ARC Act of 2024

The purpose of this section is to increase cost certainty for capital-intensive projects for which a guarantee is provided under section 1703 or 1706 of the Energy Policy Act of 2005 (42 U.S.C. 16513, 16517).

In this section:

The term account means the New Nuclear Investment Accelerator Program Account established by subsection (c)(1).

The term advanced nuclear energy project means a project for 1 or more advanced nuclear reactors (as defined in section 951(b) of the Energy Policy Act of 2005 (42 U.S.C. 16271(b))).

The term Class 2 estimate means an estimate of the cost of a qualifying project that is prepared in accordance with the industry-specific cost estimate standards for nuclear power industries described in Recommended Practice 115R–21 of the Association for the Advancement of Cost Engineering entitled Cost Estimate Classification System—As Applied in Engineering, Procurement, and Construction for the Nuclear Power Industries (or a successor document).

The term Director means the Director of the Loan Programs Office.

The term expected payment amount means the amount that the Director expects to pay to the Federal Financing Bank under subsection (d)(2)(B) when a qualifying project is placed in service.

The term guarantee has the meaning given the term in section 1701 of the Energy Policy Act of 2005 (42 U.S.C. 16511).

The term Loan Programs Office means the Loan Programs Office of the Department of Energy.

The term overrun, with respect to the costs of a qualifying project, means any costs in excess of the point base estimate of the Class 2 estimate approved as described in paragraph (11)(C)(iv).

The term point base estimate, with respect to a Class 2 estimate, means the value of the Class 2 estimate without adjustment for the accuracy range or contingency.

The term project delivery plan means a project plan that includes—

(A) a project execution plan (as defined in Recommended Practice 10S–90 of the Association for the Advancement of Cost Engineering entitled Cost Engineering Terminology (or a successor document));

(B) a contract risk allocation strategy that—

(i) aligns cost and risk incentives among all contracted stakeholders; and

(ii) follows—

(I) the best practices described in Recommended Practice 67R–11 of the Association for the Advancement of Cost Engineering entitled Contract Risk Allocation—As Applied in Engineering, Procurement, and Construction (or a successor document); or

(II) other appropriate industry best practices, as determined by the Secretary; and

(C) a plan for the division of responsibility between contracted stakeholders that describes roles and responsibilities for execution of that project plan.

The term qualifying project means an advanced nuclear energy project—

(A) that is reasonably expected to be constructed on time and on budget;

(B) that has an expected cost equal to or greater than $2,500,000,000, according to the Class 2 estimate for that advanced nuclear energy project; and

(C) with respect to which—

(i) the loan amount expected to be guaranteed under section 1703 or 1706 of the Energy Policy Act of 2005 (42 U.S.C. 16513, 16517) is—

(I) loaned through the Federal Financing Bank; and

(II) equal to or greater than $2,000,000,000;

(ii) the borrower of that amount—

(I) has established and submitted to the Director a project delivery plan;

(II) has established and submitted to the Secretary—

(aa) a Class 2 estimate with—

(AA) basis of estimate documentation for that Class 2 estimate; and

(BB) a qualifying project cost risk analysis;

(bb) a resource-loaded integrated project schedule with—

(AA) basis of estimate documentation for that resource-loaded integrated project schedule; and

(BB) a qualifying project schedule risk analysis; and

(cc) a labor survey analysis report with—

(AA) basis of estimate documentation for that labor survey analysis report; and

(BB) a labor risk analysis; and

(III) has established procedures with the Secretary to ensure enhanced project oversight, including—

(aa) a rolling forecast that—

(AA) updates the resource-loaded integrated project schedule not less frequently than annually, in alignment with the approved changes in the applicable change management program; and

(BB) includes a new qualifying project schedule risk analysis to match the most recent update; and

(bb) a quarterly meeting between the Secretary, the Director, and senior-level representatives of all contracted stakeholders in the project to review progress and, if necessary, decide corrective actions and responsibilities for implementation;

(iii) the Director has approved the project delivery plan submitted under clause (ii)(I) prior to financial close; and

(iv) the Secretary has approved the project planning documents submitted under clause (ii)(II) prior to financial close.

The term qualifying project cost risk analysis means a cost risk analysis that follows—

(A) the best practices described in the document of the Government Accountability Office entitled Cost Estimating and Assessment Guide: Best Practices for Developing and Managing Program Costs, numbered GAO–20–195G, and dated March 2020 (or a successor document); or

(B) other appropriate industry best practices, as determined by the Secretary.

The term qualifying project schedule risk analysis means a schedule risk analysis that follows—

(A) the document of the Government Accountability Office entitled Schedule Assessment Guide: Best Practices for Project Schedules, numbered GAO–16–89G, and dated December 2015 (or a successor document); or

(B) other appropriate industry best practices, as determined by the Secretary.

The term resource-loaded integrated project schedule means an approved schedule that follows—

(A) the best practices described in the document of the Government Accountability Office entitled Schedule Assessment Guide: Best Practices for Project Schedules, numbered GAO–16–89G, and dated December 2015 (or a successor document); or

(B) other appropriate industry best practices, as determined by the Secretary.

The term rolling forecast means a process for regularly updating a resource-loaded integrated project schedule.

The term Secretary means the Secretary of Energy, acting through the Director of the Office of Clean Energy Demonstrations of the Department of Energy.

There is established in the Loan Programs Office an account, to be known as the New Nuclear Investment Accelerator Program Account.

The account shall be managed by the Director.

The following amounts shall be transferred to the account on the date of enactment of this Act:

(A) Of the unobligated balances of amounts previously made available under the heading Nuclear Energy under the heading Energy Programs under the heading Department of Energy in division J of the Infrastructure Investment and Jobs Act (Public Law 117–58; 135 Stat. 1373), $1,100,000,000.

(B) Of the unobligated balance of amounts previously made available under section 50144(a) of Public Law 117–169 (136 Stat. 2044), $2,500,000,000.

Amounts transferred to the account under paragraph (3) or otherwise deposited in the account shall remain available until expended.

The Director may use amounts in the account to make payments pursuant to subsection (d)(2)(B).

Amounts in the account shall be—

(A) contingently obligated to a borrower on the approval by the Secretary of a conditional commitment that includes satisfaction of the requirements for a qualifying project under this section as a condition of financial close, subject to the conditions that—

(i) the borrower shall be considered current so long as the borrower continues to make progress in good faith toward satisfying the requirements agreed upon in the conditional commitment, as determined by the Secretary; and

(ii) if the Secretary determines that the borrower is not making progress in good faith as described in clause (i), the contingently obligated amounts shall be made available to other borrowers; and

(B) obligated to the applicable borrower at financial close.

The obligation of amounts in the account shall not be considered to be an expenditure of those amounts unless the amounts are disbursed pursuant to subsection (d)(2)(B).

With respect to a qualifying project for which a guarantee is provided under section 1703 or 1706 of the Energy Policy Act of 2005 (42 U.S.C. 16513, 16517), the borrower on the guaranteed loan shall be responsible for all overruns until the cumulative expenses of the qualifying project exceed 120 percent of the point base estimate of the Class 2 estimate.

With respect to a qualifying project for which a guarantee is provided under section 1703 or 1706 of the Energy Policy Act of 2005 (42 U.S.C. 16513, 16517), the Director shall update the expected payment amount quarterly, subject to the conditions that—

(i) cumulative expenses of the qualifying project have exceeded 120 percent of the point base estimate of the Class 2 estimate;

(ii) the quarterly increase to the expected payment amount does not exceed 50 percent of total expenses in that quarter for the qualifying project;

(iii) the updated expected payment amount does not exceed the maximum payment amount described in subparagraph (B)(ii);

(iv) the applicable guaranteed loan is not in default;

(v) the prospect of increasing the payment amount does not incentivize unnecessary spending; and

(vi) any increases to the payment amount are made in accordance with good governance principles.

When a qualifying project is placed in service, the Director shall—

(I) determine the final payment amount based on—

(aa) the expected payment amount determined under subparagraph (A); and

(bb) any additional cumulative expenses of the applicable qualifying project, determined in accordance with that subparagraph; and

(II) pay that final payment amount to the Federal Financing Bank (as the lender of the applicable guaranteed loan) from the account.

The maximum payment amount under this subparagraph for any 1 qualifying project may not exceed $1,200,000,000.

A payment under this subparagraph shall be applied to the principal amount of the applicable guaranteed loan.

The Director may make a payment under this subparagraph only if the applicable guaranteed loan is not in default.

For purposes of the Internal Revenue Code of 1986—

(i) no amount shall be included in the gross income of the borrower described in paragraph (1) by reason of any payment under subparagraph (B), and

(ii) in the case of any such borrower that is a partnership or S corporation, any amount excluded from income by reason of clause (i) shall be treated as tax exempt income for purposes of section 705 and 1366 of the Internal Revenue Code of 1986.

Notwithstanding title XVII of the Energy Policy Act of 2005 (42 U.S.C. 16511 et seq.) or any other provision of law, the Director shall offer the enhanced financing terms described in paragraph (2) for a guarantee provided under section 1703 or 1706 of that Act (42 U.S.C. 16513, 16517) with respect to a qualifying project.

The enhanced financing terms referred to in paragraph (1) are the following:

(A) Notwithstanding section 1702(c) of the Energy Policy Act of 2005 (42 U.S.C. 16512(c)), a guarantee may be an amount up to 200 percent of the point base estimate of the Class 2 estimate approved as described in subsection (a)(10)(C)(iv) for the qualifying project that is the subject of the guarantee.

(B) The Director shall seek a commitment from the Federal Financing Bank (as lender of a guaranteed loan) to amend or restructure, if appropriate, the applicable guaranteed loan to reflect the revised principal amount after payment under subsection (d)(2)(B).

Section 50(d)(2) of the Internal Revenue Code of 1986 is amended—

(i) by redesignating subparagraphs (A), (B), and (C) as clauses (i), (ii), and (ii), respectively, and by moving such clauses 2 ems to the right,

(ii) by striking Section 46(f) and inserting the following:

(A) Section 46(f)

(iii) by striking At the election of the taxpayer and inserting the following:

(B) At the election of the taxpayer

(iv) by striking election under this paragraph each place it appears and inserting election under this subparagraph, and

(v) by adding at the end the following new subparagraph:

(C) At the election of the taxpayer, this paragraph shall not apply to any qualified project (as defined in section 2(b) of the ARC Act of 2024). Rules similar to the rules of clauses (i) and (ii) of subparagraph (B) shall apply for purposes of an election under this subparagraph.

The amendments made by this paragraph shall apply to taxable years beginning after the date of the enactment of this Act.

Not later than 7 days after each quarterly meeting described in subsection (b)(11)(B)(ii)(III)(bb), the meeting minutes, which have been approved by the contracted stakeholders in the applicable qualifying project, shall be submitted by the Secretary to—

(1) the Committee on Energy and Natural Resources and the Committee on Appropriations of the Senate; and

(2) the Committee on Energy and Commerce and the Committee on Appropriations of the House of Representatives.

Section 50141(d)(3) of Public Law 117–169 (136 Stat. 2043) is amended—

(1) in subparagraph (C), by striking or at the end;

(2) in subparagraph (D), by striking the period at the end and inserting; or; and

(3) by adding at the end the following:

(E) projects partnering with—

(i) a Federal power marketing administration or the Tennessee Valley Authority;

(ii) an entity that procures energy for a military installation (as defined in section 2801(c) of title 10, United States Code) that is managed by the Secretary of Defense or a contractor of the Secretary of Defense; or

(iii) the General Services Administration for the purpose of energy procurement.

Section 45(b)(11)(B)(i) of the Internal Revenue Code of 1986 is amended by striking (B), and and inserting (B) (excluding clauses (ii) and (vii), and clause (i) to the extent that clause (i) applies to a facility described in clause (ii) or (vii), of that subparagraph), and.