[Federal Register Volume 78, Number 71 (Friday, April 12, 2013)]
[Proposed Rules]
[Pages 22044-22094]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-07273]
[[Page 22043]]
Vol. 78
Friday,
No. 71
April 12, 2013
Part II
Department of Agriculture
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Rural Business-Cooperative Service
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Rural Utilities Service
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7 CFR Part 4280
Rural Energy for America Program--Grants and Guaranteed Loans;
Proposed Rule
Federal Register / Vol. 78, No. 71 / Friday, April 12, 2013 /
Proposed Rules
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DEPARTMENT OF AGRICULTURE
Rural Business-Cooperative Service
Rural Utilities Service
7 CFR Part 4280
RIN 0570-AA76
Rural Energy for America Program--Grants and Guaranteed Loans
AGENCY: Rural Business-Cooperative Service and Rural Utilities Service,
USDA.
ACTION: Proposed rule.
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SUMMARY: Rural Development, a mission area within the U.S. Department
of Agriculture, is proposing grant and guaranteed loan programs for
renewable energy systems and energy efficiency improvement projects as
provided in the Food, Conservation, and Energy Act of 2008. The
proposed rule will revise the Rural Energy for America Program (REAP)
found in 7 CFR part 4280, subpart B.
DATES: Comments on the proposed rule must be received on or before June
11, 2013. The comment period for the information collection under the
Paperwork Reduction Act of 1995 continues through June 11, 2013.
ADDRESSES: You may submit comments to this rule by any of the following
methods:
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
Mail: Submit written comments via the U.S. Postal Service
to the Branch Chief, Regulations and Paperwork Management Branch, U.S.
Department of Agriculture, STOP 0742, 1400 Independence Avenue SW.,
Washington, DC 20250-0742.
Hand Delivery/Courier: Submit written comments via Federal
Express Mail or other courier service requiring a street address to the
Branch Chief, Regulations and Paperwork Management Branch, U.S.
Department of Agriculture, 300 7th Street SW., 7th Floor, Washington,
DC 20024.
All written comments will be available for public inspection during
regular work hours at the 300 7th Street SW., 7th Floor address listed
above.
FOR FURTHER INFORMATION CONTACT: Kelley Oehler, Branch Chief, Energy
Division, U.S. Department of Agriculture, 1400 Independence Avenue SW.,
Stop 3225, Washington, DC 20250-3201; telephone (202) 720-6819.
SUPPLEMENTARY INFORMATION:
EXECUTIVE SUMMARY
I. Purpose of the Regulatory Action
This proposed rule will revise 7 CFR part 4280, subpart B to
include changes that the Agency had previously identified, but did not
include in the April 2011 Interim Rule. The Agency did not include
these changes in order to expedite the implementation of the Food,
Conservation, and Energy Act of 2008 (2008 Farm Bill) program
modifications and to improve the administration of the program via an
updated regulation rather than, in part, through Federal Register
notices. This proposed rule fulfills our commitment to implement
changes that were not included in the April 2011 Interim Rule.
The Agency is authorized under Section 9001 of the 2008 Farm Bill
and Section 9007 of the amended Farm Security and Rural Investment Act
of 2002 to continue providing to agricultural producers and rural small
businesses loan guarantees and grants for the development and
construction of renewable energy systems and energy efficiency
improvement projects. The 2008 Farm Bill also authorized the Agency to
provide grants specifically for energy audits, renewable energy
development assistance, and renewable energy system feasibility
studies.
II. Summary of Major Provisions of the Regulatory Action
The major substantive changes being proposed, along with a brief
justification for each, are presented below.
Project eligibility. The Agency is proposing to allow the
purchase of refurbished renewable energy systems and the retrofitting
of an existing renewable energy system as eligible projects under this
subpart. These changes allow the Agency to provide funds to such
projects in recognition of the maturation of the renewable energy
industry, wherein earlier generations of systems are now being
refurbished or retrofitted with more energy efficient components. To
illustrate the difference between retrofitting and refurbishing,
consider the following wind turbine example. A wind turbine would be
considered retrofitted if new blades were put on to improve the
efficiency of the turbine. If, however, the turbine is taken off site
to a factory to have its gears and other worn parts replaced, it would
be considered refurbished.
For energy efficiency improvement projects, the Agency is proposing
several changes, including ensuring that energy efficiency improvements
use less energy on an annual basis than the original building and/or
equipment they improve or replace in order to be eligible for program
funding. These changes are being proposed to provide clarification and
achieve consistency in the administration of the program.
Technical reports. Changes being proposed for technical
reports include simplifying the energy efficiency improvement technical
report; simplifying the technical report for renewable energy system
projects with total project costs of $200,000 or less; revising
provisions associated with what is required for an energy assessment
and an energy audit; providing for a single technical report option for
renewable energy systems submitted through the process for applications
for projects with total project costs of $200,000 or less; and
eliminating the distinction between large and small solar and wind
projects in preparing the technical reports. The Agency is proposing
these changes to reduce overall burden for the program and streamline
the application process.
Applications. The proposed rule incorporates three grant
application processes--one for projects with total project costs
greater than $200,000; one for projects with total project costs of
$200,000 or less (but more than $80,000); and one for projects with
total project costs of $80,000 or less. The three application processes
require different amounts of paperwork. With the proposed changes, the
smaller the total project costs, the lesser amount of paperwork and
burden associated with the process. The Agency is proposing these
changes to reduce overall burden for the program and to streamline the
grant application process by requesting documentation for a complete
application based on total project costs.
Scoring criteria. The Agency is proposing to modify
several elements of the scoring criteria including eliminating the
technical merit and commercial availability criteria; adding a
criterion based on energy generated per dollar requested; modifying the
size of the agricultural producer/small business criterion; and
modifying the environmental benefits criterion. These changes are being
proposed to make the scoring more objective and to better align the
scoring metrics with the goals of the program.
Pre-commercial technology. The Agency is proposing to
remove pre-commercial technology as an eligible technology. As
proposed, only commercially available technologies would be eligible
for grants and guaranteed loans. The Agency is making this change to
avoid overlap with the Biorefinery Assistance guaranteed loan program.
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Energy audit requirement threshold for Energy Efficiency
Improvements (EEI) applications. The Agency is proposing to raise the
threshold for requiring an energy audit (versus an energy assessment)
from $50,000 to $200,000 in total project cost. The Agency is proposing
this change because experience with the program shows that the
information provided in an energy assessment for these projects is
sufficient for the Agency to assess the merits of the EEI project.
Additionally, this change makes it unnecessary for an applicant to
incur the cost of a full energy audit for a $50,000 project when an
energy assessment provides sufficient information for the Agency to
evaluate the project.
Energy analysis. The Agency is proposing to allow for an
energy efficiency improvement project with total project costs of
$80,000 or less to conduct an energy analysis instead of an energy
assessment or an energy audit. The Agency is proposing this because the
information provided by an energy analysis for these size projects is
sufficient for the Agency to assess the merits of the EEI project,
while at the same time reducing the costs to the applicant as an energy
analysis is less costly than an energy assessment.
Competing guaranteed loan only applications. The Agency is
proposing to implement for guaranteed loan-only applications a
quarterly competition. Guaranteed loan-only applications that achieve a
minimum priority score would compete for available funds on the first
business day of the second month of each Federal fiscal quarter.
Guaranteed loan-only applications that do not achieve the minimum
priority score would only be able to compete for funding during the
last quarter of the Federal fiscal year. The change to quarterly awards
is intended to make this part of REAP more appealing to lenders and
prospective borrowers by ensuring funds are available all year, while
competing the loan applications is intended to help ensure the most
worthwhile projects receive priority for funding.
III. Summary of Benefits and Costs
A Regulatory Impact Analysis (RIA) was undertaken to examine the
benefits and costs of the proposed changes to the Interim Rule for
REAP. The RIA calculated a net cost savings due to proposed
improvements in the implementation of the REAP program.
The estimate of benefits under the proposed rule are not expected
to differ significantly from those that would have occurred under the
Interim Rule for REAP. However, the net savings afforded to applicants
and to the federal government as a result of streamlining and reduced
burden will result in positive net benefits. Using the estimate of cost
changes per application and the estimate of the number of applications
will be affected by this rulemaking, the net benefits of this rule are
estimated to be approximately $3.7 million in Fiscal Year 2013.
In addition, these changes are not expected to affect the nature
and size of the environmental and energy impacts of the REAP program.
While there are expected to be job benefits from REAP funding, these
jobs were not quantified.
Background Information
Executive Order 12866
This proposed rule has been reviewed under Executive Order (EO)
12866 and has been determined to be economically significant by the
Office of Management and Budget. The EO defines a ``significant
regulatory action'' as one that is likely to result in a rule that may:
(1) Have an annual effect on the economy of $100 million or more or
adversely affect, in a material way, the economy, a sector of the
economy, productivity, competition, jobs, the environment, public
health or safety, or State, local, or tribal governments or
communities; (2) Create a serious inconsistency or otherwise interfere
with an action taken or planned by another agency; (3) Materially alter
the budgetary impact of entitlements, grants, user fees, or loan
programs or the rights and obligations of recipients thereof; or (4)
Raise novel legal or policy issues arising out of legal mandates, the
President's priorities, or the principles set forth in this EO.
The Agency conducted a benefit-cost analysis to fulfill the
requirements of EO 12866. In this analysis, the Agency identifies
potential benefits and costs of REAP to lenders, borrowers, and the
Agency. The analysis contains quantitative estimates of the burden to
the public and the Federal government and qualitative descriptions of
the expected economic, environmental, and energy impacts associated
with REAP.
Unfunded Mandates Reform Act
Title II of the Unfunded Mandates Reform Act 1995 (UMRA) (Pub. L.
104-4) establishes requirements for Federal agencies to assess the
effects of their regulatory actions on State, local, and tribal
governments and the private sector. Under section 202 of the UMRA,
Rural Development generally must prepare a written statement, including
a cost-benefit analysis, for proposed and final rules with ``Federal
mandates'' that may result in expenditures to State, local, or tribal
governments, in the aggregate, or to the private sector of $100 million
or more in any one year. When such a statement is needed for a rule,
section 205 of the UMRA generally requires Rural Development to
identify and consider a reasonable number of regulatory alternatives
and adopt the least costly, more cost-effective, or least burdensome
alternative that achieves the objectives of the rule.
This proposed rule contains no Federal mandates (under the
regulatory provisions of Title II of the UMRA) for State, local, and
tribal governments or the private sector. Thus, this rule is not
subject to the requirements of sections 202 and 205 of the UMRA.
Environmental Impact Statement
Under this program, the Agency conducts a National Environmental
Policy Act of 1969 (NEPA), 42 U.S.C. 4321 et seq., review for each
application received. To date, no significant environmental impacts
have been reported, and Findings of No Significant Impact (FONSI) have
been issued for each approved application. Taken collectively, the
applications show no potential for significant adverse cumulative
effects.
This document has been reviewed in accordance with 7 CFR part 1940,
subpart G, ``Environmental Program.'' Rural Development has determined
that this action does not constitute a major Federal action
significantly affecting the quality of the human environment, and in
accordance with NEPA, an Environmental Impact Statement is not
required. Grant and guaranteed loan applications will be reviewed
individually to determine compliance with NEPA.
Executive Order 12988, Civil Justice Reform
This proposed rule has been reviewed under EO 12988, Civil Justice
Reform. In accordance with this rule: (1) All State and local laws and
regulations that are in conflict with this rule will be preempted; (2)
no retroactive effect will be given to this rule; and (3)
administrative proceedings in accordance with 7 CFR part 11 must be
exhausted before bringing suit in court challenging action taken under
this rule unless those regulations specifically allow bringing suit at
an earlier time.
Executive Order 13132, Federalism
It has been determined, under EO 13132, Federalism, that this
proposed rule does not have sufficient federalism implications to
warrant the preparation of a Federalism Assessment. The
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provisions contained in the proposed rule will not have a substantial
direct effect on States or their political subdivisions or on the
distribution of power and responsibilities among the various government
levels.
Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601-612) (RFA) generally
requires an agency to prepare a regulatory flexibility analysis of any
rule subject to notice and comment rulemaking requirements under the
Administrative Procedure Act or any other statute unless the agency
certifies that the rule will not have an economically significant
impact on a substantial number of small entities. Small entities
include small businesses, small organizations, and small governmental
jurisdictions.
In compliance with the RFA, Rural Development has determined that
this action, while mostly affecting small entities, will not have a
significant economic impact on a substantial number of these small
entities. Rural Development made this determination based on the fact
that this regulation only impacts those who choose to participate in
the program. Small entity applicants will not be affected to a greater
extent than large entity applicants.
Executive Order 13211, Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution, or Use
The regulatory impact analysis conducted for this proposed rule
meets the requirements for EO 13211, which states that an agency
undertaking regulatory actions related to energy supply, distribution,
or use is to prepare a Statement of Energy Effects. This analysis finds
that this proposed rule will not have any adverse impacts on energy
supply, distribution, or use.
Executive Order 12372, Intergovernmental Review of Federal Programs
This program is not subject to the provisions of EO 12372, which
require intergovernmental consultation with State and local officials.
Executive Order 13175, Consultation and Coordination With Indian Tribal
Governments
This EO imposes requirements on Rural Development in the
development of regulatory policies that have Tribal implications or
preempt Tribal laws. Rural Development has determined that the proposed
rule has substantial direct effects on one or more Indian Tribe(s) or
on either the relationship or the distribution of powers and
responsibilities between the Federal Government and the Indian Tribes.
This rule was included in the USDA Joint Agency Regional Consultations
that consolidated consultation efforts of 70 rules from the 2008 Farm
Bill. USDA Rural Development sent senior level agency staff to seven
regional locations and reached out to Tribal leadership in each region
to consult on this proposed rule. Upon completion of the consultation
process, USDA Rural Development analyzed the feedback and incorporated
input from the consultation into this regulation.
For example, with the intent to increase Tribal participation in
the program, the definition of a small business in this rule includes
Tribal corporations chartered under Section 17 of the Indian
Reorganization Act (25 U.S.C. 477) or other Tribal business entities
that have similar structures and relationships with their Tribal
governments as determined by the Agency. The Agency shall determine the
small business status of such a Tribal entity without regard to the
resources of the Tribal government.
USDA will respond in a timely and meaningful manner to all Tribal
government requests for consultation concerning this rule. The policies
contained in this rule do not have implications that preempt Tribal
law.
Programs Affected
The Catalog of Federal Domestic Assistance program number assigned
to the affected program is 10.868, Rural Energy for America Program.
Paperwork Reduction Act
In accordance with the Paperwork Reduction Act of 1995, USDA Rural
Development will seek the Office of Management and Budget (OMB)
approval of the reporting and recordkeeping requirements contained in
this rule and hereby open a 60-day public comment period.
Title: Rural Energy for America Program.
Type of Request: New collection.
Abstract: Rural Development is providing grants and guaranteed
loans for the construction or retrofitting of renewable energy systems
and to make energy efficiency improvements; grants for energy audits;
grants for renewable energy development assistance; and grants for
feasibility studies for renewable energy systems. This financial
assistance is contained in 7 CFR part 4280, subpart B.
The collection of information is vital for Rural Development to
make wise decisions regarding the eligibility of projects and borrowers
in order to ensure compliance with the regulations and that the funds
obtained from the Government are used appropriately (e.g., used for the
purposes for which the guaranteed loans were awarded). The type of
information required depends on the type of financial assistance being
sought, as summarized below.
1. Renewable energy systems (RES) and energy efficiency
improvements (EEI) grants. Persons seeking RES or EEI grants under this
program will have to submit applications applicable to the size of
their proposed projects. The information to be included is similar, but
applications for projects with total project costs of $200,000 or less
require less information to be submitted than applications for projects
with total project costs of more than $200,000. Similarly, applications
for projects with total project costs of $80,000 or less require still
less information to be submitted than the other applications.
All applications require certain forms and certifications,
applicant information (or, in the case of applications for projects
with total project costs of $80,000 or less, a certification that the
applicant is eligible), project information (or, in the case of
applications for projects with total project costs of $80,000 or less,
a certification that the project is eligible), information on previous
grants and guaranteed loans received under REAP, information on
environmental benefits, and matching funds, and a technical report.
Applications for projects with total project costs of more than
$200,000 also require financial information on the applicant and any
affiliated companies, and, if the application is for a renewable energy
system with total project costs of more than $200,000, a feasibility
study for the renewable energy system. Information in the application
will be used to determine applicant and project eligibility, including
if the project has technical merit.
Between grant approval and completion of project construction,
grantees are required to submit semiannual performance reports, with a
final project development report due once the project has been
constructed.
Once the project has been completed, annual reports are required on
the project. For a renewable energy system project, the outcome project
performance report is required annually for 3 years following its
completion. For an energy efficiency improvement project, the outcome
project performance report is required annually for 2 years following
its completion.
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2. Renewable energy systems and energy efficiency improvements
guaranteed loans. With one major exception, persons seeking loan
guarantees under this program will have to submit applications that
include the information required for grant applications of similar
total project costs. For example, loan guarantee requests for total
project costs of $200,000 or less would follow the application
requirements of grants with total project costs of $200,000 or less
(but more than $80,000). The major exception is in regards to the
forms, certifications, and agreements required for loan guarantee
applications, which include, but are not limited to, the lender's
analysis, appraisals, commercial credit reports on the borrower, and
proposed loan agreement. The information included in applications for
loan guarantee will be used to determine applicant and project
eligibility and to ensure that funds are used for projects that are
likely to be financially sound.
Once a project has been approved and the loan has been guaranteed,
lenders must submit periodic reports on the status of their loan
portfolios and, when applicable, bimonthly default reports. In
addition, lenders are required to conduct annual inspections of each
completed project.
3. Renewable energy system feasibility study grants. Persons
seeking a renewable energy system feasibility study grant will have to
submit certain standard forms; the primary North American Industry
Classification System (NAICS) code applicable to the applicant's
operation if known or a description of the operation in enough detail
for the Agency to determine the primary NAICS code; certification that
the applicant is a legal entity in good standing (as applicable), and
operating in accordance with the laws of the state(s) where the
applicant has a place of business; a proposed scope of work;
certification that the applicant has not received any other Federal or
State assistance for a feasibility study for the same renewable energy
system project that is the subject of the application; if the applicant
is a rural small business, certification that the feasibility study
grant will be for a renewable energy system project that is located in
a rural area; and certification associated with financial information
to determine the applicant's size. The information included in
applications will be used to determine applicant and project
eligibility and to ensure that funds are used for viable projects.
Beginning the first full year after the feasibility study has been
completed, a grantee is required to submit an outcome project
performance report annually for 2 years on the status of the renewable
energy system for which the feasibility study was completed.
4. Energy audit and renewable energy development assistance grants.
Entities seeking an energy audit or renewable energy development
assistance grant will have to submit certain standard forms;
certification that the applicant is a legal entity in good standing (as
applicable), and operating in accordance with the laws of the state(s)
where the applicant has a place of business; and a proposed scope of
work. The information included in applications for the grant will be
used to determine applicant and project eligibility and to ensure that
funds are used for viable projects.
While the project activities are being completed, grantees must
submit semi-annual performance reports, which will, in part, compare
actual accomplishments to the objectives, and a list of recipients. A
final performance report is also required. Lastly, an outcome project
performance report is required 1 year after submittal of the final
performance report.
Estimate of Burden for Entire REAP Rule
The following estimates are based on the average over the first 3
years the program has been in place.
Estimate of Burden: Public reporting burden for this collection of
information is estimated to average 3.9 hours per response.
Respondents: Agricultural producers; rural small businesses; units
of State, tribal, or local government; instrumentalities of a State,
tribal, or local government; land-grant colleges (including 1994 land-
grant Tribal Colleges and Universities and 1890 land-grant Historically
Black Colleges and Universities); universities, or other institutions
of higher education; rural electric cooperatives; and public power
entities.
Estimated Number of Respondents: 3,957.
Estimated Number of Responses per Respondent: 14.8.
Estimated Number of Responses: 58,399.
Estimated Total Annual Burden (hours) on Respondents: 219,347.
Copies of this information collection can be obtained from Jeanne
Jacobs, Regulations and Paperwork Management Branch, Support Services
Division, U.S. Department of Agriculture, Rural Development, STOP 0742,
1400 Independence Ave., SW., Washington, DC 20250-0742 or by calling
(202) 692-0040.
Comments
Comments are invited on: (a) Whether the proposed collection of
information is necessary for the proper performance of the functions of
Rural Development, including whether the information will have
practical utility; (b) the accuracy of the new Rural Development
estimate of the burden of the proposed collection of information,
including the validity of the methodology and assumptions used; (c)
ways to enhance the quality, utility, and clarity of the information to
be collected; and (d) ways to minimize the burden of the collection of
information on those who are to respond, including through the use of
appropriate automated, electronic, mechanical, or other technological
collection techniques or other forms of information technology.
Comments may be sent to Jeanne Jacobs, Regulations and Paperwork
Management Branch, U.S. Department of Agriculture, Rural Development,
STOP 0742, 1400 Independence Ave., SW., Washington, DC 20250. All
responses to this proposed rule will be summarized and included in the
request for OMB approval. All comments will also become a matter of
public record.
E-Government Act Compliance
Rural Development is committed to complying with the E-Government
Act, to promote the use of the Internet and other information
technologies to provide increased opportunities for citizen access to
Government information and services, and for other purposes.
I. Background
Rural Development administers a multitude of Federal programs for
the benefit of rural America, ranging from housing and community
facilities to infrastructure and business development. Its mission is
to increase economic opportunity and improve the quality of life in
rural communities by providing the leadership, infrastructure, venture
capital, and technical support that enables rural communities to
prosper. To achieve its mission, Rural Development provides financial
support (including direct loans, grants, and loan guarantees) and
technical assistance to help enhance the quality of life and provide
the foundation for economic development in rural areas.
In response to the Farm Security and Rural Investment Act of 2002
(FSRIA), which established the Renewable Energy Systems and Energy
Efficiency Improvements Program under Title IX,
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Section 9006, Rural Business-Cooperative Service (RBS) promulgated a
rule (70 FR 41264, July 18, 2005) establishing the renewable energy
systems and energy efficiency improvements program (7 CFR part 4280,
subpart B) for making grants, loan guarantees, and direct loans to
farmers and ranchers (agricultural producers) or rural small businesses
to purchase renewable energy systems and make energy efficiency
improvements. Renewable energy sources eligible for funding included
bioenergy, anaerobic digesters, electric geothermal, direct geothermal,
solar, hydrogen, and wind.
Since it established the program, RBS has funded, through FY 2008,
over 2,000 projects. Of these, nearly 1,700 projects have received
grant-only funds totaling approximately $115 million. Another 327
projects received grants and guaranteed loans, totaling approximately
$62.9 million in grant and loan funds combined, while 9 projects
received only guaranteed loans totaling approximately $71 million.
Section 9001 of the Food, Conservation, and Energy Act of 2008
(2008 Farm Bill) amended Title IX of the FSRIA. Under the 2008 Farm
Bill and Section 9007 of the amended FSRIA, the Agency is authorized to
continue providing to agricultural producers and rural small businesses
loan guarantees and grants for the development and construction of
renewable energy systems and energy efficiency improvement projects. In
addition to the current set of renewable energy projects eligible for
funding, the 2008 Farm Bill expands the program to include two new
renewable energy technologies: hydroelectric and ocean energy. Further,
the 2008 Farm Bill authorizes the Agency to provide grants specifically
for energy audits, renewable energy development assistance, and
renewable energy system feasibility studies. This newly expanded
program is referred to as REAP, which continues the Agency's assistance
to the adoption of both renewable energy systems and energy efficiency
improvements through Federal government loan guarantees and grants.
On April 14, 2011, Rural Development published an Interim Rule for
REAP (76 FR 21110). The Interim Rule established a consolidated REAP
program by including each part of the program in a single subpart. Up
to then, only the RES and EEI grant and guaranteed loan program
requirements had been implemented under 7 CFR part 4280, subpart B and,
for requirements established by the 2008 Farm Bill, through Federal
Register notices. Since the 2008 Farm Bill, the requirements for RES
feasibility study grants and for energy audit and renewable energy
development assistance grants had been implemented through a series of
Federal Register notices. For the RES feasibility studies, these
notices were published on May 26, 2009 (74 FR 24769) and August 6, 2010
(75 FR 47525). For energy audits and renewable energy development
assistance, these notices were published on March 11, 2009 (74 FR
10533) and May 27, 2010 (75 FR 29706).
As noted in the April 14, 2011, Federal Register notice, the Agency
indicated that it would publish a proposed rule following publication
of the Interim Rule. This notice fulfills that intent.
II. Discussion of Proposed Rule for REAP
In this section, the proposed rule for REAP is described. As has
been noted, the Agency is proposing to revise 7 CFR part 4280, subpart
B. The following paragraphs discuss the proposed changes, first by
identifying several of the more significant changes and then discussing
changes by sections.
A. Summary of Significant Changes
The Agency is proposing a number of revisions to 7 CFR part 4280,
subpart B based, in part, on its effort to streamline and improve the
program. The major substantive changes being proposed are summarized
below.
1. Project eligibility. The Agency is proposing to allow the
purchase of a refurbished renewable energy system and the retrofitting
of an existing renewable energy system as eligible projects for a RES
or EEI grant, guaranteed loan or combination guaranteed loan and grant
project. In addition, the Agency is clarifying several eligible
projects and associated project costs, including:
Making energy efficiency improvements that will use less
energy on an annual basis than the original building and/or equipment
that it will improve or replace;
Replacing multiple pieces of equipment with one piece of
equipment that will use less energy on an annual basis; and
Constructing a new energy efficient building only when the
building is used for the same purpose as the existing building, it will
be more cost effective to construct a new building, and the new
building will use less energy on an annual basis than improving the
existing building.
In all cases, the applicant must demonstrate that less energy is
used on an annual basis as documented in an energy analysis,
assessment, or audit as applicable.
2. Technical reports. Numerous changes are being proposed for
technical reports including, but not limited to, the following:
simplifying the energy efficiency improvement technical report;
simplifying the technical report for renewable energy system projects
with total project costs of $200,000 or less; revising provisions
associated with what is required for an energy assessment and an energy
audit; providing for a single technical report option for renewable
energy systems submitted through the process for applications for
projects with total project costs of $200,000 or less; and eliminating
the distinction between large and small solar and wind projects in
preparing the technical reports.
3. Applications. The Agency is proposing changes to RES and EEI
applications that are intended to reduce overall burden for the program
and streamline the grant application process by requesting
documentation for a complete application based on total project costs.
Specifically, the proposed rule has defined three grant application
processes to include projects with total project costs greater than
$200,000, projects with total project costs of $200,000 or less (but
more than $80,000), and projects with total project costs of $80,000 or
less. With the proposed changes, the smaller the total project costs,
the lesser amount of paperwork and burden associated with the process.
Applications for projects with total project costs of less
than $200,000. In addition to compiling applicable provisions into a
single section within the rule, the Agency is proposing to remove the
requirement that the Agency has to sign off on all procurement
contracts for projects with total project costs of less than $200,000
(referred to in 7 CFR part 4280, subpart B as ``simplified''
applications).
Applications for projects with total project costs of
$80,000 or less. The Agency is proposing a new application process for
projects with total project costs of $80,000 or less. These provisions
are intended to reduce the application burden for these smaller
projects from the current provisions in the Interim Rule, while still
providing the Agency sufficient information to determine applicant and
project eligibility and to evaluate and score the applications. The
Agency is proposing the $80,000 threshold based on the set-aside for
projects seeking grants of $20,000 or less and the maximum grant
portion that the Agency can provide of 25 percent of the total project
costs. For
[[Page 22049]]
more information on how these new provisions differ from the provisions
for these applications under the Interim Rule for REAP, please see the
discussion on ``Grant applications for projects with total project
costs of $80,000 or less'' later in this preamble.
4. Scoring criteria. The Agency is proposing to modify several
elements of the scoring criteria including eliminating the technical
merit and commercial availability criteria; adding a criterion based on
energy generated per dollar requested; modifying the size of the
agricultural producer/small business criterion; and modifying the
environmental benefits criterion. For a more detailed accounting of the
changes being proposed to the scoring criteria, please see discussion
for Table 1 under the ``Section by section discussion of revisions to
the RES and EEI Grant and Guaranteed Loan Program'' later in this
preamble.
5. Pre-commercial technology. The Agency is proposing to remove
pre-commercial technology as an eligible technology. As proposed, only
commercially available technologies would be eligible for grants and
guaranteed loans.
6. Energy audit requirement threshold for EEI applications. The
Agency is proposing to raise the threshold for requiring an energy
audit (versus an energy assessment) from $50,000 to $200,000 in total
project cost.
7. Construction planning and performing development. The Agency is
proposing a major reorganization and clarification of these provisions
to address confusion under 7 CFR part 4280, subpart B and to provide
greater consistency in its implementation by each state.
8. Competing guaranteed loan applications. The Agency is proposing
to establish new procedures for competing guaranteed loan applications.
Major features of the new procedures are:
Establishing quarterly competitions for guaranteed loan-
only applications;
Establishing each year a minimum score to determine
whether an application is competed in each quarter (only those
applications that score at or above the minimum score) or only in the
last quarter of the Federal fiscal year (those applications that score
below the minimum score and all other applications that were not
funded);
Procedures for making awards when there are insufficient
funds available; and
Limiting the number of competitions each application can
participate for funding--four quarters for applications that score at
or above the minimum score and only the last quarter of the Federal
fiscal year for applications that score below the minimum score and all
other applications that were not funded.
The proposed procedures are intended to encourage more guaranteed
loan applications by making awards throughout the year. This allows
potential applicants more flexibility in preparing and submitting their
applications. Further, the Agency is encouraging better projects by
establishing a minimum score.
Section by Section Discussion of Revisions to the RES and EEI Grant and
Guaranteed Loan Program
Purpose (Sec. 4280.101)
The only change being proposed to this section is the removal of
the reference to ``in rural areas'' because certain projects proposed
by agricultural producers may be eligible for REAP funds even though
the project is located in a non-rural area. The Agency is proposing
this change for two reasons.
First, the Agency has determined that there are a number of
agricultural producers that operate in non-rural areas that can benefit
from REAP. Such agricultural producers may include commercial nurseries
and truck farms (the growing of one or more crops on a scale necessary
for shipment to distant markets) that are located near urban areas.
Second, to the extent the authorizing statutes allow, the Agency
wanted REAP to be consistent with the Biorefinery Assistance Program,
the Repowering Assistance Program, and the Advanced Biofuel Payment
Program. The three programs do not include a rural area requirement in
their respective interim rules published in February 2011.
Organization of This Subpart (Sec. 4280.102)
The purpose of this section continues to be providing the reader
with an overview of the organization of the subpart. The section has
been updated to reflect the changes in the rule.
Definitions (Sec. 4280.103)
The Agency is revising or deleting some of the definitions, as well
as cross-referencing Sec. 4279.2 for guaranteed loan terms. The Agency
is also proposing to define several new terms.
Revised Terms
Anaerobic digester project. The primary revision to this
term is replacing ``waste'' with ``or other Renewable Biomass'' in
order to clarify that human waste is an eligible feedstock to anaerobic
digesters.
Bioenergy project. This term is being updated to refer to
``Renewable Biomass'' and is being revised by removing the last portion
of the definition referring to anaerobic digesters, which the Agency
determined is unnecessary to define the term.
Blended liquid transportation fuel. This term is being
clarified by recasting the last part of the definition to refer to
Federal or State requirements, whichever of the two is higher.
Capacity. This term is being clarified by replacing
``load'' with ``output rate'' and replacing ``meet'' with ``attain.''
Commercially available. This term is being revised to: (1)
clarify that the proven operating history has to be for at least one
year and warranties are only required on major parts, and (2) add a
provision for technologies currently only available outside the United
States to qualify as commercially available.
Design/build method. This term is being revised by
replacing ``prime contractor'' with ``contractor.''
Eligible project costs. This term is being revised by
including costs that are eligible to be paid or guaranteed with program
funds as part of eligible project costs.
Energy assessment. This term is being revised in three
ways. First, ``experienced energy assessor, certified energy manager,
or professional engineer'' is being replaced with ``Energy Auditor,
Energy Assessor, or an individual supervised by either an Energy
Assessor or Energy Auditor.'' Second, the assessment of energy ``use''
is being added. Third, the details of what constitutes an energy
assessment are being revised and moved from the definition section to
Section C of Appendix A of this subpart.
Energy assessor. This term is being revised as to who
qualifies as an energy assessor under this subpart and to require that
the energy assessor must be a qualified consultant.
Energy audit. This term is being revised in two ways.
First, ``certified energy manager or professional engineer'' is being
replaced with ``energy auditor.'' Second, the details of what
constitutes an energy audit are being revised and moved from the
definition section to Section B of Appendix A of this subpart.
Energy auditor. The term is being revised as to who
qualifies as an energy auditor under this subpart and to require that
the energy auditor must be a qualified consultant.
Energy efficiency improvement. This term is being revised
by adding ``or replacement of''; by replacing ``a facility, building,
or process'' with ``an
[[Page 22050]]
existing building and/or equipment''; and by replacing ``reduce energy
consumption, or reduce energy consumed per square foot'' with ``reduces
energy consumption on an annual basis.''
Feasibility study. This term is being revised by adding
``conducted by a qualified consultant.''
Financial feasibility. This term is being revised by
referring to ``sufficient income'' rather than ``the income.''
Geothermal electric generation. This term is being
clarified by referring to ``thermal energy from a geothermal source''
and by removing ``high pressure steam for'' because it is not needed.
Hydroelectric energy. The term being defined in the
proposed rule is now ``hydroelectric source'' to conform to the
terminology in the 2008 Farm Bill. In addition, the definition has been
clarified to refer to it as a ``Renewable Energy System producing
electricity.'' Lastly, the definition now includes reference to
hydroelectric sources with a rated power of 30 megawatts or less,
rather than having a separate definition for small hydropower.
Hydrogen project. This definition is being edited for
clarification.
Instrumentality. Examples have been added to the
definition.
Interconnection agreement. This term is being revised by
adding ``A contract containing'' to the beginning of the definition.
Matching funds. This term is being clarified by referring
to total eligible project costs instead of eligible project costs.
Passive investor. This term is being clarified by
replacing ``arrangement'' with ``agreement.''
Qualified consultant. This term is being expanded by
incorporating from the definition of ``qualified party'' the concept of
an independent third-party.
Renewable biomass. The definition for renewable biomass is
provided to the Agency by the 2008 Farm Bill. This term is being
clarified to identify it includes ``other biodegradable waste'' and to
state that waste material does not include unsegregated solid waste.
Renewable energy site assessment. This definition is being
revised through editing and presentation to be consistent with the
technical report requirements contained in Sections A through C of
Appendix B for renewable energy system applications submitted with a
total project cost of $200,000 or less.
Rural Business Cooperative Service Grant Agreement (Form
RD 4280-2) or successor form. This term is being redefined as ``Grant
Agreement'' and is being updated to reflect the new name of the form.
Simple payback. This term is being revised in several
ways.
Reference to ``(including REAP grants)'' in several equations is
being removed because the phrase is unnecessary.
The calculation of energy saved or replaced is being revised. The
applicant is to calculate the actual average annual total energy used
in the original building and/or equipment, as applicable, prior to the
RES or EEI project over the most recent 36 months of operation or, if
in operation less than 36 months, over the length of ownership. Next,
the applicant is to calculate the projected average annual total energy
that would have been used in the original building and/or equipment, as
applicable, for this same 36-month period if the proposed project had
been in place over that time period. The difference between these two
values for the applicable time period represents the amount of energy
saved or replaced. The Agency notes that the value of the price of
energy used in the calculation of simple payback is to be calculated
for this same 36-month period or period of ownership, if less than 36
months.
The adjustment for energy efficiency equipment based on the ratio
of capacity is being removed. However, there may be projects where
multiple pieces of equipment are being replaced by one piece of
equipment. The applicant must demonstrate in an energy analysis,
assessment, or audit, as applicable, that the average annual total
energy used by the one piece of equipment is less than the combined
average annual total energy used by the multiple pieces of equipment.
The calculation of simple payback for flexible fuel pumps is being
revised to specify that only the flexible fuel pump cost, revenue, and
expenses are to be included in the calculation. In addition, income is
now ``average net income'' and is based on all energy-related revenue
streams.
Small business. This term is being revised by removing
reference to providing service to rural consumers ``on a cost-of-
service basis without support from public funds or subsidy from the
Government authority establishing the district.''
Added Terms
Complete application. This term is being added to clarify
the timeframe for when eligible project costs can begin to be incurred.
Federal fiscal year. This term is being added to ensure
clarity in implementing the subpart.
Energy analysis. This term is being added because the
Agency is proposing to allow for an energy efficiency improvement
project with total project costs of $80,000 or less to conduct an
energy analysis instead of an energy assessment or an energy audit. In
addition, the details of what constitutes an energy analysis have been
added to Sec. 4280.119(b)(3)(iii). The Agency notes that an energy
analysis covers the same areas as an energy assessment, but will have
less detail than an energy assessment, as provided in Appendix A of
this subpart.
Hybrid. This term is being added because the program now
specifically addresses projects in which more than one renewable
technology is proposed.
Immediate family. This term is being added to conform to a
proposed change, as discussed later, replacing ``close relative'' with
``immediate family.''
Inspector. This term is being added to clarify who can
perform inspections required under the subpart.
Retrofitting. This term is being added because the rule
addresses retrofitting as an eligible project purpose.
Rural Small Business. This term is being added to clarify
the applicability of certain sections of the rule.
Deleted Terms
The following terms are being deleted because they are already
defined in Sec. 4279.2 of this part and the Agency has determined
there is no reason for the terms to be defined differently between
regulations.
Borrower.
Holder.
Interim financing.
Lender.
Participation.
Promissory note.
The following terms are being deleted because they are no longer
used in this subpart.
Existing business.
Fair market value of equity in real property.
Hydropower.
Large solar, electric.
Large solar, thermal.
Large wind system.
Necessary capital improvement.
Post-application.
Pre-commercial technology.
Qualified party.
Simplified application.
Small hydropower.
Small solar, electric.
Small solar, thermal.
Small wind system.
Spreadsheet.
Very small business.
Exception Authority (Sec. 4280.104)
This section is being revised to focus consideration of the
application of
[[Page 22051]]
requirement or provision on the financial interest of the Federal
government when evaluating whether to make an exception.
Review or Appeal Rights (Sec. 4280.105)
This section is being revised, in part, to conform with recent
energy title rulemakings to be simpler and to identify the availability
of a review of an Agency decision and, in part, to clarify which
parties may appeal an adverse decision associated with a guaranteed
loan loss payment and with a combined funding application.
Conflicts of Interest (Sec. 4280.106)
This section is being revised to clarify and provide examples of
conflict of interest situations dealing with the receipt of Federal
awards, matching funds, and procurement contracts. In addition, a new
paragraph specifically addressing assistance to Agency employees and
their relatives and associates has been included. The Agency is adding
this provision to provide greater transparency and accountability in
government.
Laws That Contain Other Compliance Requirements (Sec. 4280.108)
Several references have been moved or deleted as follows:
Reference to equal employment opportunity is being
relocated from this section to the Construction Planning and Performing
Development section (see Sec. 4280.124(a)(2)).
Reference to the Equal Credit Opportunity Act at the end
of paragraph (a) of this section is being removed because it duplicates
reference to it earlier in the paragraph and thus is unnecessary.
Reference to the Americans with Disabilities Act as a
separate, stand alone paragraph was removed because it is adequately
covered elsewhere in this section and in the Construction Planning and
Performing Development section (see Sec. 4280.124(d)(2)).
Reference to Executive Order 12898, which addresses the
Agency's conduct of a Civil Rights Impact Analysis, is being removed
because it is internal Agency policy and as such it is unnecessary to
include it in a rule.
With regard to 7 CFR 4280.108(e), Environmental analysis, the
Agency is proposing that, if the applicant takes any actions or incurs
any obligations that would either limit the range of alternatives to be
considered or that would have an adverse effect on the environment
prior to the Agency completing the environmental review, such action or
obligation ``may'' (rather than ``will'') result in the project being
determined by the Agency to be ineligible. This change is not intended
to limit any NEPA requirements. Actions taken by an applicant prior to
Agency review that have an adverse effect on the environment, would be
a basis for the Agency to determine the project ineligible for funding.
Further, the Agency is proposing to clarify this provision by changing
``during the time of application or application review'' to ``prior to
the Agency completing the environmental review.'' Lastly, because this
provision addresses any project's eligibility, it has been moved to the
project eligibility section for each program.
General Applicant, Application, and Funding Provisions (Sec. 4280.110)
Several changes are being proposed for this section. Paragraph (b)
is being added to address application submittal. Previously,
application windows were identified through the issuance of notices in
the Federal Register. As proposed, all applications (grants, guaranteed
loans, and combination grants and guaranteed loans) may be submitted at
any time throughout the year except for energy audit and renewable
energy development assistance applications. The Agency will select
grant and combination grant and guaranteed loan applications based on
the grant application's score and subject to available funding.
All guaranteed loan-only applications will be scored. Applications
that are ready for funding and that score at or above the minimum score
will be competed on a quarterly basis, with higher scoring applications
receiving priority. Applications ready for funding, but that score
below the minimum score and all other applications that were not funded
will only be competed during the last quarter of the Federal fiscal
year.
Paragraph (c) is being added to set limits on the number of
applications an applicant can submit each Federal fiscal year.
Specifically, an applicant can submit only one application for a
renewable energy system project, one application for an energy
efficiency improvement project, and one application for a renewable
energy system feasibility study project. Thus, for example, an
applicant cannot submit applications for two renewable energy system
projects in the same Federal fiscal year. This provision clarifies the
Agency's intent in implementing the program to provide for a greater
distribution of funds by limiting an applicant to one application for
each of the three types of projects each Federal fiscal year. An
applicant will still, however, be allowed to submit a total of three
applications, one for each type of project.
Paragraph (d), currently 7 CFR 4280.116(a)(1), is being clarified
to refer to ``types of funding requests'' rather than to ``types of
funding applications.'' In addition, the Agency is moving these
provisions to this section because they are more appropriately placed
in the general section of the rule than in the RES/EEI grant section.
Paragraph (e) is being added to address modifications to
applications once they have been submitted to the Agency, how the date
of record is affected, and how the Agency will consider the modified
application for selection.
In addition to retitling paragraph (f) to ``Incomplete
applications,'' the provisions associated with incomplete applications
are being clarified.
Paragraph (h) is being added to address provisions common to the
technical reports submitted with the application--the level of detail
each is to provide; modifications to the technical report prior to the
applicant's selection of a final design, equipment vendor, or
contractor; and hybrid projects. For the most part, these provisions
are the same as found in 7 CFR 4280, subpart B, but have been brought
together in this paragraph.
Paragraph (i) addresses technical merit. The Agency will determine
the technical merit of all applications submitted under this subpart,
except for renewable energy system feasibility study grant applications
and energy audit and renewable energy development assistance grant
applications.
While projects that are without technical merit are still
ineligible, the Agency is proposing to replace scoring the technical
merit of a project with a process for determining whether the project
has or does not have technical merit. Under the Interim Rule, technical
merit is a criterion used to score and rank applications to determine
which projects are funded. The Agency has determined based on its
experience with REAP applications that this criterion is too subjective
and has determined that it is in the best interest of the program not
to continue using it to score applications. However, the very nature of
REAP is such that only projects that have ``technical merit'' be
eligible for funding. Thus, the Agency is proposing to revise the
regulation such that each proposed project will be determined by the
Agency either to have technical merit or not to have technical merit.
The Agency will make the technical merit determination based on the
[[Page 22052]]
information provided in the application, including the technical report
whose purpose is to provide the details of the proposed project. The
Agency will examine such items in the technical report as prior
performance data of the system, experience of the installation team,
resource data, and the engineering of the system in making its decision
on technical merit.
If the information in the application is insufficient to allow the
Agency to make a technical merit determination, the application will be
considered incomplete. If the Agency determines that an application is
incomplete, it will notify the applicant of the elements that made the
application incomplete. The applicant will be given an opportunity to
provide the missing information. If the applicant provides the missing
information on or before the last applicable application deadline, the
Agency will continue considering the application for funding as
described in the subpart. However, if the applicant provides the
missing information after the last applicable application deadline, the
Agency will only consider the application for funding in subsequent
funding cycles as described in the subpart.
Paragraph (j) has been added to clarify that all grants awarded
under this subpart must be completed within 2 years from the date the
Grant Agreement was signed by the Agency unless otherwise approved by
the Agency. All grant funds must be returned to the Agency if the
grantee does not meet the requirements of the Grant Agreement.
Notifications (Sec. 4280.111)
Three changes are being made to this section. First, the paragraph
addressing ineligible applications was integrated into the paragraph
addressing eligibility notifications. Second, reference is being made
to lenders to make this section applicable to guaranteed loan
applications. Third, paragraph (c), which is titled ``Awards'' is being
retitled ``Disposition of applications.'' This change is being made to
clarify that this paragraph applies to not only applications selected
for award, but to applications that are not selected for award. The
Agency is also proposing to add a provision to this paragraph that it
will include any applicable appeal or review rights in its notification
to applicants whose applications are not funded.
Renewable Energy System and Energy Efficiency Improvements Grants
Applicant Eligibility (Sec. 4280.112)
This section provides the criteria the Agency will use to determine
whether an applicant is eligible to receive an RES or EEI grant under
this subpart, including identifying situations in which an applicant
will be determined to be ineligible.
Paragraph (b) addresses ownership and control requirements. While a
similar provision is found in 7 CFR part 4280, subpart B under project
eligibility, the proposed rule clarifies and expands these
requirements. It requires ownership and site ownership or control for
the project at the time of application and, if an award is made, for
the useful life of the project as described in the grant agreement.
Paragraph (c) addresses revenues and expenses. While a similar
provision is found in 7 CFR part 4280, subpart B under project
eligibility, the proposed rule clarifies and expands these
requirements. It requires that the applicant have available at the time
of application satisfactory sources of revenue in an amount sufficient
to provide for the operation, management, maintenance, and any debt
service of the project for the useful life of the project. In addition,
the applicant must control the revenues and expenses of the project,
including its operation and maintenance, for which the assistance is
sought.
Paragraph (d) is new and clarifies that applicants are required to
have the legal authority necessary to apply for and carry out the
purpose of the grant. This specific provision has been part of
administering the program, but it is not easily identifiable in 7 CFR
part 4280, subpart B.
Paragraph (e) is new and clarifies that applicants are required to
follow the Universal identifier and SAM requirements of 2 CFR unless
exempt under 2 CFR 25.110.
Project Eligibility (Sec. 4280.113)
This section provides the criteria the Agency will use to determine
whether a project is eligible to receive an RES or EEI grant under this
subpart. These provisions of the proposed rule are similar to 7 CFR
part 4280, subpart B, but there are several differences to note.
With regard to project eligibility, the Agency is proposing several
changes. For renewable energy systems, the Agency is clarifying that
funds can be used to purchase ``new'' or ``Refurbished'' renewable
energy systems. In addition, the Agency is proposing to allow funds to
be used to retrofit existing renewable energy systems.
The Agency is proposing to include as an eligible energy efficiency
improvement project, the construction of a new energy efficient
building only when the building is used for the same purpose, and based
on an energy audit or energy assessment, as applicable, it will be more
cost effective to construct a new building and will provide more energy
savings than improving the existing building.
The Agency is removing pre-commercial technology from being
eligible; all projects must now be for commercially available
technologies. The Agency is making this change to avoid overlap with
the Biorefinery Assistance guaranteed loan program.
The Agency is adding the conditions that must be met for the
construction of a new energy efficiency improvement building in order
to be an eligible project. Specifically, such construction would be an
eligible project only when the building is used for the same purpose,
it will be more cost effective to construct a new building, and it will
use less energy on an annual basis than improving the existing
building. The Agency is adding a new eligibility criterion addressing
duplicative grant applications. Specifically, as proposed, if the
proposed energy efficiency improvement would duplicate the same energy
efficiency improvement that had previously received funds under this
subpart, then the proposed improvement is ineligible. For example, an
applicant received a grant to replace the windows in a warehouse with
more energy efficient windows. Shortly thereafter, the applicant
decides to replace the new windows. An application for replacing the
new windows would be ineligible for REAP funding.
As noted above, the Agency is relocating the ownership and control
and revenue provisions of 7 CFR 4280.113(f) through (h) from the
project eligibility section to the applicant eligibility section.
The separate technical feasibility provision is removed because an
application has to pass a technical merit review as discussed
previously (which technical feasibility is part of) in order to be
considered for funding.
RES/EEI Grant Funding (Sec. 4280.115)
This section addresses four areas associated with grant funding, as
summarized below.
Maximum grant assistance (paragraph (a)(3)). While the maximum
amount that an individual or entity can receive in a Federal fiscal
year is not
[[Page 22053]]
changing (it remains at $750,000), the Agency is clarifying that this
maximum amount applies to all grant assistance received under this
subpart, including energy audit, renewable energy development
assistance, and feasibility study grants.
Matching funds (paragraph (b)). The Agency is clarifying that the
applicant is responsible for securing the remainder of the total
project costs not covered by grant funds rather than just total
eligible project costs and modifying the text found in paragraph (b)(2)
of this section to clarify that equity raised from the sale of Federal
tax credits is an acceptable form of passive third-party contributions.
Eligible project costs (paragraph (c)). The Agency is proposing
several changes to the eligible project costs.
In addition to the cost being an ``integral component,'' the Agency
is allowing as an alternative that the cost can be ``directly related
to and its use and purpose is limited to'' the renewable energy system
or energy efficiency improvement.
The Agency is replacing the term ``post-application'' with ``after
a Complete Application has been received'' for clarity in determining
the eligibility of certain project costs.
With regard to the purchase and installation of equipment, the
Agency is removing reference to ``remanufactured'' equipment and
relocating the exceptions for agricultural tillage equipment, used
equipment, and vehicles to the ineligible project costs section.
The Agency is removing the provision associated with pro-rating
eligible project costs based for energy efficiency improvement projects
that have a greater capacity than the existing building and/or
equipment being replaced. Under the proposed rule, no such pro-rating
would be used.
The Agency is clarifying that the permit fees referred to are
construction permit fees.
The Agency is clarifying that eligible project costs for
professional service fees are those fees incurred for qualified
consultants, contractors, installers, and other third-party services.
Reference to energy analyses, energy assessments, energy audits,
technical reports, and feasibility studies has been moved to the
eligible project costs section for guaranteed loans. These items are no
longer considered as eligible project costs for grants. Because these
items are needed as part of a complete grant application, costs
incurred before the complete application is submitted to the Agency are
considered ineligible project costs.
The Agency has relocated from eligible project cost provisions, the
construction of a new energy efficiency facility to the project
eligibility section.
Ineligible project costs (paragraph (d)). To provide clarity on
what costs would not be eligible for funding, the Agency developed a
paragraph specifically addressing ineligible project costs.
Grant Applications--General (Sec. 4280.116)
This is a new section to clarify that under paragraph (a), separate
applications are to be submitted for renewable energy system and energy
efficiency improvement projects and also only an original application
needs to be submitted. Under the current 7 CFR part 4280, subpart B,
separate applications for renewable energy system and energy efficiency
improvement projects are not discussed and an original and a copy of
the application are required.
Paragraph (b) of this section states which section of the rule
applies to applications with total project costs of greater than
$200,000, applications with total project costs of $200,000 or less
(but more than $80,000), and applications with total project costs of
$80,000 or less. Lastly, paragraph (c) of this section addresses how
the Agency will evaluate each application. This paragraph is very
similar to the paragraph (a) of 7 CFR 4280.117, but adds a reference to
the technical merit of the project and having complete application
documentation.
Grant Applications for Projects With Total Project Costs Greater Than
$200,000 (Sec. 4280.117)
Certifications are being required in place of documentation and
some of the forms only need to be submitted at the time of award
because they are not needed at the time of application. The Agency is
also proposing to remove the provision requiring a Table of Contents
with clear pagination and chapter identification.
To clarify their applicability, the Agency is adding a new
paragraph (f) to identify the construction planning and performing
development provisions that are applicable to these grant applications
by cross-referencing Sec. 4280.124.
Grant Applications for Projects With Total Project Costs of $200,000 or
Less (Sec. 4280.118)
This section incorporates the criteria for submitting such
applications, which are currently found in 7 CFR 4280.114.
Under paragraph (a), the Agency is proposing that only commercially
available projects be eligible for REAP (paragraph (a)(2) of Sec.
4280.118 cross references the requirements of Sec. 4280.113 and more
specifically to Sec. 4280.113(b) which requires the project to be
``Commercially Available''). In addition, because the Agency is
proposing that all projects awarded grants under REAP be completed
within 2 years, the criterion requiring such applicants to complete
projects within 2 years is also no longer needed.
The Agency is proposing changes to the content for these
applications (see paragraph (b)), including moving forms not needed at
the application stage to the award stage.
The primary change being proposed for construction planning and
performing development is allowing for small acquisition and
construction procedures to be utilized and not requiring the need for
applicant to get Agency approval on contracts (see paragraph (c)).
The Agency is proposing a new process that clearly identifies the
payment process for projects (see paragraph (d) of this section).
Grant Applications for RES and EEI Projects With Total Project Costs of
$80,000 or Less (Sec. 4280.119)
This section identifies the contents of an application for projects
with total project costs of $80,000 or less. A technical report is
still required for this application process; however, it can be
submitted as a narrative rather than a separate report like under the
other two application processes in the proposed rule. Energy efficiency
improvement projects applying under this process will have to provide
36 months of data for total energy used and projected and the total
cost of the energy as well as projected.
The structure of this section parallels that for applications for
projects with total project costs of less than $200,000. Paragraph (a)
identifies the criteria for submitting applications for projects with
total project costs of $80,000 or less. These criteria are identical to
those for submitting applications for projects with total project costs
of $200,000 or less, except for the threshold (i.e., $80,000 versus
$200,000).
Application content is presented in paragraph (b). In general, the
Agency is proposing to simplify the application by requiring the
applicant to certify to a number of items (e.g., applicant eligibility,
project eligibility) rather than submit information with the
application. The following identify specific differences associated
with
[[Page 22054]]
these applications compared to the applications for the other two
tiers:
Certify that the applicant meets the criteria for submitting a
``$80,000 or less'' application
Submit a ``unique'' set of certifications covering:
[cir] Applicant and project eligibility criteria
[cir] Ability of project to meet is intended purpose
[cir] Will abide to open and free competition requirements
[cir] For bioenergy projects, any and all woody biomass feedstock
from National forest system land or public lands cannot be used as a
higher value wood-based product
[cir] For flexible fuel pumps, blended liquid transportation fuel
is available and there is demand for that fuel in its service area
Application description, including the financial information,
in Sec. 4280.117(b) is not required
A separate project description and identification of project
location is not required
RES feasibility study (Sec. 4280.117(d)) does not apply and
thus is not required (difference from the ``>$200,000'' applications
only)
Less onerous technical reports from the other two application
tiers, including for EEI applicants the submittal of an energy analysis
rather than either an energy assessment or energy audit.
Paragraphs (c) and (d) presents the procurement and payment
processes, which are the same as for projects with total project costs
of $200,000 or less (but more than $80,000).
Scoring Grant Applications (Sec. 4280.120)
This section identifies the criteria the Agency will use to score
each RES and EEI application. The Agency is including a provision that
would allow it to modify the scoring through the publication of a
Federal Register notice.
Numerous changes have been made to the scoring criteria as
summarized in Table 1. Reasons for the changes are discussed following
Table 1.
Table 1--Summary of Scoring Criteria Changes for RES/EEI Grant
Applications
------------------------------------------------------------------------
7 CFR part 4280, subpart B Proposed criteria
criteria and maximum points and maximum points Summary of changes
------------------------------------------------------------------------
1. Quantity of energy b. Quantity of Replaces this
replaced, produced or energy generated or criterion with
saved, and flexible fuel saved per REAP ``Quantity of
pumps. grant dollar energy generated or
requested, and saved per REAP
renewable fuel grant dollar
dispensed through requested, and
flexible fuel pumps renewable fuel
(max 25 points). dispensed through
flexible fuel
pumps''.
2. Environmental benefits a. Environmental 1. Revises criterion
(max 10 points). benefits (max 5 to award points
points). based on positive
effects in three
areas: resource
conservation,
public health, and
the environment.
2. Decreases points
from 10 to 5.
3. Commercial availability .................... Removed.
(max 10 points).
4. Technical merit (max 35 .................... Removes criterion as
points). scoring criterion.
Instead, all
projects will be
assessed on a pass/
fail basis for
technical merit.
5. Readiness (max 15 points) c. Readiness (max 25 Increases points
points). from 15 to 25.
6. Small agricultural d. Size of Changes metric for
producer/very small agricultural awarding points to
business (max 10 points). producer or rural size of applicant
small business (max relative to the
10 points). Small Business
Administration's
small business size
standards.
7. Simplified application/ .................... Removes criterion.
low cost projects (max 5
points).
8. Previous grantees or e. Previous grantees Increases maximum
borrowers (max 5 points). or borrowers (max points from 5 to
10 points). 10.
------------------------------------------------------------------------
Quantity of energy replaced, produced or saved, and
flexible fuel pumps. The Agency is replacing this criterion with
``Quantity of energy generated or saved per REAP grant dollar
requested, and renewable fuel dispensed through flexible fuel pumps''
based on Office of Inspector General audit recommendation and given
that maintaining both criteria would be duplicative.
Environmental benefits. The Agency is revising the method
for awarding points under this criterion. Under the Interim Rule, an
applicant is required to obtain a letter from an authority within the
State supporting the project. While support from the State is viewed as
positive, it puts extra burden on the applicant to obtain the letter
and puts those applicants that do not get a letter at a disadvantage.
In addition, receiving such a letter does not make it a better project.
Lastly, under the current guidance it has also been very hard to
quantify environmental benefits. Therefore, for these reasons, the
Agency is proposing to award points under this criterion based on the
applicant providing documentation that the proposed project will have a
positive effect on any of the three impact areas: resource
conservation, public health, and environment.
Commercial availability. The Agency is removing this
criterion because only commercially available technologies are eligible
for the program.
Technical merit. The Agency is removing this criterion for
scoring purposes because of its subjective nature. Instead, the Agency
is proposing to make technical merit an eligibility criterion. Based on
the information in the technical report, the Agency will make a
determination as to whether a project has technical merit or not. If
the Agency determines that a project does not have technical merit, the
project will be ineligible for funding.
Readiness. In order to encourage applicants to provide
written commitment of matching funds with the application submittal,
the Agency is proposing to increase the maximum number of points
awarded under this criterion from 15 to 25.
Small agricultural producer/very small business. The
Agency is proposing to change the basis for awarding points to size of
applicant relative to the Small Business Administration's small
business size standards. Under the Interim Rule for
[[Page 22055]]
REAP, there are different measurement standards for determining the
size of a small agricultural producer and the size of a very small
business for awarding of points under this scoring criterion. The new
provision will measure each applicant based on the size requirement
published by the Small Business Administration. Grantees one-third or
less than the SBA size requirement will get full points, while those
two-thirds or less of the SBA size requirement will get one-half of the
points. The Agency has determined this is a more equitable method for
awarding points for this criterion between agricultural producers and
rural small businesses.
Simplified applications/low cost projects. The Agency is
proposing to remove this criterion because it will set aside funding
for grants requesting less than $20,000 and therefore priority points
are not needed.
Previous grantees or borrowers. In order to encourage new
applicants, the Agency is proposing to increase points awarded under
this criterion from 5 to 10. Under the proposed rule, an applicant who
has not received a grant in the previous two years will be awarded 5
points, while an applicant that has never received REAP funding will
receive 10 points.
Selecting RES and EEI Grants for Award (Sec. 4280.121)
This is a new section and addresses the process the Agency will use
to select applications for awards as summarized below. This section
covers the following:
Application competitions (paragraphs (a) through (c)).
Paragraphs (a) through (c) describe application competitions and
deadline dates to compete for funding. Paragraph (a) describes the
process for State competitions, paragraph (b) is dedicated to the
grants of $20,000 or less set-aside, and paragraph (c) describes the
details for national competitions. In the past, application
competitions and deadlines have been published in a Federal Register
notice on an annual basis. The proposed rule is establishing these
dates in the rule to ensure that program delivery is not solely tied to
the Federal budgetary process and applications can be accepted year
round except for energy audit and renewable energy development
assistance applications.
Funding selected applications (paragraph (d)). This
paragraph identifies how the Agency will handle an application selected
for funding, but for which insufficient funds remain to fund the
application.
Disposition of ranked applications not funded (paragraph
(f)). This paragraph identifies how long an application will be held by
the Agency and for which competitions the application may compete for
funds as described in paragraphs (a) through (c) of this section.
Disposition of ranked applications not funded was never discussed in 7
CFR part 4280, subpart B, and the Agency wants to ensure that
applicants are aware of their chances for funding. Thus, this paragraph
was added for clarity.
Commencement of the project (paragraph (g)). Applicants
are put on notice that they assume all risks if they purchase the
technology proposed or start construction of the proposed project after
the application has been received by the Agency, but prior to award
announcement.
Awarding and Administering RES and EEI Grants (Sec. 4280.122)
This section addresses the process the Agency will use to award and
administer grants. This section places in one spot in the rule, several
provisions that are currently found in various places of 7 CFR part
4280, subpart B. By doing so, the proposed rule provides a clearer
presentation of this process.
Servicing RES and EEI Grants (Sec. 4280.123)
This section addresses the procedures the Agency will use to
service RES and EEI grants. The proposed section expands upon the
provisions found in Sec. 4280.121 and includes several provisions
found in other portions of 7 CFR part 4280, subpart B.
Many of the provisions are being incorporated from the grant
agreement into the text of the regulation. Some of the provisions
(e.g., programmatic changes, project monitoring, transfer of
obligations, and grant close-out) are similar to provisions developed
by the Agency or as cited in the Department regulations when it was
considering consolidating various grant programs into a single rule.
The renewable energy system and energy efficiency improvement grant
outcome project performance reporting requirements in this section are
very similar to those found in 7 CFR part 4280, subpart B, with the
differences found in the report contents.
For the renewable energy system report, the Agency is proposing to
drop from the report the documentation of any identified health and/or
sanitation problem that has been solved because the Agency has
determined that it provides little benefit. In its place, the Agency is
proposing to add the type of technology to the report. Two other
changes are to clarify that the actual amount of energy generated will
be reported as an ``annual'' amount and to identify how that amount is
to be calculated.
For energy efficiency improvement projects, the Agency is proposing
one substantive change. The Agency is adding to the report the actual
jobs created or saved. While creating or saving jobs is being added to
the reporting requirements, the Agency does not expect every energy
efficiency project to have an impact on employment. Most energy
efficiency projects may report zero jobs created or saved, because the
impact of the grant was to save the applicant money on energy bills and
improve their profitability.
Construction Planning and Performing Development (Sec. 4280.124)
This section replaces the current construction planning and
performing development provisions found in 7 CFR 4280.119. While this
section is organized differently from the current corresponding
section, it covers many of the same subjects.
The primary change is the provision of exceptions to the surety
requirements for: (1) Small acquisition and construction procedures,
(2) equipment purchases and installation-only projects of more than
$200,000 if two conditions are met, and (3) other construction projects
that have only one contractor performing work.
There are also numerous substantive changes associated with the
provisions for technical services for projects with total project costs
greater than $400,000. The proposed rule clarifies that technical
services may be provided by the applicant's `in-house' professional
engineers or contracted professional engineers. In addition, all
contracts for design services require Agency concurrence. Services
performed by engineers may only be done by engineers licensed in the
state in which the facility is located.
Further, the Agency is proposing an exemption from these
requirements for projects with total project costs greater than
$400,000 if State or Tribal law does not require the use of a licensed
professional engineer and if the project is not complex and can be
completed to meet the requirements of the program without the services
of a licensed professional engineer. An example to demonstrate this
exemption would be a large equipment purchase that does not require
changes to a structure or require State-approved plans to be installed.
[[Page 22056]]
RES and EEI Guaranteed Loans
Compliance With Sec. Sec. 4279.29 Through 4279.99 (Sec. 4280.125)
7 CFR part 4280, subpart B required compliance with the Business
and Industry (B&I) provisions found in Sec. Sec. 4279.29 through
4279.99, but contained a number of exceptions. Because there is no need
to maintain a distinction for loans guaranteed under REAP, the proposed
rule follows the provisions of the B&I regulations, with one exception.
The one exception is associated with Sec. 4279.71, because REAP does
not apply to public bodies and non-profit corporations.
One of the distinctions being removed is the current REAP provision
that excludes mortgage companies that are part of a bank holding
company from being an eligible lender. To the extent the B&I provisions
allow such entities to be an eligible lender, so would REAP.
Guarantee Fee/Annual Renewal Fee (Sec. 4280.126)
The Agency is proposing to conform the REAP guarantee fee and
annual renewable fee provisions (found in 7 CFR 4280.127) to those
found in the B&I rule. The one exception is that the B&I provisions for
receiving a reduced guarantee fee would not apply to REAP guaranteed
loans. Instead, the Agency is proposing to announce the conditions, if
any, in a Federal Register notice that would enable a reduced guarantee
fee for REAP guaranteed loans.
Borrower Eligibility (Sec. 4280.127)
The Agency is proposing that eligible borrowers meet the same
eligibility as RES/EEI grant applicants. However, some of the applicant
requirements have been moved from other places in 7 CFR part 4280,
subpart B into proposed Sec. 4280.112 and those that are applicable to
borrowers are repeated in this section (rather than cross-referencing
back to Sec. 4280.112).
Project Eligibility (Sec. 4280.128)
The basic eligibility requirements for projects are the same as for
RES/EEI grants, but, as noted earlier in the preamble, some of those
requirements have changed. In addition, the Agency is proposing to
allow loans for the purchase of a qualifying existing renewable energy
system to be guaranteed. This provision would replace 7 CFR 4280,
subpart B's provision for ``necessary capital improvements to an
existing renewable energy system.''
Guaranteed Loan Funding (Sec. 4280.129)
The Agency is proposing several changes to these provisions for
guaranteed loan funding.
The Agency is identifying project costs that would be ineligible
for payment using the guaranteed loan. These are consistent with the
items identified as ineligible for payment under the RES/EEI grant
provisions, except that construction or equipment costs that would be
incurred regardless of the installation of a renewable energy system or
energy efficiency improvement may be included as an eligible project
cost for guaranteed loans. In addition, the Agency is including as
ineligible project costs, paragraph (p) from the B&I provisions at 7
CFR 4279.114, which addresses loans made with the proceeds of any
obligation the interest on which is excludable from income under 26
U.S.C. 103 or a successor statute.
The Agency is also proposing to refer to eligible project costs
that are included under grants (7 CFR 4280.115(c)) for guaranteed loans
as well as the following items:
Working capital;
Land acquisition;
Routine lender fees; and
Energy analyses, energy assessments, energy audits,
technical reports, business plans, and feasibility studies completed
and acceptable to the Agency, if no portion was financed by any other
Federal or State grant or payment assistance, including, but not
limited to, a REAP energy analysis, assessment, or audit, feasibility
study, or renewable energy development assistance grant.
The Agency is proposing that these four sets of eligible costs be
``capped'' at no more than 5 percent of the guaranteed loan amount.
This cap is intended to ensure that these expenses do not inadvertently
or otherwise consume a substantial share of funds for the actual
project.
Loan Processing (Sec. 4280.130)
In the proposed rule, the Agency is proposing to reduce the number
of exceptions between REAP and B&I loan guarantees. The following
paragraphs summarize the proposed changes.
a. Interest rates. In the proposed rule, the interest rate
provisions for B&I guaranteed loans would apply in their entirety to
REAP guaranteed loans. This would remove some changes in the
determination of interest rates, but the Agency has determined that the
B&I provisions are sufficient and any difference between the two
programs in unnecessary.
b. Loan terms. In the proposed rule, the loan term provisions for
B&I guaranteed loans would apply in their entirety to REAP guaranteed
loans. This would change the loan term for machinery and equipment and
eliminate a few specific requirements, but the Agency has determined
that the B&I provisions are sufficient and any difference between the
two programs in unnecessary.
c. Insurance requirements. The Agency is proposing to make the
insurance requirement identical to those in the B&I program. 7 CFR part
4280, subpart B requires that the coverage be maintained for the life
of the loan unless this requirement is waived or modified by the
Agency. The Agency has determined that the provisions of the B&I
program are sufficient and that this requirement is unnecessary.
d. Appraisals. The Agency has determined that the additional
appraisal requirements found in 7 CFR part 4280, subpart B do not need
to be maintained for the program. Therefore, the Agency is proposing
that REAP appraisals be conducted in accordance with the B&I appraisal
provisions.
e. Construction planning and performing development. The Interim
Rule provides specific provisions for construction planning and
performing development (see 7 CFR 4280.119). Under the proposed rule,
the Agency is proposing that 7 CFR 4279.156 applies to guaranteed loan
projects under this subpart.
Credit Quality (Sec. 4280.131)
The Agency is proposing to make the credit quality requirements
identical to those in the B&I program with the exception of equity. In
general, with the exception of equity, conforming the REAP credit
quality provisions to those in the B&I program does not create
substantive changes from 7 CFR part 4280, subpart B.
With regard to the proposed equity provisions, there are
substantive differences from the 7 CFR part 4280, subpart B equity
provisions and the B&I guaranteed loan program equity provisions. There
is no longer a distinction between the size of the loan guarantee for
REAP equity requirements. For example, the cash equity injection is
specified at 25 percent for all loan guarantees. The Agency is also
proposing to eliminate the provision in 7 CFR 4280, subpart B that
allows the fair market value of equity in real property that is to be
pledged as collateral for the loan to be substituted for any portion of
the cash equity requirement.
[[Page 22057]]
Financial Statements (Sec. 4280.132)
The proposed rule would adopt, in their entirety, the financial
statement provisions found in the B&I program, except that, due to a
difference in eligible applicants, the proposed rule would allow
agricultural producers the option of providing financial information in
the manner that is generally required by commercial lenders. The Agency
notes that the financial information requested in 7 CFR 4280.140(a) is
still being requested under the proposed rule, but in a different
provision.
Personal and Corporate Guarantees (Sec. 4280.134)
Except for passive investors, the Agency is proposing to allow all
of Sec. 4279.149 to apply to this subpart. Currently, the 7 CFR part
4280, subpart B adopts only Sec. 4279.149(a).
Scoring RES and EEI Guaranteed Loan Only Applications (Sec. 4280.135)
The Agency is proposing this new section to clarify how guaranteed
loan-only applications will be scored. Specifically, these applications
will be scored using the same criteria as for RES and EEI grants, but
with the calculations, as applicable, to be made using guaranteed loan
amounts and not grant amounts. This section also identifies that the
Agency will establish a minimum score each year to assist in funding
higher priority projects. The minimum score will also be used to
determine whether or not an application is competed in each quarter.
Lastly, the Agency will notify applicants whose applications are below
the minimum score.
Application and Documentation (Sec. 4280.137)
A number of changes are being proposed for guaranteed loan
applications, as discussed below.
a. Applications for guaranteed loan requests greater than $600,000.
To provide flexibility for the applicant, the Agency is proposing
to remove the requirement that the application be ``organized pursuant
to a Table of Contents format in a chapter format presented in the
order shown'' and provision of a project summary.
The application content still mirrors that required for RES/EEI
grants and, thus, the changes described earlier in this proposed rule
for those applications would apply to these guaranteed loan
applications as well.
Several substantive changes were made to the lender forms,
certifications, and agreements that are to be submitted with the
application, as follows:
With regard to appraisals, the Agency is proposing to add
that its approval in the form of a Conditional Commitment may be issued
subject to receipt of adequate appraisals.
With regard to historical financial statements, the Agency
is proposing to remove reference to Generally Accepted Accounting
Principles and adding a provision to allow agricultural producers to
submit these statements in the format that is generally required by
commercial agricultural lenders.
The Agency is proposing to remove reference to the
business-level feasibility study because the feasibility study is
required through a cross-reference to the provisions for grant
applications.
The Agency is proposing to remove the requirement for
certification by the lender that it has completed a comprehensive
written analysis of the proposal. This certification duplicates the
requirement to submit the lender's complete comprehensive written
analysis.
With regard to the certification by the lender that the
loan is for authorized purposes, the Agency is proposing to remove the
phrase ``with technical merit.''
b. Applications for guaranteed loan requests of $600,000 or less.
The Agency is proposing to remove the requirement that the
application be ``organized pursuant to a Table of Contents format in a
chapter format presented.''
The application content will vary for these projects depending on
the total project cost for the proposed project. If the total project
cost is more than $200,000, the application would contain the
information specified for RES/EEI grant applications of similar size.
If the total project cost is $200,000 or less, the application would
contain the information specified for RES/EEI grant applications of
similar size.
Changes in the application content for these applications parallel
those identified earlier in this proposed rule for RES/EEI grant
applications.
With regard to forms, certifications, and agreements, the Agency is
proposing to require the lender to submit the appraisal rather than
keep it on file and to submit the certification by the lender that the
borrower is eligible, the loan is for authorized purposes, and there is
a reasonable assurance of repayment.
Evaluation of RES and EEI Guaranteed Loan Applications (Sec. 4280.138)
The Agency is proposing to modify 7 CFR part 4280, subpart B
provisions for application evaluation (see 7 CFR 4280.129) in several
ways.
The Agency is proposing to evaluate applicant and project
eligibility using the procedures specified in 7 CFR 4279.165, except
that the applicant and project eligibility criteria for REAP will be
used.
The Agency has moved the provisions for technical merit
determination (7 CFR 4280.129(b)) to a general section of the rule. One
change being proposed is that the interest rate on the loan would not
be used as a scoring criterion.
Lastly, the Agency is removing the evaluation criteria from 7 CFR
4280.129(c) and including the revised criteria in Sec. 4280.135, as
discussed earlier.
Loan Approval and Obligation of Funds (7 CFR 4280.139)
The Agency has determined that a separate provision for loan
approval and obligation of funds in 7 CFR part 4280, subpart B is not
required.
Selection of RES and EEI Guaranteed Loan Only Applications (Sec.
4280.139)
This is a new section that contains the procedures to be used for
competing guaranteed loan only applications as has been described
earlier. The procedures in this section apply only to guaranteed loan
only applications. The process and procedures for guaranteed loan
applications that are part of a combination funding request are covered
under Sec. 4280.165.
Conditions Precedent to the Issuance of the Loan Note Guarantee (Sec.
4280.142)
The Agency is proposing to conform the REAP provisions to the B&I
provisions with two exceptions, which are: that all development must
have been performed at a steady state operating level in accordance
with the technical requirements and, when applicable, a copy of the
executed power purchase agreement must be provided to the Agency before
the Loan Note Guarantee can be issued.
Servicing Guaranteed Loans (Sec. 4280.152)
With two exceptions, the Agency is proposing that REAP guaranteed
loans be serviced in accordance with the servicing provisions for B&I
guaranteed loans. In general, this results in few changes, because 7
CFR part 4280, subpart B already cross-references most of the B&I
servicing regulations with few changes.
The two remaining exceptions pertain to borrowers being determined
to be eligible borrowers under the REAP regulation when they are
involved in a
[[Page 22058]]
transfer and assumption and to loans providing additional funds in
connection with a transfer and assumption must be considered as new
loan application under the REAP regulation and would compete against
other applications received for funding consideration in that
competition cycle for the fiscal year, provided there is sufficient
budget authority available to fund the project.
Combined Funding for Renewable Energy Systems and Energy Efficiency
Improvements
Changes being proposed for applications for renewable energy
systems and energy efficiency improvement projects seeking combined
funding are summarized below.
Clarifying that the grant portion of the combined funding
request shall not exceed 25 percent of total eligible project costs.
Clarifying what the contents of the guaranteed loan
application are if the guaranteed loan request is greater than $600,000
or is less than or equal to $600,000.
Clarifying what needs to be submitted when both
applications would contain the same documentation, form, or
certification.
Requiring that the grant portion of the funding request
must be at least $1,500 for energy efficiency improvement projects and
at least $2,500 for renewable energy system projects.
Identifying when the System for Awards Management (SAM)
number and expiration date must be submitted.
Adding a provision to identify how combined funding
applications will be handled if they are ranked, but not funded.
Adding a provision indicating that compliance reviews will
be conducted.
Revising the process for evaluating combined funding
requests to refer only to the grant procedures.
Renewable Energy System Feasibility Study Grants
Changes being proposed for renewable energy system feasibility
study grants are summarized below.
General Provisions (Sec. 4280.169)
The Agency is proposing to add a provision that would make a
feasibility study application ineligible if the applicant proposes to
conduct any portion of the feasibility study. In other words, the
feasibility study must be conducted entirely by entities other than the
applicant.
Applicant Eligibility (Sec. 4280.170)
In addition to make a few clarifying changes, the Agency is
proposing to add new conditions, which would make this set of applicant
eligibility requirements consistent with the other grant programs in
REAP. These four provisions are:
In lieu of being the prospective owner of the RES project,
the applicant has the option of being the prospective controller of the
site for the useful life of the property on which the RES would be
placed; and
The applicant must have the legal authority necessary to
apply for and carry out the purpose of the grant.
The applicant is required to follow the Universal
identifier and the SAM requirements of 2 CFR unless exempt under 2 CFR
25.110.
Eligibility of RES Projects for Feasibility Study Grants (Sec.
4280.171)
In addition to several clarifications, the Agency is also proposing
two substantive changes to this section.
The Agency is removing the provision that would allow the
technology to be a ``pre-commercial'' technology to qualify. This
change is consistent with the overall proposed change to RES project
eligibility requirements as stated earlier in this Notice.
The Agency is adding a provision cautioning the applicant from
taking any actions or incurring any obligations prior to the Agency
completing the environmental review that would either limit the range
of alternatives to be considered or that would have an adverse effect
on the environment, such as the initiation of construction, because
taking any such actions or incurring any such obligations could result
in project ineligibility.
Application Eligibility Provisions
While the proposed rule would no longer have this section, its
provisions have been incorporated elsewhere in the rule. There is one
change, however, associated with the 7 CFR part 4280, subpart B
requirement prohibiting a feasibility study application being submitted
in the same Federal fiscal year that a renewable energy system
application is submitted and vice-versa. This requirement is being
replaced with one that states: ``An applicant can apply for only one
Renewable Energy System project, one Energy Efficiency Improvement
project, and one Feasibility Study project under this subpart per
Federal fiscal year.'' This could, theoretically, allow an applicant to
submit a feasibility study application and a renewable energy system
application for the same renewable energy system in the same Federal
fiscal year.
Grant Funding for RES Feasibility Studies (Sec. 4280.173)
Several substantive changes are being proposed for this section.
The Agency is proposing to increase the maximum amount of grant
funds from $50,000 to $100,000, but still require the lesser of the
$100,000 or 25 percent of the total eligible costs.
The Agency is proposing to revise the list of items that illustrate
what can be considered as eligible projects costs as follows:
Payment of services to qualified consultants to perform
the evaluations needed for the feasibility study and to complete the
feasibility study; and
Other studies or assessments to evaluate the economic,
technical, market, financial, and management feasibility of the
renewable energy system that are needed to complete the feasibility
study (e.g., resource assessment, transmission study, or environmental
study).
The reference to resource assessment, transmission study, and
environmental study in 7 CFR part 4280, subpart B has been incorporated
into the second item describing eligible project costs.
The Agency is proposing to add two new ineligible project costs:
preparing the application package and funding of political or lobbying
activities. These two new ineligible project costs are consistent with
the other grant provisions.
The provision concerning the requirement to expend the grant funds
within 2 years still applies to feasibility study grants, but has been
relocated to the General section of the rule (see proposed Sec.
4280.110(j)).
Feasibility Study Grant Applications--Content (Sec. 4280.176)
In addition to several clarifying and conforming edits, the
following substantive changes are being proposed.
The provision requiring a Table of Contents with clear pagination
and chapter identification is being removed.
The requirement to submit a copy of legal organizational documents
is being removed.
Applicants would now identify the primary NAICS code applicable to
their operation, if known, or a description of their operation in
sufficient detail for the Agency to determine the applicable primary
NAICS code.
Applicants are now certifying that they are legal entities in good
standing, if applicable, and operating in accordance with the laws of
the state(s) in which the applicants have a place of business.
Removed from the proposed scope of work (referred to in 7 CFR part
4280,
[[Page 22059]]
subpart B as the proposed work plan) is the requirement to submit a
description of the feasibility study to be conducted. In addition,
reference to the applicant requiring those conducting the feasibility
study to consider and document within the feasibility study the
important environmental factors and alternatives is being removed
because such consideration is adequately covered elsewhere in the rule.
The changes to the paragraphs concerning the experience of the
qualified consultants and the source and amount of matching funds are
clarification in nature, with emphasis on submitting written
commitments in part so that the Agency can score the application.
The submittal of the applicant's DUNS number is removed because it
is already required on Standard Form SF-424, ``Application for Federal
Assistance.''
With regard to the financial information, the Agency is only
requesting a certification on financial items specific to rural small
businesses and agricultural producers. This information is needed for
scoring purposes and rather than having an applicant submit financial
statements, the Agency will accept a certification on the applicable
financial items.
Evaluation of Feasibility Study Grant Applications (Sec. 4280.177)
The Agency has determined that the process for evaluating
feasibility study grant applications is no different than the process
it will use to evaluate RES/EEI grant applications. Therefore, rather
than repeating that process, as was done in 7 CFR part 4280, subpart B,
the Agency is proposing to cross-reference the RES/EEI grant
application process. The one difference is that a technical merit
determination is not applicable to feasibility study grant
applications.
Scoring Feasibility Study Grant Applications (Sec. 4280.178)
The Agency is proposing several substantive changes to how it will
score feasibility study grant applications. These changes are
summarized in Table 2.
Table 2--Summary of Scoring Criteria Changes for RES Feasibility Study
Grant Applications
------------------------------------------------------------------------
7 CFR part 4280, subpart B Proposed change(s)
------------------------------------------------------------------------
Energy replacement or generation....... Remove as a scoring criterion.
Commitment of funds.................... Increase maximum points from 10
to 25.
Written commitments are
required in order to obtain
points.
Distribution of points is
changed.
Designation as a small agricultural Criterion changed to size of
producer or rural small business. agricultural producer or rural
small business.
Points reduced from 20 to 10.
Points awarded on basis of
relative size of the applicant
to SBA size standards for the
applicant's applicable NAICS
code.
Experience and qualifications.......... Points increased from 15 to 25.
Distribution of points changed.
Size of grant request.................. Dollar thresholds doubled for
determining points awarded.
Previous grantees and borrowers........ New criterion for ``Previous
grantees and borrowers''.
Maximum 10 points.
Consistent with change made in
RES/EEI grant scoring.
Resources to implement project......... Removed.
------------------------------------------------------------------------
Selecting Feasibility Study Grant Applications for Award (Sec.
4280.179)
The Agency is proposing to revamp the process it will use to select
feasibility study applications for award. While higher scoring
applications will still receive preference, the Agency is proposing to
accept applications throughout the year, with two competitions held.
The first competition would be for those complete and eligible
applications received by November 30; and the second, for those
received by May 31. All applications would be eligible for two rounds
of competitions, which could result in an application being competed
across two Federal fiscal years (i.e., first competed in the May 31
competition and then again in the November 30 competition).
The Agency is revising one of the provisions associated with
funding selected applications by requiring that the applicant provide
the remaining total funds needs to complete the project in situations
in which the applicant agrees to lower its grant request in order to be
awarded the grant. This replaces the current provision that the Agency
must determine the project is financially feasible at the lower amount.
The Agency is also proposing to add a new provision that puts the
applicant on notice that the applicant assumes all risk if the choice
is made to purchase the technology proposed or start construction of
the project to be financed in the grant application after the complete
application has been received by the Agency.
Actions Prior to Grant Closing (7 CFR 4280.180)
The Agency is proposing to move the two provisions in this section
to new locations within the proposed rule. The first paragraph
concerning environmental assessment is covered in the proposed rule at
Sec. 4280.108(c). The second paragraph concerning evidence of funds is
covered in the proposed rule at Sec. 4280.181, which cross references
Sec. 4280.122.
Awarding and Administering Feasibility Study Grants (Sec. 4280.181)
The Agency has determined that, with two exceptions, the same
process for awarding and administering RES/EEI grants is applicable to
feasibility study grants and that there is no reason to repeat those
provisions. Thus, this section has been modified to refer back to the
corresponding RES/EEI grant section.
The two exceptions noted in the previous paragraph are:
the insurance requirements in Sec. 4280.122(b) does not
apply unless equipment is purchased, and
the power purchase agreement specified in Sec.
4280.122(e) does not apply.
Servicing Feasibility Study Grants (Sec. 4280.182)
The Agency has determined that, with a few exceptions and
additions, the same process for servicing RES/EEI grants is applicable
to feasibility study grants and that there is no reason to
[[Page 22060]]
repeat those provisions. Thus, this section has been modified to refer
back to the corresponding RES/EEI grant section.
The exceptions noted in the previous paragraph are:
Feasibility study grant funds are to be expended on a pro
rata basis with matching funds;
Form SF-270, ``Request for Advancement or Reimbursement,''
is to be used;
The final 10 percent of grant funds will be held back
until an acceptable feasibility study has been submitted;
Upon completion of the project, the feasibility study
acceptable to the Agency and Form SF-270 are to be submitted; and
Outcome project performance reports are to be submitted
beginning the first full year after completion of the feasibility
study.
The Agency notes that it is proposing one change to the project
performance report. This change is to add a discussion, when
applicable, of why the renewable energy system is not underway.
Energy Audit and Renewable Energy Development Assistance Grants
Changes being proposed for energy audit and renewable energy
development assistance grants are summarized below.
Applicant Eligibility (Sec. 4280.186)
Two substantive changes are being proposed to this section.
The Agency is proposing to remove the option of allowing an
applicant to ``obtain'' the legal authority necessary such that all
applicants must have the necessary legally authority at the time of
application.
Currently, 7 CFR part 4280, subpart B requires that this legal
authority is necessary ``to carry out the purpose of the grant.'' The
Agency is proposing an additional requirement--that the applicant has
the legal authority necessary to ``apply for the grant'' as well.
Project Eligibility (Sec. 4280.187)
The Agency is proposing several clarifications to this section,
including removing the text identifying what constitutes an energy
audit, because that material is covered in Section B of Appendix A of
this subpart. In addition to these clarifications, the Agency is
proposing one substantive change. As it is proposing to do for the RES
feasibility study grants, the Agency is adding a provision cautioning
the applicant from taking any actions or incurring any obligations
prior to the Agency completing the environmental review that would
either limit the range of alternatives to be considered or that would
have an adverse effect on the environment, such as the initiation of
construction, because taking any such actions or incurring any such
obligations could result in project ineligibility.
Grant Funding for Energy Audit and Renewable Energy Development
Assistance (Sec. 4280.188)
The proposed changes to the paragraph on eligible project costs are
clarification-type changes, including removing unnecessary examples.
One example is replacing the term ``administrative expenses'' with
``expenses charged as a direct cost or as an indirect cost * * * for
administering the grant.''
With regard to ineligible project costs, the Agency is proposing to
add as an identified ineligible project cost, any goods or services
provided by a person or entity that has a conflict of interest. The
Agency is also proposing to add the leasing of equipment as an
ineligible project cost. The current provision associated with the
payment of costs incurred prior to the application date was removed
from the list of ineligible project costs. The Agency has determined
that it is unnecessarily duplicative of the provision that limits
eligible project costs to only those costs that are incurred after a
complete application has been received by the Agency.
In addition, the Agency is proposing to allow a grantee to use
program income to further the objectives of their project or energy
audit services offered during the grant period in accordance with
Department regulations.
Energy Audit/Renewable Energy Development Assistance Grant
Applications--Content (Sec. 4280.190)
In addition to several clarifying and conforming edits, the
following substantive changes are being proposed.
The Agency is proposing that an applicant may only submit one
energy audit (EA) grant application and one renewable energy
development assistance (REDA) grant application each Federal fiscal
year and that combination applications (one in which an applicant
proposed both EA and REDA) will not be accepted. The Agency is
proposing to drop several items from the application as follows.
A copy of the applicant's organizational documents showing
the applicant's legal existence and authority to perform the activities
under the grant (7 CFR 4280.190(d)).
The Executive Summary (7 CFR 4280.190(e)(1)).
The itemized budget (7 CFR 4280.190(e)(4)).
The narrative addressing the applicant's resources,
including personnel, finances, and technology, to complete what is
proposed (7 CFR 4280.190(e)(7), although the applicant is still
required to demonstrate that it has sufficient resources to complete
all projects if the project is located in multiple states.
The most recent financial audit of the applicant, or
subdivision thereof, that will be performing the project (7 CFR
4280.190(f)).
The applicant's DUNS number (7 CFR 4280.190(g)), because
it is contained in Standard Form SF-424.
Dropping the ``using State and Federal support'' provision
in 7 CFR 4280.190(e)(6)(iii) when describing the applicant's
experience, resulting in a broader discussion.
The Agency is proposing to add several items to the application as
follows.
Certification that the applicant is a legal entity in good
standing (as applicable) and operating in accordance with the laws of
the state(s) where the applicant has a place of business.
A description of the goals of the project.
Identification of the specific needs for the service area
and the target audience to be served.
The name and contact information, if available, for those
that will be served by the project.
Identification of the specific needs for the service area
and the target audience to be served.
Discussing whether the applicant has any existing programs
that can demonstrate the achievement of energy savings or energy
generation with the agricultural producers and/or rural small
businesses the applicant has served.
If the applicant has received one or more awards within
the last 5 years in recognition of its renewable energy, energy
savings, or energy-based technical assistance, describing that
achievement.
The Agency is proposing to revise several of the requirements,
including:
Consolidating provisions associated with the timeline and
schedule for the project.
Consolidating the requirements associated with outreach (7
CFR 4280.190(e)(9)) into a more general description of what is being
requested.
[[Page 22061]]
Evaluation of EA and REDA Grant Applications (Sec. 4280.191)
The Agency has determined that the process for evaluating energy
audit and REDA grant applications is no different than the process it
will use to evaluate RES/EEI grant applications. Therefore, the Agency
is proposing to cross-reference the RES/EEI grant application process.
The one difference is that a technical merit determination is not
applicable to either EA or REDA grant applications.
Scoring EA and REDA Grant Applications (Sec. 4280.192)
The Agency is proposing several substantive changes to how it will
score energy audit and REDA grant applications. These changes are
summarized in Table 3.
Table 3--Summary of Scoring Criteria Changes for Energy Audit and
Renewable Energy Development Assistance Grant Applications
------------------------------------------------------------------------
Interim rule Proposed change(s)
------------------------------------------------------------------------
Project proposal....................... Remove as a scoring criterion.
Use of grant funds for administrative Remove as a scoring criterion.
expenses.
Applicant's organizational experience Changed title of scoring
in completing proposed activity. criterion.
Increased maximum points from
15 to 25.
Adjusted distribution of
points.
Geographic scope of project............ Points increased from 10 to 20.
Adjusted distribution of
points.
Number of agricultural producers/rural Points increased from 15 to 20.
small businesses to be served. Distribution of points changed.
Added a new metric to receive
an additional 10 points if the
applicant provides a list of
ultimate recipients, including
their name and contact
information, that are ready to
be assisted.
Potential to produce energy savings and Points decreases from 25 to 10.
its attending environmental benefits. Revised distribution and how
points will be awarded.
Marketing and outreach plan............ Points decreased from 10 to 5.
Level of commitment of other funds for Increased points from 5 to 20.
the project. Revised distribution and how
points will be awarded.
------------------------------------------------------------------------
Selecting EA and REDA Grant Applications for Award (Sec. 4280.193)
The Agency is proposing several substantive changes to this
section.
The Agency is proposing a single competition for all complete
applications received by January 31 of each year.
In selecting applications for funding, if two or more applications
score the same and if remaining funds are insufficient to fund each
application, the Agency is proposing to distribute the remaining funds
to each such application on a pro-rata basis. While the Agency is
proposing to continue the provision that unfunded applications will not
be carried forward into the next Federal fiscal year, the Agency is
adjusting the language to make this clear (currently the rule only
refers to not carrying unfunded applications forward into Fiscal Year
2012).
Actions Prior to Grant Closing
The Agency is proposing to remove 7 CFR 4280.194.
Awarding and Administering EA and REDA Grants (Sec. 4280.195)
The Agency has determined that, with three exceptions, the same
process for awarding and administering RES/EEI grants is applicable to
energy audit and REDA grants and that there is no reason to repeat
those provisions. Thus, this section has been modified to refer back to
the corresponding RES/EEI grant section.
The three exceptions noted in the previous paragraph are:
The insurance requirements in Sec. 4280.122(b) do not
apply. Instead, the Agency is proposing that the grantee must provide
satisfactory evidence to the Agency that all officers of grantee
organization authorized to receive and/or disburse Federal funds are
covered by such bonding and/or insurance requirements as are normally
required by the grantee.
Form RD 400-1, ``Equal Opportunity Agreement,'' specified
in Sec. 4280.122(c)(6) is not required.
The power purchase agreement specified in Sec.
4280.122(h) does not apply.
Servicing EA and REDA Grants (Sec. 4280.196)
The Agency has determined that, with a few exceptions and
additions, the same process for servicing RES/EEI grants is applicable
to energy audit and REDA grants and that there is no reason to repeat
those provisions. Thus, this section has been modified to refer back to
the corresponding RES/EEI grant section.
The exceptions noted in the previous paragraph are:
Grant disbursement;
Semi-annual reports;
Final performance report; and
Outcome project performance reports (referred to in 7 CFR
part 4280, subpart B as Final Status Reports.)
The Agency is proposing to remove the requirement to identify the
percentage of financial resources expended on contractors for the semi-
annual and final performance reports.
III. Request for Comments
The Agency is interested in receiving comments on all aspects of
the proposed rule. Areas in which the Agency is seeking specific
comments are identified below. All comments should be submitted as
indicated in the ADDRESSES section of this preamble. In addition, all
written comments received under the REAP interim rule that was
published in the Federal Register on April 14, 2011 (76 FR 21110) will
be considered along with any comments received under this proposed
rule. The Agency will address all written comments in a final rule in
the Federal Register.
a. The Agency is proposing to allow projects with total project
costs of no more than $200,000 to submit applications that contain less
documentation. The Agency is requesting comment on this threshold as to
whether it is at an appropriate level. If you believe that the level
should be different, please identify your suggested level and provide
your rationale.
b. The Agency is proposing to allow projects with total project
costs of no
[[Page 22062]]
more than $80,000 to submit applications that contain less
documentation. The Agency is requesting comment on this threshold as to
whether it is at an appropriate level. If you believe that the level
should be different, please identify your suggested level and provide
your rationale.
c. The Agency is seeking comment on the definition of small
business. This definition has changed since the original rule was
developed as the Section 9006 program. The Agency is interested in
alternative definitions that would simplify the identification of small
businesses. Please be sure to provide your rationale.
d. As proposed, the maximum grant that would be made for a
renewable energy system feasibility study is $100,000. The Agency is
interested in receiving comments on the appropriateness of this limit.
If you believe that the level should be different, please identify your
suggested level and provide your rationale.
e. The Agency is proposing to award points for flexible fuel pumps
based on the average annual gallons of renewable fuel estimated to be
sold over the first two years by the pumps per grant dollar requested.
The Agency is seeking comment on this metric. For example, to what
extent would this metric be a good selection criterion? The Agency is
also seeking suggestions for alternative metrics. Please be sure to be
specific in your comments and suggestions and provide your rationale.
f. The Agency is considering replacing the current cash equity
requirement with a minimum of 25 percent tangible balance sheet equity
(or a maximum debt-to-tangible net worth ratio of 3:1). Please comment
on this consideration, including pros and cons on each metric (i.e.
cash equity, tangible balance sheet equity) and your suggestions on the
level of debt-to-tangible net worth ratio. In addition, the Agency
acknowledges that Federal and State grants can be recorded differently
on the balance sheet and how this can impact tangible balance sheet
equity in various ways. This should also be a consideration when making
comments on the proposed cash equity requirement change. Please be sure
to provide your rationale for your position.
g. The Agency is seeking to encourage greater use of REAP
guaranteed loans. The Agency is interested in other possible provisions
to expand the use of the guaranteed loan only applications under REAP.
To make informed decisions in this regard, the Agency needs a better
understanding of specific rule provisions that affect the decision to
use or not use REAP guaranteed loans.
For any suggested changes to the rule that you believe will
encourage more guaranteed loan only applications, please be sure to
provide your rationale/basis for each suggested change. An important
consideration for the Agency in making any change is the potential
effect on increasing the risk of default and thus increasing the
subsidy rate (which would reduce the level of funding that the Agency
could use in making loan guarantees). Therefore, please be sure to
address this issue and, to the extent possible, suggest ways that could
mitigate increases in risk.
h. As noted in the preamble to this rule, the Agency is proposing
to compete guaranteed-loan only applications on a quarterly basis. The
Agency is specifically seeking comment on the frequency with which
guaranteed-loan only applications are competed. Please comment on how
the frequency of competition cycles such as monthly, semi-annually, and
annually would meet the needs of lenders and borrowers better than
quarterly competitions. Please be specific in your comments and provide
your rationale.
i. The Agency is considering issuing the REAP Loan Note Guarantee
prior to construction for technologies that demonstrate lower risk to
the government. The Agency is interested in receiving comments on the
appropriateness of this action and would like to receive suggestions on
what type of technologies should be considered. Please be sure to be
specific in your comments and provide your rationale.
j. The Agency is seeking comment on how a multi-farm, community
digester project could be developed based upon the requirements
contained in this proposed rule. Please be sure to be specific in your
comments and provide your rationale.
k. The current REAP regulation allows the State Director or the
Administrator to award points to an application that is ``for an under-
represented technology'' (see Sec. 4280.120(g)). Under Renewable
Energy Systems, there are different categories or technologies: wind,
solar, renewable biomass, ocean (including tidal, wave, current, and
thermal), geothermal, hydroelectric source, or hydrogen derived from
one of these sources. Energy efficiency only has one category.
The Agency is considering revising how it awards points for the
``under-represented technology'' provision for EEI technology. For
example, looking at the number of prior lighting project awards
compared to the number of prior grain dryer or poultry house project
awards and awarding State Director or Administrator points to those
projects that are under-represented. To this end, the Agency is seeking
comments on the following questions. In all cases, please provide your
rationale to support your comments.
For energy efficiency improvement projects, how would you
suggest subdividing EEI projects to create ``similar classes of EEI
technologies'' for purposes of determining ``under-representation''?
Should we determine under-represented based on the pool of
applications each year or based on the historical data for the program?
List of Subjects in 7 CFR Part 4280
Loan programs--Business and industry, Economic development, Energy,
Energy Efficiency Improvements, Feasibility studies, Grant programs,
Guaranteed loan programs, Renewable Energy Systems, and Rural areas.
For the reasons set forth in the preamble, under the authority at 5
U.S.C. 301, 7 U.S.C. 1989, and 7 U.S.C. 8107, chapter XLII of title 7
of the Code of Federal Regulations is proposed to be amended as
follows: Chapter XLII--Rural Business-Cooperative Service and Rural
Utilities Service, Department of Agriculture
PART 4280--LOAN AND GRANTS
0
1. The authority citation for part 4280 continues to read as follows:
Authority: 5 U.S.C. 301; 7 U.S.C. 940c; 7 U.S.C. 8107
0
2. Subpart B is revised as follows:
Subpart B--Rural Energy for America Program
General
Sec.
4280.101 Purpose.
4280.102 Organization of subpart.
4280.103 Definitions.
4280.104 Exception authority.
4280.105 Review or appeal rights.
4280.106 Conflict of interest.
4280.107 USDA Departmental regulations.
4280.108 Laws that contain other compliance requirements.
4280.109 Ineligible applicants, borrowers, and owners.
4280.110 General applicant, application, and funding provisions.
4280.111 Notifications.
Renewable Energy System and Energy Efficiency Improvement Grants
4280.112 Applicant eligibility.
4280.113 Project eligibility.
4280.114 [Reserved]
[[Page 22063]]
4280.115 RES and EEI grant funding.
4280.116 Grant applications--general.
4280.117 Grant applications for RES and EEI projects with total
project costs greater than $200,000.
4280.118 Grant applications for RES and EEI projects with total
project costs of $200,000 or less.
4280.119 Grant applications for RES and EEI projects with total
project costs of $80,000 or less.
4280.120 Scoring RES and EEI grant applications.
4280.121 Selecting RES and EEI grant applications for award.
4280.122 Awarding and administering RES and EEI grants.
4280.123 Servicing RES and EEI grants.
4280.124 Construction planning and performing development.
Renewable Energy System and Energy Efficiency Improvement Guaranteed
Loans
4280.125 Compliance with Sec. Sec. 4279.29 through 4279.99.
4280.126 Guarantee/annual renewal fee.
4280.127 Borrower eligibility.
4280.128 Project eligibility.
4280.129 Guaranteed loan funding.
4280.130 Loan processing.
4280.131 Credit quality.
4280.132 Financial statements.
4280.133 [Reserved]
4280.134 Personal and corporate guarantees.
4280.135 Scoring RES and EEI guaranteed loan only applications.
4280.136 [Reserved]
4280.137 Application and documentation.
4280.138 Evaluation of RES and EEI guaranteed loan applications.
4280.139 Selection of RES and EEI guaranteed loan only applications.
4280.140 [Reserved]
4280.141 Changes in borrower.
4280.142 Conditions precedent to issuance of loan note guarantee.
4280.143 Requirements after project construction.
4280.144-4280.151 [Reserved]
4280.152 Servicing guaranteed loans.
4280.153-4280.164 [Reserved]
Combined Funding for Renewable Energy Systems and Energy Efficiency
Improvements
4280.165 Combined funding for renewable energy systems and energy
efficiency improvements.
4280.166-4280.168 [Reserved]
Renewable Energy System Feasibility Study Grants
4280.169 General provisions.
4280.170 Applicant eligibility.
4280.171 Eligibility of RES projects for feasibility study grants.
4280.172 [Reserved]
4280.173 Grant funding for RES feasibility studies.
4280.174-4280.175 [Reserved]
4280.176 Feasibility study grant applications--content.
4280.177 Evaluation of feasibility study grant applications.
4280.178 Scoring feasibility study grant applications.
4280.179 Selecting feasibility study grant applications for award.
4280.180 [Reserved]
4280.181 Awarding and administering feasibility study grants.
4280.182 Servicing feasibility study grants.
4280.183--4280.185 [Reserved]
Energy Audit and Renewable Energy Development Assistance Grants
4280.186 Applicant eligibility.
4280.187 Project eligibility.
4280.188 Grant funding for energy audit and renewable energy
development assistance.
4280.189 [Reserved]
4280.190 EA and REDA grant applications--content.
4280.191 Evaluation of EA and REDA grant applications.
4280.192 Scoring EA and REDA grant applications.
4280.193 Selecting EA and REDA grant applications for award.
4280.194 [Reserved]
4280.195 Awarding and administering EA and REDA grants.
4280.196 Servicing EA and REDA grants.
4280.197-4280.199 [Reserved]
4280.200 OMB control number.
Appendix A to Part 4280--Technical Report for Energy Efficiency
Improvement Projects
Appendix B to Part 4280--Technical Reports for Renewable Energy
System (RES) Projects with Total Project Costs of $200,000 or Less
Appendix C to Part 4280--Technical Reports for Renewable Energy
System Projects with Total Project Costs of Greater than $200,000
Appendix D to Part 4280 -Feasibility Study Content
General
Sec. 4280.101 Purpose.
The subpart contains the procedures and requirements for providing
the following financial assistance under the Rural Energy for America
Program (REAP):
(a) Grants or guaranteed loans, or a combination grant and
guaranteed loan, for the purpose of purchasing and installing Renewable
Energy Systems (RES) and Energy Efficiency Improvements (EEI);
(b) Grants for conducting RES Feasibility Studies; and
(c) Grants to assist Agricultural Producers and Rural Small
Businesses by conducting Energy Audits (EA) and providing
recommendations and information on Renewable Energy Development
Assistance (REDA) and improving energy efficiency.
Sec. 4280.102 Organization of subpart.
(a) Sections 4280.103 through 4280.111 discuss definitions;
exception authority; review or appeal rights; conflict of interest;
USDA Departmental Regulations; other applicable laws; ineligible
applicants, borrowers, and owners; general applicant, application, and
funding provisions; and notifications, which are applicable to all of
the funding programs under this subpart.
(b) Sections 4280.112 through 4280.124 discuss the requirements
specific to RES and EEI grants. Sections 4280.112 and 4280.113 discuss,
respectively, applicant and project eligibility. Section 4280.115
addresses funding provisions for these grants. Sections 4280.116
through 4280.119 address grant application content and required
documentation. Sections 4280.120 through 4280.123 address the scoring,
selection, awarding and administering, and servicing of these grant
applications. Section 4280.124 addresses construction planning and
development.
(c) Sections 4280.125 through 4280.152 discuss the requirements
specific to RES and EEI guaranteed loans. Sections 4280.125 through
4280.128 discuss eligibility and requirements for making and processing
loans guaranteed by the Agency. Section 4280.129 addresses funding for
guaranteed loans. In general, Sections 4280.130 through 4280.152
provide guaranteed loan origination and servicing requirements. These
requirements apply to lenders, holders, and other parties involved in
making, guaranteeing, holding, servicing, or liquidating such loans.
Section 4280.137 addresses the application requirements for guaranteed
loans.
(d) Section 4280.165 presents the process by which the Agency will
make combined loan guarantee and grant funding available for RES and
EEI projects.
(e) Sections 4280.170 through 4280.182 presents the process by
which the Agency will make RES Feasibility Study grant funding
available. These sections cover applicant and project eligibility,
grant funding, application content, evaluation, scoring, selection,
awarding and administering, and servicing.
(f) Sections 4280.186 through 4280.196 present the process by which
the Agency will make EA and REDA grant funding available. These
sections cover applicant and project eligibility, grant funding,
application content, evaluation, scoring, selection, awarding and
administering, and servicing.
(g) Appendices A through C cover technical report requirements.
Appendix A applies to EEI projects; Appendix B applies to RES projects
with Total Project Costs of $200,000 or less; and Appendix C applies
RES projects with Total Project Costs greater
[[Page 22064]]
than $200,000. Appendix D identifies the contents of the Feasibility
Study that will be required to be submitted to the Agency if funding is
provided under Sec. Sec. 4280.169 through 4280.182. Appendices A and B
do not apply to RES and EEI projects with Total Project Costs of
$80,000 or less, respectively. Instead, technical report requirements
for these projects are found in Sec. 4280.119.
Sec. 4280.103 Definitions.
Terms used in this subpart are defined in either Sec. 4279.2 of
this chapter or in this section. If a term is defined in both Sec.
4279.2 and this section, it will have, for purposes of this subpart
only, the meaning given in this section. Terms used in this subpart
that have the same meaning as the terms defined in this section have
been capitalized in this subpart.
Administrator. The Administrator of Rural Business-Cooperative
Service within the Rural Development Mission Area of the U.S.
Department of Agriculture.
Agency. The Rural Business-Cooperative Service (RBS) or successor
agency assigned by the Secretary of Agriculture to administer the Rural
Energy for America Program. References to the National Office, Finance
Office, State Office, or other Agency offices or officials should be
read as prefaced by ``Agency'' or ``Rural Development'' as applicable.
Agricultural producer. An individual or entity directly engaged in
the production of agricultural products, including crops (including
farming); livestock (including ranching); forestry products;
hydroponics; nursery stock; or aquaculture, whereby 50 percent or
greater of their gross income is derived from the operations.
Anaerobic digester project. A Renewable Energy System that uses
animal or other Renewable Biomass and may include other organic
substrates, via anaerobic digestion, to produce biomethane that is used
to produce thermal or electrical energy or that is converted to a
compressed gaseous or liquid state.
Annual receipts. The total income or gross income (sole
proprietorship) plus cost of goods sold.
Applicant. (1) Except for EA and REDA grants, the Agricultural
Producer or Rural Small Business that is seeking a grant, guaranteed
loan, or a combination of a grant and loan, under this subpart.
(2) For EA and REDA grants, a unit of state, tribal, or local
government; a land-grant college or university or other Institution of
Higher Education; a rural electric cooperative; a Public Power Entity;
or an Instrumentality of a State, Tribal, or local government that is
seeking an EA or REDA grant under this subpart.
Assignment Guarantee Agreement (Form RD 4279-6, or successor form).
The signed agreement among the Agency, the lender, and the holder
containing the terms and conditions of an assignment of a guaranteed
portion of a loan, using the single note system.
Bioenergy project. A Renewable Energy System that produces fuel,
thermal energy, or electric power from a Renewable Biomass source only.
Blended liquid transportation fuel. A fuel used for transportation
that:
(1) Is composed of one or more fuel types, at least one of which
must meet the Renewable Fuel Standard, and
(2) Results in a blended fuel that exceeds the highest Federal or
State percentage volume, if any, for a renewable fuel required for each
retail service station for the respective jurisdiction. For example, if
the Federal government required E15 be dispensed at all retail service
stations and a State required E30 be dispensed at all retail service
stations in this State, then Applicants in that State would be eligible
for funds under this program only if the Flexible Fuel Pump to be
installed would dispense a Blended Liquid Transportation Fuel higher
than E30 (e.g., E50, E85).
Capacity. The maximum output rate that an apparatus or heating unit
is able to attain on a sustained basis as rated by the manufacturer.
Commercially available. A system that has a proven operating
history for at least one year specific to the proposed application.
Such a system is based on established design and installation
procedures and practices. Professional service providers, trades, large
construction equipment providers, and labor are familiar with
installation procedures and practices. Proprietary and balance of
system equipment and spare parts are readily available. Service is
readily available to properly maintain and operate the system. An
established warranty exists for major parts and labor. If the system is
currently Commercially Available only outside of the U.S.,
authoritative evidence of the foreign operating history, performance
and reliability is required in order to address the proven operating
history.
Complete application. An application that contains all parts
necessary for the Agency to determine Applicant and project
eligibility, to score the application, and, where applicable, to enable
the Agency to perform a technical evaluation of the project.
Conditional Commitment (Form RD 4279-3, or successor form). The
Agency's notice to the lender that the loan guarantee it has requested
is approved subject to the completion of all conditions and
requirements set forth by the Agency and outlined in the Conditional
Commitment.
Departmental regulations. The regulations of the Department of
Agriculture's Office of Chief Financial Officer (or successor office)
as codified in 2 CFR part 417 and 7 CFR parts 3000 through 3099,
including, but not necessarily limited to, 7 CFR parts 3015 through
3019, 7 CFR part 3021, and 7 CFR part 3052, and successor regulations
to these parts.
Design/build method. A method of project development whereby all
design, engineering, procurement, construction, and other related
project activities are performed under a single contract. The
contractor is solely responsible and accountable for successful
delivery of the project to the grantee and/or borrower as applicable.
Eligible project costs. The Total Project Costs that are eligible
to be paid or guaranteed with program funds.
Energy analysis. An Agency-approved report prepared by an
individual or entity who has at least 3 years experience and completed
at least five energy analyses, energy assessments, or energy audits on
similar type projects, assessing energy use, cost and efficiency by
analyzing energy bills and surveying the target building and/or
equipment sufficiently to provide an Agency-approved energy analysis.
Energy assessment. An Agency-approved report prepared by an Energy
Auditor, Energy Assessor, or an individual supervised by either an
Energy Assessor or Energy Auditor, assessing energy use, cost, and
efficiency by analyzing energy bills and surveying the target building
and/or equipment sufficiently to provide an Agency-approved energy
assessment. The final energy assessment must be validated and signed by
the Energy Assessor or Energy Auditor who conducted the assessment or
by the supervising Energy Assessor or Energy Auditor of the individual
who conducted the assessment, as applicable.
Energy assessor. A Qualified Consultant who has at least 3 year
experience and completed at least five Energy Assessments or Energy
Audits on similar type projects and who adheres to generally recognized
engineering principles and practices.
Energy audit (EA). A comprehensive report that meets an Agency
approved standard prepared by an Energy Auditor
[[Page 22065]]
or an individual supervised by an Energy Auditor that documents current
energy usage; recommended potential improvements, typically called
energy conservation measures, and their costs; energy savings from
these improvements; dollars saved per year; and Simple Payback. The
methodology of the energy audit must meet professional and industry
standards. The final energy audit must be validated and signed off by
the Energy Auditor who conducted the audit or by the supervising Energy
Auditor of the individual who conducted the audit, as applicable.
Energy auditor. A Qualified Consultant that meets one of the
following criteria:
(1) A Certified Energy Auditor certified by the Association of
Energy Engineers;
(2) A Certified Energy Manager certified by the Association of
Energy Engineers;
(3) A Licensed Professional Engineer in the State in which the
audit is conducted with at least 1 year experience and who has
completed at least two similar type Energy Audits; or
(4) An individual with a four-year engineering or architectural
degree with at least 3 years experience and who has completed at least
five similar type Energy Audits.
Energy efficiency improvement (EEI). Improvements to or replacement
of an existing building and/or equipment that reduces energy
consumption on an annual basis.
Feasibility study. An analysis conducted by a qualified consultant
of the economic, market, technical, financial, and management
feasibility of a proposed project or business.
Federal fiscal year. The 12-month period beginning October 1 of any
given year and ending on September 30 of the following year.
Financial feasibility. The ability of a project or business to
achieve sufficient income, credit, and cash flow to financially sustain
a project over the long term. The concept of financial feasibility
includes assessments of the cost-accounting system, the availability of
short-term credit for seasonal businesses, and the adequacy of raw
materials and supplies.
Flexible fuel pump. A retail pump that combines and dispenses a
Blended Liquid Transportation Fuel or dispenses a Blended Liquid
Transportation Fuel. If a flexible fuel pump dispenses more than one
blend of liquid transportation fuel, at least one of the blends must
meet the definition of Blended Liquid Transportation Fuel found in this
section.
Geothermal direct generation. A system that uses thermal energy
directly from a geothermal source.
Geothermal electric generation. A system that uses thermal energy
from a geothermal source to produce electricity.
Grant agreement (Form RD 4280-2, Rural Business Cooperative Service
Grant Agreement, or successor form). An agreement between the Agency
and the grantee setting forth the provisions under which the grant will
be administered.
Hybrid. A combination of two or more Renewable Energy technologies
that are incorporated into a unified system to support a single
project.
Hydroelectric source. A Renewable Energy System producing
electricity using various types of moving water including, but not
limited to, diverted run-of-river water, in-stream run-of-river water,
and in-conduit water. For the purposes of this subpart, only those
hydroelectric sources with a Rated Power of 30 megawatts or less are
eligible.
Hydrogen project. A system that produces hydrogen from a Renewable
Energy source or that uses hydrogen produced from a Renewable Energy
source as an energy transport medium in the production of mechanical or
electric power or thermal energy.
Immediate family. Individuals who are closely related by blood,
marriage, or adoption, or who live within the same household, such as a
spouse, domestic partner, parent, child, brother, sister, aunt, uncle,
grandparent, grandchild, niece, or nephew.
Inspector. A Qualified Consultant with at least 3 year experience
and who has completed at least five inspections on similar type
projects. A project might require one or more inspectors to perform the
required inspections.
Institution of higher education. As defined in 20 U.S.C. 1002(a).
Instrumentality. An organization recognized, established, and
controlled by a State, Tribal, or local government, for a public
purpose or to carry out special purposes (e.g., a Water District,
Resource Conservation and Development Council, etc.).
Interconnection agreement. A contract containing the terms and
conditions governing the interconnection and parallel operation of the
grantee's or borrower's electric generation equipment and the utility's
electric power system.
Lender's Agreement (Form RD 4279-4, or successor form). Agreement
between the Agency and the lender setting forth the lender's loan
responsibilities.
Loan Note Guarantee (Form RD 4279-5, or successor form). A
guarantee issued and executed by the Agency containing the terms and
conditions of the guarantee.
Matching funds. The funds needed to pay for the portion of the
Total Project Costs not funded or guaranteed by the Agency. Unless
authorized by statute, other Federal grant funds cannot be used to meet
a Matching Funds requirement.
Ocean energy. Energy created by use of various types of moving
water in the ocean and other large bodies of water (e.g., Great Lakes)
including, but not limited to, tidal, wave, current, and thermal
changes.
Passive investor. An equity investor that does not actively
participate in management and operation decisions of the business
entity as evidenced by a contractual agreement.
Power purchase agreement. The terms and conditions governing the
sale and transportation of electricity produced by the grantee or
borrower to another party.
Public power entity. Is defined using the definition of ``state
utility'' as defined in section 217(A)(4) of the Federal Power Act (16
U.S.C. 824q(a)(4)). As of this writing, the definition ``means a State
or any political subdivision of a State, or any agency, authority, or
instrumentality of any one or more of the foregoing, or a corporation
that is wholly owned, directly or indirectly, by any one or more of the
foregoing, competent to carry on the business of developing,
transmitting, utilizing, or distributing power.''
Qualified consultant. An independent third-party individual or
entity possessing the knowledge, expertise, and experience to perform
the specific task required.
Rated power. The maximum amount of energy that can be created at
any given time.
Refurbished. Refers to a Renewable Energy System or equipment that
has been brought into a facility, thoroughly inspected, and worn parts
replaced. A refurbished system or equipment will typically have some
type of warranty.
Renewable biomass. (1) Materials, pre-commercial thinnings, or
invasive species from National Forest System land or public lands (as
defined in section 103 of the Federal Land Policy and Management Act of
1976 (43 U.S.C. 1702)) that:
(i) Are byproducts of preventive treatments that are removed to
reduce hazardous fuels; to reduce or contain disease or insect
infestation; or to restore ecosystem health;
[[Page 22066]]
(ii) Would not otherwise be used for higher-value products; and
(iii) Are harvested in accordance with applicable law and land
management plans and the requirements for old-growth maintenance,
restoration, and management direction of paragraphs (e)(2), (e)(3), and
(e)(4) and large-tree retention of subsection (f) of section 102 of the
Healthy Forests Restoration Act of 2003 (16 U.S.C. 6512); or
(2) Any organic matter that is available on a renewable or
recurring basis from non-Federal land or land belonging to an Indian or
Indian Tribe that is held in trust by the United States or subject to a
restriction against alienation imposed by the United States, including:
(i) Renewable plant material, including feed grains; other
agricultural commodities; other plants and trees; and algae; and
(ii) Waste material, including crop residue; other vegetative waste
material (including wood waste and wood residues); animal waste and
byproducts (including fats, oils, greases, and manure); and food waste,
yard waste, and other biodegradable waste. (Waste material does not
include unsegregated solid waste.)
Renewable energy. Energy derived from:
(1) A wind, solar, Renewable Biomass, ocean (including tidal, wave,
current, and thermal), geothermal or Hydroelectric Source; or
(2) Hydrogen derived from Renewable Biomass or water using wind,
solar, ocean (including tidal, wave, current, and thermal), geothermal
or Hydroelectric Sources.
Renewable energy development assistance (REDA). Assistance provided
by eligible grantees to Agricultural Producers and Rural Small
Businesses to become more energy efficient and to use Renewable Energy
technologies and resources. The renewable energy development assistance
may consist of Renewable Energy site assessment and/or Renewable Energy
Technical Assistance.
Renewable energy site assessment. A report provided to an
Agricultural Producer or Rural Small Business providing information
regarding and recommendations for the use of Commercially Available
Renewable Energy technologies in its operation. The report must be
prepared by a Qualified Consultant and must contain the information
specified in Sections A through C of Appendix B.
Renewable energy system (RES). A system that produces or produces
and delivers a usable energy from a Renewable Energy source, or is a
Flexible Fuel Pump.
Renewable energy technical assistance. Assistance provided to
Agricultural Producers and Rural Small Businesses on how to use
Renewable Energy technologies and resources in their operations.
Retrofitting. The modification of a Renewable Energy System to
incorporate features not included in the original design or for the
replacement of existing components with ones that improve the original
design.
Rural or rural area. Any area of a State not in a city or town that
has a population of more than 50,000 inhabitants, according to the
latest decennial census of the United States, or in the urbanized area
contiguous and adjacent to a city or town that has a population of more
than 50,000 inhabitants, and any area that has been determined to be
``rural in character'' by the Under Secretary for Rural Development, or
as otherwise identified in this definition.
(1) An area that is attached to the urbanized area of a city or
town with more than 50,000 inhabitants by a contiguous area of
urbanized census blocks that is not more than two census blocks wide.
Applicants from such an area should work with their Rural Development
State Office to request a determination of whether their project is
located in a rural area under this provision.
(2) For the purposes of this definition, cities and towns are
incorporated population centers with definite boundaries, local self
government, and legal powers set forth in a charter granted by the
State.
(3) For the Commonwealth of Puerto Rico, the island is considered
rural and eligible except for the San Juan Census Designated Place
(CDP) and any other CDP with greater than 50,000 inhabitants. CDPs with
greater than 50,000 inhabitants, other than the San Juan CDP, may be
determined to be eligible if they are ``not urban in character.''
(4) For the State of Hawaii, all areas within the State are
considered rural and eligible except for the Honolulu CDP within the
County of Honolulu.
(5) For the purpose of defining a rural area in the Republic of
Palau, the Federated States of Micronesia, and the Republic of the
Marshall Islands, the Agency shall determine what constitutes rural and
rural area based on available population data.
(6) The determination that an area is ``rural in character'' will
be made by the Under Secretary of Rural Development. The process to
request a determination under this provision is outlined in paragraph
(6)(ii) of this definition.
(i) The determination that an area is ``rural in character'' under
this definition will apply to areas that are within:
(A) An urbanized area that has two points on its boundary that are
at least 40 miles apart, which is not contiguous or adjacent to a city
or town that has a population of greater than 150,000 inhabitants or
the urbanized area of such a city or town; or
(B) An urbanized area contiguous and adjacent to a city or town of
greater than 50,000 inhabitants that is within one quarter mile of a
rural area.
(ii) Units of local government may petition the Under Secretary of
Rural Development for a ``rural in character'' designation by
submitting a petition to both the appropriate Rural Development State
Director and the Administrator on behalf of the Under Secretary. The
petition shall document how the area meets the requirements of
paragraph (6)(i)(A) or (B) of this definition and discuss why the
petitioner believes the area is ``rural in character,'' including, but
not limited to, the area's population density, demographics, and
topography and how the local economy is tied to a rural economic base.
Upon receiving a petition, the Under Secretary will consult with the
applicable Governor or leader in a similar position and request
comments to be submitted within 5 business days, unless such comments
were submitted with the petition. The Under Secretary will release to
the public a notice of a petition filed by a unit of local government
not later than 30 days after receipt of the petition by way of
publication in a local newspaper and posting on the Agency's Web site,
and the Under Secretary will make a determination not less than 15
days, but no more than 60 days, after the release of the notice. Upon a
negative determination, the Under Secretary will provide to the
petitioner an opportunity to appeal a determination to the Under
Secretary, and the petitioner will have 10 business days to appeal the
determination and provide further information for consideration.
Rural Small Business. A Small Business that is located in a Rural
Area or that can demonstrate the proposed project for which assistance
is being applied for under this subpart is located in a Rural Area.
Simple payback. The estimated simple payback of a project funded
under this subpart as calculated using paragraph (1), (2), or (3), as
applicable, of this definition.
(1) For energy generation projects, Simple Payback is calculated as
follows:
[[Page 22067]]
(i) Simple Payback = (Total Project Costs)/(Average Net Income +
Interest Expense + Depreciation Expense (for the project))
(ii) Average Net Income:
(A) Is based on all energy related revenue streams which include
monetary benefits from production tax credit, renewable energy credit,
carbon credits, revenue from byproducts produced by the energy system,
fair market value of byproducts produced by and used in the project or
related enterprises, and other incentives that can be annualized.
(B) Is based on income remaining after all project obligations are
paid (operating and maintenance), except interest and depreciation as
noted above.
(C) Is based on the Agency's review and acceptance of the project's
typical year income (which is after the project is operating and
stabilized) projections at the time of application submittal.
(D) Does not allow Investment Tax Credits, State tax incentives, or
other one-time construction and investment related benefits that cannot
be annualized to be included as income or reduce total Eligible Project
Costs.
(2) For EEI projects, Simple Payback is calculated as follows:
(i) Simple Payback = (Total Project Costs)/Dollar Value of Energy
Generated or Saved (as applicable)
(ii) Dollar Value of Energy Generated or Saved incorporates the
following:
(A) All energy related revenue streams, which include monetary
benefits from production tax credit, renewable energy credit, carbon
credits, revenue from byproducts produced by the energy system, and
other monetary incentives that can be annualized.
(B) Energy saved or replaced will be calculated on the quantity of
energy saved or replaced (as determined by subtracting the result
obtained under paragraph (2)(ii)(B)(2) from the result obtained under
paragraph (2)(ii)(B)(1) of this definition, and converted to a monetary
value using a constant value or price of energy (as determined under
paragraph (2)(ii)(B)(3) of this definition).
(1) Actual energy used in the original building and/or equipment,
as applicable, prior to the RES or EEI project, shall be based on the
actual average annual total energy used (BTU) over the most recent 36
months of operation or, if in operation for less than 36 months, the
length of ownership.
(2) Projected energy use if the proposed RES or EEI project had
been in place for the original building and/or equipment, as
applicable, for the same time period used to determine that actual
energy use under paragraph (2)(ii)(B)(1) of this definition.
(3) Value or price of energy shall be the actual average price paid
over the same time period used to calculate the actual energy used
under paragraph (2)(ii)(B)(1) of this definition.
(C) Does not allow Energy Efficiency Improvements to monetize
benefits other than the dollar amount of the energy savings the
Agricultural Producer or Rural Small Business realizes as a result of
the improvement.
(D) Does not allow investment tax credits, State tax incentives, or
other one-time construction and investment related benefits that cannot
be annualized to be included as income or reduce total Eligible Project
Costs.
(3) For Flexible Fuel Pumps, only the costs for the Flexible Fuel
Pump and any equipment and tanks directly associated with the Flexible
Fuel Pump, revenue, and expenses will be included in the calculation
for Simple Payback as follows:
(i) Simple Payback = (Total Project Costs)/(Average Net Income +
Interest Expense + Depreciation Expense (for the project))
(ii) Average Net Income is based on:
(A) All energy-related revenue streams, which include monetary
benefits from tax credits and other credits or incentives that can be
annualized.
(B) Income remaining after all project obligations are paid
(operating and maintenance), except interest and depreciation as noted
above.
(C) The Agency's review and acceptance of the project's typical
year income (which is after the project is operating and stabilized)
projections at the time of application submittal.
(D) Does not allow State tax incentives or other one-time
construction and investment related benefits that cannot be annualized
to be included as income or reduce total Eligible Project Costs.
Small business. An entity is considered a small business in
accordance with the Small Business Administration's (SBA) small
business size standards categorized by the North American Industry
Classification System (NAICS) found in 13 CFR part 121. A private
entity, including a sole proprietorship, partnership, corporation,
cooperative (including a cooperative qualified under section 501(c)(12)
of the Internal Revenue Code), and an electric utility (including a
Tribal or governmental electric utility) that provides service to rural
consumers provided such utilities meet SBA's definition of small
business. These entities must operate independent of direct Government
control except for Tribal corporations charted under Section 17 of the
Indian Reorganization Act (25 U.S.C. 477) or other Tribal business
entities that have similar structures and relationships with their
Tribal governments as determined by the Agency. The Agency shall
determine the small business status of such a Tribal entity without
regard to the resources of the Tribal government. With the exception of
the entities described above, all other non-profit entities are
excluded.
State. Any of the 50 States of the United States, the Commonwealth
of Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, the
Commonwealth of the Northern Mariana Islands, the Republic of Palau,
the Federated States of Micronesia, and the Republic of the Marshall
Islands.
Total project costs. The sum of all costs associated with a
completed project.
Used equipment. Any equipment that has been used in any previous
application and is provided in an ``as is'' condition.
Sec. 4280.104 Exception authority.
The Administrator may, with the concurrence of the Secretary of
Agriculture, make an exception, on a case-by-case basis, to any
requirement or provision of this subpart that is not inconsistent with
any authorizing statute or applicable law, if the Administrator
determines that application of the requirement or provision would
adversely affect the Federal government's financial interest.
Sec. 4280.105 Review or appeal rights.
An Applicant, lender, holder, borrower, or grantee may seek a
review of an Agency decision or appeal to the National Appeals Division
in accordance with 7 CFR part 11.
(a) Guaranteed loan. In cases where the Agency has denied or
reduced the amount of final loss payment to the lender, the adverse
decision may be appealed by the lender only. An adverse decision that
only impacts the holder may be appealed by the holder only. A decision
by a lender adverse to the interest of the borrower is not a decision
by the Agency, whether or not concurred in by the Agency.
(b) Combined guaranteed loan and grant. For an adverse decision
involving a combination guaranteed loan and grant funding request, only
the party that is adversely affected may request the review or appeal.
Sec. 4280.106 Conflict of interest.
(a) General. No conflict of interest or appearance of conflict of
interest will be
[[Page 22068]]
allowed. For purposes of this subpart, conflict of interest includes,
but is not limited to, distribution or payment of grant, guaranteed
loan funds, and Matching Funds or award of project contracts to an
individual owner, partner, or stockholder, or to a beneficiary or
Immediate Family of the Applicant or borrower when the recipient will
retain any portion of ownership in the Applicant's or borrower's
project. Grant and Matching Funds may not be used to support costs for
services or goods going to, or coming from, a person or entity with a
real or apparent conflict of interest.
(b) Assistance to employees, relatives, and associates. The Agency
will process any requests for assistance under this subpart in
accordance with 7 CFR part 1900, subpart D.
(c) Member/delegate clause. No member of or delegate to Congress
shall receive any share or part of this grant or any benefit that may
arise there from; but this provision shall not be construed to bar, as
a contractor under the grant, a publicly held corporation whose
ownership might include a member of Congress.
Sec. 4280.107 USDA Departmental regulations.
All projects funded under this subpart are subject to the
provisions of the Departmental Regulations, as applicable, which are
incorporated by reference herein.
Sec. 4280.108 Laws that contain other compliance requirements.
(a) Equal opportunity and nondiscrimination. The Agency will ensure
that equal opportunity and nondiscrimination requirements are met in
accordance with the Equal Credit Opportunity Act (15 U.S.C. 1691 et
seq.) and 7 CFR part 15d, Nondiscrimination in Programs and Activities
Conducted by the United States Department of Agriculture. The Agency
will not discriminate against Applicants on the basis of race, color,
religion, national origin, sex, marital status, or age (provided that
the Applicant has the capacity to contract); because all or part of the
Applicant's income derives from any public assistance program; or
because the Applicant has in good faith exercised any right under the
Consumer Credit Protection Act (15 U.S.C. 1601 et seq).
(b) Civil rights compliance. Recipients of grants must comply with
the Americans with Disabilities Act of 1990 (42 U.S.C. 12101 et seq.),
Title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d et seq.), and
Section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794). This may
include collection and maintenance of data on the race, sex, and
national origin of the recipient's membership/ownership and employees.
These data must be available to conduct compliance reviews in
accordance with 7 CFR 1901.204.
(1) Initial compliance reviews will be conducted by the Agency
prior to funds being obligated.
(2) Grants will require one subsequent compliance review following
project completion. This will occur after the last disbursement of
grant funds has been made.
(c) Environmental analysis. 7 CFR part 1940, subpart G or successor
regulation outlines environmental procedures and requirements for this
subpart. Prospective Applicants are advised to contact the Agency to
determine environmental requirements as soon as practicable after they
decide to pursue any form of financial assistance directly or
indirectly available through the Agency.
(1) Any required environmental review must be completed by the
Agency prior to the Agency obligating any funds.
(2) The Applicant will be notified of all specific compliance
requirements, including, but not limited to, the publication of public
notices, and consultation with State Historic Preservation Offices and
the U.S. Fish and Wildlife Service.
(3) A site visit by the Agency may be scheduled, if necessary, to
determine the scope of the review.
(d) Discrimination complaints.
(1) Who may file. Persons or a specific class of persons believing
they have been subjected to discrimination prohibited by this section
may file a complaint personally, or by an authorized representative
with USDA, Director, Office of Adjudication, 1400 Independence Avenue
SW., Washington, DC 20250.
(2) Time for filing. A complaint must be filed no later than 180
days from the date of the alleged discrimination, unless the time for
filing is extended by the designated officials of USDA or Rural
Development.
Sec. 4280.109 Ineligible Applicants, borrowers, and owners.
Applicants, borrowers, and owners will be ineligible to receive
funds under this subpart as discussed in paragraphs (a) and (b) of this
section.
(a) If an Applicant, borrower, or owner has an outstanding judgment
obtained by the U.S. in a Federal Court (other than in the United
States Tax Court), is delinquent in the payment of Federal income
taxes, or is delinquent on a Federal debt, the Applicant, borrower, or
owner is not eligible to receive a grant or guaranteed loan until the
judgment is paid in full or otherwise satisfied or the delinquency is
resolved.
(b) If an Applicant, borrower, or owner is debarred from receiving
Federal assistance, the Applicant, borrower, or owner is not eligible
to receive a grant or guaranteed loan under this subpart.
Sec. 4280.110 General Applicant, application, and funding provisions.
(a) Satisfactory progress. An Applicant that has received one or
more grants and/or guaranteed loans under this program must make
satisfactory progress, as determined by the Agency, toward completion
of any previously funded projects before the Applicant will be
considered for subsequent funding.
(b) Application submittal. Applications must be submitted in
accordance with the provisions of this subpart unless otherwise
specified in a Federal Register notice. Grant applications, guaranteed
loan only applications, and combined guaranteed loan and grant
applications for financial assistance under this subpart may be
submitted at any time except for EA and REDA applications. The
application competition deadline for EA and REDA applications is
identified in Sec. 4280.193.
(1) Grant applications. Complete grant applications will be
accepted on a continuous basis, with awards made based on the
application's score and subject to available funding. EA and REDA
applications will be accepted as identified in Sec. 4280.193.
(2) Guaranteed loan only applications. Each complete guaranteed
loan-only applications received by the Agency will be scored. Each
application that is ready for funding and that scores at or above the
minimum score will be competed on the first business day of the second
month of each Federal fiscal quarter, with higher scoring applications
receiving priority. Each application ready for funding that scores
below the minimum score will be competed during the last fiscal
quarter.
(3) Combined guaranteed loan and grant applications. Applications
requesting a RES or EEI grant and a guaranteed loan under this subpart
will be accepted on a continuous basis, with awards made based on the
grant application's score and subject to available funding.
(c) Limit on number of applications. An Applicant can apply for
only one Renewable Energy System project, one Energy Efficiency
Improvement project,
[[Page 22069]]
and one Feasibility Study project under this subpart per Federal Fiscal
Year.
(d) Limit on type of funding requests. An Applicant can submit only
one type of funding request (grant-only, guaranteed loan-only or
combined funding) for each project under this subpart per Federal
Fiscal Year.
(e) Application modification. Once submitted and prior to Agency
award, if an Applicant modifies its application, the application will
be treated as a new application. The submission date of record for such
modified applications will be the date the Agency receives the modified
application, and the application will be processed by the Agency as a
new application under this subpart.
(f) Incomplete applications. Applicants must submit Complete
Applications in order to be considered for funding. If an application
is incomplete, the Agency will identify those parts of the application
that are incomplete and return it, with a written explanation, to the
Applicant for possible future resubmission. Upon receipt of a Complete
Application by the appropriate Agency office, the Agency will complete
its evaluation and will compete the application in accordance with the
procedures specified in Sec. Sec. 4280.121, 4280.179 or 4280.193 as
applicable of this subpart.
(g) Application withdrawal. During the period between the
submission of an application and the execution of loan and/or grant
award documents for an application selected for funding, the Applicant
must notify the Agency, in writing, if the project is no longer viable
or the Applicant no longer is requesting financial assistance for the
project. When the Applicant notifies the Agency, the selection will be
rescinded and/or the application withdrawn.
(h) Technical report. Each technical report submitted under this
subpart, as specified in Sec. Sec. 4280.117(e), 4280.118(b)(4), and
4280.119(b)(3) and 4280.119(b)(4) must comply with the provisions
specified in paragraphs (h)(1) through (h)(3), as applicable, of this
section.
(1) Technical report format and detail. The information in the
technical report must follow the format specified in Sec.
4280.119(b)(3), Sec. 4280.119(b)(4), and Appendices A through C of
this subpart, as applicable. Supporting information may be submitted in
other formats. Design drawings and process flowcharts are encouraged as
exhibits. In addition, the information must be of sufficient detail to:
(i) Allow the Agency to determine the technical merit of the
Applicant's project under paragraph (i) of this section; and
(ii) Demonstrate that the Renewable Energy System or Energy
Efficiency Improvement will operate or perform over the project's
useful life in a reliable, safe, and a cost-effective manner. Such
demonstration shall address project design, installation, operation,
and maintenance.
(2) Technical report modifications. If a technical report is
prepared prior to the Applicant's selection of a final design,
equipment vendor, or contractor, or other significant decision, it may
be modified and resubmitted to the Agency, provided that the overall
scope of the project is not materially changed as determined by the
Agency. Changes in the technical report might require an updated Form
RD 1940-20, ``Request for Environmental Information.''
(3) Hybrid projects. If the application is for a Hybrid project,
technical reports must be prepared for each technology that comprises
the Hybrid project.
(i) Technical merit. The Agency will determine the technical merit
of all applications submitted under this subpart. The Agency's
determination of a project's technical merit will be based on the
information provided in the application. The Agency may engage the
services of other government agencies or other recognized industry
experts in the applicable technology field, at its discretion, to
evaluate and rate the application.
(1) Projects that are determined to have technical merit are
eligible for funding under this subpart. Projects that are determined
to be without technical merit will be deemed ineligible for funding
under this subpart.
(2) If the information in the application is insufficient to allow
the Agency to make a technical merit determination, the application
will be considered by the Agency to be incomplete and such applications
will be processed according to the procedures specified in paragraph
(f) of this section.
(j) Time limit on use of grant funds. (1) Grant funds not expended
within 2 years from the date the Grant Agreement was signed by the
Agency will be returned to the Agency. However, the Agency may extend
this period if the Agency determines, at its sole discretion, that the
grantee is unable to complete the project for reasons beyond the
grantee's control. Grantees must submit a request for the no-cost
extension no later than 30 days before the expiration date of the Grant
Agreement. This request must describe the extenuating circumstances
that were beyond their control to complete the project for which the
grant was awarded, and why an approval is in the Government's best
interest.
(2) Funds remaining after grant closeout that exceed the amount the
grantee is entitled to receive under the Grant Agreement will be
returned to the Agency.
Sec. 4280.111 Notifications.
(a) Eligibility. If an Applicant and/or their application is
determined by the Agency to be eligible for participation, the Agency
will notify the Applicant or lender, as applicable, in writing.
(b) Ineligibility. If an Applicant and/or their application is
determined to be ineligible at any time, the Agency will inform the
Applicant or lender, as applicable, in writing of the decision, reasons
therefore, and any appeal rights. No further evaluation of the
application will occur.
(c) Disposition of applications. Each Applicant and/or lender, as
applicable, will be notified of the Agency's decision on their
application. If the Agency's decision is not to fund an application,
the Agency will include in the notification any applicable appeal or
review rights.
Renewable Energy System and Energy Efficiency Improvement Grants
Sec. 4280.112 Applicant eligibility.
To receive a RES or EEI grant under this subpart, an Applicant must
meet the requirements specified in paragraphs (a) through (e) of this
section. If an award is made to an Applicant, that Applicant (grantee)
must continue to meet the requirements specified in this section. If
the grantee does not, then grant funds may be recovered from the
grantee by the Agency in accordance with Departmental Regulations.
(a) Type of Applicant. The Applicant must be an Agricultural
Producer or Rural Small Business.
(b) Ownership and control. The Applicant must:
(1) Own or be the prospective owner of the project; and
(2) Own or control the site for the project described in the
application at the time of application and, if an award is made, for
the useful life of the project as described in the Grant Agreement.
(c) Revenues and expenses. The Applicant must have available at the
time of application satisfactory sources of revenue in an amount
sufficient to provide for the operation, management, maintenance, and
any debt service of the project for the useful life of the project. In
addition, the Applicant must control the revenues and expenses of
[[Page 22070]]
the project, including its operation and maintenance, for which the
assistance is sought. Notwithstanding the provisions of this paragraph,
the Applicant may employ a Qualified Consultant under contract to
manage revenues and expenses of the project and its operation and/or
maintenance.
(d) Legal authority and responsibility. Each Applicant must have
the legal authority necessary to apply for and carry out the purpose of
the grant.
(e) Universal identifier and System for Awards Management (SAM).
Unless exempt under 2 CFR 25.110, the Applicant must:
(1) Be registered in the SAM prior to submitting an application or
plan;
(2) Maintain an active SAM registration with current information at
all times during which it has an active Federal award or an application
or plan under consideration by the Agency; and
(3) Provide its DUNS number in each application or plan it submits
to the Agency. Generally, the DUNS number is included on Standard Form-
424, ``Application for Federal Assistance.''
Sec. 4280.113 Project eligibility.
For a project to be eligible to receive a RES or EEI grant under
this subpart, the proposed project must meet each of the requirements
specified in paragraphs (a) through (e) of this section.
(a) Be for:
(1) The purchase of a new Renewable Energy System;
(2) The purchase of a Refurbished Renewable Energy System;
(3) The Retrofitting of an existing Renewable Energy System; or
(4) Making Energy Efficiency Improvements that will use less energy
on an annual basis than the original building and/or equipment that it
will improve or replace as demonstrated in an Energy Analysis, Energy
Assessment, or Energy Audit as applicable.
(i) Eligible Energy Efficiency Improvements include, but are not
limited to:
(A) Efficiency improvements to existing Renewable Energy Systems
and
(B) Construction of a new energy efficient building only when the
building is used for the same purpose as the existing building, and,
based on an Energy Analysis, Energy Audit, or Energy Assessment, as
applicable, it will be more cost effective to construct a new building
and will use less energy on annual basis than improving the existing
building.
(ii) If the proposed Energy Efficiency Improvement would duplicate
the same Energy Efficiency Improvement that had previously received
funds under this subpart, then the proposed improvement is ineligible.
For example, an Applicant received a grant to replace the windows in a
warehouse with more energy efficient windows. Shortly thereafter, the
Applicant decides to replace the new windows. An application for
replacing the new windows would be ineligible for funding under this
subpart.
(b) Be for a Commercially Available and replicable technology;
(c) Have technical merit, as determined using the procedures
specified in Sec. 4280.110(i); and
(d) Be located in a Rural Area in a State if the type of Applicant
is a Rural Small Business, or in a Rural or non-Rural area in a State
if the type of Applicant is an Agricultural Producer. If the
Agricultural Producer's operation is in a non-Rural area, then the
application can only be for Renewable Energy Systems or Energy
Efficiency Improvements on integral components of or that are directly
related to the agricultural production operation, such as vertically
integrated operations, and are part of and co-located with the
agricultural production operation.
(e) The Applicant is cautioned against taking any actions or
incurring any obligations prior to the Agency completing the
environmental review that would either limit the range of alternatives
to be considered or that would have an adverse effect on the
environment, such as the initiation of construction. If the Applicant
takes any such actions or incurs any such obligations, it could result
in project ineligibility.
Sec. 4280.114 [Reserved]
Sec. 4280.115 RES and EEI grant funding.
(a) Grant amounts. The amount of grant funds that will be made
available to an eligible RES or EEI project under this subpart will not
exceed 25 percent of total Eligible Project Costs. Eligible Project
Costs are specified in paragraph (c) of this section.
(1) Minimum request. Unless otherwise specified in a Federal
Register notice, the minimum request for a RES grant application is
$2,500 and the minimum request for an EEI grant application is $1,500.
(2) Maximum request. Unless otherwise specified in a Federal
Register notice, the maximum request for a RES grant application is
$500,000 and the maximum request for an EEI grant application is
$250,000.
(3) Maximum grant assistance. Unless otherwise specified in a
Federal Register notice, the maximum amount of grant assistance to one
individual or entity under this subpart will not exceed $750,000 per
Federal Fiscal Year.
(b) Matching Funds. The Applicant is responsible for securing the
remainder of the Total Project Costs not covered by grant funds.
(1) Without specific statutory authority, other Federal grant funds
cannot be used to meet the Matching Funds requirement. A copy of the
statutory authority must be provided to the Agency to verify if the
other Federal grant funds can be used to meet the Matching Funds
requirement under this subpart.
(2) Passive third-party equity contributions are acceptable for RES
projects, including equity raised from the sale of Federal tax credits.
(c) Eligible Project Costs. Eligible Project Costs are only those
costs incurred after a Complete Application has been received by the
Agency and are associated with the items identified in paragraphs
(c)(1) through (c)(5) of this section. Each item identified in
paragraphs (c)(1) through (c)(5) is only an Eligible Project Cost if it
is either an integral component of or directly related to and its use
and purpose is limited to the Renewable Energy System or Energy
Efficiency Improvement.
(1) Purchase and installation of new or Refurbished equipment.
(2) Construction, Retrofitting, and improvements.
(3) Energy Efficiency Improvements identified in the applicable
Energy Analysis, Energy Assessment, or Energy Audit.
(4) Fees for construction permits and licenses.
(5) Professional service fees for Qualified Consultants,
contractors, installers, and other third-party services.
(d) Ineligible project costs. Ineligible project costs for RES and
EEI projects include, but are not limited to:
(1) Agricultural tillage equipment, Used Equipment, and vehicles;
(2) Residential RES or EEI projects;
(3) Construction or equipment costs that would be incurred
regardless of the installation of a Renewable Energy System or Energy
Efficiency Improvement shall not be included as an Eligible Project
Costs. For example, the foundation for a building where a Renewable
Energy System is being installed, storage only grains bins connected to
drying systems, and the roofing of a building where solar panels are
being attached;
(4) Businesses that derive more than 10 percent of annual gross
revenue (including any lease income from space or machines) from
gambling activity, excluding State or Tribal-authorized
[[Page 22071]]
lottery proceeds, as approved by the Agency, conducted for the purpose
of raising funds for the approved project;
(5) Businesses deriving income from activities of a sexual nature
or illegal activities;
(6) The guarantee of lease payments;
(7) Guaranteeing loans made by other Federal agencies;
(8) Any project that creates a conflict of interest or an
appearance of a conflict of interest as provided in Sec. 4280.106;
(9) Funding of political or lobbying activities; and
(10) To pay off any Federal direct or guaranteed loans.
(e) Award amount considerations. In determining the amount of a RES
or EEI grant awarded, the Agency will take into consideration the
following six criteria:
(1) The type of Renewable Energy System to be purchased;
(2) The estimated quantity of energy to be generated by the
Renewable Energy System;
(3) The expected environmental benefits of the Renewable Energy
System;
(4) The quantity of energy savings expected to be derived from the
activity, as demonstrated by an Energy Audit;
(5) The estimated period of time for the energy savings generated
by the activity to equal the cost of the activity; and
(6) The expected energy efficiency of the Renewable Energy System.
Sec. 4280.116 Grant applications--general.
(a) General. Separate applications must be submitted for RES and
EEI projects. An original of each application is required.
(b) Application content. Applications for RES projects or EEI
projects must contain the information specified in Sec. 4280.117
unless the requirements of either Sec. 4280.118(a) or Sec.
4280.119(a) are met. If the requirements of Sec. 4280.118(a) are met,
the application may contain the information specified in Sec.
4280.118(b). If the requirements of Sec. 4280.119(a) are met, the
application may contain the information specified in Sec. 4280.119(b).
(c) Evaluation of applications. The Agency will evaluate each RES
and EEI grant application and make a determination as to whether:
(1) The grant application documentation is complete;
(2) The Applicant is eligible;
(3) The proposed grant is for an eligible project; and
(4) The proposed project has technical merit.
Sec. 4280.117 Grant applications for RES and EEI projects with Total
Project Costs greater than $200,000.
Grant applications for RES and EEI projects with Total Project
Costs greater than $200,000 must provide the information specified in
this section. This information must be presented in the order shown in
paragraphs (a) through (f), as applicable, of this section. Each
Applicant is encouraged, but is not required, to self-score the project
using the evaluation criteria in Sec. 4280.120 and to submit with
their application the total score, including appropriate calculations
and attached documentation or specific cross-references to information
elsewhere in the application.
(a) Forms and certifications. Each application must contain the
forms and certifications specified in paragraphs (a)(1) through (a)(9),
as applicable, of this section, except that Form AD 2106, ``Form to
Assist in Assessment of USDA Compliance with Civil Rights Laws,'' is
optional.
(1) Form SF-424.
(2) Form SF-424C, ``Budget Information-Construction Programs.''
(3) Form SF-424D, ``Assurances-Construction Programs.''
(4) Form AD 2106. Although this form is optional, if the applicant
has previously submitted the form to the Agency or another Federal
agency, the applicant does not need to resubmit the form.
(5) Form RD 1940-20 with documentation attached for the appropriate
level of environmental assessment. The Applicant should contact the
Agency to determine what documentation is required to be provided.
(6) The Applicant must identify whether or not the Applicant has a
known relationship or association with an Agency employee. If there is
a known relationship, the Applicant must identify each Agency employee
with whom the Applicant has a known relationship.
(7) Certification that the Applicant is a legal entity in good
standing (as applicable), and operating in accordance with the laws of
the State(s) or Tribe where the Applicant has a place of business.
(8) Certification by the Applicant that the equipment required for
the project is available, can be procured and delivered within the
proposed project development schedule, and must be installed in
conformance with manufacturer's specifications and design requirements.
This would not be applicable when equipment is not part of the project.
(9) Certification by the Applicant that the project will be
constructed in accordance with applicable laws, regulations,
agreements, permits, codes, and standards.
(b) Applicant information. Provide information to allow the Agency
to determine the eligibility of the Applicant.
(1) Type of Applicant. Demonstrate that the Applicant meets the
definition of Agricultural Producer or Rural Small Business, including
appropriate information necessary to demonstrate that the Applicant
meets the Agricultural Producer's percent of gross income derived from
agricultural operations or the Rural Small Business' size, as
applicable, requirements identified in these definitions. Include a
description of the Applicant's farm/ranch/business operation.
(i) Rural Small Businesses. Identify the primary NAICS code
applicable to the Applicant's operation. Provide sufficient information
to determine total Annual Receipts for the past 3 years and number of
employees of the business and any parent, subsidiary, or affiliates at
other locations to demonstrate that the Applicant meets the definition
of Small Business. If the Rural Small Business Applicant has not
engaged in business operations for the past 3 years, than information
for as long as the Rural Small Business Applicant has been in business
must be submitted. New businesses that do not have any Annual Receipts
must provide projections based upon a typical operating year for a 2-
year time period.
(ii) Agricultural producers. Provide the gross market value of the
Applicant's agricultural products, gross agricultural income of the
Applicant, and gross nonfarm income of the Applicant for the calendar
year preceding the year in which the application is being submitted.
(2) Applicant description. Describe the ownership of the Applicant,
including the following information if applicable.
(i) Ownership and control. Describe how the Applicant meets the
ownership and control requirements.
(ii) Affiliated companies. For entities (e.g., corporate parents,
affiliates, subsidiaries), provide a list of the individual owners with
their contact information of those entities. Describe the relationship
between the Applicant and these other entities, including management
and products exchanged.
(3) Financial information. Financial information is required on the
total operation of the Agricultural Producer/Rural Small Business and
its parent, subsidiary, or affiliates at other
[[Page 22072]]
locations. All information submitted under this paragraph must be
substantiated by authoritative records.
(i) Historical financial statements. Provide historical financial
statements prepared in accordance with Generally Accepted Accounting
Practices (GAAP) for the past 3 years, including income statements and
balance sheets. If Agricultural Producers are unable to present this
information in accordance with GAAP, they may instead present financial
information in the format that is generally required by commercial
agriculture lenders.
(ii) Current balance sheet and income statement. Provide a current
balance sheet and income statement prepared in accordance with GAAP and
dated within 90 days of the application. Agricultural producers can
present financial information in the format that is generally required
by commercial agriculture lenders.
(iii) Pro forma financial statements. Provide pro forma balance
sheet at start-up of the Agricultural Producer's/Rural Small Business'
business that reflects the use of the loan proceeds or grant award; and
3 additional years, indicating the necessary start-up capital,
operating capital, and short-term credit; and projected cash flow and
income statements for 3 years supported by a list of assumptions
showing the basis for the projections.
(4) Previous grants and loans. State whether the Applicant has
received any grants and/or loans under this subpart. If the Applicant
has, identify each such grant and/or loan and describe the progress the
Applicant has made on each project for which the grant and/or loan was
received, including projected schedules and actual completion dates.
(c) Project information. Provide information concerning the
proposed project as a whole and its relationship to the Applicant's
operations, including the following:
(1) Identification as to whether the project is for a RES or an EEI
project. Include a description and the location of the project.
(2) A description of the process that will be used to conduct all
procurement transactions to demonstrate compliance with Sec.
4280.124(a)(1).
(3) Describe how the proposed project will have a positive effect
on resource conservation (e.g., water, soil, forest), public health
(e.g., potable water, air quality), and the environment (e.g.,
compliance with the U.S. Environmental Protection Agency's renewable
fuel standard(s), greenhouse gases, emissions, particulate matter).
(4) Identify the amount of Matching Funds and the source(s) the
Applicant is proposing to use for the project. Provide written
commitments for Matching Funds at the time the application is submitted
to receive points under the readiness scoring criterion.
(d) Feasibility Study for Renewable Energy Systems. If the
application is for a RES project with Total Project Costs greater than
$200,000, a Feasibility Study must be submitted as specified in
Appendix D of this subpart. The Feasibility Study must be conducted by
a Qualified Consultant.
(e) Technical report. Each application must contain a technical
report prepared in accordance with Sec. 4280.110(h) and Appendix A or
C, as applicable, of this subpart.
(f) Construction planning and performing development. Each
application submitted must be in accordance with Sec. 4280.124 for
planning, designing, bidding, contracting, and constructing RES and EEI
projects as applicable.
Sec. 4280.118 Grant applications for RES and EEI projects with Total
Project Costs of $200,000 or less.
Grant applications for RES and EEI projects with Total Project
Costs of $200,000 or less may provide the information specified in this
section or, if the Applicant elects to do so, the information specified
in Sec. 4280.117. In order to submit an application under this
section, the criteria specified in paragraph (a) of this section must
be met. The content for applications submitted under this section is
specified in paragraph (b) of this section. Unless otherwise specified
in this subpart, the construction planning and performing development
procedures and the payment process that will be used for awards for
applications submitted under this section are specified in paragraphs
(c) and (d), respectively, of this section.
(a) Criteria for submitting applications for projects with Total
Project Costs of $200,000 or less. In order to submit an application
under this section, each of the conditions specified in paragraphs
(a)(1) through (a)(7) of this section must be met.
(1) The Applicant must be eligible in accordance with Sec.
4280.112.
(2) The project must be eligible in accordance with Sec. 4280.113.
(3) Total Project Costs must be $200,000 or less.
(4) Construction planning and performing development must be
performed in compliance with paragraph (c) of this section. The
Applicant or the Applicant's prime contractor assumes all risks and
responsibilities of project development.
(5) The Applicant or the Applicant's prime contractor is
responsible for all interim financing, including during construction.
(6) The Applicant agrees not to request reimbursement from funds
obligated under this program until after project completion.
(7) The Applicant must maintain insurance as required under Sec.
4280.122(b), except business interruption insurance is not required.
(b) Application content. Applications submitted under this section
must contain the information specified in paragraphs (b)(1) through
(b)(4) of this section and must be presented in the same order. Each
Applicant is encouraged, but is not required, to self-score the project
using the evaluation criteria in Sec. 4280.120 and to submit with
their application the total score, including appropriate calculations
and attached documentation or specific cross-references to information
elsewhere in the application.
(1) Forms and certifications. The application must contain the
items identified in Sec. 4280.117(a). In addition, the Applicant must
submit a certification that the Applicant meets each of the criteria
for submitting an application under this section as specified in
paragraph (a) of this section.
(2) Applicant information. The application must contain the items
identified in Sec. 4280.117(b), except that the information specified
in Sec. 4280.117(b)(3) is not required.
(3) Project information. The application must contain the items
identified in Sec. 4280.117(c).
(4) Technical report. Each application must contain a technical
report in accordance with Sec. 4280.110(h) and Appendix A or B, as
applicable, of this subpart.
(c) Construction planning and performing development. Applicants
submitting applications under this section must comply with the
requirements specified in paragraphs (c)(1) through (c)(3) of this
section for construction planning and performing development.
(1) General. Paragraphs (a)(1), (a)(2), and (a)(4) of Sec.
4280.124 apply.
(2) Small acquisition and construction procedures. Small
acquisition and construction procedures are those relatively simple and
informal procurement methods that are sound and appropriate for a
procurement of services, equipment and construction of a RES or EEI
project with a Total Project Cost of not more than $200,000. The
Applicant is solely responsible for the execution of all contracts
under this
[[Page 22073]]
procedure, and Agency review and approval is not required.
(3) Contractor forms. Applicants must have each contractor sign, as
applicable:
(i) Form RD 400-6, ``Compliance Statement,'' for contracts
exceeding $10,000; and
(ii) Form AD-1048, ``Certification Regarding Debarment, Suspension,
Ineligibility and Voluntary Exclusion--Lower Tier Covered
Transactions,'' for contracts exceeding $25,000.
(d) Payment process for applications for RES and EEI projects with
Total Project Costs of $200,000 or less. (1) Upon completion of the
project, the grantee must submit to the Agency a copy of the
contractor's certification of final completion for the project and a
statement that the grantee accepts the work completed. At its
discretion, the Agency may require the Applicant to have an Inspector
certify that the project is constructed and installed correctly.
(2) The RES or EEI project must be constructed, installed, and
operating as described in the technical report prior to disbursement of
funds. For Renewable Energy Systems, the system must be operating at
the steady state operating level described in the technical report for
a period of not less than 30 days, unless this requirement is modified
by the Agency, prior to disbursement of funds. Any modification to the
30-day steady state operating level requirement will be based on the
Agency's review of the technical report and will be incorporated into
the Letter of Conditions.
(3) Prior to making payment, the Agency will be provided with Form
RD 1924-9, ``Certificate of Contractor's Release,'' and Form RD 1924-
10, ``Release by Claimants,'' or similar forms, executed by all persons
who furnished materials or labor in connection with the contract.
Sec. 4280.119 Grant applications for RES and EEI projects with Total
Project Costs of $80,000 or less.
Grant applications for RES and EEI projects with Total Project
Costs of $80,000 or less must provide the information specified in this
section or, if the Applicant elects to do so, the information specified
in either Sec. Sec. 4280.117 or 4280.118. In order to submit an
application under this section, the criteria specified in paragraph (a)
of this section must be met. The content for applications submitted
under this section is specified in paragraph (b) of this section.
Unless otherwise specified in this subpart, the construction planning
and performing development procedures and the payment process that will
be used for awards for applications submitted under this section are
specified in paragraphs (c) and (d), respectively, of this section.
(a) Criteria for submitting applications for RES and EEI projects
with Total Project Costs of $80,000 or less. In order to submit an
application under this section, each of the conditions specified in
paragraphs (a)(1) through (a)(7) of this section must be met.
(1) The Applicant must be eligible in accordance with Sec.
4280.112.
(2) The project must be eligible in accordance with Sec. 4280.113.
(3) Total Project Costs must be $80,000 or less.
(4) Construction planning and performing development must be
performed in compliance with paragraph (c) of this section. The
Applicant or the Applicant's prime contractor assumes all risks and
responsibilities of project development.
(5) The Applicant or the Applicant's prime contractor is
responsible for all interim financing, including during construction.
(6) The Applicant agrees not to request reimbursement from funds
obligated under this program until after project completion.
(7) The Applicant must maintain insurance as required under Sec.
4280.122(b), except business interruption insurance is not required.
(b) Application content. Applications submitted under this section
must contain the information specified in paragraphs (b)(1) through
(b)(4), as applicable, of this section and must be presented in the
same order. Each Applicant is encouraged, but is not required, to self-
score the project using the evaluation criteria in Sec. 4280.120 and
to submit with their application the total score, including appropriate
calculations and attached documentation or specific cross-references to
information elsewhere in the application.
(1) Forms and certifications. Each application must contain the
forms and certifications specified in paragraphs (b)(1)(i) through
(b)(1)(ix), as applicable, of this section except that Form AD 2106 is
optional.
(i) Form SF-424.
(ii) Form SF-424C.
(iii) Form SF-424D.
(iv) Form AD 2106. Although this form is optional, if the applicant
has previously submitted the form to the Agency or another Federal
agency, the applicant does not need to resubmit the form.
(v) Form RD 1940-20 with documentation attached for the appropriate
level of environmental assessment. The Applicant should contact the
Agency to determine what documentation is required to be provided.
(vi) Certification by the Applicant that:
(A) The Applicant meets each of the Applicant eligibility criteria
found in Sec. 4280.112;
(B) The proposed project meets each of the project eligibility
requirements found in Sec. 4280.113;
(C) The design, engineering, testing, and monitoring will be
sufficient to demonstrate that the proposed project will meet its
intended purpose;
(D) The equipment required for the project is available, can be
procured and delivered within the proposed project development
schedule, and will be installed in conformance with manufacturer's
specifications and design requirements. This would not be applicable
when equipment is not part of the project;
(E) The project will be constructed in accordance with applicable
laws, regulations, agreements, permits, codes, and standards;
(F) The Applicant meets the criteria for submitting an application
for projects with Total Project Costs of $80,000 or less;
(G) The Applicant will abide by the open and free competition
requirements in compliance with Sec. 4280.124(a)(1);
(H) For Bioenergy Projects, any and all woody biomass feedstock
from National forest system land or public lands cannot be otherwise
used as a higher value wood-based product; and
(I) For applications for the installation of equipment and tanks
directly associated with Flexible Fuel Pumps, Blended Liquid
Transportation Fuel is available and there is demand for that fuel in
its service area.
(vii) State whether the Applicant has received any grants and/or
loans under this subpart. If the Applicant has, identify each such
grant and/or loan and describe the progress the Applicant has made on
each project for which the grant and/or loan was received, including
projected schedules and actual completion dates.
(viii) The Applicant must identify whether or not the Applicant has
a known relationship or association with an Agency employee. If there
is a known relationship, the Applicant must identify each Agency
employee with whom the Applicant has a known relationship.
(ix) The Applicant is a legal entity in good standing (as
applicable), and operating in accordance with the laws of the State(s)
or Tribe where the Applicant has a place of business.
[[Page 22074]]
(2) General. For both RES and EEI project applications:
(i) Identify whether the project is for a RES or an EEI project;
(ii) Identify the primary NAICS code applicable to the Applicant's
operation if known or a description of the operation in enough detail
for the Agency to determine the primary NAICS code;
(iii) Describe in detail or document how the proposed project will
have a positive effect on resource conservation (e.g., water, soil,
forest), public health (e.g., potable water, air quality), and the
environment (e.g., compliance with the U.S. Environmental Protection
Agency's renewable fuel standard(s), greenhouse gases, emissions,
particulate matter); and
(iv) Identify the amount of Matching Funds and the source(s) the
Applicant is proposing to use for the project. In order to receive
points under the readiness scoring criterion, written commitments for
Matching Funds (e.g., a Letter of Commitment, bank statement) must be
submitted when the application is submitted.
(3) Technical report for energy efficiency improvements. Each EEI
application submitted under this section must include a technical
report in accordance with Sec. 4280.110(h) and paragraphs (b)(3)(i)
through (b)(3)(v) of this section.
(i) Project description. Provide a description of the proposed
Energy Efficiency Improvement, including its intended purpose.
(ii) Qualifications of EEI provider(s). Provide a resume or other
evidence of the contractor or installer's qualifications and experience
with the proposed EEI technology. Any contractor or installer with less
than 2 years of experience may be required to provide additional
information in order for the Agency to determine if they are a
qualified installer/contractor.
(iii) Energy Analysis. For the most recent 36 months, or the length
of ownership if in operation for less than 36 months, prior to the date
the application is submitted, provide both the total amount and the
total cost of energy used for the original building and/or equipment,
as applicable, for each improvement identified in the potential
project. In addition, provide for each improvement identified in the
potential project an estimate of the total amount energy that would
have been used and the total cost that would have been incurred if the
proposed project was in operation for this same time period.
(iv) Simple Payback. Estimate Simple Payback.
(v) Qualifications of Energy Analysis provider. Provide the
qualifications of the individual or entity which completed the Energy
Analysis specified in paragraph (b)(3)(iii) of this section.
(4) Technical report for Renewable Energy Systems. Each RES
application submitted under this section must include a technical
report in accordance with Sec. 4280.110(h) and paragraphs (b)(4)(i)
through (b)(4)(iv) of this section.
(i) Project and resource descriptions. Provide a description of the
project, including its intended purpose and a summary of how the
project will be constructed and installed. Identify the project's
location and describe the project site. Describe the quality and
availability of the renewable resource at the project site.
(ii) Energy generation. Identify the amount of Renewable Energy
that will be generated once the proposed system is operating at its
steady state operating level.
(iii) Project economic assessment. Describe the projected financial
performance of the proposed project. The description must address Total
Project Costs, energy savings, and revenues, including applicable
investment and other production incentives accruing from government
entities. Revenues to be considered shall accrue from the sale of
energy, offset or savings in energy costs, byproducts, and green tags.
Information must be provided to allow the calculation of Simple
Payback.
(iv) Qualifications of key service providers. Describe the key
service providers, including the number of similar systems installed
and/or manufactured, professional credentials, licenses, and relevant
experience. If specific numbers are not available for similar systems,
you may submit an estimation of the number of similar systems.
(c) Construction planning and performing development for
applications submitted under this section. All Applicants submitting
applications under this section must comply with the requirements
specified in paragraphs (c)(1) through (c)(3) of this section for
construction planning and performing development.
(1) General. Paragraphs (a)(1), (a)(2), and (a)(4) of Sec.
4280.124 apply.
(2) Small acquisition and construction procedures. Small
acquisition and construction procedures are those relatively simple and
informal procurement methods that are sound and appropriate for a
procurement of services, equipment and construction of a RES or EEI
project with a Total Project Cost of not more than $80,000. The
Applicant is solely responsible for the execution of all contracts
under this procedure, and Agency review and approval is not required.
(3) Contractor forms. Applicants must have each contractor sign, as
applicable:
(i) Form RD 400-6 for contracts exceeding $10,000; and
(ii) Form AD-1048 for contracts exceeding $25,000.
(d) Payment process for applications for RES and EEI projects with
Total Project Costs of $80,000 or less. (1) Upon completion of the
project, the grantee must submit to the Agency a copy of the
contractor's certification of final completion for the project and a
statement that the grantee accepts the work completed. At its
discretion, the Agency may require the Applicant to have an Inspector
certify that the project is constructed and installed correctly.
(2) The RES or EEI project must be constructed, installed, and
operating as described in the technical report prior to disbursement of
funds. For Renewable Energy Systems, the system must be operating at
the steady state operating level described in the technical report for
a period of not less than 30 days, unless this requirement is modified
by the Agency, prior to disbursement of funds. Any modification to the
30-day steady state operating level requirement will be based on the
Agency's review of the technical report and will be incorporated into
the Letter of Conditions.
(3) Prior to making payment, the grantee must provide the Agency
with Form RD 1924-9 and Form RD 1924-10, or similar forms, executed by
all persons who furnished materials or labor in connection with the
contract.
Sec. 4280.120 Scoring RES and EEI grant applications.
Agency personnel will score each eligible RES and EEI application
based on the scoring criteria specified in this section, unless
otherwise specified in a Federal Register notice, with a maximum score
of 100 points possible.
(a) Environmental benefits. Five points will be awarded for this
criterion if the Applicant has documented in the application that the
proposed project will have a positive effect on any of the three impact
areas: resource conservation (e.g., water, soil, forest), public health
(e.g., potable water, air quality), and the environment (e.g.,
compliance with the U.S. Environmental Protection Agency's renewable
fuel standard(s), greenhouse gases, emissions, particulate matter).
(b) Quantity of energy generated or saved per REAP grant dollar
requested,
[[Page 22075]]
and renewable fuel dispensed through Flexible Fuel Pumps. For RES and
EEI projects, points will be awarded for either the amount of energy
generation per grant dollar requested, which includes those projects
that are replacing energy usage with a renewable source, or the average
annual energy savings over the most recent 36 months per grant dollar
requested; points will not be awarded for more than one category. For
Flexible Fuel Pumps, points will be awarded based on the average annual
gallons of renewable fuel estimated to be sold over the first 2 years
per grant dollar requested. Ratios of energy generated and energy
savings per grant dollar requested and of average annual gallons of
renewable fuel estimated to be sold over the first 2 years per grant
dollar requested that fall between the levels identified below will be
assigned points based on Equations 1, 2, or 3, as applicable, rounded
to the nearest hundredth of a point.
(1) Renewable Energy Systems. The quantity of energy generated per
grant dollar requested will be determined by dividing the projected
total annual energy generated by the Renewable Energy System, which
will be converted to BTUs, by the grant dollars requested. Points will
be awarded based on the annual amount of energy generated per grant
dollar requested for the proposed Renewable Energy System as determined
using paragraphs (b)(1)(i) and (b)(1)(ii) of this section. A maximum of
25 points will be awarded under this criterion.
(i) The annual energy generated per grant dollar requested will be
calculated using Equation 1.
Equation 1: EG/$ = (EG12/GR)
Where:
EG/$ = Energy generated per grant dollar requested.
EG12 = Energy generated (BTUs) by the proposed Renewable
Energy System over the most recent 12-month period.
GR = Grant amount requested under this subpart.
(ii) If the annual energy generated per grant dollar requested
calculated under paragraph (b)(1)(i) of this section is:
(A) Less than 25,000 BTUs annual energy generated per grant dollar
requested, points will be awarded as follows: Points awarded = (EG/$)/
25,000 x 25 points, where the points awarded are rounded to the nearest
hundredth of a point.
(B) 25,000 BTUs annual energy generated per grant dollar or higher,
25 points will be awarded. For example, An Applicant has requested a
$2,500 grant to install a small wind Renewable Energy System which will
generate 5,000 kilowatt hours (kWh) per year, or 17,060,000 BTUs per
year (one kWh equals 3,412 BTUs). Thus, there are 6,824 BTUs per grant
dollar requested (17,060,000 BTUs/$2,500). Because this is less than
25,000 BTUs annual energy generated per grant dollar requested, points
will be awarded as follows:
Points awarded = 6,824 BTUs/25,000 BTUs x 25 = 6.824
This would be rounded to the nearest hundredth, or to 6.82.
(2) Energy efficiency improvements. Energy savings per grant dollar
requested will be determined by dividing the average annual energy
projected to be saved as determined by the Energy Analysis, Energy
Assessment, or Energy Audit for the Energy Efficiency Improvement,
which will be converted to BTUs, by the grant dollars requested. Points
will be awarded based on the average annual amount of energy saved per
grant dollar requested for the proposed Energy Efficiency Improvement
as determined using paragraphs (b)(2)(i) and (b)(2)(ii) of this
section. A maximum of 25 points will be awarded under this criterion.
(i) The average annual energy saved per grant dollar requested
shall be calculated using Equation 2.
Equation 2: ES/$ = (ES36/GR)
Where:
ES/$ = Average annual energy saved per grant dollar requested.
ES36 = Average annual energy saved by the proposed Energy
Efficiency Improvement over the most recent 36-month period as
identified in the Energy Analysis, Energy Assessment, or Energy
Audit, as applicable.
GR = Grant amount requested under this subpart.
(ii) If the average annual energy saved per grant dollar requested
calculated under paragraph (b)(2)(i) of this section is:
(A) Less than 25,000 BTUs average annual energy saved per grant
dollar requested, points will be awarded as follows: Points awarded =
(ES/$)/25,000 x 25 points, where the points awarded are rounded to the
nearest hundredth of a point.
(B) 25,000 BTUs average annual energy saved per grant dollar
requested or higher, 25 points will be awarded. For example, an
Applicant has requested a $1,500 grant to install a new boiler. The
average BTU usage of the existing boiler for the most recent 36 months
prior to submittal of the application was 125,555,000 BTUs per year. If
the new boiler had been in place for those same 36 months, the annual
average BTU usage is estimated to be 100,000,000 BTUs. Thus, the new
boiler is projected to save the Applicant 25,555,000 BTUs per year.
Based on this example, there are 17,036.6667 BTUs saved per grant
dollar requested (25,555,000 BTUs/$1,500). Because this is less than
25,000 BTUs average annual energy saved per grant dollar requested,
points will be awarded as follows:
Points awarded = 17,036.6667 BTUs/25,000 BTUs x 25 = 17.03667
This would be rounded to the nearest hundredth, or to 17.04 points.
(3) RES--flexible fuel pump(s) for renewable fuels. If the proposed
project is for Flexible Fuel Pump(s), points will be awarded based on
the average annual gallons of renewable fuel estimated to be sold over
the first 2 years by the pumps per grant dollar requested for the
proposed Flexible Fuel Pumps to be installed, as determined using
paragraphs (b)(3)(i) and (b)(3)(ii) of this section. A maximum of 25
points will be awarded under this criterion.
(i) The average annual gallons of renewable fuel estimated to be
sold over the first 2 years per grant dollar shall be calculated using
Equation 3.
Equation 3: RG24/$ = (RG24/GR)
Where:
RG24/$ = Renewable fuel gallons estimated to be sold over
the first 2 years per grant dollar requested.
RG24 = Average annual renewable gallons estimated to be
sold by the Applicant over the first 24-month period.
GR = Grant amount requested under this subpart.
(ii) If the average annual renewable fuel gallons estimated to be
sold over the first 2 years per grant dollar requested calculated under
paragraph (b)(3)(i) of this section is:
(A) Less than 25 gallons of average annual renewable fuel estimated
to be sold over the first 2 years per grant dollar requested, points
will be awarded as follows: Points awarded = (RG24/$)/25 x
25 points, where the points awarded are rounded to the nearest
hundredth of a point.
(B) 25 gallons of annual average renewable fuel estimated to be
sold over the first 2 years per grant dollar or higher, 25 points will
be awarded. For example, an Applicant has requested a $7,500 grant to
install a Flexible Fuel Pump at a gas station that, based on the
technical report, is estimated to sell 100,000 gallons of renewable
fuel in the first year and 225,000 gallons of renewable fuel in the
second year, for an average annual sales over the first 2 years of
162,500 gallons. This equates to approximately 21.67 renewable fuel
gallons per grant dollar requested (162,500 gallons/$7,500). Because
this is less than 25 gallons estimated to be sold
[[Page 22076]]
annually per grant dollar, points will be awarded as follows:
Points awarded = ((162,500 gallons/$7,500)/25) x 25 = 21.6667
This would be rounded to the nearest hundredth, or to 21.67 points.
(c) Readiness. A maximum of 25 points will be awarded based on the
level of written commitment an Applicant has from its Matching Fund
sources that are documented with a Complete Application. If the
Applicant has written commitments from the source(s) confirming
commitment of:
(1) 100 percent of the Matching Funds, 25 points will be awarded.
(2) 75 percent up to but not including 100 percent of the Matching
Funds, 10 points will be awarded.
(3) 50 percent up to but not including 75 percent of the Matching
Funds, 5 points will be awarded.
(4) Less than 50 percent, no points will be awarded.
(d) Size of Agricultural Producer or Rural Small Business.
Applicants will be awarded points under this criterion based on
Applicant size compared to the SBA Small Business size standards
categorized by the NAICS found in 13 CFR 121.201. A maximum of 10
points will be awarded under this criterion. For Applicants that are:
(1) One-third or less of the maximum size standard identified by
SBA, 10 points will be awarded.
(2) Greater than one-third up to and including two-thirds of the
maximum size standard identified by SBA, 5 points will be awarded.
(3) Larger than two-thirds of the maximum size standard identified
by SBA, no points will be awarded. For example, most agricultural
production NAICS codes are limited to $750,000 in Annual Receipts. An
Agricultural Producer within one of the agricultural production NAICS
codes with Annual Receipts of $250,000 or less would be awarded 10
points, while an Agricultural Producer with Annual Receipts of more
than $250,000 Annual Receipts up to and including $500,000, would be
awarded 5 points.
(e) Previous grantees and borrowers. Points under this scoring
criterion will be awarded based on whether the Applicant has received a
grant or guaranteed loan under this subpart. A maximum of 10 points
will be awarded.
(1) If the Applicant has never received a grant and/or guaranteed
loan under this subpart, 10 points will be awarded.
(2) If the Applicant has not received a grant and/or guaranteed
loan under this subpart within the 2 previous Federal Fiscal Years, 5
points will be awarded.
(f) Simple Payback. A maximum of 15 points will be awarded for
either Renewable Energy Systems or Energy Efficiency Improvements;
points will not be awarded for more than one category. In either case,
points will be awarded based on the Simple Payback of the project.
(1) Renewable Energy Systems, including Flexible Fuel Pumps. If the
Simple Payback of the proposed project is:
(i) Less than 10 years, 15 points will be awarded;
(ii) 10 years up to but not including 15 years, 10 points will be
awarded;
(iii) 15 years up to and including 20 years, 5 points will be
awarded; or
(iv) Longer than 20 years, no points will be awarded.
(2) Energy Efficiency Improvements. If the Simple Payback of the
proposed project is:
(i) Less than 4 years, 15 points will be awarded;
(ii) 4 years up to but not including 8 years, 10 points will be
awarded;
(iii) 8 years up to and including 12 years, 5 points will be
awarded; or
(iv) Longer than 12 years, no points will be awarded.
(g) State Director and Administrator priority points.
A State Director, for its State allocation under this subpart, or the
Administrator, for making awards from the National Office reserve, may
award up to 10 points to an application if the application is for an
under-represented technology or for Flexible Fuel Pumps or if selecting
the application would help achieve geographic diversity. In no case
shall an application receive more than 10 points under this criterion.
Sec. 4280.121 Selecting RES and EEI grant applications for award.
(a) State competitions. Complete RES and EEI grant applications
will be competed against each other twice each calendar year. Complete
RES and EEI grant applications received by the Agency by 4:30 p.m.
local time on November 30 will be competed against each other. Complete
RES and EEI applications received by the Agency by 4:30 p.m. local time
on May 31, including any Complete Applications competed in the November
30 competition, but that were not funded, will be competed against each
other. If November 30 or May 31 falls on a weekend or a Federally-
observed holiday, the next Federal business day will be considered the
last day for receipt of a Complete Application.
(b) Set-aside funding for grants of $20,000 or less. There will be
one State competition for grants of $20,000 or less competing for set-
aside funds. Complete RES and EEI grant applications for grants of
$20,000 or less received by the Agency by 4:30 p.m. local time on April
30 will be competed against each other. If April 30 falls on a weekend
or a Federally-observed holiday, the next Federal business day will be
considered the last day for receipt of a Complete Application.
(c) National competition. All unfunded eligible State applications
that competed in the May 31 State competition and the April 30 set-
aside competition for grant of $20,000 or less will be competed against
other applications from other States or Tribes at a final National
competition.
(d) Ranking of applications. Complete applications will be
evaluated, processed, and subsequently ranked, and will compete for
funding, subject to the availability of grant funding, as described in
paragraph (a) of this section. Higher scoring applications will receive
first consideration.
(e) Funding selected applications. As applications are funded, if
insufficient funds remain to fund the next highest scoring application,
the Agency may elect to fund a lower scoring application. Before this
occurs, the Agency will provide the Applicant of the higher scoring
application the opportunity to reduce the amount of the Applicant's
grant request to the amount of funds available. If the Applicant agrees
to lower its grant request, the Applicant must certify that the
purposes of the project will be met and provide the remaining total
funds needed to complete the project. At its discretion, the Agency may
also elect to allow any remaining multi-year funds to be carried over
to the next fiscal year rather than selecting a lower scoring
application.
(f) Disposition of ranked applications not funded. (1) Based on the
availability of funding, a ranked application might not be funded in
the first semiannual competition for which it is eligible. All
applications not selected for funding will be retained by the Agency
for consideration in the next subsequent semiannual competition.
Applications not selected for funding after a total of two semiannual
competitions will not be considered for funding in future semiannual
competitions. However, the application may compete in one National
competition as described in paragraph (c) of this section within the
Federal Fiscal Year received. If an application is not selected for
funding after competing in a total of two semiannual competitions and
one National competition, the Agency will discontinue considering the
application for potential funding.
[[Page 22077]]
(2) Applications not selected for funding in the set-aside
competition for grants of $20,000 or less will not be considered for
funding in future set-aside competitions. However, applications can
compete in the May 31 semiannual State competition and the National
competition as described in paragraph (c) of this section within the
fiscal year received. If an application is not selected for funding
after the May 31 semiannual State competition and the National
competition, the Agency will discontinue considering the application
for potential funding.
(g) Commencement of the project. The Applicant assumes all risks if
the choice is made to purchase the technology proposed or start
construction of the project to be financed in the grant application
after the Complete Application has been received by the Agency, but
prior to award announcement.
Sec. 4280.122 Awarding and administering RES and EEI grants.
The Agency will award and administer RES and EEI grants in
accordance with Departmental Regulations and with paragraphs (a)
through (h) of this section.
(a) Letter of conditions. A Letter of Conditions will be prepared
by the Agency, establishing conditions that must be agreed to by the
Applicant before any obligation of funds can occur. Upon reviewing the
conditions and requirements in the Letter of Conditions, the Applicant
must complete, sign, and return the Form RD 1942-26, ``Letter of Intent
to Meet Conditions,'' and Form RD 1940-1, ``Request for Obligation of
Funds,'' to the Agency if they accept the conditions of the grant; or
if certain conditions cannot be met, the Applicant may propose
alternate conditions to the Agency. The Agency must concur with any
changes proposed to the Letter of Conditions by the Applicant before
the application will be further processed.
(b) Insurance requirements. Agency approved insurance coverage must
be maintained for 3 years after the Agency has approved the final
performance report unless this requirement is waived or modified by the
Agency in writing. Insurance coverage shall include, but is not limited
to:
(1) Property insurance, such as fire and extended coverage, will
normally be maintained on all structures and equipment.
(2) Liability.
(3) National flood insurance is required in accordance with 7 CFR
part 1806, subpart B, of this title, if applicable.
(4) Business interruption insurance for projects with Total Project
Costs of more than $200,000.
(c) Forms and certifications. The forms specified in paragraphs
(c)(1) through (c)(8) of this section will be attached to the Letter of
Conditions referenced in paragraph (a) of this section. The forms
specified in paragraphs (c)(1) through (c)(7) of this section and all
of the certifications must be submitted prior to grant approval. The
form specified in paragraph (c)(8) of this section, which is to be
completed by contractors, does not need to be returned to the Agency,
but must be kept on file by the Grantee.
(1) Form RD 1942-46, ``Letter of Intent to Meet Conditions.''
(2) Form RD 1940-1.
(3) Form AD-1049, ``Certification Regarding Drug-Free Workplace
Requirements (Grants) Alternative 1-For Grantees Other than
Individuals.''
(4) Form SF-LLL, ``Disclosure of Lobbying Activities,'' if the
grant exceeds $100,000 and/or if the grantee has made or agreed to make
payment using funds other than Federal appropriated funds to influence
or attempt to influence a decision in connection with the application.
(5) Form AD-1047, ``Certification Regarding Debarment, Suspension,
and Other Responsibility Matters-Primary Covered Transactions.''
(6) Form RD 400-1, ``Equal Opportunity Agreement,'' or successor
form.
(7) Form RD 400-4, ``Assurance Agreement,'' or successor form.
(8) Form AD-1048, as signed by the contractor or other lower tier
party.
(d) Evidence of Matching Funds. If an Applicant submitted written
evidence of Matching Funds with the application, the Applicant is
responsible for ensuring that such written evidence is still in effect
(i.e., not expired) when the grant is executed. If the Applicant did
not submit written evidence of Matching Funds with the application, the
Applicant must submit such written evidence that is in effect before
the Agency will execute the Grant Agreement. In either case, written
evidence of Matching Funds must be provided to the Agency before
execution of the Grant Agreement and must be in effect (i.e., must not
have expired) at the time Grant Agreement is executed.
(e) SAM number. Before the Grant Agreement can be executed, the
number and expiration date of the Applicant's SAM number are required.
(f) Grant Agreement. Once the requirements specified in paragraphs
(a) through (e) of this section have been met, the Grant Agreement can
be executed by the grantee and the Agency. The grantee must abide by
all requirements contained in the Grant Agreement, this subpart, and
any other applicable Federal statutes or regulations. Failure to follow
these requirements might result in termination of the grant and
adoption of other available remedies.
(g) Grant approval. The grantee will be sent a copy of the executed
Form RD 1940-1, the approved scope of work, and the Grant Agreement.
(h) Power Purchase Agreement. Where applicable, the grantee shall
provide to the Agency a copy of the executed Power Purchase Agreement
within 12 months from the date that the Grant Agreement is executed,
unless otherwise approved by the Agency.
Sec. 4280.123 Servicing RES and EEI grants.
The Agency will service RES and EEI grants in accordance with the
requirements specified in Departmental Regulations; 7 CFR part 1951,
subparts E and O; the Grant Agreement; and paragraphs (a) through (k)
of this section.
(a) Inspections. Grantees must permit periodic inspection of the
project records and operations by a representative of the Agency.
(b) Programmatic changes. The grantee must obtain prior Agency
approval for any change to the costs, scope, or contractor or vendor of
the approved project. Failure to obtain prior approval of any such
change could result in such remedies as suspension, termination, and
recovery of grant funds. Requests for changes must be submitted in
writing to the Agency.
(1) Changes in project cost or scope. If there is a significant
reduction in project cost or changes in project scope, then the
Applicant's funding needs, eligibility, and scoring, as applicable,
will be reassessed. Decreases in Agency funds will be based on revised
project costs and other factors, including Agency regulations used at
the time of grant approval.
(2) Change of contractor or vendor. When seeking a change, the
grantee must submit to the Agency a written request for approval. The
proposed contractor or vendor must have qualifications and experience
acceptable to the Agency. The written request must contain sufficient
information, which may include a revised technical report as required
under Sec. 4280.117(e), Sec. 4280.118(b)(4), Sec. 4280.119(b)(3), or
Sec. 4280.119(b)(4), as applicable, to demonstrate to the Agency's
satisfaction that such change maintains project integrity. If the
Agency determines that project integrity continues to be
[[Page 22078]]
demonstrated, the grantee may make the change. If the Agency determines
that project integrity is no longer demonstrated, the change will not
be approved and the grantee has the following options: continue with
the original contractor or vendor; find another contractor or vendor
that has qualifications and experience acceptable to the Agency to
complete the project; or terminate the grant by providing a written
request to the Agency. No additional funding will be available from the
Agency if costs for the project have increased. The Agency decision
will be provided in writing.
(c) Transfer of obligations. Prior to the construction of the
project, the grantee may request, in writing, a transfer of obligation
to a different (substitute) grantee. Subject to Agency approval
provided in writing, an obligation of funds established for a grantee
may be transferred to a substitute grantee provided:
(1) The substituted grantee
(i) Is eligible;
(ii) Has a close and genuine relationship with the original
grantee; and
(iii) Has the authority to receive the assistance approved for the
original grantee; and
(2) The type of RES or EEI technology, the project cost and scope
of the project for which the Agency funds will be used remain
unchanged.
(d) Transfer of ownership. After the construction of the project,
the grantee may request, in writing, a transfer of the Grant Agreement
to another entity. Subject to Agency approval provided in writing, the
Grant Agreement may be transferred to another entity provided:
(1) The entity is determined by the Agency to be an eligible entity
under this subpart; and
(2) The type of RES or EEI technology and the scope of the project
for which the Agency funds will be used remain unchanged.
(e) Disposition of acquired property. Grantees must abide by the
disposition requirements outlined in Departmental Regulations.
(f) Financial management system and records. The grantee must
provide for financial management systems and maintain records as
specified in paragraphs (f)(1) and (f)(2) of this section.
(1) Financial management system. The grantee will provide for a
financial system that will include:
(i) Accurate, current, and complete disclosure of the financial
results of each grant;
(ii) Records that identify adequately the source and application of
funds for grant-supporting activities, together with documentation to
support the records. Those records must contain information pertaining
to grant awards and authorizations, obligations, unobligated balances,
assets, liabilities, outlays, and income; and
(iii) Effective control over and accountability for all funds. The
grantee must adequately safeguard all such assets and must ensure that
funds are used solely for authorized purposes.
(2) Records. The grantee will retain financial records, supporting
documents, statistical records, and all other records pertinent to the
grant for a period of at least 3 years after completion of grant
activities except that the records must be retained beyond the 3-year
period if audit findings have not been resolved or if directed by the
United States. The Agency and the Comptroller General of the United
States, or any of their duly authorized representatives, must have
access to any books, documents, papers, and records of the grantee that
are pertinent to the specific grant for the purpose of making audit,
examination, excerpts, and transcripts.
(g) Audit requirements. If applicable, grantees must provide an
annual audit in accordance with 7 CFR part 3052. The Agency may
exercise its right to do a program audit after the end of the project
to ensure that all funding supported Eligible Project Costs.
(h) Grant Disbursement. As applicable, grantees must disburse grant
funds as scheduled in accordance with the appropriate construction and
inspection requirements in Sec. Sec. 4280.118, 4280.119 or 4280.124 as
applicable of this subpart. Unless required by third parties providing
cost sharing payments to be provided on a pro-rata basis with other
Matching Funds, grant funds will be disbursed after all other Matching
Funds have been expended.
(1) Unless authorized by the Agency to do so, grantees may submit
requests for reimbursement no more frequently than monthly. Ordinarily,
payment will be made within 30 days after receipt of a proper request
for reimbursement.
(2) Grantees must not request reimbursement for the Federal share
of amounts withheld from contractors to ensure satisfactory completion
of work until after it makes those payments.
(3) Payments will be made by electronic funds transfer.
(4) Grantees must use SF-271, ``Outlay Report and Request for
Reimbursement for Construction Programs,'' or other format prescribed
by the Agency to request grant reimbursements.
(5) For a grant awarded to a project with Total Project Costs over
$200,000, grant funds will be disbursed in accordance with the above
through 90 percent of grant disbursement. The final 10 percent of grant
funds will be held by the Agency until construction of the project is
completed, the project is operational, and the project has met or
exceeded the steady state operating level as set out in the grant award
requirements. In addition, the Agency reserves the right to request
additional information or testing if upon a final site visit the 30 day
steady state operating level is not found acceptable to the Agency.
(i) Monitoring of project. Grantees are responsible for ensuring
that all activities are performed within the approved scope of work and
that funds are only used for approved purposes.
(1) Grantees shall constantly monitor performance to ensure that:
(i) Time schedules are being met;
(ii) Projected work by time periods is being accomplished;
(iii) Financial resources are being appropriately expended by
contractors (if applicable); and
(iv) Any other performance objectives identified in the scope of
work are being achieved.
(2) To the extent that resources are available, the Agency will
monitor grantees to ensure that activities are performed in accordance
with the Agency-approved scope of work and to ensure that funds are
expended for approved purposes. The Agency's monitoring of grantees
neither:
(i) Relieves the grantee of its responsibilities to ensure that
activities are performed within the scope of work approved by the
Agency and that funds are expended for approved purposes only; nor
(ii) Provides recourse or a defense to the grantee should the
grantee conduct unapproved activities, engage in unethical conduct,
engage in activities that are or that give the appearance of a conflict
of interest, or expend funds for unapproved purposes.
(j) Reporting requirements. Financial and project performance
reports must be provided by grantees and contain the information
specified in paragraphs (j)(1) through (j)(3)of this section.
(1) Federal financial reports. Between grant approval and
completion of project (i.e., construction), SF-425, ``Federal Financial
Report'' will be required of all grantees as applicable on a semiannual
basis. The grantee will complete the project within the total sums
available to it, including the grant, in accordance with the scope of
work and any necessary modifications thereof
[[Page 22079]]
prepared by grantee and approved by the Agency.
(2) Project performance reports. Between grant approval and
completion of project (i.e., construction), grantees must provide
semiannual project performance reports and a final project development
report containing the information specified in paragraphs (j)(2)(i) and
(j)(2)(ii) of this section. These reports are due 30 working days after
June 30 and December 31 of each year.
(i) Semiannual project performance reports. Each semiannual project
performance report must include the following:
(A) A comparison of actual accomplishments to the objectives for
that period;
(B) Reasons why established objectives were not met, if applicable;
(C) Reasons for any problems, delays, or adverse conditions which
will affect attainment of overall program objectives, prevent meeting
time schedules or objectives, or preclude the attainment of particular
objectives during established time periods. This disclosure must be
accompanied by a statement of the action taken or planned to resolve
the situation; and
(D) Objectives and timetables established for the next reporting
period.
(ii) Final project development report. The final project
development report must be submitted 90 days after project completion
and include:
(A) A detailed project funding and expense summary; and
(B) A summary of the project's installation/construction process,
including recommendations for development of similar projects by future
Applicants to the program.
(3) Outcome project performance reports. Once the project has been
constructed, the grantee must provide the Agency periodic reports.
These reports will include the information specified in paragraphs
(j)(3)(i) or (j)(3)(ii) of this section, as applicable.
(i) Renewable Energy Systems. For RES projects, commencing the
first full calendar year following the year in which project
construction was completed and continuing for 3 full years, provide a
report detailing the information specified in paragraphs (j)(3)(i)(A)
through (j)(3)(i)(G) of this section.
(A) Type of technology;
(B) The actual annual amount of energy generated in BTUs, kilowatt-
hours, or similar energy equivalents;
(C) Annual income for systems that are selling energy, if
applicable, and/or energy savings of the Renewable Energy System;
(D) A summary of the cost of operations and maintenance;
(E) A description of any associated major maintenance or
operational problems;
(F) Recommendations for development of future similar projects; and
(G) Actual number of jobs created or saved as a result of the REAP
funding.
(ii) Energy Efficiency Improvements. For EEI projects, commencing
the first full calendar year following the year in which project
construction was completed and continuing for 2 full years, provide a
report detailing, including calculations and any assumptions:
(A) The actual amount of energy saved annually as determined by the
difference between:
(1) The annual amount of energy used by the project with the
project in place and
(2) The annual average amount of energy used for the 36 month
period prior to application submittal as reported in the application;
and
(B) Actual number of jobs created or saved as a result of the REAP
funding.
(k) Grant close-out. Grant close-out must be performed in
accordance with the requirements specified in Departmental Regulations.
Sec. 4280.124 Construction planning and performing development.
(a) General. The following requirements are applicable to all
procurement methods specified in paragraph (f) of this section.
(1) Maximum open and free competition. All procurement
transactions, regardless of procurement method and dollar value, must
be conducted in a manner that provides maximum open and free
competition. Procurement procedures must not restrict or eliminate
competition. Competitive restriction examples include, but are not
limited to, the following: placing unreasonable requirements on firms
in order for them to qualify to do business; noncompetitive practices
between firms; organizational conflicts of interest; and unnecessary
experience and bonding requirements. In specifying material(s), the
grantee and its consultant will consider all materials normally
suitable for the project commensurate with sound engineering practices
and project requirements. The Agency will consider any recommendation
made by the grantee's consultant concerning the technical design and
choice of materials to be used for such a project. If the Agency
determines that a design or material, other than those that were
recommended, should be considered by including them in the procurement
process as an acceptable design or material in the project, the Agency
will provide such Applicant or grantee with a comprehensive
justification for such a determination. The justification will be
documented in writing.
(2) Equal employment opportunity. For all construction contracts
and grants in excess of $10,000, the contractor must comply with
Executive Order 11246, as amended by Executive Order 11375, and as
supplemented by applicable Department of Labor regulations (41 CFR part
60). The Applicant, or the lender and borrower, as applicable, is
responsible for ensuring that the contractor complies with these
requirements.
(3) Surety. Any contract exceeding $100,000 for procurement will
require surety, except as provided for in paragraph (a)(3)(v) of this
section.
(i) Surety covering both performance and payment will be required.
The United States, acting through the Agency, will be named as co-
obligee on all surety unless prohibited by State or Tribal law. Surety
may be provided as specified in paragraphs (a)(3)(i)(A) or (a)(3)(i)(B)
of this section.
(A) Surety in the amount of 100 percent of the contract cost may be
provided using either:
(1) A bank letter of credit; or
(2) Performance bonds and payment bonds. Companies providing
performance bonds and payment bonds must hold a certificate of
authority as an acceptable surety on Federal bonds as listed in
Treasury Circular 570 as amended and be legally doing business in the
State where the project is located.
(B) Cash deposit in escrow of at least 50 percent of the contract
amount. The cash deposit cannot be from funds awarded under this
subpart.
(ii) The surety will normally be in the form of performance bonds
and payment bonds; however, when other methods of surety are necessary,
bid documents must contain provisions for such alternative types of
surety. The use of surety other than performance bonds and payment
bonds requires concurrence by the Agency after submission of a
justification to the Agency together with the proposed form of escrow
agreement or letter of credit.
(iii) For contracts of lesser amounts, the grantee may require
surety.
(iv) When surety is not provided, contractors will furnish evidence
of payment in full for all materials, labor, and any other items
procured under the contract. Forms RD 1924-9 and RD
[[Page 22080]]
1924-10 can be obtained at the local Rural Development office and used
for this purpose. Other similar forms may be used with Rural
Development State Office concurrence.
(v) Exceptions may be granted to surety for any of the following
situations:
(A) Small acquisition and construction procedures as specified in
Sec. 4280.118(c)(2) or Sec. 4280.119(c)(2) as applicable are used.
(B) The proposed project is for equipment purchase and installation
only and the contract costs for the equipment purchase and installation
are $200,000 or less.
(C) The proposed project is for equipment purchase and installation
only and the contract costs for the equipment purchase and installation
are more than $200,000 and the following requirements can be met:
(1) The project involves two or fewer subcontractors; and
(2) The equipment manufacturer or provider must act as the general
contractor.
(D) Other construction projects that have only one contractor
performing work.
(4) Grantees accomplishing work. In some instances, grantees may
wish to perform a part of the work themselves. Grantees may accomplish
construction by using their own personnel and equipment, provided the
grantees possess the necessary skills, abilities, and resources to
perform the work. For a grantee to provide a portion of the work, with
the remainder to be completed by a contractor:
(i) A clear understanding of the division of work must be
established and delineated in the contract;
(ii) Grantees are not eligible for payment for their own work as it
is not an Eligible Project Cost;
(iii) Warranty requirements applicable to the technology must cover
the grantee's work;
(iv) Inspection and acceptance of the grantee's work will be
completed by either:
(A) An Inspector that will:
(1) Inspect, as applicable, and accept construction; and
(2) Furnish inspection reports.
(B) A licensed engineer that will:
(1) Prepare design drawings and specifications;
(2) Inspect, as applicable, and accept construction; and
(3) Furnish inspection reports.
(b) Forms used. Technical service and procurement documents must be
approved by the Agency and may be used only if they are customarily
used in the area and protect the interest of the Applicant and the
Government with respect to compliance with items such as the drawings,
specifications, payments for work, inspections, completion,
nondiscrimination in construction work and acceptance of the work. The
Agency will not become a party to a construction contract or incur any
liability under it. No contract will become effective until concurred
in writing by the Agency. Such concurrence statement must be attached
to and made a part of the contract.
(c) Technical services. Unless the requirements of paragraph (c)(4)
of this section can be met, all RES and EEI projects with Total Project
Costs greater than $400,000 require:
(1) The design, installation monitoring, testing prior to
commercial operation, and project completion certification be completed
by a licensed professional engineer (PE) or team of licensed PEs.
Licensed PEs may be ``in-house'' PEs or contracted PEs.
(2) Any contract for design services must be subject to Agency
concurrence.
(3) Engineers must be licensed in the State where the project is to
be constructed.
(4) The Agency may grant an exception to the requirements of
paragraphs (c)(1) through (c)(3) of this section if the following
requirements are met:
(i) State or Tribal law does not require the use of a licensed PE;
and
(ii) The project is not complex, as determined by the Agency, and
can be completed to meet the requirements of this program without the
services of a licensed PE.
(d) Design policies. Final plans and specifications must be
reviewed by the Agency and approved prior to the start of construction.
Facilities funded by the Agency must meet the following design
requirements, as applicable:
(1) Environmental review. Facilities financed by the Agency must
undergo an environmental analysis in accordance with the National
Environmental Policy Act and 7 CFR part 1940, subpart G of this title.
Project planning and design must not only be responsive to the
grantee's needs but must consider the environmental consequences of the
proposed project. Project design must incorporate and integrate, where
practicable, mitigation measures that avoid or minimize adverse
environmental impacts. Environmental reviews serve as a means of
assessing environmental impacts of project proposals, rather than
justifying decisions already made. Applicants may not take any action
on a project proposal that will have an adverse environmental impact or
limit the choice of reasonable project alternatives being reviewed
prior to the completion of the Agency's environmental review. If such
actions are taken, the Agency has the right to withdraw and discontinue
processing the application.
(2) Architectural barriers. All facilities intended for or
accessible to the public or in which physically handicapped persons may
be employed must be developed in compliance with the Architectural
Barriers Act of 1968 (42 U.S.C. 4151 et seq.) as implemented by 41 CFR
101-19.6, section 504 of the Rehabilitation Act of 1973 (42 U.S.C 1474
et seq.) as implemented by 7 CFR parts 15 and 15b, and Titles II and
III of the Americans with Disabilities Act of 1990 (42 U.S.C. 12101 et
seq.).
(3) Energy/environment. Project design shall consider cost
effective energy-efficient and environmentally-sound products and
services.
(4) Seismic safety. All new structures, fully or partially
enclosed, used or intended for sheltering persons or property will be
designed with appropriate seismic safety provisions in compliance with
the Earthquake Hazards Reduction Act of 1977 (42 U.S.C. 7701 et seq.),
and Executive Order 12699, Seismic Safety of Federal and Federally
Assisted or Regulated New Building Construction. Designs of components
essential for system operation and substantial rehabilitation of
structures that are used for sheltering persons or property shall
incorporate seismic safety provisions to the extent practicable as
specified in 7 CFR part 1792, subpart C.
(e) Contract Methods. This paragraph identifies the three types of
contract methods that can be used for projects funded under this
subpart. The procurement methods, which are applicable to each of these
contract methods, are specified in paragraph (f) of this section.
(1) Traditional method or design-bid-build. The services of the
consulting engineer or architect and the general construction
contractor shall normally be procured from unrelated sources in
accordance with the following paragraphs.
(i) Solicitation of offers. Solicitation of offers must:
(A) Incorporate a clear and accurate description of the technical
requirements for the material, product, or service to be procured. The
description must not, in competitive procurements, contain features
that unduly restrict competition. The description may include a
statement of the qualitative nature of the material, product or service
to be procured, and when necessary will set forth those
[[Page 22081]]
minimum essential characteristics and standards to which it must
conform if it is to satisfy its intended use. When it is impractical or
uneconomical to make a clear and accurate description of the technical
requirements, a ``brand name or equal'' description may be used to
define the performance or other salient requirements of a procurement.
The specific features of the named brands which must be met by offerors
must be clearly stated.
(B) Clearly specify all requirements which offerors must fulfill
and all other factors to be used in evaluating bids or proposals.
(ii) Contract pricing. Cost plus a percentage of cost method of
contracting must not be used.
(iii) Unacceptable bidders. The following will not be allowed to
bid on, or negotiate for, a contract or subcontract related to the
construction of the project:
(A) An engineer or architect as an individual or entity who has
prepared plans and specifications or who will be responsible for
monitoring the construction;
(B) Any entity in which the grantee's architect or engineer is an
officer, employee, or holds or controls a substantial interest in the
grantee;
(C) The grantee's governing body officers, employees, or agents;
(D) Any member of the grantee's Immediate Family or partners in
paragraphs (e)(1)(iii)(A), (e)(1)(iii)(B), or (e)(1)(iii)(C) of this
section; or
(E) An entity which employs, or is about to employ, any person in
paragraph (e)(1)(iii)(A), (e)(1)(iii)(B), (e)(1)(iii)(C), or
(e)(1)(iii)(D) of this section.
(iv) Contract award. Contracts must be made only with responsible
parties possessing the potential ability to perform successfully under
the terms and conditions of a proposed procurement. Consideration must
include, but not be limited to, matters such as integrity, record of
past performance, financial and technical resources, and accessibility
to other necessary resources. Contracts must not be made with parties
who are suspended or debarred.
(2) Design/Build Method. The Design/Build Method, where the same
person or entity provides design and engineering work, as well as
construction or installation, may be used with Agency written approval.
(i) Concurrence information. The Applicant will request Agency
concurrence by providing the Agency at least the information specified
in paragraphs (e)(2)(i)(A) through (e)(2)(i)(H) of this section.
(A) The grantee's written request to use the Design/Build Method
with a description of the proposed method.
(B) A proposed scope of work describing in clear, concise terms the
technical requirements for the contract. It shall include a
nontechnical statement summarizing the work to be performed by the
contractor, the results expected, and a proposed construction schedule
showing the sequence in which the work is to be performed.
(C) A proposed firm-fixed-price contract for the entire project
which provides that the contractor will be responsible for any extra
cost which result from errors or omissions in the services provided
under the contract, as well as compliance with all Federal, State,
local, and Tribal requirements effective on the contract execution
date.
(D) Where noncompetitive negotiation is proposed and found, by the
Agency, to be an acceptable procurement method, then the Agency will
evaluate documents indicating the contractor's performance on previous
similar projects in which the contractor acted in a similar capacity.
(E) A detailed listing and cost estimate of equipment and supplies
not included in the construction contract but which are necessary to
properly operate the project.
(F) Evidence that a qualified construction Inspector who is
independent of the contractor has or will be hired.
(G) Preliminary plans and outline specifications. However, final
plans and specifications must be completed and reviewed by the Agency
prior to the start of construction.
(H) The grantee's attorney's opinion and comments regarding the
legal adequacy of the proposed contract documents and evidence that the
grantee has the legal authority to enter into and fulfill the contract.
(ii) Agency concurrence of Design/Build Method. The Agency will
review the material submitted by the Applicant. When all items are
acceptable, the Agency approval official will concur in the use of the
Design/Build Method for the proposal.
(iii) Forms used. Agency approved contract documents must be used
provided they are customarily used in the area and protect the interest
of the Applicant and the Agency with respect to compliance with items
such as the drawings, specifications, payments for work, inspections,
completion, nondiscrimination in construction work, and acceptance of
the work. The Agency will not become a party to a construction contract
or incur any liability under it. No contract shall become effective
until concurred, in writing, by the Agency. Such concurrence statement
must be attached to and made a part of the contract.
(iv) Contract provisions. Contracts will have a listing of
attachments and must contain the following:
(A) The contract sum;
(B) The dates for starting and completing the work;
(C) The amount of liquidated damages, if any, to be charged;
(D) The amount, method, and frequency of payment;
(E) Surety provisions that meet the requirements of paragraph
(a)(3) of this section;
(F) The requirement that changes or additions must have prior
written approval of the Agency as identified in the letter of
conditions;
(G) Contract review and concurrence. The grantee's attorney will
review the executed contract documents, including performance and
payment bonds, and will certify that they are in compliance with
Federal, State, or Tribal law, and that the persons executing these
documents have been properly authorized to do so. The contract
documents, engineer's recommendation for award, and bid tabulation
sheets will be forwarded to the Agency for concurrence prior to
awarding the contract. All contracts will contain a provision that they
are not effective until they have been concurred, in writing, by the
Agency;
(H) This part does not relieve the grantee of any responsibilities
under its contract. The grantee is responsible for the settlement of
all contractual and administrative issues arising out of procurement
entered into in support of Agency funding. These include, but are not
limited to, source evaluation, protests, disputes, and claims. Matters
concerning violation of laws are to be referred to the applicable
local, State, Tribal, or Federal authority; and
(3) Construction Management. Construction Managers as a Constructor
(CMc) acts in the capacity of a General Contractor and is financially
and professionally responsible for the construction. This type of
Construction Management is also referred to as Construction Manager
``At Risk.'' The construction contract is between the grantee and the
CMc. The CMc in turn subcontracts for some or all of the work. The CMc
will need to carry the Agency required 100 percent surety and
insurance, as required under paragraph (a)(3) of this section. Projects
using construction management must follow the requirements of (e)(2)(i)
through (e)(2)(iv) of this section.
[[Page 22082]]
(f) Procurement methods. Procurement must be made by one of the
following methods: competitive sealed bids (formal advertising);
competitive negotiation; or noncompetitive negotiation. Competitive
sealed bids (formal advertising) are the preferred procurement method
for construction contracts.
(1) Competitive sealed bids. In competitive sealed bids (formal
advertising), sealed bids are publicly solicited and a firm-fixed-price
contract (lump sum or unit price) is awarded to the responsible bidder
whose bid, conforming with all the material terms and conditions of the
invitation for bids, is lowest, price and other factors considered.
When using this method, the following will apply:
(i) At a sufficient time prior to the date set for opening of bids,
bids must be solicited from an adequate number of qualified sources. In
addition, the invitation must be publicly advertised.
(ii) The invitation for bids, including specifications and
pertinent attachments, must clearly define the items or services needed
in order for the bidders to properly respond to the invitation under
paragraph (f)(1) of this section.
(iii) All bids must be opened publicly at the time and place stated
in the invitation for bids.
(iv) A firm-fixed-price contract award must be made by written
notice to that responsible bidder whose bid, conforming to the
invitation for bids, is lowest. When specified in the bidding
documents, factors such as discounts and transportation costs will be
considered in determining which bid is lowest.
(v) The Applicant, with the concurrence of the Agency, will
consider the amount of the bids or proposals, and all conditions listed
in the invitation. On the basis of these considerations, the Applicant
will select and notify the lowest responsible bidder. The contract will
be awarded using Form RD 1924-6, ``Construction Contract,'' or a
similar Agency-approved document.
(vi) Any or all bids may be rejected by the grantee when it is in
their best interest.
(2) Competitive negotiation. In competitive negotiations, proposals
are requested from a number of sources. Negotiations are normally
conducted with more than one of the sources submitting offers
(offerors). Competitive negotiation may be used if conditions are not
appropriate for the use of formal advertising and where discussions and
bargaining with a view to reaching agreement on the technical quality,
price, other terms of the proposed contract and specifications are
necessary. If competitive negotiation is used for procurement, the
following requirements will apply:
(i) Proposals must be solicited from two qualified sources, unless
otherwise approved by the Agency, to permit reasonable competition
consistent with the nature and requirements of the procurement.
(ii) The Request for Proposal must identify all significant
evaluation factors, including price or cost where required, and their
relative importance.
(iii) The grantee must provide mechanisms for technical evaluation
of the proposals received, determination of responsible offerors for
the purpose of written or oral discussions, and selection for contract
award.
(iv) Award may be made to the responsible offeror whose proposal
will be most advantageous to the grantee, price and other factors
considered. Unsuccessful offerors must be promptly notified.
(v) Owners may utilize competitive negotiation procedures for
procurement of architectural/engineering and other professional
services, whereby the offerors' qualifications are evaluated and the
most qualified offeror is selected, subject to negotiations of fair and
reasonable compensation.
(3) Noncompetitive negotiation. Noncompetitive negotiation is
procurement through solicitation of a proposal from only one source.
Noncompetitive negotiation may be used when the award of a contract is
not feasible under small acquisition and construction procedures,
competitive sealed bids (formal advertising) or competitive negotiation
procedures. Circumstances under which a contract may be awarded by
noncompetitive negotiations are limited to the following:
(i) After solicitation of a number of sources, competition is
determined inadequate; or
(ii) No acceptable bids have been received after formal
advertising.
(4) Additional procurement methods. The grantee may use additional
innovative procurement methods provided the grantee receives prior
written approval from the Agency. Contracts will have a listing of
attachments and the minimum provisions of the contract will include:
(i) The contract sum;
(ii) The dates for starting and completing the work;
(iii) The amount of liquidated damages to be charged;
(iv) The amount, method, and frequency of payment;
(v) Whether or not surety bonds will be provided; and
(vi) The requirement that changes or additions must have prior
written approval of the Agency.
(g) Contracts awarded prior to applications. Applicants awarding
contracts prior to filing an application must comply with 7 CFR
1780.74.
(h) Contract administration. Contract administration must comply
with 7 CFR 1780.76. If another authority, such as a Federal, State, or
Tribal agency, is providing funding and requires oversight of
inspections, change orders, and pay requests, the Agency will accept
copies of their reports or forms as meeting oversight requirements of
the Agency.
Renewable Energy System and Energy Efficiency Improvement Guaranteed
Loans
Sec. 4280.125 Compliance with Sec. Sec. 4279.29 through 4279.99.
All loans guaranteed under this subpart must comply with the
provisions found in Sec. Sec. 4279.29 through 4279.99 of this chapter,
except that the provisions of Sec. 4279.71 of this chapter are not
applicable.
Sec. 4280.126 Guarantee/annual renewal fee.
Except for the conditions for receiving reduced guarantee fee and
unless otherwise specified in a Federal Register notice, the provisions
specified in Sec. 4279.107 of this chapter apply to loans guaranteed
under this subpart.
Sec. 4280.127 Borrower eligibility.
To receive a RES or EEI guaranteed loan under this subpart, a
borrower must be eligible under Sec. 4280.109. In addition, borrower
must meet the requirements of paragraphs (a) through (e) of this
section. Borrowers who receive a loan guaranteed under this subpart
must continue to meet the requirements specified in this section.
(a) Type of borrower. The borrower must be an Agricultural Producer
or Rural Small Business.
(b) Ownership. The borrower must:
(1) Own or be the prospective owner of the project; and
(2) Own or control the site for the project at the time of
application and, if the loan is guaranteed under this subpart, for the
term of the loan.
(c) Revenues and expenses. The borrower must have available, at the
time of application, satisfactory sources of revenue in an amount
sufficient to provide for the operation, management, maintenance, and
any debt service of the project for the term of the loan. In
[[Page 22083]]
addition, the borrower must control the revenues and expenses of the
project, including its operation and maintenance, for which the loan is
sought. Notwithstanding the provisions of this paragraph, the borrower
may employ a Qualified Consultant under contract to manage revenues and
expenses of the project and its operation and/or maintenance.
(d) Legal authority and responsibility. Each borrower and lender
must have the legal authority necessary to apply for and carry out the
purpose of the guaranteed loan.
(e) Universal identifier and SAM. Unless exempt under 2 CFR 25.110,
the borrower must:
(1) Be registered in the SAM prior to submitting an application or
plan;
(2) Maintain an active SAM registration with current information at
all times during which it has an active Federal award or an application
or plan under consideration by the Agency; and
(3) Provide its DUNS number in each application or plan it submits
to the Agency.
Sec. 4280.128 Project eligibility.
For a RES or EEI project to be eligible to receive a guaranteed
loan under this subpart, the project must meet each criteria specified
in Sec. 4280.113(a) through (e). In addition, the purchase of an
existing RES that meets the criteria specified in Sec. 4280.113(b)
through (f) is an eligible project under this section.
Sec. 4280.129 Guaranteed loan funding.
(a) The amount of the loan that will be made available to an
eligible project under this subpart will not exceed 75 percent of total
Eligible Project Costs. Eligible Project Costs are specified in
paragraph (e) of this section. Ineligible project costs are identified
in paragraph (f) of this section.
(b) The minimum amount of a guaranteed loan made to a borrower will
be $5,000, less any program grant amounts. The maximum amount of a
guaranteed loan made to a borrower is $25 million.
(c) The percentage of guarantee, up to the maximum allowed by this
section, will be negotiated between the lender and the Agency. The
maximum percentage of guarantee is:
(1) 85 percent for loans of $600,000 or less;
(2) 80 percent for loans greater than $600,000 up to and including
$5 million;
(3) 70 percent for loans greater than $5 million up to and
including $10 million; and
(4) 60 percent for loans greater than $10 million.
(d) The total amount of the loans guaranteed under this subpart to
one borrower, including the guaranteed and unguaranteed portion, the
outstanding principal, and interest balance of any existing loans
guaranteed under this program and the new loan request, must not exceed
$25 million.
(e) Eligible Project Costs are only those costs associated with the
items identified in Sec. 4280.115(c) and paragraphs (e)(1) through
(e)(4) of this section, as long as the items are an integral and
necessary part of the Renewable Energy System or Energy Efficiency
Improvement. The Eligible Project Costs identified in paragraphs (e)(1)
through (e)(4) of this section cannot exceed more than 5 percent of the
loan amount.
(1) Working capital.
(2) Land acquisition.
(3) Routine lender fees, as described in Sec. 4279.120(a) of this
chapter.
(4) Energy Analyses, Energy Assessments, Energy Audits, technical
reports, business plans, and Feasibility Studies completed and
acceptable to the Agency, except if any portion was financed by any
other Federal or State grant or payment assistance, including, but not
limited to, a REAP Energy Analysis, Energy Assessment, or Energy Audit,
Feasibility Study, or REDA grant.
(f) Ineligible project costs include, but are not limited to costs
identified in Sec. Sec. 4280.115(d)(1), (d)(2), and (d)(4) through
(d)(9) and loans made with the proceeds of any obligation the interest
on which is excludable from income under 26 U.S.C. 103 or a successor
statute. Funds generated through the issuance of tax-exempt obligations
may neither be used to purchase the guaranteed portion of any Agency
guaranteed loan nor may an Agency guaranteed loan serve as collateral
for a tax-exempt issue. The Agency may guarantee a loan for a project
which involves tax-exempt financing only when the guaranteed loan funds
are used to finance a part of the project that is separate and distinct
from the part which is financed by the tax-exempt obligation, and the
guaranteed loan has at least a parity security position with the tax-
exempt obligation.
(g) In determining the amount of a loan awarded, the Agency will
take into consideration the criteria specified in Sec. 4280.115(e).
Sec. 4280.130 Loan processing.
(a) Processing RES and EEI guaranteed loans under this subpart must
comply with the provisions found in Sec. Sec. 4279.120 through
4279.187 of this chapter, except for those sections specified in
paragraph (b) of this section, and as provided in Sec. Sec. 4280.131
through 4280.142.
(b) The provisions found in Sec. Sec. 4279.150, 4279.155,
4279.161, and 4279.175 of this chapter do not apply to loans guaranteed
under this subpart.
Sec. 4280.131 Credit quality.
Except for Sec. 4279.131(d) of this chapter, the credit quality
provisions of Sec. 4279.131 of this chapter apply to this subpart.
Instead of complying with Sec. 4279.131(d), borrowers must demonstrate
evidence of cash equity injection in the project of not less than 25
percent of total Eligible Project Costs. Cash equity injection must be
in the form of cash. For guaranteed loan only requests, Federal grant
funds may be counted as cash equity.
Sec. 4280.132 Financial statements.
All financial statements must be in accordance with Sec. 4279.137
of this chapter except that, for Agricultural Producers, the borrower
may provide financial information in the manner that is generally
required by agricultural commercial lenders.
Sec. 4280.133 [Reserved]
Sec. 4280.134 Personal and corporate guarantees.
All personal and corporate guarantees must be in accordance with
Sec. 4279.149 of this chapter. In addition, except for Passive
Investors, unconditional personal and corporate guarantees for those
owners with a beneficial interest greater than or equal to 20 percent
of the borrower will be required where legally permissible.
Sec. 4280.135 Scoring RES and EEI guaranteed loan only applications.
(a) Evaluation criteria. The Agency will score each guaranteed loan
only application received using the evaluation criteria specified in
Sec. 4280.120, except that, in Sec. 4280.120(b), the calculation will
be made on the loan amount requested and not on the grant amount
requested.
(b) Minimum score. The Agency will announce each year in a Federal
Register notice the minimum score guaranteed loan-only applications
must meet in order to be considered for funding in quarterly
competitions, as specified in Sec. 4280.138(b). Any application that
does not meet the applicable minimum score is only eligible to compete
during the last quarter of the Federal Fiscal Year, as specified in
Sec. 4280.138(b).
(c) Notification. The Agency will notify in writing each lender and
borrower whose application does not meet the applicable minimum score.
[[Page 22084]]
Sec. 4280.136 [Reserved]
Sec. 4280.137 Application and documentation.
The requirements in this section apply to guaranteed loan
applications for RES and EEI projects under this subpart.
(a) General. Guaranteed loan applications must be submitted in
accordance with the guaranteed loan requirements specified in Sec.
4280.110 and in this section.
(b) Application content for guaranteed loans greater than $600,000.
Each guaranteed loan only application for greater than $600,000 must
contain the information specified in paragraphs (b)(1) and (b)(2) of
this section.
(1) Application content. Each application submitted under this
paragraph must contain the information specified in Sec. Sec.
4280.117(a)(6) through (a)(9) and (b) through (e) and as specified in
paragraph (b)(2) of this section, and must present the information in
the same order as shown in Sec. 4280.117.
(2) Lender forms, certifications, and agreements. Each application
submitted under paragraph (b) of this section must contain applicable
forms, certifications, and agreements specified in paragraphs (b)(2)(i)
through (b)(2)(xi) of this section instead of the forms and
certifications specified in Sec. 4280.117(a).
(i) A completed Form RD 4279-1, ``Application for Loan Guarantee.''
(ii) Form RD 1940-20.
(iii) Form AD 2106. Although this form is optional, if the
applicant has previously submitted the form to the Agency or another
Federal agency, the applicant does not need to resubmit the form.
(iv) A personal credit report from an Agency approved credit
reporting company for each owner, partner, officer, director, key
employee, and stockholder owning 20 percent or more interest in the
borrower's business, except Passive Investors and those corporations
listed on a major stock exchange.
(v) Appraisals completed in accordance with Sec. 4279.144 of this
chapter. Completed appraisals should be submitted when the application
is filed. If the appraisal has not been completed when the application
is filed, the Applicant must submit an estimated appraisal. Agency
approval in the form of a Conditional Commitment may be issued subject
to receipt of adequate appraisals. In all cases, a completed appraisal
must be submitted prior to the loan being closed.
(vi) Commercial credit reports obtained by the lender on the
borrower and any parent, affiliate, and subsidiary firms.
(vii) Current personal and corporate financial statements of any
guarantors.
(viii) Financial information is required on the total operation of
the Agricultural Producer/Rural Small Business and its parent,
subsidiary, or affiliates at other locations. All information submitted
under this paragraph must be substantiated by authoritative records.
(A) Historical financial statements. Provide 3 years of historical
financial statements including income statements and balance sheets.
Agricultural producers may present historical financial information in
the format that is generally required by commercial agriculture
lenders.
(B) Current balance sheet and income statement. Provide a current
balance sheet and income statement presented in accordance with GAAP
and dated within 90 days of the application submittal. Agricultural
producers may present financial information in the format that is
generally required by commercial agriculture lenders or in a similar
format used when submitting the same information in support of the
borrower's Federal income tax returns.
(C) Pro forma financial statements. Provide pro forma balance sheet
at start-up of the borrower's business that reflects the use of the
loan proceeds or grant award; 3 additional years of financial
statements, indicating the necessary start-up capital, operating
capital, and short-term credit; and projected cash flow and income
statements for 3 years supported by a list of assumptions showing the
basis for the projections.
(ix) Lender's complete comprehensive written analysis in accordance
with Sec. 4280.131.
(x) A certification by the lender that the borrower is eligible,
the loan is for authorized purposes, and there is reasonable assurance
of repayment ability based on the borrower's history, projections,
equity, and the collateral to be obtained.
(xi) A proposed loan agreement or a sample loan agreement with an
attached list of the proposed loan agreement provisions. The following
requirements must be addressed in the proposed or sample loan
agreement:
(A) Prohibition against assuming liabilities or obligations of
others;
(B) Restriction on dividend payments;
(C) Limitation on the purchase or sale of equipment and fixed
assets;
(D) Limitation on compensation of officers and owners;
(E) Minimum working capital or current ratio requirement;
(F) Maximum debt-to-net worth ratio;
(G) Restrictions concerning consolidations, mergers, or other
circumstances;
(H) Limitations on selling the business without the concurrence of
the lender;
(I) Repayment and amortization provisions of the loan;
(J) List of collateral and lien priority for the loan, including a
list of persons and corporations guaranteeing the loan with a schedule
for providing the lender with personal and corporate financial
statements. Financial statements for corporate and personal guarantors
must be updated at least annually once the guarantee is provided;
(K) Type and frequency of financial statements to be required from
the borrower for the duration of the loan;
(L) The addition of any requirements imposed by the Agency in its
Conditional Commitment;
(M) A reserved section for any Agency environmental requirements;
and
(N) A provision for the lender or the Agency to have reasonable
access to the project and its performance information during its useful
life or the term of the loan, whichever is longer, including the
periodic inspection of the project by a representative of the lender or
the Agency.
(c) Application content for guaranteed loans of $600,000 or less.
Each guaranteed loan only application for $600,000 or less must contain
the information specified in paragraphs (c)(1) and (c)(2) of this
section.
(1) Application Contents. If the application is for $200,000 or
less, the application must contain the information specified in Sec.
4280.118(b), except as specified in paragraph (c)(2) of this section
(e.g., the grant forms under Sec. 4280.117(a) are not required to be
submitted), and must present the information in the same order as shown
in Sec. 4280.118(b). If the application is for more than $200,000, the
application must contain the information specified in Sec. 4280.117,
except as specified in paragraph (c)(2) of this section, and must
present the information in the same order as shown in Sec. 4280.117.
(2) Lender forms, certifications, and agreements. Each application
submitted under paragraph (c) of this section must use Form RD 4279-1A,
``Application for Loan Guarantee, Short Form,'' and the forms and
certifications specified in paragraphs (b)(2)(ii), (b)(2)(iii) (if not
previously submitted), (b)(2)(v), (b)(2)(viii), (b)(2)(ix), (b)(2)(x),
and (b)(2)(xi) of this section. The lender must have the documentation
contained in paragraphs (b)(2)(iv), (b)(2)(vi), and
[[Page 22085]]
(b)(2)(vii) available in its files for the Agency's review.
Sec. 4280.138 Evaluation of RES and EEI guaranteed loan applications.
The provisions of Sec. 4279.165 of this chapter apply to this
subpart, although the Agency will determine borrower and project
eligibility in accordance with the provisions of this subpart.
Sec. 4280.139 Selection of RES and EEI guaranteed loan only
applications.
Complete and eligible guaranteed loan-only applications that are
ready to be approved will be processed according to this section,
unless otherwise modified by the Agency in a notice published in the
Federal Register. Guaranteed loan applications that are part of a
grant-guaranteed loan combination request will be processed according
to Sec. 4280.165(d).
(a) Competing applications. On the first business day of the second
month of each Federal fiscal quarter, the Agency will compete each
eligible application that is ready to be funded and that has a priority
score, as determined under Sec. 4280.135, that meets or exceeds the
applicable minimum score. An application that does not meet the minimum
score will be competed against all other applications during the last
quarter of the Federal Fiscal Year. Higher scoring applications will
receive first consideration.
(b) Funding selected applications. As applications are funded, the
remaining guaranteed funding authority may be insufficient to fund the
next highest scoring application or applications in those cases where
two or more applications receive the same priority score. The
procedures described in paragraphs (b)(1) and (b)(2) of this section
may be repeated as necessary in order to consider all applications as
appropriate.
(1) If the remaining funds are insufficient to fund the next
highest scoring project completely, the Agency will notify the lender
and offer the lender the opportunity to accept the level of funds
available. If the lender does not accept the offer, the Agency will
process the next highest scoring application.
(2) If the remaining funds are insufficient to fund each project
that receives the same priority score, the Agency will notify each
lender and offer the lender the opportunity to accept the level of
funds available and the level of funds the Agency offers to each such
lender will be proportional to the amount of the lenders' requests. If
funds are still remaining, the Agency may consider funding the next
highest scoring project.
(3) Any lender offered less than the full amount requested under
either paragraph (b)(1) or (b)(2) of this section may either accept the
funds available or can request to compete in the following quarter's
competition. Under no circumstances would there be an assurance that
the project(s) would be funded in subsequent competitions.
(4) If a lender agrees to the lower loan funding offered by the
Agency under either paragraph (b)(1) or (b)(2) of this section, the
lender must certify that the purpose(s) of the project can still be met
at the lower funding level and must provide documentation that the
borrower has obtain the remaining total funds needed to complete the
project.
(c) Disposition of ranked applications not funded. How the Agency
disposes of ranked applications that have not received funding depends
on whether the application's priority score is equal to or greater than
the minimum score or is less than the minimum score.
(1) An application with a priority score equal to or greater than
the minimum score that is not funded in a quarterly competition will be
retained by the Agency for consideration in subsequent quarterly
competitions. If an application is not selected for funding after four
quarterly competitions, including the first quarter in which the
application was competed, the application will be withdrawn by the
Agency from further funding consideration.
(2) An application with a priority score less than the applicable
minimum priority score will be competed during the last quarter of the
Federal Fiscal Year in which the application is ready for funding. If
the application is not funded, the application will be withdrawn by the
Agency from further funding consideration.
(d) Unused funding. At the end of each Federal fiscal quarter, the
Agency will roll any remaining guaranteed funding authority into the
next Federal fiscal quarter. At the end of each Federal Fiscal Year,
the Agency may elect at its discretion to allow any remaining multi-
year funds to be carried over to the next Federal Fiscal Year rather
than selecting a lower scoring application.
(e) Commencement of the project. The applicant assumes all risks if
the choice is made to purchase the technology proposed or start
construction of the project to be financed in the guaranteed loan only
application after the complete application has been received by the
Agency, but prior to award announcement.
Sec. Sec. 4280.139-4280.140 [Reserved]
Sec. 4280.141 Changes in borrower.
All changes in borrowers must be in accordance with Sec. 4279.180
of this chapter, but the eligibility requirements of this subpart
apply.
Sec. 4280.142 Conditions precedent to issuance of Loan Note
Guarantee.
In addition to complying with Sec. 4279.181 of this chapter,
paragraphs (a) and (b) of this section must be met as applicable.
(a) The project has been performing at a steady state operating
level in accordance with the technical requirements, plans, and
specifications, conforms with applicable Federal, State, and local
codes, and costs have not exceeded the amount approved by the lender
and the Agency.
(b) Where applicable, the lender must provide to the Agency a copy
of the executed Power Purchase Agreement.
Sec. 4280.143 Requirements after project construction.
Once the project has been constructed, the lender must provide the
Agency reports from the borrower in accordance with Sec.
4280.123(j)(3), as applicable.
Sec. Sec. 4280.144-4280.151 [Reserved]
Sec. 4280.152 Servicing guaranteed loans.
Except as specified in paragraphs (a) and (b) of this section, all
loans guaranteed under this subpart must be in compliance with the
provisions found in Sec. 4287.101(b) and in Sec. Sec. 4287.107
through 4287.199 of this chapter.
(a) Documentation of request. In complying with Sec. 4287.134(a)
of this chapter, all transfers and assumptions must be to eligible
borrowers in accordance with Sec. 4280.127.
(b) Additional loan funds. In complying with Sec. 4287.134(e) of
this chapter, loans to provide additional funds in connection with a
transfer and assumption must be considered as a new loan application
under Sec. 4280.137.
Sec. Sec. 4280.153-4280.164 [Reserved]
Combined Funding for Renewable Energy Systems and Energy Efficiency
Improvements
Sec. 4280.165 Combined funding for Renewable Energy Systems and
Energy Efficiency Improvements.
The requirements for a RES or EEI project for which an Applicant is
seeking a combined grant and guaranteed loan are specified in this
section.
(a) Eligibility. All Applicants must be eligible under the
requirements
[[Page 22086]]
specified in Sec. 4280.109. If the Applicant is seeking a grant, the
Applicant must also meet the Applicant eligibility requirements
specified in Sec. 4280.112. If the Applicant is seeking a loan, the
Applicant must also meet the borrower eligibility requirements
specified in Sec. 4280.127. Projects must meet the project eligibility
requirements specified in Sec. Sec. 4280.113 and 4280.128, as
applicable.
(b) Funding. Funding provided under this section is subject to the
limits described in paragraphs (b)(1) and (b)(2) of this section.
(1) The amount of any combined grant and guaranteed loan shall not
exceed 75 percent of total Eligible Project Costs and the grant portion
shall not exceed 25 percent of total Eligible Project Costs. For
purposes of combined funding requests, total Eligible Project Costs are
based on the total costs associated with those items specified in
Sec. Sec. 4280.115(c) and 4280.129(e). The Applicant must provide the
remaining total funds needed to complete the project.
(2) The minimum combined funding request allowed is $5,000, with
the grant portion of the funding request being at least $1,500 for EEI
projects and at least $2,500 for RES projects.
(c) Application and documentation. When applying for combined
funding, the Applicant must submit separate applications for both types
of assistance (grant and guaranteed loan). The separate applications
must be submitted simultaneously by the lender.
(1) Each application must meet the requirements, including the
requisite forms and certifications, specified in Sec. Sec. 4280.117,
4280.118, 4280.119, and 4280.137, as applicable, and as follows:
(i) Notwithstanding Form RD 4279-1, the SAM number and its
expiration date must be provided prior to obligation of funds;
(ii) A combined funding request for a guaranteed loan greater than
$600,000 must contain the information specified in Sec. 4280.137(b)(1)
and (2); and
(iii) A combined funding request for a guaranteed loan of $600,000
or less must contain the information specified in Sec. 4280.137(c)(1)
and (c)(2).
(2) Where both the grant application and the guaranteed loan
application provisions request the same documentation, form, or
certification, such documentation, form, or certification may be
submitted once; that is, the combined application does not need to
contain duplicate documentation, forms, and certifications.
(d) Evaluation. The Agency will evaluate each application according
to Sec. 4280.116(c). The Agency will select applications according to
applicable procedures specified in Sec. 4280.121 unless modified by
this section. A combination loan and grant request will be selected
based upon the grant score of the project.
(e) Interest rate and terms of loan. The interest rate and terms of
the guaranteed loan for the loan portion of the combined funding
request will be determined based on the procedures specified in
Sec. Sec. 4279.125 and 4279.126 of this chapter for guaranteed loans.
(f) Other provisions. In addition to the requirements specified in
paragraphs (a) through (e) of this section, the combined funding
request is subject to the other requirements specified in this subpart,
including, but not limited to, processing and servicing requirements,
as applicable, as described in paragraphs (f)(1) through (f)(6) of this
section.
(1) All other provisions of Sec. Sec. 4280.101 through 4280.111
apply to the combined funding request.
(2) All other provisions of Sec. Sec. 4280.112 through 4280.123
apply to the grant portion of the combined funding request and Sec.
4280.124 applies if the project for which the grant is sought has a
Total Project Cost over $200,000.
(3) All other provisions of Sec. Sec. 4280.125 through 4280.152
apply to the guaranteed loan portion of the combined funding request.
(4) All guarantee loan and grant combination applications that are
ranked, but not funded, will be processed in accordance with provisions
found in Sec. 4280.121(d), (e), and (f).
(5) Applicants whose combination applications are approved for
funding must utilize both the loan and the grant. The guaranteed loan
will be closed prior to grant funds being disbursed. The Agency
reserves the right to reduce the total loan guarantee and grant award
as appropriate.
(6) Compliance reviews will be conducted on a combined grant and
guaranteed loan request. The compliance review will encompass the
entire operation, program, or activity to be funded with Agency
assistance.
Sec. Sec. 4280.166-4280.168 [Reserved]
Renewable Energy System Feasibility Study Grants
Sec. 4280.169 General provisions.
Grants for Feasibility Studies must be for specific Renewable
Energy Systems that meet the project eligibility criteria specified for
RES projects under this subpart. Applications for industry-level
feasibility studies, also known as feasibility study templates or
guides, are not eligible because the assistance is not provided to a
specific project. In addition, any application in which the Applicant
proposes to conduct any portion of the Feasibility Study is not
eligible. The Feasibility Study completed for the proposed RES project
must conform to Appendix D of this subpart.
Sec. 4280.170 Applicant eligibility.
To be eligible for a RES Feasibility Study grant under this
subpart, the Applicant must meet the criteria specified in paragraphs
(a) through (d) of this section.
(a) The Applicant must be an Agricultural Producer or a Rural Small
Business;
(b) The Applicant must be the prospective owner of the Renewable
Energy System for which the Feasibility Study grant is sought and must
be the prospective owner or controller of the site for the useful life
of the property on which said Renewable Energy System would be placed;
and
(c) The Applicant must have the legal authority necessary to apply
for and carry out the purpose of the grant.
(d) Unless exempt under 2 CFR 25.110, the Applicant must
(1) Be registered in the SAM prior to submitting an application or
plan;
(2) Maintain an active SAM registration with current information at
all times during which it has an active Federal award or an application
or plan under consideration by the Agency; and
(3) Provide its DUNS number in each application or plan it submits
to the Agency.
Sec. 4280.171 Eligibility of RES projects for Feasibility Study
grants.
Only RES projects that meet the requirements specified in this
section are eligible for Feasibility Study grants under this subpart.
The RES project for which the Feasibility Study grant is sought shall
meet the requirements specified in paragraphs (a) through (e) of this
section.
(a) Be for a project as described in Sec. 4280.113 (a)(1) through
(a)(3) and (a)(4)(i) or Sec. 4280.128.
(b) Be for a project located in a Rural Area if the Applicant is a
Rural Small Business, or in a Rural or non-Rural Area if the Applicant
is an Agricultural Producer. If the Agricultural Producer's operation
is in a non-Rural Area, then the Feasibility Study can only be for a
Renewable Energy System on integral components of or directly related
to the Agricultural Producer's operation, such as vertically integrated
operations, and are part of and co-located with the agricultural
production operation.
[[Page 22087]]
(c) Be for technology that is Commercially Available, and that is
replicable.
(d) Not have had a Feasibility Study already completed for it with
Federal and/or State assistance.
(e) The project must be located in the same State where the
Applicant has a place of business.
(f) The Applicant is cautioned against taking any actions or
incurring any obligations prior to the Agency completing the
environmental review that would either limit the range of alternatives
to be considered or that would have an adverse effect on the
environment, such as the initiation of construction. If the Applicant
takes any such actions or incurs any such obligations, it could result
in project ineligibility.
Sec. 4280.172 [Reserved]
Sec. 4280.173 Grant funding for RES Feasibility Studies.
(a) Maximum grant amount. The maximum amount of grant funds that
will be made available for an eligible RES Feasibility Study project
under this subpart to any one recipient will not exceed $100,000 or 25
percent of the total Eligible Project Cost of the study, whichever is
less. Eligible Project Costs are specified in paragraph (b) of this
section.
(b) Eligible Project Costs. Only those costs incurred after the
date a Complete Application has been received by the Agency will be
considered eligible. Eligible Project Costs for RES Feasibility Studies
must be specific to the completion of the Feasibility Study and can
include, but are not limited to, the items listed in paragraphs (b)(1)
and (b)(2) of this section.
(1) Payment of services to Qualified Consultant(s) to perform the
necessary evaluations needed for the Feasibility Study and to complete
the Feasibility Study.
(2) Other studies or assessments to evaluate the economic,
technical, market, financial, and management feasibility of the
Renewable Energy System that are needed to complete the Feasibility
Study (e.g., resource assessment, transmission study, or environmental
study).
(c) Ineligible project costs. Ineligible project costs for RES
Feasibility Studies include, but are not limited to:
(1) Costs associated with selection of engineering, architectural,
or environmental services;
(2) Designing, bidding, or contract development for the proposed
project;
(3) Permitting and other licensing costs required to construct the
project;
(4) Payment of any judgment or debt owed to the United States.
(5) Any goods or services provided by a person or entity who has a
conflict of interest as provided in Sec. 4280.106;
(6) Any costs of preparing the application package for funding
under this subpart; and
(7) Funding of political or lobbying activities.
Sec. Sec. 4280.174-4280.175 [Reserved]
Sec. 4280.176 Feasibility Study grant applications--content.
Applications for Feasibility Study grants must contain the
information specified in paragraphs (a) through (n) of this section,
except that Form AD 2106 is optional, and must be presented in the same
order.
(a) Form SF-424.
(b) Form SF-424A, ``Budget Information--Non-Construction Programs''
(as applicable).
(c) Form SF-424B, ``Assurances--Non-Construction Programs'' (as
applicable).
(d) Form SF-424C (as applicable).
(e) Form SF-424D (as applicable).
(f) Form AD 2106. Although this form is optional, if the applicant
has previously submitted the form to the Agency or another Federal
agency, the applicant does not need to resubmit the form.
(g) Form RD 1940-20 (as applicable).
(h) Identify the primary NAICS code applicable to the Applicant's
operation if known or a description of the operation in enough detail
for the Agency to determine the primary NAICS code;
(i) Certification that the Applicant is a legal entity in good
standing (as applicable), and operating in accordance with the laws of
the state(s) where the Applicant has a place of business.
(j) The Applicant must identify whether or not the Applicant has a
known relationship or association with an Agency employee. If there is
a known relationship, the Applicant must identify each Agency employee
with whom the Applicant has a known relationship.
(k) A proposed scope of work, which includes:
(1) A brief description of the proposed Renewable Energy System
that the Feasibility Study will evaluate;
(2) The timeframe for completion of the Feasibility Study;
(3) The experience of the Qualified Consultant completing the
Feasibility Study, including the number of similar Feasibility Studies
the Qualified Consultant has performed, the number of years the
Qualified Consultant has been performing a similar service, and
corresponding resumes; and
(4) The identification of the amount and source of Matching Funds
the Applicant is proposing to use for the proposed Feasibility Study
and the amount of funds for which the Applicant has received written
commitments at the time the application is submitted. Include
documentation verifying the written commitment(s) that the Applicant
has received from its Matching Funding sources;
(l) A certification that the Applicant has not received any other
Federal or State assistance for a Feasibility Study for the subject
Renewable Energy System.
(m) If the Applicant is a Rural Small Business, certification that
the Feasibility Study grant will be for a RES project that is located
in a Rural Area.
(n) A certification providing:
(1) For Rural Small Businesses, the total Annual Receipts for the
past 3 years and number of employees of the business and any parent,
subsidiary or affiliates at other locations for Rural Small Businesses.
If the Rural Small Business Applicant has not engaged in business
operations for the past 3 years, than information for as long as the
Rural Small Business Applicant has been in business must be submitted.
New businesses that do not have any Annual Receipts must provide
projections based upon a typical operating year for a 2-year time
period; or
(2) For Agricultural Producers, the gross market value of the
Applicant's agricultural products, gross agricultural income of the
Applicant, and gross nonfarm income of the Applicant for the calendar
year preceding the year in which the application is being submitted.
Sec. 4280.177 Evaluation of Feasibility Study grant applications.
Section 4280.116(c) applies to this subpart, except for Sec.
4280.116(c)(4).
Sec. 4280.178 Scoring Feasibility Study grant applications.
The Agency will score each Feasibility Study application based on
the evaluation criteria specified in paragraphs (a) through (f) of this
section, with a maximum score of 100 points possible.
(a) Commitment of funds for the RES Feasibility Study. A maximum of
25 points will be awarded based on the level of written commitment an
Applicant has from its Matching Funds source(s) that are documented
with a Complete Application. If the Applicant has written commitments
from the source(s) confirming commitment of:
[[Page 22088]]
(1) 100 percent of the Matching Funds, 25 points will be awarded.
(2) 75 percent up to but not including 100 percent of the Matching
Funds, 10 points will be awarded.
(3) 50 percent up to but not including 75 percent of the Matching
Funds, 5 points will be awarded.
(4) Less than 50 percent, no points will be awarded.
(b) Size of Agricultural Producer or Rural Small Business.
Applicants will be awarded points under this criterion based on
Applicant size compared to the SBA Small Business size standards
categorized by the NAICS codes found in 13 CFR 121.201. A maximum of 10
points will be awarded under this criterion. For Applicants that are:
(1) One-third or less of the maximum size standard identified by
SBA, 10 points will be awarded.
(2) Greater than one-third up to and including two-thirds of the
maximum size standard identified by SBA, 5 points will be awarded.
(3) Larger than two-thirds of the maximum size standard identified
by SBA, no points will be awarded. For example, most agricultural
production NAICS codes are limited to $750,000 in Annual Receipts. An
Agricultural Producer within one of the agricultural production NAICS
codes with Annual Receipts of $250,000 or less would be awarded 10
points, while an Agricultural Producer with Annual Receipts of more
than $250,000 Annual Receipts up to and including $500,000, would be
awarded 5 points.
(c) Experience with the proposed technology of the Qualified
Consultant identified to perform the RES Feasibility Study. A maximum
of 25 points can be awarded under this section. If the entity's
experience in the field of study for the technology being proposed is:
(1) 10 or more years, 25 points will be awarded.
(2) 5 or more years, but less than 10 years, 20 points will be
awarded.
(3) 2 or more years, but less than 5 years, 10 points will be
awarded.
(4) Less than 2 years, no points will be awarded.
(d) Size of RES Feasibility Study grant request. A maximum of 20
points can be awarded under this criterion. If the grant request is:
(1) $20,000 or less, 20 points will be awarded.
(2) Greater than $20,000 up to and including $50,000, 10 points
will be awarded.
(3) Greater than $50,000, no points will be awarded.
(e) Resources to implement project. Points will be awarded under
this criterion depending on whether the RES project for which the
Applicant is seeking to conduct a Feasibility Study qualifies for local
or State program assistance for the construction of the proposed RES
project or, once it has been constructed, for its operation. Points can
be awarded for both types of assistance, for a maximum of 10 points.
(1) If the Applicant has identified local programs, 5 points will
be awarded.
(2) If the Applicant has identified State programs, 5 points will
be awarded.
(f) Previous grantees and borrowers. Points under this scoring
criterion will be awarded based on whether the Applicant has received a
grant or guaranteed loan under this subpart. A maximum of 10 points
will be awarded.
(1) If the Applicant has never received a grant and/or guaranteed
loan under this subpart, 10 points will be awarded.
(2) If the Applicant has not received a grant and/or guaranteed
loan under this subpart within the 2 previous Federal Fiscal Years, 5
points will be awarded.
Sec. 4280.179 Selecting Feasibility Study grant applications for
award.
(a) Application competitions. Complete RES Feasibility Study grant
applications will be competed against each other twice each calendar
year. Complete RES Feasibility Study grant applications received by the
Agency by 4:30 p.m. local time on November 30 will be competed against
each other. Complete RES Feasibility Study grant applications received
by the Agency by 4:30 p.m. local time on May 31, including any Complete
Applications competed in the November 30 competition, but that were not
funded, will be competed against each other. If November 30 or May 31
falls on a weekend or a Federally-observed holiday, the next Federal
business day will be considered the last day for receipt of a Complete
Application.
(b) Ranking of applications. Complete applications will be
evaluated, processed, and subsequently ranked, and will compete for
funding, subject to the availability of grant funding, as described in
paragraph (a) of this section. Higher scoring applications will receive
first consideration.
(c) Funding selected applications. As applications are funded, if
insufficient funds remain to fund the next highest scoring application,
the Agency may elect to fund a lower scoring application. Before this
occurs, the Administrator will provide the Applicant of the higher
scoring application the opportunity to reduce the amount of the
Applicant's grant request to the amount of funds available. If the
Applicant agrees to lower its grant request, the Applicant must certify
that the purposes of the project will be met and provide the remaining
total funds needed to complete the project. At its discretion, the
Agency may also elect to allow any remaining multi-year funds to be
carried over to the next fiscal year rather than selecting a lower
scoring application.
(d) Disposition of ranked applications not funded. Based on the
availability of funding, a ranked application might not be funded in
the first semiannual competition for which it is eligible. All
applications not selected for funding will be retained by the Agency
for consideration in the next subsequent semiannual competition. The
Agency will discontinue considering the application for potential
funding after the application has competed in a total of two semiannual
competitions.
(e) Commencement of the project. The Applicant assumes all risks if
the choice is made to purchase the technology proposed or start
construction of the project to be financed in the grant application
after the Complete Application has been received by the Agency.
Sec. 4280.180 [Reserved]
Sec. 4280.181 Awarding and administering Feasibility Study grants.
The Agency will award and administer RES Feasibility Study grants
in accordance with Departmental Regulations and with the procedures and
requirements specified in Sec. 4280.122, except as specified in
paragraphs (a) and (b) of this section.
(a) The insurance specified in Sec. 4280.122(b) does not apply,
unless equipment is purchased.
(b) The Power Purchase Agreement specified in Sec. 4280.122(h)
does not apply.
Sec. 4280.182 Servicing Feasibility Study grants.
The Agency will service RES Feasibility Study grants in accordance
with the requirements specified in Departmental Regulations; 7 CFR part
1951, subparts E and O; the Grant Agreement; and the requirements in
Sec. 4280.123 except as specified in paragraph (a) through (c) of this
section.
(a) Grant disbursement. RES Feasibility Study grant funds will be
expended on a pro rata basis with Matching Funds.
(1) Form SF-270, ``Request for Advance or Reimbursement,'' or other
format prescribed by the Agency shall be used to request grant
reimbursements.
[[Page 22089]]
(2) RES Feasibility Study grant funds will be disbursed in
accordance with the above through 90 percent of grant disbursement. The
final 10 percent of grant funds will be held by the Agency until a
Feasibility study acceptable to the Agency has been submitted.
(b) Final deliverables. Upon completion of the Feasibility Study,
the grantee shall submit the following to the Agency:
(1) A Feasibility Study acceptable to the Agency; and
(2) Form SF-270.
(c) Outcome project performance reports. Beginning the first full
year after the Feasibility Study has been completed, grantees must
report annually for 2 years on the following:
(1) Is the RES project for which the Feasibility Study was
conducted underway? If ``yes,'' describe how far along the RES project
is (e.g., financing has been secured, site has been secured,
construction contracts are in place, project is completed). If ``no,''
discuss why the RES project is not underway.
(2) Is the RES project complete? If so, what is the actual amount
of energy being produced?
Sec. Sec. 4280.183-4280.185 [Reserved]
Energy Audit (EA) and Renewable Energy Development Assistance (REDA)
Grants
Sec. 4280.186 Applicant eligibility.
To be eligible for an EA grant or a REDA grant under this subpart,
the Applicant must meet each of the criteria, as applicable, specified
in paragraphs (a) through (d) of this section. The Agency will
determine an Applicant's eligibility.
(a) The Applicant must be one of the following:
(1) A unit of State, Tribal, or local government;
(2) A land-grant college or university, or other Institution of
Higher Education;
(3) A rural electric cooperative;
(4) A Public Power Entity; or
(5) An Instrumentality of a State, Tribal, or local government.
(b) The Applicant must have sufficient capacity to perform the EA
or REDA activities proposed in the application to ensure success. The
Agency will make this assessment based on the information provided in
the application.
(c) The Applicant must have the legal authority necessary to apply
for and carry out the purpose of the grant.
(d) Unless exempt under 2 CFR 25.110, the Applicant must:
(1) Be registered in the SAM prior to submitting an application or
plan;
(2) Maintain an active SAM registration with current information at
all times during which it has an active Federal award or an application
or plan under consideration by the Agency; and
(3) Provide its DUNS number in each application or plan it submits
to the Agency. Generally, the DUNS number is included on Standard Form-
424.
Sec. 4280.187 Project eligibility.
To be eligible for an EA or a REDA grant, the grant funds for a
project must be used by the grantee to assist Agricultural Producers or
Rural Small Businesses in one or both of the purposes specified in
paragraphs (a) and (b) of this section, and must also comply with
paragraphs (c) through (f) of this section.
(a) Conducting and promoting Energy Audits.
(b) Conducting and promoting Renewable Energy Development
Assistance by providing to Agricultural Producers and Rural Small
Businesses recommendations and information on how to improve the energy
efficiency of their operations and to use Renewable Energy technologies
and resources in their operations.
(c) Energy Audit and Renewable Energy Development Assistance can be
provided only to a project located in a Rural Area unless the grantee
of such project is an Agricultural Producer. If the project is owned by
an Agricultural Producer, the project for which such services are being
provided may be located in either a Rural or non-Rural Area. If the
Agricultural Producer's project is in a non-Rural Area, then the Energy
Audit or Renewable Energy Development Assistance can only be for a
Renewable Energy System or Energy Efficiency Improvement on integral
components of or directly related to the Agricultural Producer's
project, such as vertically integrated operations, and are part of and
co-located with the agricultural production operation.
(d) The Energy Audit or Renewable Energy Development Assistance
must be provided to a recipient in a State.
(e) The Applicant must have a place of business in a State.
(f) The Applicant is cautioned against taking any actions or
incurring any obligations prior to the Agency completing the
environmental review that would either limit the range of alternatives
to be considered or that would have an adverse effect on the
environment, such as the initiation of construction. If the Applicant
takes any such actions or incurs any such obligations, it could result
in project ineligibility.
Sec. 4280.188 Grant funding for Energy Audit and Renewable Energy
Development Assistance.
(a) Maximum grant amount. The maximum aggregate amount of EA and
REDA grants awarded to any one recipient under this subpart cannot
exceed $100,000. Grant funds awarded for EA and REDA projects may be
used only to pay Eligible Project Costs, as described in paragraph (b)
of this section. Ineligible project costs are listed in paragraph (c)
of this section.
(b) Eligible Project Costs. Eligible Project Costs for Energy
Audits and Renewable Energy Development Assistance are those costs
incurred after the date a Complete Application has been received by the
Agency and that are directly related to conducting and promoting Energy
Audits and Renewable Energy Development Assistance, which include but
are not limited to:
(1) Salaries;
(2) Travel expenses;
(3) Office supplies (e.g., paper, pens, file folders); and
(4) Expenses charged as a direct cost or as an indirect cost of up
to a maximum of 5 percent for administering the grant.
(c) Ineligible project costs. Ineligible project costs for EA and
REDA grants include, but are not limited to:
(1) Payment for any construction-related activities;
(2) Purchase or lease of equipment;
(3) Payment of any judgment or debt owed to the United States;
(4) Any goods or services provided by a person or entity who has a
conflict of interest as provided in Sec. 4280.106;
(5) Any costs of preparing the application package for funding
under this subpart; and
(6) Funding of political or lobbying activities.
(d) Energy Audits. A grantee that conducts an Energy Audit must
require that, as a condition of providing the Energy Audit, the
Agricultural Producer or Rural Small Business pay at least 25 percent
of the cost of the Energy Audit. Further, the amount paid by the
Agricultural Producer or Rural Small Business will be retained by the
grantee as a contribution towards the cost of the Energy Audit and
considered program income. The grantee may use the program income to
further the objectives of their project or EA services offered during
the grant period in accordance with Departmental Regulations.
[[Page 22090]]
Sec. 4280.189 [Reserved]
Sec. 4280.190 EA and REDA grant applications--content.
(a) Unless otherwise specified in a Federal Register notice,
Applicants may only submit one EA grant application and one REDA grant
application each Federal Fiscal Year. No combination (Energy Audit and
Renewable Energy Development Assistance) applications will be accepted.
(b) Applicants must submit Complete Applications consisting of the
elements specified in paragraphs (b)(1) through (b)(7) of this section,
except that Form AD 2106 is optional.
(1) Form SF-424.
(2) Form SF-424A.
(3) Form SF-424B.
(4) Form AD 2106. Although this form is optional, if the applicant
has previously submitted the form to the Agency or another Federal
agency, the applicant does not need to resubmit the form.
(5) Certification that the Applicant is a legal entity in good
standing (as applicable), and operating in accordance with the laws of
the State(s) or Tribe where the Applicant has a place of business.
(6) The Applicant must identify whether or not the Applicant has a
known relationship or association with an Agency employee. If there is
a known relationship, the Applicant must identify each Agency employee
with whom the Applicant has a known relationship.
(7) A proposed scope of work to include the following items:
(i) A brief summary including a project title describing the
proposed project;
(ii) Goals of the proposed project;
(iii) Geographic scope or service area of the proposed project and
the method and rationale used to select the service area;
(iv) Identification of the specific needs for the service area and
the target audience to be served. The number of Agricultural Producers
and/or Rural Small Businesses to be served shall be identified
including name and contact information, if available, as well as the
method and rationale used to select the Agricultural Producers and/or
Rural Small Businesses;
(v) Timeline describing the proposed tasks to be accomplished and
the schedule for implementation of each task. Include whether
organizational staff, consultants, or contractors will be used to
perform each task. If a project is located in multiple states,
resources must be sufficient to complete all projects;
(vi) Marketing strategies to include a discussion on how the
Applicant will be marketing and providing outreach activities to the
proposed service area ensuring that Agricultural Producers and/or Rural
Small Businesses are served;
(vii) Applicant's experience as follows:
(A) If applying for a REDA grant, the Applicant's experience in
completing similar REDA activities, including the number of similar
projects the Applicant has performed and the number of years the
Applicant has been performing a similar service.
(B) If applying for an EA grant, the number of Energy Audits and
Energy Assessments the Applicant has completed and the number of years
the Applicant has been performing those services;
(C) For all Applicants, the amount of experience in administering
EA, REDA, or similar activities as applicable to the purpose of the
proposed project. Provide discussion if the Applicant has any existing
programs that can demonstrate the achievement of energy savings or
energy generation with the Agricultural Producers and/or Rural Small
Businesses the Applicant has served. If the Applicant has received one
or more awards within the last 5 years in recognition of its renewable
energy, energy savings, or energy-based technical assistance, please
describe the achievement; and
(viii) Identify the amount of Matching Funds and the source(s) the
Applicant is proposing to use for the project. Provide written
commitments for Matching Funds at the time the application is
submitted.
Sec. 4280.191 Evaluation of EA and REDA grant applications.
Section 4280.116(c) applies to EA and REDA grants, except for Sec.
4280.116(c)(4).
Sec. 4280.192 Scoring EA and REDA grant applications.
The Agency will score each EA and REDA application using the
criteria specified in paragraphs (a) through (f) of this section, with
a maximum score of 100 points possible.
(a) Applicant's organizational experience in completing the EA or
REDA proposed activity. The Applicant will be scored based on the
experience of the organization in providing Energy Audits or Renewable
Energy Development Assistance as applicable to the purpose of the
proposed project. The organization must have been in business and
provided services for the number of years as identified in the
paragraphs below. A maximum of 25 points can be awarded.
(1) More than 10 years of experience, 25 points will be awarded.
(2) At least 5 years and up to and including 10 years of
experience, 20 points will be awarded.
(3) At least 2 years and up to and including 5 years of experience,
10 points will be awarded.
(4) Less than 2 years of experience, no points will be awarded.
(b) Geographic scope of project in relation to identified need. A
maximum of 20 points can be awarded.
(1) If the Applicant's proposed or existing service area is State-
wide or includes all or parts of multiple states, and the scope of work
has identified needs throughout that service area, 20 points will be
awarded.
(2) If the Applicant's proposed or existing service area consists
of multiple counties in a single State and the scope of work has
identified needs throughout that service area, 15 points will be
awarded.
(3) If the Applicant's service area consists of a single county or
municipality and the scope of work has identified needs throughout that
service area, 10 points will be awarded.
(c) Number of Agricultural Producers/Rural Small Businesses to be
served. Applicants will be awarded points based on the proposed number
of ultimate recipients to be assisted and if the Applicant can identify
an actual list of ultimate recipients to be assisted. A maximum of 20
points can be awarded.
(1) If the Applicant plans to provide Energy Audits or Renewable
Energy Development Assistance to:
(i) Up to 10 ultimate recipients, 2 points will be awarded.
(ii) Between 11 and up to and including 25 ultimate recipients, 5
points will be awarded.
(iii) More than 25 ultimate recipients, 10 points will be awarded.
(2) If the Applicant provides a list of ultimate recipients,
including their name and contact information, that are ready to be
assisted, an additional 10 points may be awarded.
(d) Potential of project to produce energy savings or generation
and its attending environmental benefits. Applicants can be awarded
points under both paragraphs (d)(1) and (d)(2) of this section. A
maximum of 10 points can be awarded.
(1) If the Applicant has an existing program that can demonstrate
the achievement of energy savings or energy generation with the
Agricultural Producers and/or Rural Small Businesses it has served, 5
points will be awarded.
[[Page 22091]]
(2) If the Applicant provides evidence that it has received one or
more awards within the last 5 years in recognition of its renewable
energy, energy savings, or energy-based technical assistance, up to a
maximum of 5 points will be awarded as follows:
(i) International/national--3 points for each.
(ii) Regional/state--2 points for each.
(iii) Local--1 point for each.
(e) Marketing and outreach plan. If the scope of work included in
the application provides a satisfactory discussion of each of the
following criteria, one point for each (a maximum of 5 points) can be
awarded.
(1) The goals of the project;
(2) Identified need;
(3) Targeted ultimate recipients;
(4) Timeline and action plan; and
(5) Marketing and outreach strategies and supporting data for
strategies.
(f) Commitment of Matching Funds for the Total Project Cost. In
order to receive points under this criterion, written documentation
from each source providing Matching Funds is required when the
application is submitted. A maximum of 20 points can be awarded.
(1) If the Applicant proposes to match 50 percent or more of the
grant funds requested, 20 points will be awarded.
(2) If the Applicant proposes to match 20 percent or more but less
than 50 percent of the grant funds requested, 15 points will be
awarded.
(3) If the Applicant proposes to match 5 percent or more but less
than 20 percent of the grant funds requested, 10 points will be
awarded.
(4) If the Applicant proposes to match less than 5 percent of the
grant funds requested, no points will be awarded.
Sec. 4280.193 Selecting EA and REDA grant applications for award.
(a) Application competition. Complete EA and REDA applications
received by the Agency by 4:30 p.m. local time on January 31 will be
competed against each other. If January 31 falls on a weekend or a
Federally-observed holiday, the next Federal business day will be
considered the last day for receipt of a Complete Application. Unless
otherwise specified in a Federal Register notice, the two highest
scoring applications from each State, based on the scoring criteria
established under Sec. 4280.192, will compete for funding.
(b) Ranking of applications. All applications submitted to the
National Office under paragraph (a) of this section will be ranked in
priority score order. All applications that are ranked will be
considered for selection for funding.
(c) Selection of applications for funding. Using the ranking
created under paragraph (a) of this section, the Agency will consider
the score an application has received compared to the scores of other
ranked applications, with higher scoring applications receiving first
consideration for funding. If two or more applications score the same
and if remaining funds are insufficient to fund each such application,
the Agency will distribute the remaining funds to each such application
on a pro-rata basis. At its discretion, the Agency may also elect to
allow any remaining multi-year funds to be carried over to the next
fiscal year rather than funding on a pro-rata basis.
(d) Disposition of ranked applications not funded. Based on the
availability of funding, a ranked application submitted for EA and/or
REDA funds may not be funded. Such ranked applications will not be
carried forward into the next Federal Fiscal Year's competition.
Sec. 4280.194 [Reserved]
Sec. 4280.195 Awarding and administering EA and REDA grants.
The Agency will award and administer EA and REDA grants in
accordance with Departmental Regulations and with the procedures and
requirements specified in Sec. 4280.122, except as specified in
paragraphs (a) through (c) of this section.
(a) Instead of complying with Sec. 4280.122(b), the grantee must
provide satisfactory evidence to the Agency that all officers of
grantee organization authorized to receive and/or disburse Federal
funds are covered by such bonding and/or insurance requirements as are
normally required by the grantee.
(b) Form RD 400-1 specified in Sec. 4280.122(c)(6) is not
required.
(c) The Power Purchase Agreement specified in Sec. 4280.122(h) is
not required.
Sec. 4280.196 Servicing EA and REDA grants.
The Agency will service EA and REDA grants in accordance with the
requirements specified in Departmental Regulations, the Grant
Agreement, 7 CFR part 1951, subparts E and O, and the requirements in
Sec. 4280.123, except as specified in paragraphs (a) through (d) of
this section.
(a) Grant disbursement. The Agency will determine, based on the
applicable Departmental Regulations, whether disbursement of a grant
will be by advance or reimbursement. Form SF-270 must be completed by
the grantee and submitted to the Agency no more often than monthly to
request either advance or reimbursement of funds.
(b) Semiannual performance reports. Project performance reports
shall include, but not be limited to, the following:
(1) A comparison of actual accomplishments to the objectives
established for that period (e.g., the number of Energy Audits
performed, number of recipients assisted and the type of assistance
provided for Renewable Energy Development Assistance);
(2) A list of recipients, each recipient's location, and each
recipient's NAICS code;
(3) Problems, delays, or adverse conditions, if any, that have in
the past or will in the future affect attainment of overall project
objectives, prevent meeting time schedules or objectives, or preclude
the attainment of particular project work elements during established
time periods. This disclosure shall be accompanied by a statement of
the action taken or planned to resolve the situation;
(4) Objectives and timetable established for the next reporting
period.
(c) Final performance report. A final performance report will be
required with the final Federal financial report within 90 days after
project completion. The final performance report must contain the
information specified in paragraphs (c)(2)(i) or (c)(2)(ii), as
applicable, of this section.
(1) For EA projects, the final performance report must provide
complete information regarding:
(i) The number of audits conducted,
(ii) A list of recipients (Agricultural Producers and Rural Small
Businesses) with each recipient's NAICS code,
(iii) The location of each recipient,
(iv) The cost of each audit and documentation showing that the
recipient of the Energy Audit provided 25 percent of the cost of the
audit, and
(v) The expected energy saved for each audit conducted if the audit
is implemented.
(2) For REDA projects, the final performance report must provide
complete information regarding:
(i) The number of recipients assisted and the type of assistance
provided,
(ii) A list of recipients with each recipient's NAICS code,
(iii) The location of each recipient, and
(iv) The expected Renewable Energy that would be generated if the
projects were implemented.
(d) Outcome project performance report. One year after submittal of
the final performance report, the grantee will provide the Agency a
final status report on the number of projects that are proceeding with
the grantee's recommendations, including the
[[Page 22092]]
amount of energy saved and the amount of Renewable Energy generated, as
applicable.
Sec. Sec. 4280.197-4280.200. [Reserved]
Appendix A to Part 4280--Technical Report for Energy Efficiency
Improvement Projects
For all Energy Efficiency Improvement (EEI) projects with Total
Project Costs of more than $80,000, provide the information
specified in Sections A and D and in Section B or Section C, as
applicable. If the application is for an EEI project with Total
Project Costs of $80,000 or less, please see Sec. 4280.119(b)(3)
for the technical report information to be submitted with your
application.
If the application is for an EEI project with Total Project
Costs of more than $200,000, you must conduct an Energy Audit.
However, if the application is for an EEI project with a Total
Project Costs of $200,000 or less, you may conduct either an Energy
Assessment or an Energy Audit.
Section A--Project information. Describe how all the
improvements to or replacement of an existing building and/or
equipment meet the requirements of being Commercially Available.
Describe how the design, engineering, testing, and monitoring are
sufficient to demonstrate that the proposed project will meet its
intended purpose, ensure public safety, and comply with applicable
laws, regulations, agreements, permits, codes, and standards.
Describe how all equipment required for the Energy Efficiency
Improvement(s) is available and able to be procured and delivered
within the proposed project development schedule. In addition,
present information regarding component warranties and the
availability of spare parts.
Section B--Energy Audit. If conducting an Energy Audit, provide
the following information.
(1) Situation report. Provide a narrative description of the
existing building and/or equipment, its energy system(s) and usage,
and activity profile. Also include average price per unit of energy
(electricity, natural gas, propane, fuel oil, renewable energy,
etc.) paid by the customer for the most recent 36 months or, if in
operation less than 36 months, the length of ownership for the
building and equipment being audited. Any energy conversion should
be based on use rather than source.
(2) Potential improvement description. Provide a narrative
summary of the potential improvement and its ability to reduce
energy consumption or improve energy efficiency, including a
discussion of reliability and durability of the improvements.
(i) Provide preliminary specifications for critical components.
(ii) Provide preliminary drawings of project layout, including
any related structural changes.
(iii) Identify significant changes in future related operations
and maintenance costs.
(iv) Describe explicitly how outcomes will be measured.
(3) Technical analysis. Give consideration to the interactions
among the potential improvements and the current energy system(s).
(i) For the most recent 36 months, or the length of ownership if
in operation for less than 36 months, prior to the date the
application is submitted, provide both the total amount and the
total cost of energy used for the original building and/or
equipment, as applicable, for each improvement identified in the
potential project. In addition, provide for each improvement
identified in the potential project an estimate of the total amount
of energy that would have been used and the total cost that would
have been incurred if the proposed project was in operation for this
same time period.
(ii) Calculate all direct and attendant indirect costs of each
improvement; and
(iii) Rank potential improvements measures by cost-
effectiveness.
(4) Qualifications of the auditor. Provide the qualifications of
the individual or entity which completed the audit.
Section C--Energy Assessment. If conducting an Energy
Assessment, provide the following information.
(1) Situation report. Provide a narrative description of the
existing building and/or equipment, its energy system(s) and usage,
and activity profile. Also include average price per unit of energy
(electricity, natural gas, propane, fuel oil, renewable energy,
etc.) paid by the customer for the most recent 36 months or, if in
operation less than 36 months, the length of ownership for the
building and equipment being evaluated. Any energy conversion shall
be based on use rather than source.
(2) Potential improvement description. Provide a narrative
summary of the potential improvement and its ability to reduce
energy consumption or improve energy efficiency.
(3) Technical analysis. Giving consideration to the interactions
among the potential improvements and the current energy system(s),
provide the information specified in paragraphs (3)(i) through
(3)(iii) of this section.
(i) For the most recent 36 months, or the length of ownership if
in operation for less than 36 months, prior to the date the
application is submitted, provide both the total amount and the
total cost of energy used for the original building and/or
equipment, as applicable, for each improvement identified in the
potential project. In addition, provide for each improvement
identified in the potential project an estimate of the total amount
of energy that would have been used and the total cost that would
have been incurred if the proposed project was in operation for this
same time period.
(ii) Document baseline data compared to projected consumption,
together with any explanatory notes on source of the projected
consumption data. When appropriate, show before-and-after data in
terms of consumption per unit of production, time, or area.
(iii) Estimate Simple Payback.
(4) Qualifications of the assessor. Provide the qualifications
of the individual or entity which completed the assessment.
Section D--Qualifications. Provide a resume or other evidence of
the contractor or installer's qualifications and experience with the
proposed energy efficiency improvement technology. Any contractor or
installer with less than 2 years of experience may be required to
provide additional information in order for the Agency to determine
if they are qualified installer/contractor.
Appendix B to Part 4280--Technical Reports for Renewable Energy System
(RES) Projects With Total Project Costs of $200,000 or Less
Provide the information specified in Sections A through D for
each technical report prepared under this appendix. A Renewable
Energy Site Assessment may be used in lieu of Sections A through C
if the Renewable Energy Site Assessment contains the information
requested in Sections A through C. In such instances, the technical
report would consist of Section D and the Renewable Energy Site
Assessment.
Note: If the Total Project Cost for the RES project is $80,000
or less, this appendix does not apply. Instead, for such projects,
please provide the information specified in Sec. 4280.119(b)(4).
Section A--Project description. Provide a description of the
project, including descriptions of the project site and its location
and the quality and availability of the Renewable Energy resource.
Describe how all the major equipment and construction meet the
requirements of being Commercially Available. Identify the amount of
Renewable Energy generated through the deployment of the proposed
system. If applicable, also identify the percentage of energy being
replaced by the system.
If the application is for a Bioenergy Project, provide
documentation that demonstrates that any and all woody biomass
feedstock from National forest system land or public lands cannot be
used as a higher value wood-based product.
If the application is for the installation of equipment and
tanks directly associated with Flexible Fuel Pumps, provide
documentation that demonstrates the availability of Blended Liquid
Transportation Fuel and the demand for that fuel in its service
area.
Section B--Project economic assessment. Describe the projected
financial performance of the proposed project. The description must
address Total Project Costs, energy savings, and revenues, including
applicable investment and other production incentives accruing from
government entities. Revenues to be considered shall accrue from the
sale of energy, offset or savings in energy costs, byproducts, and
green tags. Information must be provided to allow the calculation of
Simple Payback.
Section C--Project construction and equipment information.
Describe how the design, engineering, testing, and monitoring are
sufficient to demonstrate that the proposed project will meet its
intended purpose, ensure public safety, and comply with applicable
laws, regulations, agreements, permits, codes, and standards.
Describe how all equipment required for the Renewable Energy System
is available and able to be procured and delivered within the
proposed project development schedule. In addition, present
information regarding
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component warranties and the availability of spare parts.
Section D--Qualifications of key service providers. Describe the
key service providers, including the number of similar systems
installed and/or manufactured, professional credentials, licenses,
and relevant experience. When specific numbers are not available for
similar systems, estimations will be acceptable.
Appendix C to Part 4280--Technical Reports for Renewable Energy System
Projects With Total Project Costs of Greater than $200,000
Provide the information specified in Sections A through G for
each technical report prepared under this appendix. Provide the
resource assessment under Section C that is applicable to the
project.
Section A--Qualifications of the project team. Describe the
project team, their professional credentials, and relevant
experience. The description shall support that the project team key
service providers have the necessary professional credentials,
licenses, certifications, and relevant experience to develop the
proposed project.
Section B--Agreements and permits. Describe the necessary
agreements and permits (including any for local zoning requirements)
required for the project and the anticipated schedule for securing
those agreements and permits. For example, Interconnection
Agreements and Power Purchase Agreements are necessary for all
renewable energy projects electrically interconnected to the utility
grid.
Section C--Resource assessment. Describe the quality and
availability of the renewable resource and the amount of Renewable
Energy generated through the deployment of the proposed system. For
all Bioenergy Projects, except Anaerobic Digesters, complete Section
C.3. For Anaerobic Digester projects, complete Section C.7.
1. Wind. Provide adequate and appropriate data to demonstrate
the amount of renewable resource available. Indicate the source of
the wind data and the conditions of the wind monitoring when
collected at the site or assumptions made when applying nearby wind
data to the site.
2. Solar. Provide adequate and appropriate data to demonstrate
the amount of renewable resource available. Indicate the source of
the solar data and assumptions.
3. Bioenergy Project. Provide adequate and appropriate data to
demonstrate the amount of renewable resource available. Indicate the
type, quantity, quality, and seasonality of the Renewable Biomass
resource, including harvest and storage, where applicable. Where
applicable, also indicate shipping or receiving method and required
infrastructure for shipping. For proposed projects with an
established resource, provide a summary of the resource. Document
that any and all woody biomass feedstock from National forest system
land or public lands cannot be used as a higher value wood-based
product.
4. Flexible Fuel Pumps. Applications for the installation of
equipment and tanks directly associated with Flexible Fuel Pumps
must document availability of Blended Liquid Transportation Fuel and
the demand for that fuel in its service area.
5. Geothermal Electric Generation. Provide adequate and
appropriate data to demonstrate the amount of renewable resource
available. Indicate the quality of the geothermal resource,
including temperature, flow, and sustainability and what conversion
system is to be installed. Describe any special handling of cooled
geothermal waters that may be necessary. Describe the process for
determining the geothermal resource, including measurement setup for
the collection of the geothermal resource data. For proposed
projects with an established resource, provide a summary of the
resource and the specifications of the measurement setup.
6. Geothermal Direct Generation. Provide adequate and
appropriate data to demonstrate the amount of renewable resource
available. Indicate the quality of the geothermal resource,
including temperature, flow, and sustainability and what direct use
system is to be installed. Describe any special handling of cooled
geothermal waters that may be necessary. Describe the process for
determining the geothermal resource, including measurement setup for
the collection of the geothermal resource data. For proposed
projects with an established resource, provide a summary of the
resource and the specifications of the measurement setup.
7. Anaerobic digester. Provide adequate and appropriate data to
demonstrate the amount of renewable resource available. Indicate the
substrates used as digester inputs, including animal wastes or other
Renewable Biomass in terms of type, quantity, seasonality, and
frequency of collection. Describe any special handling of feedstock
that may be necessary. Describe the process for determining the
feedstock resource. Provide either tabular values or laboratory
analysis of representative samples that include biodegradability
studies to produce gas production estimates for the project on
daily, monthly, and seasonal basis.
8. Hydrogen Project. Provide adequate and appropriate data to
demonstrate the amount of renewable resource available. Indicate the
type, quantity, quality, and seasonality of the Renewable Biomass
resource. For solar, wind, or geothermal sources of energy used to
generate hydrogen, indicate the renewable resource where the
hydrogen system is to be installed. Local resource maps may be used
as an acceptable preliminary source of renewable resource data. For
proposed projects with an established renewable resource, provide a
summary of the resource.
9. Hydroelectric/Ocean Energy projects. Provide adequate and
appropriate data to demonstrate the amount of renewable resource
available. Indicate the quality of the resource, including
temperature (if applicable), flow, and sustainability of the
resource, including a summary of the resource evaluation process and
the specifications of the measurement setup and the date and
duration of the evaluation process and proximity to the proposed
site. If less than 1 year of data is used, a Qualified Consultant
must provide a detailed analysis of the correlation between the site
data and a nearby, long-term measurement site.
Section D--Design and engineering. Describe the intended purpose
of the project and the design, engineering, testing, and monitoring
needed for the proposed project. The description shall support that
the system will be designed, engineered, tested, and monitored so as
to meet its intended purpose, ensure public safety, and comply with
applicable laws, regulations, agreements, permits, codes, and
standards. In addition, identify that all major equipment is
Commercially Available, including proprietary equipment, and justify
how this unique equipment is needed to meet the requirements of the
proposed design. In addition, information regarding component
warranties and the availability of spare parts must be presented.
Section E--Project development. Describe the overall project
development method, including the key project development activities
and the proposed schedule, including proposed dates for each
activity. The description shall identify each significant historical
and projected activity, its beginning and end, and its relationship
to the time needed to initiate and carry the activity through to
successful project completion. The description shall address
Applicant project development cash flow requirements. Details for
equipment procurement and installation shall be addressed in Section
F of this Appendix.
Section F--Equipment procurement and installation. Describe the
availability of the equipment required by the system. The
description shall support that the required equipment is available
and can be procured and delivered within the proposed project
development schedule. Describe the plan for site development and
system installation, including any special equipment requirements.
In all cases, the system or improvement shall be installed in
conformance with manufacturer's specifications and design
requirements, and comply with applicable laws, regulations,
agreements, permits, codes, and standards.
Section G--Operations and maintenance. Describe the operations
and maintenance requirements of the system, including major rebuilds
and component replacements necessary for the system to operate as
designed over its useful life. The warranty shall cover and provide
protection against both breakdown and a degradation of performance.
The performance of the renewable energy system or energy efficiency
improvement shall be monitored and recorded as appropriate to the
specific technology.
Appendix D to Part 4280--Feasibility Study Content
Elements in an acceptable Feasibility Study include, but are not
necessarily limited to, the elements specified in Sections A through
G, as applicable, of this appendix.
Section A. Executive Summary. Provide an introduction and
overview of the project. In the overview, describe the nature and
scope of the proposed project, including purpose, project location,
design features, Capacity, and estimated total capital cost. Include
a summary of each of the elements of the Feasibility Study,
including:
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(1) Economic feasibility determinations;
(2) Market feasibility determinations;
(3) Technical feasibility determinations;
(4) Financial Feasibility determinations;
(5) Management feasibility determinations; and
(6) Recommendations for implementation of the proposed project.
Section B. Economic Feasibility. Provide information regarding
the project site; the availability of trained or trainable labor;
and the availability of infrastructure, including utilities, and
rail, air and road service to the site. Discuss feedstock source
management, including feedstock collection, pre-treatment,
transportation, and storage, and provide estimates of feedstock
volumes and costs. Discuss the proposed project's potential impacts
on existing manufacturing plants or other facilities that use
similar feedstock if the proposed technology is adopted. Provide
projected impacts of the proposed project on resource conservation,
public health, and the environment. Provide an overall economic
impact of the proposed project including any additional markets
created (e.g., for agricultural and forestry products and
agricultural waste material) and potential for rural economic
development. Provide the proposed project's plans for working with
producer associations or cooperatives including estimated amount of
annual feedstock and biofuel and byproduct dollars from producer
associations and cooperatives.
Section C. Market Feasibility. Provide information on the sales
organization and management. Discuss the nature and extent of market
and market area and provide marketing plans for sale of projected
output, including both the principal products and the by-products.
Discuss the extent of competition including other similar facilities
in the market area. Provide projected total supply of and projected
competitive demand for raw materials. Describe the procurement plan,
including projected procurement costs and the form of commitment of
raw materials (e.g., marketing agreements, etc.). Identify
commitments from customers or brokers for both the principal
products and the by-products. Discuss all risks related to the
industry, including industry status.
Section D. Technical Feasibility. The technical feasibility
report shall be based upon verifiable data and contain sufficient
information and analysis so that a determination may be made on the
technical feasibility of achieving the levels of income or
production that are projected in the financial statements. If no
other individual or firm with the expertise necessary to make such a
determination is reasonably available to perform the function, an
individual or firm that is not independent may be used.
(1) Identify any constraints or limitations in the financial
projections and any other project or design-related factors that
might affect the success of the enterprise. Identify and estimate
project operation and development costs and specify the level of
accuracy of these estimates and the assumptions on which these
estimates have been based.
(2) Discuss all risks related to construction of the project and
regulatory and governmental action as they affect the technical
feasibility of the project.
Section E. Financial Feasibility. Discuss the reliability of the
financial projections and assumptions on which the financial
statements are based including all sources of project capital both
private and public, such as Federal funds. Provide 3 years (minimum)
projected Balance Sheets, Income Statements, and cash flow
projections for the life of the project. Discuss the ability of the
business to achieve the projected income and cash flow. Provide an
assessment of the cost accounting system. Discuss the availability
of short-term credit or other means to meet seasonable business
costs and the adequacy of raw materials and supplies. Provide a
sensitivity analysis, including feedstock and energy costs. Discuss
all risks related to the project, financing plan, the operational
units, and tax issues.
Section F. Management Feasibility. Discuss the continuity and
adequacy of management. Identify Applicant and/or management's
previous experience concerning the receipt of Federal financial
assistance, including amount of funding, date received, purpose, and
outcome. Discuss all risks related to the Applicant as a company
(e.g., Applicant is at the development stage) and conflicts of
interest, including appearances of conflicts of interest.
Section G. Qualifications. Provide a resume or statement of
qualifications of the author of the Feasibility Study, including
prior experience.
Dated: March 21, 2013.
Doug O'Brien,
Deputy Under Secretary, Rural Development.
[FR Doc. 2013-07273 Filed 4-11-13; 8:45 am]
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