PCAP - Presidential Climate Action Project

The Rural Utilities Services (RUS) is the agency within the USDA authorized by the RuralElectrification Act of 1936 (REA) to evaluate and extend loans for rural electrical and telephonicdevelopment. 143 The RUS currently administers the Rural Development Utilities Programs(RDUP). 144 The Department of Energy (“DOE”) is authorized by the REA to promulgate criteriathat the Secretary of Agriculture is required to consider when deciding whether to extend REAloans. 145 Recently, the USDA announced that it has suspended low-interest loans for coal-firedplants, due in part to uncertainty over litigation. 146Statutes. The U.S. Court of Appeals for the 10th Circuit found that Congress’ intent in enactingthe REA was “to facilitate extension of electric service to rural America.” 147 Pursuant to section902 of the REA, the Secretary of Agriculture is generally authorized to “make loans . . . for ruralelectrification and for the purpose of furnishing and improving electric and telephone service inrural areas . . . and for the purpose of assisting electric borrowers to implement demand sidemanagement, energy efficiency and conservation programs, and on-grid and off-grid renewableenergy systems.” 148Pursuant to section 904, loans under this program are “for the purpose of financing theconstruction and operation of generating plants, electric transmission and distribution lines orsystems for the furnishing and improving of electric service to persons in rural areas, includingby assisting electric borrowers to implement demand side management, energy efficiency andconservation programs, and on-grid and off-grid renewable energy systems . . . .” 149 Thus, theREA confers broad discretionary authority to the Secretary of Agriculture to make loans forrenewable energy projects intended to supply power to rural areas. 150 Although the authorizingprovision specifically mentions renewable energy systems, there is not an explicit grant ofauthority to the Secretary of Agriculture to prohibit REA loans to otherwise eligible borrowers.Four considerations govern loans for renewable energy systems under the REA:1) The USDA is authorized to make REA loans. 1512) The Secretary of Agriculture is authorized to set conditions for REAloans. 152143 U.S. Dep’t of Agriculture: Rural Development, Rural Electrification Act of 1936, Informational Publication 100-1, viii. The REA is codified at 7 U.S.C. §§ 901-950bb.144 72 Fed. Reg. 38,560-01 (July 13, 2007).145 7 U.S.C. § 916.146 See Letter from James M. Andrew, Administrator, Utilities Programs, to U.S. House Representative Henry A.Waxman, Chairman, Committee on Oversight and Government Reform (March 11, 2008), available athttp://oversight.house.gov/documents/20080312104146.pdf. See also Steven Mufson, Government SuspendsLending for Coal Plants, WASH. POST, March 13, 2008, at D01 (indicates that the USDA is awaiting new guidancefor the program, i.e. from the next administration and/or Congress).147 City of Stilwell, Okl. v. Ozarks Rural Elec. Co-op. Corp., 79 F.3d 1038, 1044 (10th Cir. 1996), remanded andaff’d, 166 F.3d 1064 (10th Cir. 1999).148 7 U.S.C. § 902, as amended by Pub. L. 110-234, 122 Stat 923 (May 22, 2008).149 Id. at § 904, as amended by Pub. L. 110-234, 122 Stat 923 (May 22, 2008).150 See Id. at § 904.151 Id. at. § 902.152 Id. at § 904.CEES 35 | P age