Senate Proposal Rolls Back LPO Lending Authority, Creates New Energy Dominance Fund

U.S. Senate Committee on Energy and Natural Resources Chair Mike Lee (R-Utah) on June 11, 2025, released legislative text for the committee's section of Senate Republicans' budget reconciliation package. Framed as a vehicle for advancing "American energy dominance," the Senate proposal repeals several Inflation Reduction Act (IRA) programs and rescinds billions in unspent U.S. Department of Energy (DOE) funding, as well as redirects resources toward fossil fuel development, liquified natural gas (LNG) exports and a new loan authority aimed at repowering and redeveloping legacy energy infrastructure.

The legislation's most consequential energy finance provisions would repeal and rescind nearly all of the IRA's supplemental support for DOE's Loan Programs Office (LPO) and simultaneously establish a new energy dominance financing authority under Title 17.

Key Takeaways for DOE Loan Programs

Repeal and Rescind IRA Loan Authorities

The Senate proposal repeals and rescinds all remaining authority and unobligated balances from the following IRA-backed loan and financing programs:

• $3.6 billion in credit subsidy and $40 billion in additional commitment authority for LPO's Title 17 Energy Financing Program
• $3 billion in new credit subsidy for the Advanced Technology Vehicles Manufacturing (ATVM) Loan Program, along with limitations that reserved loans for low- or zero-emission vehicles
• $5 billion in credit subsidy and $250 billion in commitment authority for the Energy Infrastructure Reinvestment (EIR) Financing Program (Section 1706)
• $75 million in credit subsidy for the Tribal Energy Loan Guarantee Program (TELGP)

Collectively, these actions would roll back the largest expansion of LPO loan and loan guarantee authority since the Obama Administration – disrupting momentum for electricity transmission, critical mineral supply chains and industrial manufacturing.

New Energy Dominance Financing Authority

At the same time, the Senate bill creates a new Section 1706 Energy Dominance Financing Program, capitalized with more than $660 million. Unlike the Section 1706 authority established under the IRA, which tied eligibility to decarbonization measures, the new program would be narrowly focused on:

• repowering, repurposing or replacing decommissioned energy infrastructure
• extending the life of infrastructure used to produce, transport or process energy and critical minerals
• projects that may include environmental remediation but would be ineligible for federal grants, incentives or other nontaxpayer forms of support

The new Section 1706 program contains the same restrictions already applied to Title 17 loan guarantees under the IRA. Notably, it preserves the presidential certification and "no double dipping" requirements included in the original IRA statute.

Structural Changes Could Limit Future Lending

The Senate bill would also repeal key statutory language affirming that DOE can guarantee loans made by the Federal Financing Bank (FFB). This change may signal congressional intent to limit future guarantees to nonfederal lenders – an outcome that would require a fundamental overhaul of LPO operations. To date, nearly all loans guaranteed by LPO (aside from a handful of American Recovery and Reinvestment Act of 2009 (ARRA)-era Federal Investment Partnership Program (FIPP) projects) have been issued by the FFB.

In addition, rescinding unobligated credit subsidy without changing DOE's regulations would dramatically lower the risk profile of projects DOE can lend to, undermining first-of-its-kind technology deployment. For many project sponsors – particularly those with less than investment-grade credit ratings – this could threaten deal viability by impairing expected returns. DOE could respond by reverting to pre-IRA regulations that allowed conditional commitments to be revoked at the DOE secretary's discretion, effectively delaying subsidy collection until the project closes.

Broader Provisions Reflect Shift in Energy Policy Priorities

Beyond LPO, the Senate reconciliation package advances several policies intended to expand fossil fuel production and LNG exports while scaling back Biden-era investments in clean energy deployment:

• restores quarterly lease sales and expands drilling in the Arctic National Wildlife Refuge (ANWR), National Petroleum Reserve in Alaska (NPR-A) and offshore Alaska
• lowers federal royalty rates to boost U.S. competitiveness in oil, gas and coal
• appropriates more than $660 million to refill the Strategic Petroleum Reserve (SPR)
• authorizes a $1 million fee for LNG export applications to non-Free Trade Agreement (FTA) countries and deeming such exports automatically in the public interest
• rescinds remaining funds for DOE's Industrial Demonstrations Program (IDP), which awarded projects aimed at reducing emissions from steel, cement, chemicals and other hard-to-abate sectors
• rescinds transmission siting grants and programs intended to modernize grid planning for interregional and offshore wind infrastructure

What Comes Next

Compared to its counterpart in the U.S. House of Representatives, the Senate package adopts a far more aggressive posture toward repealing IRA energy provisions. While House Republicans have proposed rescinding unspent credit subsidy for LPO, they've so far preserved the office's core statutory authority. (See Holland & Knight's previous blog post, "What the House Reconciliation Bill Means for DOE's Loan Programs Office," May 23, 2025.) The Senate bill goes much further – repealing the IRA's supplemental lending authorities and proposing a narrower loan program aligned with President Donald Trump's energy dominance agenda.

This approach by Congress does not fully align with the White House. Just weeks ago, the administration released its full fiscal year (FY) 2026 budget request, which maintains full lending authority for LPO, seeks $750 million in new credit subsidy for Title 17 and anticipates issuing more than $50 billion in new loans for projects spanning advanced nuclear, critical minerals and grid infrastructure. (See Holland & Knight's previous blog post, "Full FY 2026 Budget Reorients DOE Around Nuclear and Hard Infrastructure," June 3, 2025.) The proposal affirms LPO's central role in delivering on the administration's energy priorities – even as congressional Republicans move to pare back the office's authority.

As the reconciliation process moves forward, House and Senate Republicans will need to reconcile their divergent approaches in bicameral negotiations. With a slim Senate and House majority and reconciliation rules limiting what can be included in the final bill, the path forward remains fluid. Still, industry stakeholders – especially those with pending or expected LPO applications – should closely monitor developments as the Senate package moves toward floor consideration.

Holland & Knight will continue to track the reconciliation process and its implications for energy financing programs. For additional information about how your project may be affected, please contact the authors.