, whichever is lower) times the millions of Btu’s sold. For new projects, the same rules apply except payments may run for up to 7 consecutive 12-month periods, interest must not exceed the rate for existing-project loans, and repayment after the last payment is over up to the remaining life or 15 years, whichever is shorter. The Secretary may also guarantee a minimum sales price for new projects for up to 7 years, but guarantees cannot be a cost-plus profit guarantee (normal cost-of-service pricing is allowed). “New” means placed in service after June 30, 1980, or expanded and placed in service after that date; “placed in service” means operating at more than 50 percent capacity. The Secretary must set the standard support price (based on No. 6 fuel oil imported on June 30, 1980), rules about when to use 125 percent of that price, and how to determine the displaced fuel and its price within 90 days after June 30, 1980. Retained biomass is treated as sold at a price the Secretary sets.

Full Legal Text

Title 42, §8834

The Public Health and Welfare, Source: USLM XML via OLRC

(a)Authority of Secretary of Energy with respect to loans for existing projects; disbursements, etc.

(1)In the case of any existing municipal waste energy project which produces and sells biomass energy, the Secretary of Energy may commit to make, and make, a price support loan in amounts determined under paragraph (3) for the operation of such project. Payments under any such loan shall be disbursed on an annual basis, as determined (in accordance with paragraph (3)) on the basis of the amount of biomass energy produced and sold by that project during the 12-month period involved and the type and cost of fuel displaced by the biomass energy sold.

(2)(A)In the case of any support loan under this section for an existing municipal waste energy project—

(i)disbursements under such loan may not be made for more than 5 consecutive 12-month periods;

(ii)the amount of the disbursement for the second and any subsequent 12-month period for which disbursements are to be made under the support loan shall be reduced by an amount determined by multiplying the amount calculated under paragraph (3) by a factor determined by dividing the number of 12-month periods for which disbursements are made under the support loan into the number of such periods which have elapsed;

(iii)commencing at the end of the last of such 12-month periods, the support loan shall be repayable over a period equal to the then remaining useful life of the project (as determined by the Secretary) or 10 years, whichever is shorter; and

(iv)commencing at the end of such last 12-month period, such loan shall bear interest at a rate determined by the Secretary of Energy (taking into consideration the current average market yield on outstanding marketable obligations of the United States with remaining periods to maturity comparable to the average maturities of such loans) plus not to exceed one per centum, as determined by the Secretary of Energy, and adjusted to the nearest one-eighth of one per centum.

(3)The amount of the loan payment to be disbursed under this subsection for any year with respect to each type of biomass energy produced and sold by an existing municipal waste energy project shall be equal to—

(A)(i)the standard support price reduced by the cost of the fuel displaced by the biomass energy sold, or (ii) $2.00, whichever is lower, multiplied by

(B)the amount of such biomass energy sold (in millions of Btu’s).

(b)Authority of Secretary of Energy with respect to loans for new projects; disbursements, etc.

(1)In the case of any new municipal waste energy project which produces and sells biomass energy, the Secretary of Energy may commit to make, and make, a price support loan in amounts determined in accordance with the provisions of subsection (a), except as provided in paragraph (2).

(2)In the case of any loan under this subsection for a new municipal waste energy project—

(A)disbursements under such loan may not be made for more than 7 consecutive 12-month periods (with reductions as provided in subsection (a)(2)(A)(ii));

(B)such loan shall bear interest at a rate not in excess of the rate prescribed under subsection (a); and

(C)the principal of or interest on such loan shall, in accordance with the support loan agreement, be repayable, commencing at the end of the last 12-month period covered by the support loan, over a period not in excess of the period equal to the then remaining useful life of the project (as determined by the Secretary) or 15 years, whichever is shorter.

(c)Authority of Secretary of Energy with respect to guarantees for new projects; pricing determinations, etc.

(1)In the case of any new municipal waste energy project which produces and sells biomass energy, the Secretary of Energy may commit to make, and make, a price guarantee for the operation of such project which guarantees that the price the owner or operator will receive for all or part of the production from that project shall not be less than a specified sales price determined as of the date of execution of the guarantee agreement.

(2)(A)No price guarantee under this section may be based upon a cost-plus arrangement, or variant thereof, which guarantees a profit to the owner or operator involved.

(B)The use of a cost-of-service pricing mechanism by a person pursuant to law, or by a regulatory body establishing rates for a regulated person, shall not be deemed to be a cost-plus arrangement, or variant thereof, for purposes of subparagraph (A).

(3)In the case of any price guarantee under this subsection for a new municipal waste energy project—

(A)disbursements under such guarantee may not be made for more than 7 consecutive 12-month periods; and

(B)amounts paid under this subsection may be required to be repaid to the Secretary of Energy under such terms and conditions as the Secretary may prescribe, including interest at a rate not in excess of the rate prescribed under subsection (a).

(d)Definitions; sale price of retained fuel; rules relating to fuel displacement

For purposes of this section

(1)

(2)The term “existing municipal waste energy project” means any municipal waste energy project which is not a new municipal waste project.

(3)The term “placed in service” means operated at more than 50 percent of the estimated operational capacity.

(4)(A)Except as provided in subparagraphs (B) and (C), the term “standard support price” means the average price (per million Btu’s) for No. 6 fuel oil imported into the United States on June 30, 1980, as determined, by rule, by the Secretary of Energy not later than 90 days after June 30, 1980.

(B)In any case in which the fuel displaced is No. 6 fuel oil or any higher grade of petroleum (as determined by the Secretary of Energy), the term “standard support price” means 125 per centum of the price determined by rule under subparagraph (A).

(C)In any case in which biomass energy produced and sold by a project is steam or electricity, the term “standard support price” means the price determined by rule under subparagraph (A), subject to such adjustments as the Secretary of Energy may authorize by rule.

(5)The term “cost of the fuel displaced” means the cost of the fuel (per million Btu’s) which the purchaser of biomass energy would have purchased if the biomass energy had not been available for sale to that purchaser.

(6)Any biomass energy produced by a municipal waste energy project which may be retained for use by the owner or operator of such project shall be considered to be sold at such price as the Secretary of Energy determines.

(7)Not later than 90 days after June 30, 1980, the Secretary of Energy shall prescribe, by rule, the manner of determining the fuel displaced by the sale of any biomass energy, and the price of the fuel displaced.

Reference

Citations & Metadata

Citation

42 U.S.C. § 8834

Title 42, The Public Health and Welfare

Last Updated

Sep 23, 2026

Release point: 119-110