Policies and Procedures for Loan Guarantees for Projects That Employ Innovative Technologies and for Direct Loans Under the Advanced Technology Vehicles Manufacturing Program |
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Treena V. Garrett
Department of Energy
15 January 2021
[Federal Register Volume 86, Number 10 (Friday, January 15, 2021)]
[Rules and Regulations]
[Pages 3747-3761]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-29278]
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DEPARTMENT OF ENERGY
10 CFR Parts 609 and 611
RIN 1910-AA54
Policies and Procedures for Loan Guarantees for Projects That
Employ Innovative Technologies and for Direct Loans Under the Advanced
Technology Vehicles Manufacturing Program
AGENCY: Loan Programs Office, U.S. Department of Energy.
ACTION: Final rule.
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SUMMARY: The U.S. Department of Energy (DOE) Loan Programs Office (LPO)
establishes amended policies and procedures for the issuance of DOE
loan guarantees pursuant to the Title XVII
[[Page 3748]]
Program and funding awards and loans pursuant to the Advanced
Technology Vehicles Manufacturing Program in accordance with the
Executive order of September 30, 2020, entitled ``Addressing the Threat
to the Domestic Supply Chain from Reliance on Critical Minerals from
Foreign Adversaries''. The rule will establish revised policies and
procedures for receiving, evaluating, and approving applications for
loan guarantees, funding awards and loans from DOE. The rule will
refine the definition of ``Eligible Project'' and address the use of
Preliminary Term sheets and conditional commitments, as well as the
payment of costs and fees by non-Federal third parties.
DATES: This rule is effective on January 15, 2021.
FOR FURTHER INFORMATION CONTACT: Mr. John Lushetsky, Senior Advisor,
Loan Programs Office, Loan Guarantee Program, U.S. Department of Energy
LP 10, 1000 Independence Avenue SW, Washington, DC 20585, (202) 586-
2678, or by email to: john.lushetsky@hq.doe.gov.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Introduction and Background
II. Discussion of Final Rule
III. Regulatory Review
I. Introduction and Background
DOE issues this final rule to update regulations in accordance with
the requirements of Executive Order 13953, ``Addressing the Threat to
the Domestic Supply Chain from Reliance on Critical Minerals from
Foreign Adversaries,'' 85 FR 62539 (Sept. 30, 2020). Executive Order
13953 establishes policy pertaining to lending activities by LPO
pursuant to Title XVII of the Energy Policy Act of 2005, as amended (42
U.S.C. 16511, et seq.) (``Title XVII''), and Section 136 of the Energy
Independence and Security Act of 2007, as amended (42 U.S.C. 17013)
(the ``ATVM Statute''), as they apply to ``Critical Minerals,''
``Critical Minerals Production,'' and related activities, including
activities related to minerals more broadly. Executive Order 13953
requires that DOE update the relevant regulation in accordance with the
policy presented in the Executive order.
II. Discussion of Final Rule
Executive Order 13953 requires that DOE LPO establish amended
policies and procedures for the issuance of DOE loan guarantees, in
order to provide financial support to eligible projects that will
support a domestic supply chain for critical minerals and critical
minerals production. The rule will establish revised policies and
procedures for receiving, evaluating, and approving applications for
loan guarantees from DOE. The rule will revise the definition of
Eligible Project, for both the Title XVII and ATVM Programs, consistent
with E.O. 13953 and address the use of Preliminary Term sheets and
conditional commitments, as well as the payment of costs and fees by
non-Federal third parties. These changes will facilitate the
accessibility and availability of loan guarantees from DOE to potential
applicants in both the critical minerals space, as well as traditional
innovative projects. These changes also will allow for the use of
Preliminary Term sheets between DOE and potential applicants in the
critical minerals space and other innovative projects. The use of
Preliminary Term Sheets will aid potential applicants in obtaining
their offtake agreements, while negotiating with DOE for a potential
loan guarantee, subject to conditions required by DOE. The final rule
will also clarify that payment by non-Federal third parties of costs
and fees associated with a loan guarantee will be permissible, where
necessary, to support the applicant. As required by Executive Order
13953, these changes will make DOE loan guarantees more available and
accessible to critical minerals projects.
III. Regulatory Review
A. Executive Order 12866
This final rule is not a ``significant regulatory action'' under
Executive Order 12866, ``Regulatory Planning and Review.'' 58 FR 51735
(October 4, 1993). The rule revises the definition of Eligible Project
consistent with E.O. 13953 and clarifies DOE's procedures for the
review of applications to LPO for loan guarantees under the Title XVII
Program and funding awards and loans under the ATVM Program.
B. Executive Orders 13771 and 13777
On January 30, 2017, the President issued Executive Order 13771,
``Reducing Regulation and Controlling Regulatory Costs.'' See 82 FR
9339 (January 30, 2017). E.O. 13771 states that the policy of the
executive branch is to be prudent and financially responsible in the
expenditure of funds, from both public and private sources. E.O. 13771
states that it is essential to manage the costs associated with the
governmental imposition of private expenditures required to comply with
Federal regulations.
Additionally, on February 24, 2017, the President issued Executive
Order 13777, ``Enforcing the Regulatory Reform Agenda.'' The order
required the head of each agency designate an agency official as its
Regulatory Reform Officer (RRO). Each RRO oversees the implementation
of regulatory reform initiatives and policies to ensure that agencies
effectively carry out regulatory reforms, consistent with applicable
law. Further, E.O. 13777 requires the establishment of a regulatory
task force at each agency. The regulatory task force is required to
make recommendations to the agency head regarding the repeal,
replacement, or modification of existing regulations, consistent with
applicable law. At a minimum, each regulatory reform task force must
attempt to identify regulations that:
(i) Eliminate jobs, or inhibit job creation;
(ii) Are outdated, unnecessary, or ineffective;
(iii) Impose costs that exceed benefits;
(iv) Create a serious inconsistency or otherwise interfere with
regulatory reform initiatives and policies;
(v) Are inconsistent with the requirements of Information Quality
Act, or the guidance issued pursuant to that Act, in particular those
regulations that rely in whole or in part on data, information, or
methods that are not publicly available or that are insufficiently
transparent to meet the standard for reproducibility; or
(vi) Derive from or implement Executive orders or other
Presidential directives that have been subsequently rescinded or
substantially modified.
Finally, on March 28, 2017, the President signed Executive Order
13783, entitled ``Promoting Energy Independence and Economic Growth.''
Among other things, E.O. 13783 requires the heads of agencies to review
all existing regulations, orders, guidance documents, policies, and any
other similar agency actions (collectively, agency actions) that
potentially burden the development or use of domestically produced
energy resources, with particular attention to oil, natural gas, coal,
and nuclear energy resources. Such review does not include agency
actions that are mandated by law, necessary for the public interest,
and consistent with the policy set forth elsewhere in that order.
DOE concludes that this final rule is consistent with the
directives set forth in these Executive orders. This final rule is
expected to be an E.O. 13771 deregulatory action. The provisions in
this final rule, as described in section II, revise the definition of
Eligible Project consistent with E.O. 13953 and establish amended
policies and procedures for the issuance of DOE loan guarantees,
[[Page 3749]]
funding awards and loans in accordance with Executive Order 13953 and
for receiving, evaluating, and approving applications for loan
guarantees from DOE.
C. Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires
preparation of an initial regulatory flexibility analysis for any rule
that by law must be proposed for public comment, unless the agency
certifies that the rule, if promulgated, will not have a significant
economic impact on a substantial number of small entities. Because a
notice of proposed rulemaking is not required for this action pursuant
to 5 U.S.C. 553, or any other law, no regulatory flexibility analysis
has been prepared for this final rule.
In addition, DOE notes that the rule would clarify DOE's policies
and procedures for processing applications for loan guarantees, funding
awards, and loans, and would not impose a burden on applicants,
including small entities. Specifically, these changes will facilitate
the accessibility and availability of loan guarantees, funding awards,
and loans from DOE to potential applicants in the critical minerals
space, as well as for traditional innovative projects. The changes also
will allow for the use of Preliminary Term sheets between DOE and
potential applicants in the critical minerals space and for other
innovative projects. The use of Preliminary Term Sheets will aid
potential applicants in obtaining their offtake agreements, while
negotiating with DOE for a potential loan guarantee, subject to
conditions required by DOE. The final rule will clarify that payment by
non-Federal third parties of costs and fees associated with a loan
guarantee will be permissible, where necessary, to support the
applicant.
D. Paperwork Reduction Act
The final rule would impose no new information or record keeping
requirements. Accordingly, Office of Management and Budget (OMB)
clearance is not required under the Paperwork Reduction Act. (44 U.S.C.
3501 et seq.). The information collection necessary to administer DOE
loan guarantees for projects that employ innovative technologies under
10 CFR part 609 is subject to OMB approval under the Paperwork
Reduction Act (PRA), 44 U.S.C. 3501 et seq. The information collection
provisions of this part were previously approved by OMB under OMB
Control No. 1910-5134.
Notwithstanding any other provision of the law, no person is
required to respond to, nor shall any person be subject to a penalty
for failure to comply with, a collection of information subject to the
requirements of the PRA, unless that collection of information displays
a currently valid OMB Control Number.
E. National Environmental Policy Act
DOE has determined that this final rule will be covered under the
Categorical Exclusion found in DOE's National Environmental Policy Act
regulations at paragraph A5 of appendix A to subpart D, 10 CFR part
1021, which applies to a rulemaking that amends an existing rule or
regulation and that does not change the environmental effect of the
rule or regulation being amended. Accordingly, neither an environmental
assessment nor an environmental impact statement is required.
F. Executive Order 13132
Executive Order 13132, ``Federalism,'' 64 FR 43255 (August 4, 1999)
imposes certain requirements on agencies formulating and implementing
policies or regulations that preempt State law or that have federalism
implications. Agencies are required to examine the constitutional and
statutory authority supporting any action that would limit the
policymaking discretion of the States and carefully assess the
necessity for such actions. DOE has examined this final rule and has
determined that it will not preempt State law and will not have a
substantial direct effect on the States, on the relationship between
the National Government and the States, or on the distribution of power
and responsibilities among the various levels of government. No further
action is required by Executive Order 13132.
G. Executive Order 12988
With respect to the review of existing regulations and the
promulgation of new regulations, section 3(a) of Executive Order 12988,
``Civil Justice Reform,'' 61 FR 4729 (February 7, 1996), imposes on
Executive agencies the general duty to adhere to the following
requirements: (1) Eliminate drafting errors and ambiguity; (2) write
regulations to minimize litigation; and (3) provide a clear legal
standard for affected conduct rather than a general standard and
promote simplification and burden reduction. With regard to the review
required by section 3(a), section 3(b) of Executive Order 12988
specifically requires that Executive agencies make every reasonable
effort to ensure that the regulation: (1) Clearly specifies the
preemptive effect, if any; (2) clearly specifies any effect on existing
Federal law or regulation; (3) provides a clear legal standard for
affected conduct while promoting simplification and burden reduction;
(4) specifies the retroactive effect, if any; (5) adequately defines
key terms; and (6) addresses other important issues affecting clarity
and general draftsmanship under any guidelines issued by the Attorney
General. Section 3(c) of Executive Order 12988 requires Executive
agencies to review regulations in light of applicable standards in
section 3(a) and section 3(b) to determine whether they are met or it
is unreasonable to meet one or more of them. DOE has completed the
required review and determined that, to the extent permitted by law,
this final rule meets the relevant standards of Executive Order 12988.
H. Unfunded Mandates Reform Act of 1995
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA)
requires each Federal agency to assess the effects of Federal
regulatory actions on State, local, and Tribal governments and the
private sector. Public Law 104-4, sec. 201 (codified at 2 U.S.C. 1531).
For a regulatory action likely to result in a rule that may cause the
expenditure by State, local, and Tribal governments, in the aggregate,
or by the private sector of $100 million or more in any one year
(adjusted annually for inflation), section 202 of UMRA requires a
Federal agency to publish a written statement that estimates the
resulting costs, benefits, and other effects on the national economy.
(2 U.S.C. 1532(a), (b)). The UMRA also requires a Federal agency to
develop an effective process to permit timely input by elected officers
of State, local, and Tribal governments on a ``significant
intergovernmental mandate,'' and requires an agency plan for giving
notice and opportunity for timely input to potentially affected small
governments before establishing any requirements that might
significantly or uniquely affect them. On March 18, 1997, DOE published
a statement of policy on its process for intergovernmental consultation
under UMRA. 62 FR 12820. DOE's policy statement is also available at
http://energy.gov/sites/prod/files/gcprod/documents/umra_97.pdf. UMRA
sections 202 and 205 do not apply to this action because they apply
only to rules for which a general notice of proposed rulemaking is
published. Nevertheless, DOE has determined that this final rule does
not contain a Federal intergovernmental mandate, nor is it expected to
require expenditures of $100 million or more in any one year by the
private sector.
[[Page 3750]]
I. Treasury and General Government Appropriations Act, 1999
Section 654 of the Treasury and General Government Appropriations
Act, 1999, 5 U.S.C. 601 note, requires Federal agencies to issue a
Family Policymaking Assessment for any rulemaking that may affect
family well-being. While this final rule will apply to individuals who
may be members of a family, the rule will not have any impact on the
autonomy or integrity of the family as an institution. Accordingly, DOE
has concluded that it is not necessary to prepare a Family Policymaking
Assessment.
J. Treasury and General Government Appropriations Act, 2001
The Treasury and General Government Appropriations Act, 2001 (44
U.S.C. 3516, note) provides for agencies to review most disseminations
of information to the public under guidelines established by each
agency pursuant to general guidelines issued by OMB. OMB's guidelines
were published at 67 FR 8452 (February 22, 2002), and DOE's guidelines
were published at 67 FR 62446 (October 7, 2002). DOE has reviewed the
final rule under the OMB and DOE guidelines and has concluded that it
is consistent with applicable policies in those guidelines.
K. Executive Order 13211
Executive Order 13211, ``Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution, or Use,'' 66 FR 28355
(May 22, 2001), requires Federal agencies to prepare and submit to the
Office of Information and Regulatory Affairs (OIRA), Office of
Management and Budget, a Statement of Energy Effects for any proposed
significant energy action. A ``significant energy action'' is defined
as any action by an agency that promulgated or is expected to lead to
promulgation of a final rule, and that: (1) Is a significant regulatory
action under Executive Order 12866, or any successor order; and (2) is
likely to have a significant adverse effect on the supply,
distribution, or use of energy, or (3) is designated by the
Administrator of OIRA as a significant energy action. For any proposed
significant energy action, the agency must give a detailed statement of
any adverse effects on energy supply, distribution, or use should the
proposal be implemented, and of reasonable alternatives to the action
and their expected benefits on energy supply, distribution, and use.
This regulatory action will not have a significant adverse effect on
the supply, distribution, or use of energy and is therefore not a
significant energy action. Accordingly, DOE has not prepared a
Statement of Energy Effects.
L. Administrative Procedure Act
In accordance with 5 U.S.C. 553(b), the Administrative Procedure
Act, DOE generally publishes a proposed rule and solicits public
comment on it before issuing the rule in final. DOE also generally
provides at least a 30-day delay in effective date for final rules
pursuant to 5 U.S.C. 553(d). This rulemaking, as a matter relating to
loans, is exempt from the requirement to publish a notice of proposed
rulemaking under 5 U.S.C. 553(a)(2). In addition, Executive Order 13953
specifically directs DOE to consider LPO loan guarantees, funding
awards, and loans involving critical minerals projects and supply
chains, and such projects that otherwise satisfy the requirements of
Title XVII and the ATVM Statute are already accepted, and deemed to be,
``Eligible Projects'' by DOE under applicable law and regulations.
M. Congressional Notification
As required by 5 U.S.C. 801, DOE will submit to Congress a report
regarding the issuance of this final rule prior to the effective date
set forth at the outset of this rulemaking. The report will state that
it has been determined that the rule is not a ``major rule'' as defined
by 5 U.S.C. 801(2).
N. Approval of the Office of the Secretary
The Secretary of Energy has approved publication of this final
rule.
List of Subjects
10 CFR Part 609
Administrative practice and procedure, Energy, Loan programs,
Reporting and recordkeeping requirements.
10 CFR Part 611
Administrative practice and procedure, Loan programs-energy,
Reporting and recordkeeping requirements.
Signing Authority
This document of the Department of Energy was signed on December
31, 2020, by Steven E. Winberg, Acting Under Secretary of Energy,
pursuant to delegated authority from the Secretary of Energy. That
document with the original signature and date is maintained by DOE. For
administrative purposes only, and in compliance with requirements of
the Office of the Federal Register, the undersigned DOE Federal
Register Liaison Officer has been authorized to sign and submit the
document in electronic format for publication, as an official document
of the Department of Energy. This administrative process in no way
alters the legal effect of this document upon publication in the
Federal Register.
Signed in Washington, DC, on December 31, 2020.
Treena V. Garrett,
Federal Register Liaison Officer, U.S. Department of Energy.
For the reasons stated in the preamble, DOE amends parts 609 and
611 of chapter II of title 10 of the Code of Federal Regulations as set
forth below:
0
1. Part 609 is revised to read as follows:
PART 609--LOAN GUARANTEES FOR PROJECTS THAT EMPLOY INNOVATIVE
TECHNOLOGIES
Sec.
609.1 Purpose and scope.
609.2 Definitions and interpretation.
609.3 Solicitations.
609.4 Submission of applications.
609.5 Programmatic, technical, and financial evaluation of
applications.
609.6 Term sheets and conditional commitments.
609.7 Closing on the loan guarantee agreement.
609.8 Loan guarantee agreement.
609.9 Lender servicing requirements.
609.10 Project costs.
609.11 Fees and charges.
609.12 Full faith and credit and incontestability.
609.13 Default, demand, payment, and foreclosure on collateral.
609.14 Preservation of collateral.
609.15 Audit and access to records.
609.16 Deviations.
Authority: 42 U.S.C. 16511-16514.
Sec. 609.1 Purpose and scope.
(a) This part sets forth the policies and procedures that DOE uses
for receiving, evaluating, and approving applications for loan
guarantees to support Eligible Projects under section 1703 of the
Energy Policy Act of 2005 (Act).
(b) This part applies to all Applications, Conditional Commitments,
and Loan Guarantee Agreements.
(c) Part 1024 of chapter X of title 10 of the Code of Federal
Regulations shall not apply to actions taken under this part.
(d) This part incorporates the policies set forth in Executive
Order 13953 (``Executive Order Addressing the Threat to the Domestic
Supply Chain from Reliance on Critical Minerals from Foreign
Adversaries,'' dated September
[[Page 3751]]
20, 2020), and Executive Order 13817 (``A Federal Strategy to Ensure
Secure and Reliable Supplies of Critical Minerals,'' dated December 20,
2017), as amended.
Sec. 609.2 Definitions and interpretation.
(a) Definitions. When used in this part the following words have
the following meanings.
Act means Title XVII of the Energy Policy Act of 2005 (42 U.S.C.
16511-16514), as amended.
Administrative Cost of Issuing a Loan Guarantee means the total of
all administrative expenses that DOE incurs during:
(i) The evaluation of an Application for a loan guarantee;
(ii) The negotiation and offer of a Term Sheet;
(iii) The negotiation of a Loan Guarantee Agreement and related
documents, including the issuance of a Guarantee; and
(iv) The servicing and monitoring of a Loan Guarantee Agreement,
including during the construction, startup, commissioning, shakedown,
and operational phases of an Eligible Project.
Applicant means a Person, including a prospective Borrower or
Project Sponsor, that submits an Application to DOE.
Application means a written submission of materials responsive to a
Solicitation that satisfies Sec. 609.4.
Application Fee means the fee or fees required to be paid by an
Applicant in connection with submission of an Application and specified
in a Solicitation. The Application Fee does not include the Credit
Subsidy Cost.
Attorney General means the Attorney General of the United States.
Borrower means any Person that enters into a Loan Guarantee
Agreement with DOE and issues Guaranteed Obligations.
Cargo Preference Act means the Cargo Preference Act of 1954, 46
U.S.C. 55305, as amended.
Commercial Technology means a technology in general use in the
commercial marketplace in the United States at the time the Term Sheet
is offered by DOE. A technology is in general use if it is being used
in three or more facilities that are in commercial operation in the
United States for the same general purpose as the proposed project, and
has been used in each such facility for a period of at least five
years. The five-year period for each facility shall start on the in-
service date of the facility employing that particular technology or,
in the case of a retrofit of a facility to employ a particular
technology, the date the facility resumes commercial operation
following completion and testing of the retrofit. For purposes of this
section, facilities that are in commercial operation include projects
that have been the recipients of a loan guarantee from DOE under this
part.
Conditional Commitment means a Term Sheet offered by DOE and
accepted by the offeree of the Term Sheet, all in accordance with Sec.
609.6(c); provided, that the Secretary may terminate a Conditional
Commitment for any reason at any time prior to the execution of the
Loan Guarantee Agreement; and provided, further, that the Secretary may
not delegate this authority to terminate a Conditional Commitment.
Contracting Officer means the Secretary of Energy or a DOE official
authorized by the Secretary to enter into, administer or terminate DOE
Loan Guarantee Agreements and related contracts on behalf of DOE.
Credit Subsidy Cost has the same meaning as ``cost of a loan
guarantee'' in section 502(5)(C) of the Federal Credit Reform Act of
1990, which is the net present value, at the time the Loan Guarantee
Agreement is executed, of the following estimated cash flows,
discounted to the point of disbursement:
(i) Payments by the Government to cover defaults and delinquencies,
interest subsidies, or other payments; less
(ii) Payments to the Government including origination and other
fees, penalties, and recoveries; including the effects of changes in
loan or debt terms resulting from the exercise by the Borrower,
Eligible Lender, or other Holder of an option included in the Loan
Guarantee Agreement.
Davis-Bacon Act means the statute referenced in section 1702(k) of
the Act.
DOE means the United States Department of Energy.
Eligible Lender means either:
(i) Any Person formed for the purpose of, or engaged in the
business of, lending money that, as determined by DOE in each case, is:
(A) Not debarred or suspended from participation in a Federal
Government contract or participation in a non-procurement activity
(under a set of uniform regulations implemented for numerous agencies,
such as DOE, at 2 CFR part 180);
(B) Not delinquent on any Federal debt or loan;
(C) Legally authorized and empowered to enter into loan guarantee
transactions authorized by the Act and this part;
(D) Able to demonstrate experience in originating and servicing
loans for commercial projects similar in size and scope to the Eligible
Project, or able to procure such experience through contracts
acceptable to DOE; and
(E) Able to demonstrate experience as the lead lender or
underwriter by presenting evidence of its participation in large
commercial projects or energy-related projects or other relevant
experience, or able to procure such experience through contracts
acceptable to DOE; or
(ii) The Federal Financing Bank.
Eligible Project means a project that:
(i) Is located in the United States at one location, except that
the project may be located at two or more locations in the United
States if the project is comprised of installations or facilities
employing a single New or Significantly Improved Technology that is
deployed pursuant to an integrated and comprehensive business plan. An
Eligible Project in more than one location is a single Eligible
Project;
(ii) Deploys a New or Significantly Improved Technology; and
(iii) Satisfies all applicable requirements of section 1703 of the
Act, the applicable Solicitation, and this part. For purposes of this
paragraph (iii):
(A) Eligible Projects may include manufacturing, recycling,
processing, reprocessing, remediation, or reuse of materials,
components, or subcomponents involving critical minerals, critical
minerals production, or the supply chain for such materials, as set
forth in Executive Order 13953 (``Executive Order Addressing the Threat
to the Domestic Supply Chain from Reliance on Critical Minerals from
Foreign Adversaries,'' dated September 20, 2020), and Executive Order
13817 (``A Federal Strategy to Ensure Secure and Reliable Supplies of
Critical Minerals,'' dated December 20, 2017), as amended, to the
extent such critical minerals-related activities are eligible under
section 1703 of the Act; and
(B) Some avoidance, reduction, or sequestration of air pollutants
or anthropogenic emissions of greenhouse gases by a proposed project,
or facilitated by such project, where applicable, shall be deemed to
satisfy the requirement of section 1703(a)(1).
Equity means cash contributed to the permanent capital stock (or
equivalent) of the Borrower or the Eligible Project by the shareholders
or other owners of the Borrower or the Eligible Project. Equity does
not include proceeds from the non-guaranteed portion of a Guaranteed
Obligation, proceeds from any other non-guaranteed loan or obligation,
or the value of any government assistance or support.
[[Page 3752]]
Facility Fee means the fee, to be paid in the amount and in the
manner provided in the Term Sheet, to cover the Administrative Cost of
Issuing a Loan Guarantee for the period from the Borrower's acceptance
of the Term Sheet through issuance of the Guarantee.
Federal Financing Bank means an instrumentality of the United
States Government created by the Federal Financing Bank Act of 1973,
under the general supervision of the Secretary of the Treasury.
Guarantee means the undertaking of the United States of America,
acting through the Secretary pursuant to Title XVII of the Energy
Policy Act of 2005, to pay in accordance with the terms thereof,
principal and interest of a Guaranteed Obligation.
Guaranteed Obligation means any loan or other debt obligation of
the Borrower for an Eligible Project for which DOE guarantees all or
any part of the payment of principal and interest under a Loan
Guarantee Agreement entered into pursuant to the Act.
Holder means any Person that holds a promissory note made by the
Borrower evidencing the Guaranteed Obligation (or his designee or
agent).
Intercreditor Agreement means any agreement or instrument (or
amendment or modification thereof) among DOE and one or more other
Persons providing financing or other credit arrangements to the
Borrower or an Eligible Project) or that otherwise provides for rights
of DOE in respect of a Borrower or in respect of an Eligible Project,
in each case in form and substance satisfactory to DOE.
Loan Agreement means a written agreement between a Borrower and an
Eligible Lender containing the terms and conditions under which the
Eligible Lender will make a loan or loans to the Borrower for an
Eligible Project.
Loan Guarantee Agreement means a written agreement that, when
entered into by DOE and a Borrower, and, if applicable, an Eligible
Lender, establishes the obligation of DOE to guarantee the payment of
all or a portion of the principal of, and interest on, specified
Guaranteed Obligations, subject to the terms and conditions specified
in the Loan Guarantee Agreement.
New or Significantly Improved Technology means a technology, or a
defined suite of technologies, concerned with the production,
consumption, or transportation of energy and that is not a Commercial
Technology, and that has either:
(i) Only recently been developed, discovered, or learned; or
(ii) Involves or constitutes one or more meaningful and important
improvements in productivity or value, in comparison to Commercial
Technologies in use in the United States at the time the Term Sheet is
issued.
OMB means the Office of Management and Budget in the Executive
Office of the President.
Person means any natural person or any legally constituted entity,
including a state or local government, tribe, corporation, company,
voluntary association, partnership, limited liability company, joint
venture, and trust.
Preliminary Term Sheet means the principal terms upon which DOE and
the Applicant have agreed to in writing that will serve as the basis
for a Loan Agreement or Loan Guarantee Agreement, following a
determination by DOE that such Application adequately describes an
Eligible Project, or a project that has a reasonable likelihood of
becoming an Eligible Project, consistent with Sec. 609.4(a)).
Project Costs mean those costs, including escalation and
contingencies, that are to be expended or accrued by a Borrower and are
necessary, reasonable, customary, and directly related to the design,
engineering, financing, construction, startup, commissioning, and
shakedown of an Eligible Project, as specified in Sec. 609.10(a).
Project Costs do not include costs for the items set forth in Sec.
609.10(b).
Project Sponsor means any Person that assumes substantial
responsibility for the development, financing, and structuring of an
Eligible Project and, if not the Applicant, owns or controls, by itself
and/or through individuals in common or affiliated business entities, a
five percent or greater interest in the proposed Eligible Project, the
Borrower, or the Applicant.
Risk-Based Charge means a charge that, together with the principal
and interest on the guaranteed loan, or at such other times as DOE may
determine, is payable on specified dates during the term of a
Guaranteed Obligation.
Secretary means the Secretary of Energy or a duly authorized
designee or successor in interest.
Solicitation means an announcement that DOE is accepting
Applications that is widely disseminated to the public on the DOE
website or otherwise.
Term Sheet means a written offer for the issuance of a loan
guarantee, executed by the Secretary (or a DOE official authorized by
the Secretary to execute such offer), delivered to the offeree, that
sets forth the detailed terms and conditions under which DOE and the
Applicant will execute a Loan Guarantee Agreement.
United States means the several States, the District of Columbia,
the Commonwealth of Puerto Rico, the Virgin Islands, Guam, American
Samoa, and any territory or possession of the United States of America.
(b) Interpretations. This part shall be interpreted using the
following guidelines.
(1) The word ``discretion'' when used with reference to DOE,
including the Secretary, means ``sole discretion.''
(2) Defined terms in the singular shall include the plural and vice
versa, and the masculine, feminine, or neuter gender shall include all
genders.
(3) The word ``or'' is not exclusive.
(4) References to laws by name or popular name are references to
the version of such law appearing in the United States Code and include
any amendment, supplement, or modification of such law, and all
regulations, rulings, and other laws promulgated thereunder.
(5) References to information or documents required or allowed to
be submitted to DOE mean information or documents that are marked as
provided in 10 CFR 600.15(b). A document or information that is not
marked as provided in 10 CFR 600.15(b) will not be considered as having
been submitted to or received by DOE.
(6) A reference to a Person includes such Person's successors and
permitted assigns.
(7) The words ``include,'' ``includes,'' and ``including'' are not
limiting and mean include, includes and including ``without
limitation'' and ``without limitation by specification.''
(8) The words ``hereof,'' ``herein,'' and ``hereunder'' and words
of similar import refer this part as a whole and not to any particular
provision of this part.
Sec. 609.3 Solicitations.
DOE may invite the submission of Applications for loan guarantees
for Eligible Projects pursuant to a Solicitation.
(a) Each Solicitation must include, at a minimum, the following
information:
(1) The dollar amount of loan guarantee authority potentially being
made available by DOE in that Solicitation;
(2) The place for submission of Applications;
(3) The name and address of the DOE representative whom a potential
Applicant may contact to receive further information and a copy of the
Solicitation;
(4) The form, format, and page limits applicable to the
Application;
[[Page 3753]]
(5) The amount of the Application Fee and any other fees that will
be required;
(6) The programmatic, technical, financial, and other factors that
DOE will use to evaluate response submissions, and their relative
weightings in that evaluation; and
(7) Such other information as DOE may deem appropriate.
(b) Using procedures as may be announced by DOE a potential
Applicant may request a meeting with DOE to discuss its potential
Application. At its discretion, DOE may meet with a potential
Applicant, either in person or electronically, to discuss its potential
Application. DOE may provide a potential Applicant with a preliminary
response regarding whether its proposed Application may constitute an
Eligible Project. DOE's responses to questions from potential
Applicants and DOE's statements to potential Applicants are pre-
decisional and preliminary in nature. Any such responses and statements
are subject in their entirety to any final action by DOE with respect
to an Application submitted in accordance with Sec. 609.4.
Sec. 609.4 Submission of applications.
(a) In response to a Solicitation, an Applicant must meet all
requirements and provide all information specified in this part and the
Solicitation in the manner and on or before the date specified in the
Solicitation. DOE may direct that Applications be submitted in more
than one part; provided, that the parts of such Application, taken as a
whole, satisfy the requirements of paragraph (d) of this section and
this part. In such event, subsequent parts of an Application may be
filed only after DOE invites an Applicant to make an additional
submission. If DOE directs that Applications be submitted in more than
one part, the initial part of an Application shall contain information
sufficient for DOE to determine that the project proposed by an
Applicant will be, or may reasonably become, an Eligible Project, and
to evaluate such project's readiness to proceed. If there have been any
material amendments, modifications, or additions made to the
information previously submitted by an Applicant, the Applicant shall
provide a detailed description thereof, including any changes in the
proposed project's financing structure or other terms, promptly upon
request by DOE. Where DOE has directed that an Application be submitted
in parts, DOE may provide for payment of the Application Fee in parts.
(b) An Applicant may submit only one Application for one proposed
project using a particular technology. An Applicant may not submit an
Application or Applications for multiple Eligible Projects using the
same technology. An Applicant may submit Applications for multiple
proposed projects using different technologies. For purposes of this
paragraph (b), the term Applicant shall include the Project Sponsor and
any subsidiaries or affiliates of the Project Sponsor.
(c) The open application period shall be rolling, and DOE may
accept Applications at any time.
(d) An Application must include, at a minimum, the following
information and materials:
(1) A completed Application form signed by an individual with full
authority to bind the Applicant, including the commitments and
representations made in each part of the Application;
(2) The applicable Application Fee;
(3) A description of how, and to what measurable extent, the
proposed project avoids, reduces, or sequesters air pollutants and/or
anthropogenic emissions of greenhouse gases at any level, including how
to measure and verify those effects; there is not a minimum threshold
of avoidance, reduction, or sequestration of air pollutants and/or
anthropogenic emissions of greenhouse gases that a proposed project
must show to be accepted so long as some reduction is reasonably
demonstrated;
(4) A description of the nature and scope of the proposed project
(with preliminary information where appropriate), including:
(i) Key project milestones;
(ii) Location or locations of the proposed project;
(iii) Identification and commercial feasibility of the New or
Significantly Improved Technology to be deployed;
(iv) How the Applicant intends to deploy such New or Significantly
Improved Technology in the proposed project; and
(v) How the Applicant intends to assure, to the extent possible,
the further commercial availability of the New or Significantly
Improved Technology in the United States;
(5) An explanation of how the proposed project qualifies as a
project within the category or categories of projects referred to in
the Solicitation;
(6) A detailed estimate of the total Project Costs together with a
description of the methodology and assumptions used;
(7) A detailed description of the engineering and design
contractor(s), construction contractor(s), and equipment supplier(s);
(8) The construction schedules for the proposed project, including
major activity and cost milestones;
(9) A description of the material terms and conditions of the
development and construction contracts to include the performance
guarantees, performance bonds, liquidated damages provisions, and
equipment warranties;
(10) A detailed description of the operations and maintenance
provider(s), the proposed project operating plan, estimated staffing
requirements, parts inventory, major maintenance schedule, estimated
annual downtime, and performance guarantees and related liquidated
damage provisions, if any;
(11) A description of the management plan of operations to be
employed in carrying out the proposed project, and information
concerning the management experience of each officer or key person
associated with the proposed project;
(12) A detailed description of the proposed project
decommissioning, deconstruction, and disposal plan, and the anticipated
costs associated therewith;
(13) An analysis of the market for any product (including but not
limited to electricity and chemicals) to be produced by, or services to
be provided by, the proposed project, including relevant economics
justifying the analysis, and copies of:
(i) Any contracts, or draft contracts reflecting the current state
of actual negotiations between relevant parties, for the sale of such
products or the provision of such services; or
(ii) Any other assurance of the revenues to be generated from sale
of such products or provision of such services;
(14) A detailed description of the overall financial plan for the
proposed project, including all sources and uses of funding, equity and
debt, and the liability of parties associated with the proposed project
over the term of the Loan Guarantee Agreement;
(15) A copy of all material agreements, whether entered into or
proposed, relevant to the investment, design, engineering, financing,
construction, startup commissioning, shakedown, operations, and
maintenance of the proposed project;
(16) A copy of the financial closing checklist for the equity and
debt to the extent available;
(17) The Applicant's business plan on which the proposed project is
based and Applicant's financial model with respect to the proposed
project for the proposed term of the Guaranteed Obligations, including,
as applicable, pro forma income statements, balance sheets, and cash
flows. All such
[[Page 3754]]
information and data must include assumptions made in their preparation
and the range of revenue, operating cost, and credit assumptions
considered;
(18) Financial statements for the three immediately preceding
fiscal years of the Applicant (or such shorter period as the Applicant
has been in existence) that have been audited by an independent
certified public accounting firm, including all associated
certifications, notes and letters to management, as well as interim
financial statements and notes for the current fiscal year for the
Applicant and all other Persons the credit of which is material to the
success of the transactions described in the Application;
(19) A copy of all legal opinions, and other material reports,
analyses, and reviews related to the proposed project that have been
delivered prior to submission of any part of the Application;
(20) An engineering report prepared by an engineer with experience
in the industry and familiarity with similar projects. The report
should address the proposed project's siting and permitting
arrangements, engineering and design, contractual requirements,
environmental compliance, testing, commissioning and operations, and
maintenance;
(21) A credit history of the Applicant and each Project Sponsor;
(22) A preliminary credit assessment for the proposed project
without a loan guarantee from a nationally recognized rating agency for
projects where the estimated total Project Costs exceed $25 million.
For proposed projects where the total estimated Project Costs are $25
million or less and where conditions justify, in the sole discretion of
the Secretary, DOE may require such an assessment;
(23) A list showing the status of and estimated completion date of
Applicant's required applications for Federal, state, and local
permits, authorizations or approvals to site, construct, and operate
the proposed project;
(24) A report containing an analysis of the potential environmental
impacts of the proposed project that will enable DOE to--
(i) Assess whether the proposed project will comply with all
applicable environmental requirements; and
(ii) Undertake and complete any necessary reviews under the
National Environmental Policy Act of 1969;
(25) A listing and description of the assets of or to be utilized
for the benefit of the proposed project, and of any other asset that
will serve as collateral pledged in respect of the Guaranteed
Obligations, including appropriate data as to the value of such assets
and the useful life of any physical assets. With respect to real
property assets listed, an appraisal that is consistent with the
``Uniform Standards of Professional Appraisal Practice,'' promulgated
by the Appraisal Standards Board of the Appraisal Foundation, and
performed by licensed or certified appraisers, is required;
(26) An analysis demonstrating that, at the time of the
Application, there is a reasonable prospect that Borrower will be able
to repay the Guaranteed Obligations (including interest) according to
their terms, and a complete description of the operational and
financial assumptions and methodologies on which this demonstration is
based; and
(27) If proposed project assets or facilities are or will be
jointly owned by the Applicant and one or more other Persons, each of
which owns an undivided ownership interest in such proposed project
assets or facilities, a description of the Applicant's rights and
obligations in respect of its undivided ownership interest in such
proposed project assets or facilities.
(e) During the Application evaluation process pursuant to Sec.
609.5, DOE may request additional information, potentially including a
preliminary credit rating or credit assessment, with respect to the
proposed project.
(f) DOE will not consider any part of any Application or the
Application as a whole complete unless the Application Fee (or the
required portion of the Application Fee related to a particular part of
the Application) has been paid. An Application Fee paid in connection
with one Application is not transferable to another Application. Except
in the discretion of DOE, no portion of the Application Fee is
refundable.
(g) DOE has no obligation to evaluate an Application that is not
complete, and may proceed with such evaluation, or a partial
evaluation, only in its discretion.
(h) Unless an Applicant requests an extension and such an extension
is granted by DOE in its discretion, an Application may be rejected if
it is not complete within four years from the date of submission (or
date of submission of the first part thereof, in the case of
Applications made in more than one part).
(i) Upon making a determination to engage independent consultants
or outside counsel with respect to an Application, DOE will proceed to
evaluate and process such Application only following execution by an
Applicant or Project Sponsor, as appropriate, of an agreement
satisfactory to DOE to pay the fees and expenses charged by the
independent consultants and outside legal counsel.
(j) Following a determination by DOE that an Application or, if
applicable, the initial part of an Application, adequately describes an
Eligible Project, or a project that may reasonably become an Eligible
Project, DOE may offer a Preliminary Term Sheet to be utilized by an
Applicant for the purpose of obtaining its third party contracts or
offtake agreements, or for any other lawful purpose that may reasonably
assist an Applicant in obtaining the information or conditional
agreements required to complete an Application, subject to any terms
and conditions required by DOE and applicable law. DOE may issue a
Preliminary Term Sheet only if it determines that an Applicant has
shown in an Application or, if applicable, the initial part of an
Application, a reasonable likelihood of being able to satisfy the
requirements of the Act and enter into a Conditional Commitment, but
for the lack of a Preliminary Term Sheet. The Applicant shall be
responsible for payment of any fees assessed or costs incurred by DOE
that are associated with the issuance of the Preliminary Term Sheet.
Notwithstanding any provision of a Preliminary Term Sheet to the
contrary, the issuance of a Preliminary Term Sheet shall impose no
obligation on DOE to proceed with an Application, or to enter into a
Conditional Commitment, which matters shall be governed exclusively by
the Act and the requirements set forth in Sec. 609.5. Further, DOE
may, in its sole discretion, terminate or rescind a Preliminary Term
Sheet should an Applicant fail to meet any of the terms and conditions
required therein.
(k) At any time in the lending process, the Secretary of Energy may
exercise his deviation authority under Sec. 609.16 to make such
deviations from this part as he may deem to be in the best interests of
DOE, where such deviation supports program objectives and the special
circumstances stated in any deviation request are clearly in the best
interests of the Government.
(l) DOE shall respond, in writing, to any inquiry by an Applicant
about the status of its Application within ten (10) business days of
receipt of such request.
Sec. 609.5 Programmatic, technical, and financial evaluation of
applications.
(a) In reviewing completed Applications, and in prioritizing and
selecting those as to which a Term Sheet should be offered, DOE will
apply the criteria set forth in the Act, any
[[Page 3755]]
applicable Solicitation, and this part. Applications will be considered
in a competitive process, i.e. each Application will be evaluated
against other Applications responsive to the Solicitation. At any time,
DOE may request additional information or supporting documentation from
an Applicant. Applications will be denied if:
(1) The proposed project is not an Eligible Project, however, DOE
may provide an Applicant with a reasonable opportunity to correct or
amend any Application in order to meet the conditions for an Eligible
Project;
(2) The applicable technology is not ready to be deployed
commercially in the United States, cannot yield a commercially viable
product or service in the use proposed in the Application, does not
have the potential to be deployed in other commercial projects in the
United States, or is not or will not be available for further
commercial use in the United States;
(3) The Person proposed to issue the loan or purchase other debt
obligations constituting the Guaranteed Obligations is not an Eligible
Lender;
(4) The proposed project is for demonstration, research, or
development;
(5) Significant Equity for the proposed project will not be
provided by the date of issuance of the Guaranteed Obligations, or such
later time as DOE in its discretion may determine; or
(6) The proposed project does not present a reasonable prospect of
repayment of the Guaranteed Obligations.
(b) If an Application has not been denied pursuant to paragraph (a)
of this section, DOE will evaluate the proposed project based on the
criteria set forth in the Act, any applicable Solicitation, and the
following:
(1) To what measurable extent the proposed project avoids, reduces,
or sequesters air pollutants or anthropogenic emissions of greenhouses
gases, as applicable, or contributes to the avoidance, reduction or
sequestration of air pollutants or anthropogenic emissions of
greenhouse gases;
(2) To what extent the technology to be deployed in the proposed
project--
(i) Is ready to be deployed commercially in the United States, can
be replicated, yields a commercially viable product or service in the
use proposed in the proposed project, has potential to be deployed in
other commercial projects in the United States, and is or will be
available for further commercial use in the United States; and
(ii) Constitutes an important improvement in technology, as
compared to available Commercial Technologies, used to avoid, reduce or
sequester air pollutants or anthropogenic emissions of greenhouse
gases, as applicable;
(3) To what extent the Applicant has a plan to advance or assist in
the advancement of that technology into the commercial marketplace in
the United States;
(4) The extent to which the level of proposed support in the
Application is consistent with a reasonable prospect of repayment of
the Guaranteed Obligations by considering, among other factors:
(i) The extent to which the requested amount of the loan guarantee,
the requested amount of Guaranteed Obligations and, if applicable, the
expected amount of any other financing or credit arrangements, are
reasonable relative to the nature and scope of the proposed project;
(ii) The total amount and nature of the Project Costs and the
extent to which Project Costs are to be funded by Guaranteed
Obligations; and
(iii) The feasibility of the proposed project and likelihood that
it will produce sufficient revenues to service its debt obligations
over the life of the loan guarantee and assure timely repayment of
Guaranteed Obligations;
(5) The likelihood that the proposed project will be ready for full
commercial operations in the time frame stated in the Application;
(6) The amount of Equity committed and to be committed to the
proposed project by the Borrower, the Project Sponsor, and other
Persons;
(7) Whether there is sufficient evidence that the Borrower will
diligently implement the proposed project, including initiating and
completing the proposed project in a timely manner;
(8) Whether and to what extent the Applicant will rely upon other
Federal and non-Federal Government assistance such as grants, tax
credits, or other loan guarantees to support the financing,
construction, and operation of the proposed project and how such
assistance will impact the proposed project;
(9) The levels of safeguards provided to the Federal Government in
the event of default through collateral, warranties, and other
assurance of repayment described in the Application, including the
nature of any anticipated intercreditor arrangements;
(10) The Applicant's, or the relevant contractor's, capacity and
expertise to operate the proposed project successfully, based on
factors such as financial soundness, management organization, and the
nature and extent of corporate and individual experience;
(11) The ability of the proposed Borrower to ensure that the
proposed project will comply with all applicable laws and regulations,
including all applicable environmental statutes and regulations;
(12) The levels of market, regulatory, legal, financial,
technological, and other risks associated with the proposed project and
their appropriateness for a loan guarantee provided by DOE;
(13) Whether the Application contains sufficient information,
including a detailed description of the nature and scope of the
proposed project and the nature, scope, and risk coverage of the loan
guarantee sought to enable DOE to perform a thorough assessment of the
proposed project; and
(14) Such other criteria that DOE deems relevant in evaluating the
merits of an Application.
(c) After DOE completes its review and evaluation of a proposed
project pursuant to paragraph (b) of this section and this part, DOE
will notify the Applicant in writing of its determination whether to
proceed with due diligence and negotiation of a Term Sheet in
accordance with Sec. 609.6. DOE will proceed only if it determines
that the proposed project is highly qualified and suitable for a
Guarantee. Upon written confirmation from the Applicant that it desires
to proceed, DOE and the Applicant will commence negotiations.
(d) DOE shall provide all Applicants with a reasonable opportunity
to correct or amend any Application in order to meet the criteria set
forth in this part or any other conditions required by DOE, prior to
any denial of such Application. A determination by DOE not to proceed
with a proposed project following evaluation pursuant to paragraph (b)
of this section shall be final and non-appealable, but shall not
prejudice the Applicant or other affected Persons from applying for a
Guarantee in respect of a different proposed project pursuant to
another, separate Application. Prior to DOE's denial of any
Application, DOE shall advise the Applicant in writing, not less than
ten (10) business days prior to the effective date of such denial, and
set forth the reasons for such proposed denial along with a list of
items that may be corrected or amended by the Applicant in order to
satisfy the requirements that would create an Eligible Application, if
such items can be corrected or appropriately amended. If requested by
any Applicant, DOE shall meet with such Applicant in order
[[Page 3756]]
to address questions or concerns raised by the Applicant.
Sec. 609.6 Term sheets and conditional commitments.
(a) DOE, after negotiation of a Term Sheet with an Applicant, may
offer such Term Sheet to an Applicant or such other Person that is an
affiliate of the Applicant and that is acceptable to DOE. DOE's offer
of a Term Sheet shall be in writing and signed by the Contracting
Officer. DOE's negotiation of a Term Sheet imposes no obligation on the
Secretary to offer a Term Sheet to the Applicant.
(b) DOE shall terminate its negotiations of a Term Sheet if it has
not offered a Term Sheet in respect of an Eligible Project within four
years after the date of the written notification set forth in Sec.
609.5(c), unless extended in writing in the discretion of the
Contracting Officer.
(c) If and when the offeree specified in a Term Sheet satisfies all
terms and conditions for acceptance of the Term Sheet, including
written acceptance thereof and payment of all fees specified in Sec.
609.11(f) and therein to be paid at or prior to acceptance of the Term
Sheet, the Term Sheet shall become a Conditional Commitment. Each
Conditional Commitment shall include an expiration date no more than
two years from the date it is issued, unless extended in writing in the
discretion of the Contracting Officer. When and if all of the terms and
conditions specified in the Conditional Commitment have been met, DOE
and the Applicant may enter into a Loan Guarantee Agreement.
(d) If, subsequent to execution of a Conditional Commitment, the
financing arrangements of the Borrower, or in respect of an Eligible
Project, change from those described in the Conditional Commitment, the
Applicant shall promptly provide updated financing information in
writing to DOE. All such updated information shall be deemed to be
information submitted in connection with an Application and shall be
subject to Sec. 609.4(b). Based on such updated information, DOE may
take one or more of the following actions:
(1) Determine that such changes are not material to the Borrower,
the Eligible Project or DOE;
(2) Amend the Conditional Commitment accordingly;
(3) Postpone the expected closing date of the associated Loan
Guarantee Agreement; or
(4) Terminate the Conditional Commitment.
Sec. 609.7 Closing on the loan guarantee agreement.
(a) Subsequent to entering into a Conditional Commitment with an
Applicant, DOE, after consultation with the Applicant, will set a
closing date for execution of a Loan Guarantee Agreement.
(b) Prior to or on the closing date of a Loan Guarantee Agreement,
DOE will ensure that:
(1) One of the following has occurred:
(i) An appropriation for the Credit Subsidy Cost has been made;
(ii) The Secretary has received from the Borrower payment in full
for the Credit Subsidy Cost and deposited the payment into the
Treasury; or
(iii) A combination of one or more appropriations under paragraph
(b)(1)(i) of this section and one or more payments from the Borrower
under paragraph (b)(1)(ii) of this section has been made that is equal
to the Credit Subsidy Cost;
(2) Pursuant to section 1702(h) of the Act, DOE has received from
the Applicant the remainder of the Facility Fee referred to in Sec.
609.11(b);
(3) OMB has reviewed and approved DOE's calculation of the Credit
Subsidy Cost of the Guarantee;
(4) The Department of the Treasury has been consulted as to the
terms and conditions of the Loan Guarantee Agreement;
(5) The Loan Guarantee Agreement and related documents contain all
terms and conditions DOE deems reasonable and necessary to protect the
interest of the United States;
(6) Each holder of the Guaranteed Obligations is an Eligible
Lender, and the servicer of the Guaranteed Obligations meets the
servicing performance requirements of Sec. 609.9(b);
(7) DOE has determined the principal amount of the Guaranteed
Obligations expected to be issued in respect of the Eligible Project,
as estimated at the time of issuance, will not exceed 80 percent of the
Project Costs of the Eligible Project;
(8) All conditions precedent specified in the Conditional
Commitment are either satisfied or waived by the Contracting Officer
and all other applicable contractual, statutory, and regulatory
requirements have been satisfied or waived by the Contracting Officer.
If the counterparty to the Conditional Commitment has not satisfied all
such terms and conditions on or prior to the closing date of the Loan
Guarantee Agreement, the Secretary may, in his discretion, set a new
closing date, or terminate the Conditional Commitment; and
(9) Where the total Project Costs for an Eligible Project are
projected to exceed $25 million, the Applicant must provide a credit
rating from a nationally recognized rating agency reflecting the
revised Conditional Commitment for the project without a Federal
guarantee. Where total Project Costs are projected to be $25 million or
less, the Secretary may, on a case-by-case basis, require a credit
rating. If a credit rating is required, an updated rating must be
provided to the Secretary not later than 30 days prior to closing.
Sec. 609.8 Loan guarantee agreement.
(a) Only a Loan Guarantee Agreement executed by the Contracting
Officer can obligate DOE to issue a Guarantee in respect of Guaranteed
Obligations.
(b) DOE is not bound by oral representations.
(c) Each Loan Guarantee Agreement shall contain the following
requirements and conditions, and shall not be executed until the
Contracting Officer determines that the following requirements and
conditions are satisfied:
(1) The Federal Financing Bank shall be the only Eligible Lender in
transactions where DOE guarantees 100 percent (but not less than 100
percent) of the principal and interest of the Guaranteed Obligations
issued under a Loan Guarantee Agreement.
(i) Where DOE guarantees more than 90 percent of the Guaranteed
Obligation, the guaranteed portion cannot be separated from or
``stripped'' from the non-guaranteed portion of the Guaranteed
Obligation if the loan is participated, syndicated or otherwise resold
in the secondary market; and
(ii) Where DOE guarantees 90 percent or less of the Guaranteed
Obligation, the guaranteed portion may be separated from or
``stripped'' from the non-guaranteed portion of the Guaranteed
Obligation, if the loan is participated, syndicated or otherwise resold
in the secondary debt market.
(2) The Borrower shall be obligated to make full repayment of the
principal and interest on the Guaranteed Obligations and other debt of
a Borrower over a period of up to the lesser of 30 years or 90 percent
of the projected useful life of the Eligible Project's major physical
assets, as calculated in accordance with U.S. generally accepted
accounting principles and practices. The non-guaranteed portion (if
any) of any Guaranteed Obligations must be repaid pro rata, and on the
same amortization schedule, with the guaranteed portion.
(3) If any financing or credit arrangement of the Borrower or
relating
[[Page 3757]]
to the Eligible Project, other than the Guaranteed Obligations, has an
amortization period shorter than that of the Guaranteed Obligations,
DOE shall have determined that the resulting financing structure
allocates to DOE a reasonably proportionate share of the default risk,
in light of:
(i) DOE's share of the total debt financing of the Borrower;
(ii) Risk allocation among the credit providers to the Borrower;
and
(iii) Internal and external credit enhancements.
(4) The loan guarantee does not finance, either directly or
indirectly tax-exempt debt obligations, consistent with the
requirements of section 149(b) of the Internal Revenue Code.
(5) The principal amount of the Guaranteed Obligations, when
combined with funds from other sources committed and available to the
Borrower, shall be sufficient to pay for expected Project Costs
(including adequate contingency amounts), the applicable items
specified in Sec. 609.10(b), and otherwise to carry out the Eligible
Project.
(6) There shall be a reasonable prospect of repayment by the
Borrower of the principal of and interest on the Guaranteed Obligations
and all of its other debt obligations.
(7) The Borrower shall pledge collateral or surety determined by
DOE to be necessary to secure the repayment of the Guaranteed
Obligations. Such collateral or security may include Eligible Project
assets and assets not related to the Eligible Project.
(8) The Loan Guarantee Agreement and related documents shall
include detailed terms and conditions that DOE deems necessary and
appropriate to protect the interests of the United States in the case
of default, including ensuring availability of all relevant
intellectual property rights, technical data including software, and
technology necessary for DOE or any Person selected by DOE, to
complete, operate, convey, and dispose of the defaulted Borrower or the
Eligible Project.
(9) The Guaranteed Obligations shall not be subordinate to other
financing. Guaranteed Obligations are not subordinate to other
financing if the lien on property securing the Guaranteed Obligations,
together with liens that are pari passu with such lien, if any, take
priority or precedence over other charges or encumbrances upon the same
property and must be satisfied before such other charges are entitled
to participate in proceeds of the property's sale. In DOE's discretion,
Guaranteed Obligations may share a lien position with other financing.
(10) There is satisfactory evidence that the Borrower will
diligently pursue the Eligible Project and is willing, competent, and
capable of performing its obligations under the Loan Guarantee
Agreement and the loan documentation relating to its other debt
obligations.
(11) The Borrower shall have paid all fees and expenses due to DOE
or the U.S. Government, including such amount of the Credit Subsidy
Cost as may be due and payable from the Borrower pursuant to the
Conditional Commitment, upon execution of the Loan Guarantee Agreement.
(12) The Borrower, any Eligible Lender, and each other relevant
party shall take, and be obligated to continue to take, those actions
necessary to perfect and maintain liens on collateral in respect of the
Guaranteed Obligations.
(13) DOE or its representatives shall have access to the offices of
the Borrower and the Eligible Project site at all reasonable times in
order to monitor the--
(i) Performance by the Borrower of its obligations under the Loan
Guarantee Agreement; and
(ii) Performance of the Eligible Project.
(14) DOE and Borrower have reached an agreement regarding the
information that will be made available to DOE and the information that
will be made publicly available.
(15) The Borrower shall have filed applications for or obtained any
required regulatory approvals for the Eligible Project and is in
compliance, or promptly will be in compliance, where appropriate, with
all Federal, state, and local regulatory requirements.
(16) The Borrower shall have no delinquent Federal debt.
(17) The Project Sponsors have made or will make a significant
Equity investment in the Borrower or the Eligible Project, and will
maintain control of the Borrower or the Eligible Project as agreed in
the Loan Guarantee Agreement.
(18) The Loan Guarantee Agreement and related agreements shall
include such other terms and conditions as DOE deems necessary or
appropriate to protect the interests of the United States.
(d) The Loan Guarantee Agreement shall provide that, in the event
of a default by the Borrower:
(1) Interest on the Guaranteed Obligations shall accrue at the rate
stated in the Loan Guarantee Agreement or the Loan Agreement, until DOE
makes full payment of the defaulted Guaranteed Obligations and, except
when such Guaranteed Obligations are funded through the Federal
Financing Bank, DOE shall not be required to pay any premium, default
penalties, or prepayment penalties; and
(2) The holder of collateral pledged in respect of the Guaranteed
Obligations shall be obligated to take such actions as DOE may
reasonably require to provide for the care, preservation, protection,
and maintenance of such collateral so as to enable the United States to
achieve maximum recovery.
(e)(1) An Eligible Lender or other Holder may sell, assign or
transfer a Guaranteed Obligation to another Eligible Lender that meets
the requirements of Sec. 609.9. Such latter Eligible Lender shall be
required to assume all servicing, monitoring, and reporting
requirements as provided in the Loan Guarantee Agreement. Any transfer
of the servicing, monitoring, and reporting functions shall be subject
to the prior written approval of DOE.
(2) The Secretary, or the Secretary's designee or contractual
agent, for the purpose of identifying Holders with the right to receive
payment under the Guaranteed Obligations, shall include in the Loan
Guarantee Agreement or related documents a procedure for tracking and
identifying Holders of Guaranteed Obligations. Any contractual agent
approved by the Secretary to perform this function may transfer or
assign this responsibility only with the Secretary's prior written
approval.
(f) Each Loan Guarantee Agreement shall require the Borrower to
make representations and warranties, agree to covenants, and satisfy
conditions precedent to closing and to each disbursement that, in each
case, relate to its compliance with the Davis-Bacon Act and the Cargo
Preference Act.
(g) The Applicant, the Borrower, or the Project Sponsor must
estimate, calculate, record, and provide to DOE any time DOE requests
such information and at the times provided in the Loan Guarantee
Agreement all costs incurred in the design, engineering, financing,
construction, startup, commissioning, and shakedown of the Eligible
Project in accordance with generally accepted accounting principles and
practices.
Sec. 609.9 Lender servicing requirements.
(a) When reviewing and evaluating a proposed Eligible Project, all
Eligible Lenders (other than the Federal Financing Bank) shall at all
times exercise the level of care and diligence that a reasonable and
prudent lender would exercise when reviewing, evaluating, and
disbursing a loan made by it without a Federal guarantee.
[[Page 3758]]
(b) Loan servicing duties shall be performed by an Eligible Lender,
DOE, or another qualified loan servicer approved by DOE. When
performing its servicing duties, the loan servicer shall at all times
exercise the level of care and diligence that a reasonable and prudent
lender would exercise when servicing a loan made without a Federal
guarantee, including:
(1) During the construction period, monitoring the satisfaction of
all of the conditions precedent to all loan disbursements, as provided
in the Loan Guarantee Agreement, Loan Agreement, or related documents;
(2) During the operational phase, monitoring and servicing the
Guaranteed Obligations and collection of the outstanding principal and
accrued interest as well as undertaking to ensure that the collateral
package securing the Guaranteed Obligations remains uncompromised; and
(3) Until the Guaranteed Obligation has been repaid, providing
annual or more frequent financial and other reports on the status and
condition of the Guaranteed Obligations and the Eligible Project, and
promptly notifying DOE if it becomes aware of any problems or
irregularities concerning the Eligible Project or the ability of the
Borrower to make payment on the Guaranteed Obligations or its other
debt obligations.
Sec. 609.10 Project costs.
(a) Project Costs include:
(1) Costs of acquisition, lease, or rental of real property,
including engineering fees, surveys, title insurance, recording fees,
and legal fees incurred in connection with land acquisition, lease or
rental, site improvements, site restoration, access roads, and fencing;
(2) Costs of engineering, architectural, legal and bond fees, and
insurance paid in connection with construction of the facility;
(3) Costs of equipment purchases, including a reasonable reserve of
spare parts to the extent required;
(4) Costs to provide facilities and services related to safety and
environmental protection;
(5) Costs of financial, legal, and other professional services,
including services necessary to obtain required licenses and permits
and to prepare environmental reports and data;
(6) Costs of issuing Eligible Project debt, such as fees,
transaction, and costs referred to in paragraph (a)(5) of this section,
and other customary charges imposed by Eligible Lenders;
(7) Costs of necessary and appropriate insurance and bonds of all
types including letters of credit and any collateral required therefor;
(8) Costs of design, engineering, startup, commissioning, and
shakedown;
(9) Costs of obtaining licenses to intellectual property necessary
to design, construct, and operate the Eligible Project;
(10) To the extent required by the Loan Guarantee Agreement and not
intended or available for any cost referred to in paragraph (b) of this
section, costs of funding any reserve fund, including without
limitation, a debt service reserve, a maintenance reserve, and a
contingency reserve for cost overruns during construction; provided
that proceeds of a Guaranteed Loan deposited to any reserve fund shall
not be removed from such fund except to pay Project Costs, to pay
principal of the Guaranteed Loan, or otherwise to be used as provided
in the Loan Guarantee Agreement;
(11) Capitalized interest necessary to meet market requirements and
other carrying costs during construction; and
(12) Other necessary and reasonable costs, including, without
limitation, previously acquired real estate, equipment, or other
materials, and any engineering, construction, make-ready, design,
permitting, or other work completed on an existing facility or project.
(b) Project Costs do not include:
(1) Fees and commissions charged to Borrower, including finder's
fees, for obtaining Federal or other funds;
(2) Parent corporation or other affiliated entity's general and
administrative expenses, and non-Eligible Project related parent
corporation or affiliated entity assessments, including organizational
expenses;
(3) Goodwill, franchise, trade, or brand name costs;
(4) Dividends and profit sharing to stockholders, employees, and
officers;
(5) Research, development, and demonstration costs of readying an
innovative technology for employment in a commercial project;
(6) Costs that are excessive or are not directly required to carry
out the Eligible Project, as determined by DOE;
(7) Expenses incurred after startup, commissioning, and shakedown
of the facility, or, in DOE's discretion, any portion of the facility
that has completed startup, commissioning, and shakedown;
(8) Borrower-paid Credit Subsidy Costs, the Administrative Cost of
Issuing a Loan Guarantee, and any other fee collected by DOE; and
(9) Operating costs.
Sec. 609.11 Fees and charges.
(a) Unless explicitly authorized by statute, no funds obtained from
the Federal Government, or from a loan or other instrument guaranteed
by the Federal Government, may be used to pay for the Credit Subsidy
Cost, the Application Fee, the Facility Fee, the Guarantee Fee, the
maintenance fee, and any other fees charged by or paid to DOE relating
to the Act or any Guarantee thereunder. An applicant may, at any time,
use non-Federal monies to pay the Credit Subsidy Cost or DOE fees.
(b) DOE may charge Applicants a non-refundable Facility Fee, with a
portion being payable on or prior to the date on which the Applicant
executes the Commitment Letter and the remainder being payable on or
prior to the closing date for the Loan Guarantee Agreement.
(c) In order to encourage and supplement private lending activity
DOE may collect from Borrowers for deposit in the United States
Treasury a non-refundable Risk-Based Charge which, together with the
interest rate on the Guaranteed Obligation that LPO determines to be
appropriate, will take into account the prevailing rate of interest in
the private sector for similar loans and risks. The Risk-Based Charge
shall be paid at such times and in such manner as may be determined by
DOE, but no less frequently than once each year, commencing with
payment of a pro-rated payment on the date the Guarantee is issued. The
amount of the Risk-Based Charge will be specified in the Loan Guarantee
Agreement.
(d) DOE may collect a maintenance fee to cover DOE's administrative
expenses, other than extraordinary expenses, incurred in servicing and
monitoring a Loan Guarantee Agreement. The maintenance fee shall accrue
from the date of execution of the Loan Guarantee Agreement through the
date of payment in full of the related Guaranteed Obligations. If DOE
determines to collect a maintenance fee, it shall be paid by the
Borrower each year (or portion thereof) in advance in the amount
specified in the applicable Loan Guarantee Agreement.
(e) In the event a Borrower or an Eligible Project experiences
difficulty relating to technical, financial, or legal matters or other
events (e.g., engineering failure or financial workouts), the Borrower
shall be liable as follows:
(1) If such difficulty requires DOE to incur time or expenses
beyond those customarily expended to monitor and administer performing
loans, DOE may collect an extraordinary expenses fee from the Borrower
that will reimburse
[[Page 3759]]
DOE for such time and expenses, as determined by DOE; and
(2) For all fees and expenses of DOE's independent consultants and
outside counsel, to the extent that such fees and expenses are elected
to be paid by DOE notwithstanding the provisions of paragraphs (f) and
(g) of this section.
(f) Each Applicant, Borrower, or Project Sponsor, as applicable,
shall be responsible for the payment of all fees and expenses charged
by DOE's independent consultants and outside legal counsel in
connection with an Application, Conditional Commitment, or Loan
Guarantee Agreement, as applicable. Upon making a determination to
engage independent consultants or outside counsel with respect to an
Application, DOE will proceed to evaluate and process such Application
only following execution by an Applicant or Project Sponsor, as
appropriate, of an agreement satisfactory to DOE to pay the fees and
expenses charged by the independent consultants and outside legal
counsel. Appropriate provisions regarding payment of such fees and
expenses shall also be included in each Term Sheet and Loan Guaranty
Agreement or, upon a determination by DOE, in other appropriate
agreements.
(g) Notwithstanding payment by Applicant, Borrower, or Project
Sponsor, all services rendered by an independent consultant or outside
legal counsel to DOE in connection with an Application, Conditional
Commitment, or Loan Guarantee Agreement shall be solely for the benefit
of DOE (and such other creditors as DOE may agree in writing). DOE may
require, in its discretion, the payment of an advance retainer to such
independent consultants or outside legal counsel as security for the
collection of the fees and expenses charged by the independent
consultants and outside legal counsel. In the event an Applicant,
Borrower, or Project Sponsor fails to comply with the provisions of
such payment agreement, DOE in its discretion, may stop work on or
terminate an Application, a Conditional Commitment, or a Loan Guarantee
Agreement, or may take such other remedial measures in its discretion
as it deems appropriate.
(h) DOE shall not be financially liable under any circumstances to
any independent consultant or outside counsel for services rendered in
connection with an Application, Conditional Commitment, or Loan
Guarantee Agreement except to the extent DOE has previously entered
into an express written agreement to pay for such services.
Sec. 609.12 Full faith and credit and incontestability.
The full faith and credit of the United States is pledged to the
payment of principal and interest of Guaranteed Obligations pursuant to
Guarantees issued in accordance with the Act and this part. The
issuance by DOE of a Guarantee shall be conclusive evidence that it has
been properly obtained; that the underlying loan qualified for such
Guarantee; and that, but for fraud or material misrepresentation by the
Holder, such Guarantee shall be legal, valid, binding, and enforceable
against DOE in accordance with its terms.
Sec. 609.13 Default, demand, payment, and foreclosure on collateral.
(a) If a Borrower defaults in making a required payment of
principal or interest on a Guaranteed Obligation and such default has
not been cured within the applicable grace period, the Holder may make
written demand for payment upon the Secretary in accordance with the
terms of the applicable Guarantee. If a Borrower defaults in making a
required payment of principal or interest on a Guaranteed Obligation
and such default has not been cured within the applicable grace period,
the Secretary shall notify the Attorney General.
(b) Subject to the terms of the applicable Guarantee, the Secretary
shall make payment within 60 days after receipt of written demand for
payment from the Holder, provided that the demand for payment complies
in all respects with the terms of the applicable Guarantee. Interest
shall accrue to the Holder at the rate stated in the promissory note
evidencing the Guaranteed Obligation, without giving effect to the
Borrower's default in making a required payment of principal or
interest on the applicable Guarantee Obligation or any other default by
the Borrower, until the Guaranteed Obligation has been fully paid by
DOE. Payment by the Secretary on the applicable Guarantee does not
change Borrower's obligations under the promissory note evidencing the
Guaranteed Obligation, Loan Guarantee Agreement, Loan Agreement, or
related documents, including an obligation to pay default interest.
(c) Following payment by the Secretary pursuant to the applicable
Guarantee, upon demand by DOE, the Holder shall transfer and assign to
the Secretary (or his designee or agent) the promissory note evidencing
the Guaranteed Obligation, all rights and interests of the Holder in
the Guaranteed Obligation, and all rights and interests of the Holder
in respect of the Guaranteed Obligation, except to the extent that the
Secretary determines that such promissory note or any of such rights
and interests shall not be transferred and assigned to the Secretary.
Such transfer and assignment shall include, without limitation, all of
the liens, security, and collateral rights of the Holder (or his
designee or agent) in respect of the Guaranteed Obligation.
(d) Following payment by the Secretary pursuant to a Guarantee or
other default of a Guaranteed Obligation, the Secretary is authorized
to protect and foreclose on the collateral, take action to recover
costs incurred by, and all amounts owed to, the United States as a
result of the defaulted Guarantee Obligation, and take such other
action necessary or appropriate to protect the interests of the United
States. In respect of any such authorized actions that involve a
judicial proceeding or other judicial action, the Secretary shall act
through the Attorney General. The foregoing provisions of this
paragraph (d) shall not relieve the Secretary from its obligations
pursuant to any applicable Intercreditor Agreement. Nothing in this
paragraph (d) shall limit the Secretary from exercising any rights or
remedies pursuant to the terms of the Loan Guarantee Agreement.
(e) The cash proceeds received as a result of any foreclosure on
the collateral, or other action, shall be distributed in accordance
with the Loan Guarantee Agreement (subject to any applicable
Intercreditor Agreement).
(f) The Loan Guarantee Agreement shall provide that cash proceeds
received by the Secretary (or his designee or agent) as a result of any
foreclosure on the collateral or other action shall be applied in the
following order of priority:
(1) Toward the pro rata payment of any costs and expenses
(including unpaid fees, fees and expenses of counsel, contractors and
agents, and liabilities and advances made or incurred) of the
Secretary, the Attorney General, the Holder, a collateral agent, or
other responsible person of any of them (solely in their individual
capacities as such and not on behalf of or for the benefit of their
principals), incurred in connection with any authorized action
following payment by the Secretary pursuant to a Guarantee or other
default of a Guaranteed Obligation, or as otherwise permitted under the
Loan Agreement or Loan Guarantee Agreement;
(2) To pay all accrued and unpaid fees due and payable to the
Secretary, the Attorney General, the Holder, a collateral agent, or
other responsible
[[Page 3760]]
person of any of them on a pro rata basis in respect of the Guaranteed
Obligation;
(3) To pay all accrued and unpaid interest due and payable to the
Secretary, the Attorney General, the Holder, a collateral agent, or
other responsible person of any of them on a pro rata basis in respect
of the Guaranteed Obligation;
(4) To pay all unpaid principal of the Guaranteed Obligation;
(5) To pay all other obligations of the Borrower under the Loan
Guarantee Agreement, the Loan Agreement, and related documents that are
remaining after giving effect to the preceding provisions and are then
due and payable; and
(6) To pay to the Borrower, or its successors and assigns, or as a
court of competent jurisdiction may direct, any cash proceeds then
remaining following the application of all payment described in
paragraphs (f)(1) through (5) of this section.
(g) No action taken by the Holder or its agent or designee in
respect of any collateral will affect the rights of any person,
including the Secretary, having an interest in the Guaranteed
Obligations or other debt obligations, to pursue, jointly or severally,
legal action against the Borrower or other liable persons, for any
amounts owing in respect of the Guaranteed Obligation or other
applicable debt obligations.
(h) In the event that the Secretary considers it necessary or
desirable to protect or further the interest of the United States in
connection with exercise of rights as a lien holder or recovery of
deficiencies due under the Guaranteed Obligation, the Secretary may
take such action as he determines to be appropriate under the
circumstances.
(i) Nothing in this part precludes, nor shall any provision of this
part be construed to preclude, the Secretary from purchasing any
collateral or Holder's or other Person's interest in the Eligible
Project upon foreclosure of the collateral.
(j) Nothing in this part precludes, nor shall any provision of this
part be construed to preclude, forbearance by any Holder with the
consent of the Secretary for the benefit of the Borrower and the United
States.
(k) The Holder and the Secretary may agree to a formal or informal
plan of reorganization in respect of the Borrower, to include a
restructuring of the Guaranteed Obligation and other applicable debt of
the Borrower on such terms and conditions as the Secretary determines
are in the best interest of the United States.
Sec. 609.14 Preservation of collateral.
(a) If the Secretary exercises his right under the Loan Guarantee
Agreement to require the holder of pledged collateral to take such
actions as the Secretary (subject to any applicable Intercreditor
Agreement) may reasonably require to provide for the care,
preservation, protection, and maintenance of such collateral so as to
enable the United States to achieve maximum recovery from the
collateral, the Secretary shall, subject to compliance with the
Antideficiency Act, 31 U.S.C. 1341 et seq., reimburse the holder of
such collateral for reasonable and appropriate expenses incurred in
taking actions required by the Secretary (unless otherwise provided in
applicable agreements). Except as provided in Sec. 609.13, no party
may waive or relinquish, without the consent of the Secretary, any such
collateral to which the United States would be subrogated upon payment
under the Loan Guarantee Agreement.
(b) In the event of a default, the Secretary may enter into such
contracts as he determines are required or appropriate, taking into
account the term of any applicable Intercreditor Agreement, to care
for, preserve, protect or maintain collateral pledged in respect of
Guaranteed Obligations. The cost of such contracts may be charged to
the Borrower.
Sec. 609.15 Audit and access to records.
Each Loan Guarantee Agreement and related documents shall provide
that:
(a) The Eligible Lender, or DOE in conjunction with the Federal
Financing Bank where loans are funded by the Federal Financing Bank or
other Holder or other party servicing the Guaranteed Obligations, as
applicable, and the Borrower, shall keep such records concerning the
Eligible Project as are necessary, including the Application, Term
Sheet, Conditional Commitment, Loan Guarantee Agreement, Credit
Agreement, mortgage, note, disbursement requests and supporting
documentation, financial statements, audit reports of independent
accounting firms, lists of all Eligible Project assets and non-Eligible
Project assets pledged in respect of the Guaranteed Obligations, all
off-take and other revenue producing agreements, documentation for all
Eligible Project indebtedness, income tax returns, technology
agreements, documentation for all permits and regulatory approvals, and
all other documents and records relating to the Borrower or the
Eligible Project, as determined by the Secretary, to facilitate an
effective audit and performance evaluation of the Eligible Project; and
(b) The Secretary and the Comptroller General, or their duly
authorized representatives, shall have access, for the purpose of audit
and examination, to any pertinent books, documents, papers, and records
of the Borrower, Eligible Lender, or DOE or other Holder or other party
servicing the Guaranteed Obligation, as applicable. Such inspection may
be made during regular office hours of the Borrower, Eligible Lender.
or DOE or other Holder, or other party servicing the Eligible Project
and the Guaranteed Obligations, as applicable, or at any other time
mutually convenient.
Sec. 609.16 Deviations.
(a) Whenever permitted by applicable law, the Secretary may
authorize deviations from the requirements of this part upon:
(1) Either receipt from the Applicant, Borrower, or Project
Sponsor, as applicable, of--
(i) A written request that the Secretary deviate from one or more
requirements; and
(ii) A supporting statement briefly describing one or more
justifications for such deviation; or
(iii) A determination by the Secretary in his discretion to
undertake a deviation;
(2) A finding by the Secretary that such deviation supports program
objectives and the special circumstances stated in the request make
such deviation clearly in the best interest of the Government; and
(3) If the waiver would constitute a substantial change in the
financial terms of the Loan Guarantee Agreement and related documents,
DOE shall consult with OMB and the Secretary of the Treasury.
(b) If a deviation under this section results in an increase in the
applicable Credit Subsidy Cost, such increase shall be funded either by
additional fees paid by the Borrower or on behalf of the Borrower by
any third party or, if an appropriation is available, by means of an
appropriations act. The Secretary has discretion to determine how the
cost of a deviation is funded. The Secretary may waive, alter, or
amend, through a deviation, all or any part of the Application Fee, the
Facility Fee, the Guarantee Fee, the maintenance fee, and any other
fees associated with any Application, or allow for alternative plans to
pay such fees over time or through any other means agreed upon by DOE
and the Applicant.
[[Page 3761]]
PART 611--ADVANCED TECHNOLOGY VEHICLES MANUFACTURING ASSISTANCE
PROGRAM
0
2. The authority citation for part 611 continues to read as follows:
Authority: Pub. L. 110-140 (42 U.S.C. 17013), Pub. L. 110-329.
0
3. Section 611.2 is revised to read as follows:
Sec. 611.2 Definitions.
The definitions contained in this section apply to provisions
contained in both this subpart and subpart B of this part.
Adjusted average fuel economy means a harmonic production weighted
average of the combined fuel economy of all vehicles in a fleet, which
were subject to CAFE.
Advanced technology vehicle means a passenger automobile or light
truck that meets--
(1) The Bin 5 Tier II emission standard established in regulations
issued by the Administrator of the Environmental Protection Agency
under section 202(i) of the Clean Air Act (the Act) (42 U.S.C.
7521(i)), as of the date of application, or a lower-numbered Bin
emission standard;
(2) Any new emission standard in effect for fine particulate matter
prescribed by the Administrator under the Act (42 U.S.C. 7401 et seq.),
as of the date of application; and
(3) At least 125 percent of the harmonic production weighted
average combined fuel economy, for vehicles with substantially similar
attributes in model year 2005.
Agreement means the contractual loan arrangement between DOE and a
Borrower for a loan made by and through the Federal Financing Bank with
the full faith and credit of the United States Government on the
principal and interest.
Applicant means a party that submits a substantially complete
application pursuant to this part.
Application means the compilation of the materials required by this
part to be submitted to DOE by an Applicant. One Application can
include requests for one or more loans and one or more projects.
However, an Application covering more than one project must contain
complete and separable information with respect to each project.
Automobile is used as that term is defined in 49 CFR part 523.
Borrower means an Applicant that receives a loan under the program
under this part.
CAFE means the Corporate Average Fuel Economy program of the Energy
Policy and Conservation Act, 49 U.S.C. 32901 et seq.
Combined fuel economy means the combined city/highway miles per
gallon values, as are reported in accordance with section 32904 of
title 49, United States Code. If CAFE compliance data is not available,
the combined average fuel economy of a vehicle must be demonstrated
through the use of a peer-reviewed model.
DOE or Department means the United States Department of Energy.
Eligible Facility means a manufacturing facility in the United
States that produces qualifying advanced technology vehicles, or
qualifying components.
Eligible Project means:
(1) Reequipping, expanding, or establishing a manufacturing
facility in the United States to produce qualifying advanced technology
vehicles, or qualifying components; or
(2) Engineering integration performed in the United States for
qualifying advanced technology vehicles and qualifying components; or
(3) Manufacturing, recycling, processing, reprocessing,
remediation, or reuse of materials, components, or subcomponents
involving critical minerals, critical minerals production, or the
supply chain for such materials, as set forth in Executive Order 13953
(``Executive Order Addressing the Threat to the Domestic Supply Chain
from Reliance on Critical Minerals from Foreign Adversaries,'' dated
September 20, 2020), and Executive Order 13817 (``A Federal Strategy to
Ensure Secure and Reliable Supplies of Critical Minerals,'' dated
December 20, 2017), as amended.
Engineering integration costs are the costs of engineering tasks
relating to--
(1) Incorporating qualifying components into the design of advanced
technology vehicles; and
(2) Designing tooling and equipment and developing manufacturing
processes and material suppliers for production facilities that produce
qualifying components or advanced technology vehicles.
Equivalent vehicle means a light-duty vehicle of the same vehicle
classification as specified in 10 CFR part 523.
Financially viable means a reasonable prospect that the Applicant
will be able to make payments of principal and interest on the loan as
and when such payments become due under the terms of the loan
documents, and that the Applicant has a net present value that is
positive, taking all costs, existing and future, into account.
Grantee means an entity awarded a grant made pursuant to section
136 of the Energy Independence and Security Act of 2007 and this part.
Light-duty vehicle means passenger automobiles and light trucks.
Light truck is used as that term is defined in 49 CFR part 523.
Loan Documents mean the Agreement and all other instruments, and
all documentation among DOE, the Borrower, and the Federal Financing
Bank evidencing the making, disbursing, securing, collecting, or
otherwise administering the loan [references to loan documents also
include comparable agreements, instruments, and documentation for other
financial obligations for which a loan is requested or issued].
Model year is defined as that term is defined in 49 U.S.C. 32901.
Passenger automobile is used as that term is defined in 49 CFR part
523.
Qualifying components means components that the DOE determines are:
(1) Designed for advanced technology vehicles; and
(2) Installed for the purpose of meeting the performance
requirements of advanced technology vehicles; or
(3) Involving critical minerals, as set forth in Executive Order
13953 (``Executive Order Addressing the Threat to the Domestic Supply
Chain from Reliance on Critical Minerals from Foreign Adversaries,''
dated September 20, 2020), and Executive Order 13817 (``A Federal
Strategy to Ensure Secure and Reliable Supplies of Critical Minerals,''
dated December 20, 2017), as amended, as a component of advanced
technology vehicles.
Secretary means the United States Secretary of Energy.
Security means all property, real or personal, tangible or
intangible, required by the provisions of the Loan Documents to secure
repayment of any indebtedness of the Borrower under the Loan Documents.
[FR Doc. 2020-29278 Filed 1-14-21; 8:45 am]
BILLING CODE 6450-01-P