81_FR_90940 81 FR 90699 - Loan Guarantees for Projects That Employ Innovative Technologies

81 FR 90699 - Loan Guarantees for Projects That Employ Innovative Technologies

DEPARTMENT OF ENERGY

Federal Register Volume 81, Issue 241 (December 15, 2016)

Page Range90699-90712
FR Document2016-30006

The Department of Energy (DOE or the Department) publishes a final rule to amend the existing regulations for the loan guarantee program authorized by Title XVII of the Energy Policy Act of 2005 (Title XVII or the Act). Section 1703 of Title XVII (section 1703) authorizes the Secretary of Energy (Secretary) to make loan guarantees for projects that avoid, reduce, or sequester air pollutants or anthropogenic emissions of greenhouse gases. Such projects must also employ new or significantly improved technologies as compared to commercial technologies in service in the United States at the time the guarantee is issued. The two principal goals of section 1703 are to encourage commercial use in the United States of new or significantly improved energy-related technologies and to achieve substantial environmental benefits. Section 1703 also identifies ten categories of technologies and projects that are potentially eligible for loan guarantees. Commercial use of these technologies is expected to help sustain and promote economic growth, produce a more stable and secure energy supply and economy for the United States, and improve the environment. As a result of experience gained implementing the loan guarantee program authorized by section 1703, and information received from program participants, including applicants, borrowers, sponsors, and lenders, as well as various energy industry groups, DOE finalizes amendments to the existing regulations to provide increased clarity and transparency, reduce paperwork, and provide a more workable interpretation of certain statutory provisions in light of DOE's experience with operation of the Title XVII program.

Federal Register, Volume 81 Issue 241 (Thursday, December 15, 2016)
[Federal Register Volume 81, Number 241 (Thursday, December 15, 2016)]
[Rules and Regulations]
[Pages 90699-90712]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-30006]


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DEPARTMENT OF ENERGY

10 CFR Part 609

RIN 1901-AB38


Loan Guarantees for Projects That Employ Innovative Technologies

AGENCY: Loan Programs Office, Department of Energy.

[[Page 90700]]


ACTION: Final rule.

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SUMMARY: The Department of Energy (DOE or the Department) publishes a 
final rule to amend the existing regulations for the loan guarantee 
program authorized by Title XVII of the Energy Policy Act of 2005 
(Title XVII or the Act). Section 1703 of Title XVII (section 1703) 
authorizes the Secretary of Energy (Secretary) to make loan guarantees 
for projects that avoid, reduce, or sequester air pollutants or 
anthropogenic emissions of greenhouse gases. Such projects must also 
employ new or significantly improved technologies as compared to 
commercial technologies in service in the United States at the time the 
guarantee is issued. The two principal goals of section 1703 are to 
encourage commercial use in the United States of new or significantly 
improved energy-related technologies and to achieve substantial 
environmental benefits. Section 1703 also identifies ten categories of 
technologies and projects that are potentially eligible for loan 
guarantees. Commercial use of these technologies is expected to help 
sustain and promote economic growth, produce a more stable and secure 
energy supply and economy for the United States, and improve the 
environment.
    As a result of experience gained implementing the loan guarantee 
program authorized by section 1703, and information received from 
program participants, including applicants, borrowers, sponsors, and 
lenders, as well as various energy industry groups, DOE finalizes 
amendments to the existing regulations to provide increased clarity and 
transparency, reduce paperwork, and provide a more workable 
interpretation of certain statutory provisions in light of DOE's 
experience with operation of the Title XVII program.

DATES: This rule is effective on January 17, 2017.

FOR FURTHER INFORMATION CONTACT: Mark S. Westergard, Assistant Chief 
Counsel Regulatory Affairs, Loan Programs Office, United States 
Department of Energy, 1000 Independence Avenue SW., Washington, DC 
20585-0121, (202) 287-5621, email: lgprogram@hq.doe.gov.

SUPPLEMENTARY INFORMATION:

I. Introduction and Background
II. Public Comments on the NOPR and DOE's Responses
    A. Competition with Potential Future Applications
    B. Risk-Based Charge
    C. Section 609.8(c)(2) and section 609.8(c)(3)
III. Regulatory Review
IV. Approval of the Office of the Secretary

I. Introduction and Background

    This final rule amends the regulations implementing the loan 
guarantee program authorized by Title XVII of the Energy Policy Act of 
2005 (42 U.S.C. 16511-16514) (referred to as Title XVII). Section 1703 
of Title XVII (section 1703) authorizes the Secretary of Energy 
(Secretary) to make loan guarantees for projects that: (1) Avoid, 
reduce, or sequester air pollutants or anthropogenic emissions of 
greenhouse gases; and (2) employ new or significantly improved 
technologies as compared to commercial technologies in service in the 
United States at the time the guarantee is issued. (42 U.S.C 16513(a)).
    Section 1702 of Title XVII (section 1702) authorizes the Secretary, 
after consultation with the Secretary of the Treasury, to enter into 
loan guarantees on such terms and conditions as he or she determines to 
be appropriate, in accordance with the provisions of section 1702. 
Section 1702 also directs the Secretary to include in loan guarantees 
``such detailed terms and conditions as the Secretary determines 
appropriate to (i) protect the interests of the United States in the 
case of a default; and (ii) have available all the patents and 
technology necessary for any person selected, including the Secretary, 
to complete and operate the project.'' (42 U.S.C. 16512(g)(2)(c)).
    On October 3, 2016, the Department published a proposed rule and 
request for comment on amendments to the regulations for the Title XVII 
loan guarantee program. (81 FR 67924) The proposed rule also provides 
additional background on DOE's experience in implementing the loan 
guarantee program and the history of its implementing regulations. In 
this final rule, DOE adopts the changes set forth in the proposed rule, 
except where DOE made changes in consideration of comments received on 
the proposal. In Section II of this final rule, DOE summarizes the 
comments received, and provides its responses to those comments and a 
discussion of the changes made to the proposal in this final rule.
    In this final rule, DOE adopts the proposed rule changes that 
clarify the circumstances under which potential applicants may 
communicate with DOE prior to submitting an application. DOE expects 
that the changes will increase transparency and result in more 
applications by qualified applicants with respect to potential eligible 
projects.
    The final rule eliminates the pre-application process and codifies 
procedures that divide the application into two parts.
    The final rule revises the definition of Eligible Project to 
explicitly state that a project may be located at two or more locations 
in the United States if the project is comprised of installations or 
facilities employing a single New or Significantly Improved Technology 
that is deployed pursuant to an integrated and comprehensive business 
plan.
    The final rule provides for the use of Risk-Based Charges. Use of 
Risk-Based Charges is permitted pursuant to the grant of authority to 
the Secretary in Section 1702(a) to determine the terms and conditions 
of the Title XVII loan guarantee program.
    The final rule increases clarity and transparency. For example: 
Definitions have been clarified, shortened where possible, and added; 
specific references to the Cargo Preference Act and the Davis Bacon Act 
have been added; an introductory section on how the rule is to be 
interpreted has been added; and various provisions of the existing rule 
have been re-organized to more-appropriate places in the rule.
    DOE received comments on the proposed rule, which are summarized in 
Section II of this final rule. DOE also provides its responses and 
explains any changes to the proposal made in response to the comments 
received. (For additional background on DOE's experience in 
implementing the loan guarantee program and the history of its 
implementing regulations, please see the proposed rule.)

II. Public Comments on the NOPR and DOE's Responses

A. Competition With Potential Future Applications

    Public comment: One commenter requests clarification and revision 
of the proposed changes in Sec.  609.5(a) to the competitive process 
for evaluating completed Applications, which would require completed 
Applications to be evaluated against potential projects that may become 
the subject of an Application. The commenter is concerned that the 
proposed changed will delay the Application process and put otherwise 
qualified projects in ``limbo'' while the DOE awaits the filing of 
Applications that may be filed on other projects. In the commenter's 
view, this may result in a longer and more opaque process, because 
fewer projects would be able to withstand the additional timing delays, 
as well as in greater market uncertainty about the DOE loan guarantee 
program.

[[Page 90701]]

    DOE Response: DOE notes that applications are reviewed against all 
other applications filed within the same round. For that reason DOE 
does not believe the proposed change would delay the application 
process or put otherwise qualified projects in ``limbo.'' Nevertheless, 
DOE agrees that the proposed change could cause a more opaque process 
and market uncertainty regarding, among other matters, whether a 
project will be competed against potential projects that may become the 
subject of an application. The proposal to consider potential future 
Applications is inconsistent with competing filed Applications against 
all other Applications filed within the same round. For those reasons 
DOE has decided to withdraw the proposed change to the competitive 
process which would allow consideration of potential projects during 
the competition.

B. Risk-Based Charge

    Public comments: Both commenters requested clarification regarding 
the ``Risk-based-charge'' which they believe is duplicative of other 
existing fees. The commenters urge DOE not to impose this additional 
fee on recipients of DOE's Title XVII loan guarantees.
    One commenter also pointed out that the Title XVII loan guarantee 
program currently charges two fees to compensate DOE for the credit 
risk it assumes. First, the program charges a ``Credit-Based Interest 
Rate Spread'' based on the credit rating of the Applicant's project. 
Second, the program charges a ``Credit Subsidy Fee'' to directly 
compensate the United States for the specific credit risk of the 
applicant's project. The commenter requested clarification that the 
reference to a ``Risk-based charge'' means the ``Credit Based Interest 
Rate Spread'', and that the program is not intending to impose a new 
fee and increase the interest rate spreads beyond the current spreads.
    DOE Response: Section 1702(e) of Title XVII requires the Secretary 
to establish interest rates that do not exceed a level that the 
Secretary determines appropriate, taking into account the prevailing 
rate of interest in the private sector for similar loans and risks. In 
the proposed rule, DOE proposed a ``Risk-Based Charge'' that, taking 
into account all interest and interest-related costs, is intended to 
make DOE's charges and costs consistent with the commercial markets and 
other federal credit programs. Thus, the Risk-Based Charge will be used 
only to the extent the aggregate of other interest-related charges do 
not sufficiently reflect creditworthiness or specific risks arising 
from individual transactions. The Risk-Based Charge, while distinct 
from the fee for the Credit Subsidy Cost, may incidentally affect that 
fee by increasing expected inflows to the United States that are 
considered in calculating the amount of the fee. In that respect, 
taking into account the time value of money, the Risk-Based Charge can 
be viewed as affecting the time of payment rather than the amount of 
payment based on the creditworthiness of the borrower and the 
expectations regarding probability of repayment. After factoring in the 
Risk-Based Charge, DOE does not expect the present value of the 
interest amounts expected to be paid by the borrower as the cost of the 
loan should be significantly different than the interest amounts that 
would be paid without the Risk-Based Charge.

C. Section 609.8(c)(2) and Section 609.8(c)(3)

    Public comment: One commenter requested clarification of what it 
views as an apparent inconsistency between Sec. Sec.  609.8(c)(2) and 
609.8(c)(3) of the proposed rule. The commenter stated that Sec.  
609.8(c)(2) appears to require that the guaranteed and nonguaranteed 
portions of a loan partially guaranteed by DOE be repaid pro rata, and 
on the same amortization schedule. Section 609.8(c)(3) appears to the 
commenter to provide for exceptions to this requirement under certain 
conditions.
    The commenter also requested that DOE modify Sec.  609.8 to allow 
for commercial co-lenders to provide structured loan facilities that 
would have the same amortization schedule as the guaranteed portion of 
the facility but with a shorter loan tenor and a related refinancing 
requirement at maturity of the structured loan facility.
    DOE Response: DOE does not view Sec. Sec.  609.8(c)(2) and 
609.8(c)(3) as inconsistent. Section 609.8(c)(2) deals with the 
guaranteed and nonguaranteed portions of loans partially guaranteed by 
DOE. Section 609.8(c)(3) deals with financing or credit arrangements 
not guaranteed by DOE.
    The commenter's request for a shorter loan tenor in connection with 
certain commercial loan products is similar to a comment DOE received 
in response to a proposed rule to amend the Title XVII regulations 
published in 2009. (74 FR 39569, Aug. 7, 2009) In the final rule, 
published on December 4, 2009, DOE made adjustments, retained by the 
proposed rulemaking and subject to the same conditions set forth in the 
current rule, to permit shorter or faster amortization schedules for 
project-related financing or other credit arrangements not guaranteed 
by DOE. See 74 FR 63544, 63546, Section II.C. Shorter Amortization of 
Non-Guaranteed Obligations. DOE has reviewed the issue in response to 
the comment and has determined that the provisions established in the 
2009 rule address the concern while at the same time protecting the 
interests of the United States. For that reason, DOE has determined 
that no change in the existing language of the final rule is warranted.
    Other Changes: While reviewing the proposed rule in response to 
public comments, DOE found certain areas in the proposed rule that 
should be modified consistent with DOE's intent to increase 
transparency and clarity. On further consideration, DOE determined that 
its treatment of the prohibition in Section 149(b) of the Internal 
Revenue Code in Sec.  609.8(c)(4) created ambiguity and made 
application of the provision more complicated. Therefore, DOE 
eliminated the changes in the proposed rule and restored the language 
of the existing rule to tie the rule to the requirements of law as they 
related to tax-exempt debt obligation financing. Finally, DOE clarified 
a provision relating to communications with applicants by deleting a 
sentence that was unclear and not required by law.

III. Regulatory Review

A. Executive Order 12866

    This final rule has been determined to be a significant regulatory 
action under Executive Order 12866, ``Regulatory Planning and Review,'' 
58 FR 51735 (October 4, 1993). Accordingly, this action was subject to 
review under that Executive Order by the Office of Information and 
Regulatory Affairs (OIRA) of the Office of Management and Budget (OMB).

B. National Environmental Policy Act

    DOE has determined that this final rule is covered under the 
Categorical Exclusion found in DOE's National Environmental Policy Act 
regulations at paragraph A.5 of appendix A to subpart D, 10 CFR part 
1021, which applies to rulemaking that amends an existing rule or 
regulation which does not change the environmental effect of the rule 
or regulation being amended.

C. Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires 
preparation of an initial regulatory flexibility analysis for any rule 
that by law must be proposed for public comment, unless the agency 
certifies that the rule, if

[[Page 90702]]

promulgated, will not have a significant economic impact on a 
substantial number of small entities. As required by Executive Order 
13272, ``Proper Consideration of Small Entities in Agency Rulemaking,'' 
67 FR 53461 (August 16, 2002), DOE published procedures and policies on 
February 19, 2003, to ensure that the potential impacts of its rules on 
small entities are properly considered during the rulemaking process 
(68 FR 7990). DOE has made its procedures and policies available on the 
Office of General Counsel's Web site: http://www.energy.gov/gc/downloads/executive-order-13272-consideration-small-entities-agency-rulemaking.
    DOE is not obligated to prepare a regulatory flexibility analysis 
for this rulemaking because there is not a requirement to publish a 
general notice of proposed rulemaking for rules related to loans under 
the Administrative Procedure Act (5 U.S.C. 553(a)(2)).

D. Paperwork Reduction Act

    Information collection requirements for the DOE regulations at 10 
CFR part 609 have been submitted for approval to OMB pursuant to the 
Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.) and the 
procedure implementing that Act (5 CFR 1320.1 et seq.) under OMB 
Control Number 1910-5134. The revised recordkeeping and reporting 
requirements associated with this rulemaking are not mandatory until 
the information collection is approved by OMB.
    Public reporting burden for the revised requirements in this final 
rule is estimated to average 130 hours per response, including the time 
for reviewing instructions, searching existing data sources, gathering 
and maintaining the data needed, and completing and reviewing the 
collection of information. All responses are expected to be collected 
electronically.
    Notwithstanding any other provision of law, a person is not 
required to respond to a collection of information unless it displays a 
currently valid OMB control number.

E. Unfunded Mandates Reform Act of 1995

    The Unfunded Mandates Reform Act of 1995 (Act) (Pub. L. 104-4) 
generally requires Federal agencies to examine closely the impacts of 
regulatory actions on State, local, and tribal governments. The term 
``Federal mandate'' is defined in the Act to mean a Federal 
intergovernmental mandate or a Federal private sector mandate. Although 
the final rule would impose certain requirements on non-Federal 
governmental and private sector applicants for loan guarantees, the 
Act's definitions of the terms ``Federal intergovernmental mandate'' 
and ``Federal private sector mandate'' exclude among other things, any 
provision in legislation, statute, or regulation that is a condition of 
Federal assistance or a duty arising from participation in a voluntary 
program. The final rule would establish requirements that persons 
voluntarily seeking loan guarantees for projects that would use certain 
new and improved energy technologies must satisfy as a condition of a 
Federal loan guarantee. Thus, the final rule falls under the exceptions 
in the definitions of ``Federal intergovernmental mandate'' and 
``Federal private sector mandate'' for requirements that are a 
condition of Federal assistance or a duty arising from participation in 
a voluntary program. The Act does not apply to this rulemaking.

F. Treasury and General Government Appropriations Act, 1999

    Section 654 of the Treasury and General Government Appropriations 
Act, 1999 (Pub. L. 105-277) requires Federal agencies to issue a Family 
Policymaking Assessment for any proposed rule that may affect family 
well-being. The final rule would not have any impact on the autonomy or 
integrity of the family as an institution. Accordingly, DOE has 
concluded that it is not necessary to prepare a Family Policymaking 
Assessment.

G. Executive Order 13132

    Executive Order 13132, ``Federalism,'' 64 FR 43255 (August 4, 1999) 
imposes certain requirements on agencies formulating and implementing 
policies or regulations that preempt State law or that have federalism 
implications. Agencies are required to examine the constitutional and 
statutory authority supporting any action that would limit the 
policymaking discretion of the States and carefully assess the 
necessity for such actions. DOE has examined this final rule and has 
determined that it would not preempt State law and would not have a 
substantial direct effect on the States, on the relationship between 
the national government and the States, or on the distribution of power 
and responsibilities among the various levels of government. No further 
action is required by Executive Order 13132.

H. Executive Order 12988

    With respect to the review of existing regulations and the 
promulgation of new regulations, section 3(a) of Executive Order 12988, 
``Civil Justice Reform,'' 61 FR 4729 (February 7, 1996), imposes on 
Executive agencies the general duty to adhere to the following 
requirements: (1) Eliminate drafting errors and ambiguity; (2) write 
regulations to minimize litigation; and (3) provide a clear legal 
standard for affected conduct rather than a general standard and 
promote simplification and burden reduction. With regard to the review 
required by section 3(a), section 3(b) of Executive Order 12988 
specifically requires that Executive agencies make every reasonable 
effort to ensure that the regulation: (1) Clearly specifies the 
preemptive effect, if any; (2) clearly specifies any effect on existing 
Federal law or regulation; (3) provides a clear legal standard for 
affected conduct while promoting simplification and burden reduction; 
(4) specifies the retroactive effect, if any; (5) adequately defines 
key terms; and (6) addresses other important issues affecting clarity 
and general draftsmanship under any guidelines issued by the Attorney 
General. Section 3(c) of Executive Order 12988 requires Executive 
agencies to review regulations in light of applicable standards in 
section 3(a) and section 3(b) to determine whether they are met or it 
is unreasonable to meet one or more of them. DOE has completed the 
required review and determined that, to the extent permitted by law, 
the final rule meets the relevant standards of Executive Order 12988.

I. Treasury and General Government Appropriations Act, 2001

    The Treasury and General Government Appropriations Act, 2001 (44 
U.S.C. 3516 note) provides for agencies to review most disseminations 
of information to the public under guidelines established by each 
agency pursuant to general guidelines issued by OMB.
    OMB's guidelines were published at 67 FR 8452 (February 22, 2002), 
and DOE's guidelines were published at 67 FR 62446 (October 7, 2002). 
DOE has reviewed this final rule under the OMB and DOE guidelines and 
has concluded that it is consistent with applicable policies in those 
guidelines.

J. Executive Order 13211

    Executive Order 13211, ``Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use,'' 66 FR 28355 
(May 22, 2001) requires Federal agencies to prepare and submit to the 
OMB, a Statement of Energy Effects for any proposed significant energy 
action. A ``significant energy action'' is defined as any action by an 
agency that

[[Page 90703]]

promulgated or is expected to lead to promulgation of a final rule, and 
that: (1) Is a significant regulatory action under Executive Order 
12866, or any successor order; and (2) is likely to have a significant 
adverse effect on the supply, distribution, or use of energy, or (3) is 
designated by the Administrator of OIRA as a significant energy action. 
For any proposed significant energy action, the agency must give a 
detailed statement of any adverse effects on energy supply, 
distribution, or use should the proposal be implemented, and of 
reasonable alternatives to the action and their expected benefits on 
energy supply, distribution, and use. This regulatory action would not 
have a significant adverse effect on the supply, distribution, or use 
of energy and has not been designated by OIRA as a significant energy 
action, and is therefore not a significant energy action. Accordingly, 
DOE has not prepared a Statement of Energy Effects.

K. Executive Order 12630

    The Department has determined, under Executive Order 12630, 
``Governmental Actions and Interference with Constitutionally Protected 
Property Rights,'' 53 FR 8859 (March 18, 1988), that this rule would 
not result in any takings which might require compensation under the 
Fifth Amendment to the United States Constitution.

L. Congressional Notification

    As required by 5 U.S.C. 801, DOE will report to Congress on the 
promulgation of this rule prior to its effective date. The report will 
state that it has been determined that the rule is not a ``major rule'' 
as defined by 5 U.S.C. 804(2).

IV. Approval of the Office of the Secretary

    The Secretary of Energy has approved publication of this final 
rule.

List of Subjects in 10 CFR Part 609

    Administrative practice and procedure, Energy, Loan programs, and 
Reporting and recordkeeping requirements.

    Issued in Washington, DC, on December 6, 2016.
Mark A. McCall,
Executive Director, Loan Programs Office.
    For the reasons stated in the preamble, DOE revises part 609 of 
chapter II of title 10 of the Code of Federal Regulations as set forth 
below:

PART 609--LOAN GUARANTEES FOR PROJECTS THAT EMPLOY INNOVATIVE 
TECHNOLOGIES

Sec.
609.1 Purpose and scope.
609.2 Definitions and interpretation.
609.3 Solicitations.
609.4 Submission of applications.
609.5 Programmatic, technical and financial evaluation of 
applications.
609.6 Term sheets and conditional commitments.
609.7 Closing on the loan guarantee agreement.
609.8 Loan guarantee agreement.
609.9 Lender servicing requirements.
609.10 Project costs.
609.11 Fees and charges.
609.12 Full faith and credit and incontestability.
609.13 Default, demand, payment, and collateral liquidation.
609.14 Preservation of collateral.
609.15 Audit and access to records.
609.16 Deviations.

    Authority: 42 U.S.C. 7254, 16511-16514.


Sec.  609.1  Purpose and scope.

    (a) This part sets forth the policies and procedures that DOE uses 
for receiving, evaluating, and approving applications for loan 
guarantees to support Eligible Projects under section 1703 of the 
Energy Policy Act of 2005 (Act).
    (b) This part applies to all Applications, Conditional Commitments, 
and Loan Guarantee Agreements.
    (c) Part 1024 of chapter X of title 10 of the Code of Federal 
Regulations shall not apply to actions taken under this part.


Sec.  609.2  Definitions and interpretation.

    (a) Definitions. When used in this part the following words have 
the following meanings.
Act means Title XVII of the Energy Policy Act of 2005 (42 U.S.C. 16511-
16514), as amended.
Administrative Cost of Issuing a Loan Guarantee means the total of all 
administrative expenses that DOE incurs during:
    (1) The evaluation of an Application for a loan guarantee;
    (2) The negotiation and offer of a Term Sheet;
    (3) The negotiation of a Loan Guarantee Agreement and related 
documents, including the issuance of a Guarantee; and
    (4) The servicing and monitoring of a Loan Guarantee Agreement, 
including during the construction, startup, commissioning, shakedown, 
and operational phases of an Eligible Project.

Applicant means a Person, including a prospective Borrower or Project 
Sponsor, that submits an Application to DOE.
Application means a written submission of materials responsive to a 
Solicitation that satisfies Sec.  609.4.
Application Fee means the fee or fees required to be paid by an 
Applicant in connection with submission of an Application and specified 
in a Solicitation. The Application Fee does not include the Credit 
Subsidy Cost.
Attorney General means the Attorney General of the United States.
Borrower means any Person that enters into a Loan Guarantee Agreement 
with DOE and issues Guaranteed Obligations.
Cargo Preference Act means the Cargo Preference Act of 1954, 46 U.S.C. 
55305, as amended.
Commercial Technology means a technology in general use in the 
commercial marketplace in the United States at the time the Term Sheet 
is offered by DOE. A technology is in general use if it is being used 
in three or more facilities that are in commercial operation in the 
United States for the same general purpose as the proposed project, and 
has been used in each such facility for a period of at least five 
years. The five-year period for each facility shall start on the in-
service date of the facility employing that particular technology or, 
in the case of a retrofit of a facility to employ a particular 
technology, the date the facility resumes commercial operation 
following completion and testing of the retrofit. For purposes of this 
section, facilities that are in commercial operation include projects 
that have been the recipients of a loan guarantee from DOE under this 
part.
Conditional Commitment means a Term Sheet offered by DOE and accepted 
by the offeree of the Term Sheet, all in accordance with Sec.  
609.6(c); provided, that the Secretary may terminate a Conditional 
Commitment for any reason at any time prior to the execution of the 
Loan Guarantee Agreement; and provided, further, that the Secretary may 
not delegate this authority to terminate a Conditional Commitment.
Contracting Officer means the Secretary of Energy or a DOE official 
authorized by the Secretary to enter into, administer or terminate DOE 
Loan Guarantee Agreements and related contracts on behalf of DOE.
Credit Subsidy Cost has the same meaning as ``cost of a loan 
guarantee'' in section 502(5)(C) of the Federal Credit Reform Act of 
1990, which is the net present value, at the time the

[[Page 90704]]

Loan Guarantee Agreement is executed, of the following estimated cash 
flows, discounted to the point of disbursement:

    (1) Payments by the Government to cover defaults and delinquencies, 
interest subsidies, or other payments; less
    (2) Payments to the Government including origination and other 
fees, penalties, and recoveries; including the effects of changes in 
loan or debt terms resulting from the exercise by the Borrower, 
Eligible Lender or other Holder of an option included in the Loan 
Guarantee Agreement.

Davis-Bacon Act means the statute referenced in section 1702(k) of the 
Act.
DOE means the United States Department of Energy.
Eligible Lender means either:
    (1) Any Person formed for the purpose of, or engaged in the 
business of, lending money that, as determined by DOE in each case, is:
    (i) Not debarred or suspended from participation in a Federal 
government contract or participation in a non-procurement activity 
(under a set of uniform regulations implemented for numerous agencies, 
such as DOE, at 2 CFR part 180);
    (ii) Not delinquent on any Federal debt or loan;
    (iii) Legally authorized and empowered to enter into loan guarantee 
transactions authorized by the Act and these regulations;
    (iv) Able to demonstrate experience in originating and servicing 
loans for commercial projects similar in size and scope to the Eligible 
Project, or able to procure such experience through contracts 
acceptable to DOE; and
    (v) Able to demonstrate experience as the lead lender or 
underwriter by presenting evidence of its participation in large 
commercial projects or energy-related projects or other relevant 
experience, or able to procure such experience through contracts 
acceptable to DOE; or
    (2) The Federal Financing Bank.
Eligible Project means a project that:
    (1) Is located in the United States at one location, except that 
the project may be located at two or more locations in the United 
States if the project is comprised of installations or facilities 
employing a single New or Significantly Improved Technology that is 
deployed pursuant to an integrated and comprehensive business plan. An 
Eligible Project in more than one location is a single Eligible 
Project;
    (2) Deploys a New or Significantly Improved Technology; and
    (3) Satisfies all applicable requirements of section 1703 of the 
Act, the applicable Solicitation, and this part.

Equity means cash contributed to the permanent capital stock (or 
equivalent) of the Borrower or the Eligible Project by the shareholders 
or other owners of the Borrower or the Eligible Project. Equity does 
not include proceeds from the non-guaranteed portion of a Guaranteed 
Obligation, proceeds from any other non-guaranteed loan or obligation, 
or the value of any government assistance or support.
Facility Fee means the fee, to be paid in the amount and in the manner 
provided in the Term Sheet, to cover the Administrative Cost of Issuing 
a Loan Guarantee for the period from the Borrower's acceptance of the 
Term Sheet through issuance of the Guarantee.
Federal Financing Bank means an instrumentality of the United States 
government created by the Federal Financing Bank Act of 1973, under the 
general supervision of the Secretary of the Treasury.
Guarantee means the undertaking of the United States of America, acting 
through the Secretary pursuant to Title XVII of the Energy Policy Act 
of 2005, to pay in accordance with the terms thereof, principal and 
interest of a Guaranteed Obligation.
Guaranteed Obligation means any loan or other debt obligation of the 
Borrower for an Eligible Project for which DOE guarantees all or any 
part of the payment of principal and interest under a Loan Guarantee 
Agreement entered into pursuant to the Act.
Holder means any Person that holds a promissory note made by the 
Borrower evidencing the Guaranteed Obligation (or his designee or 
agent).
Intercreditor Agreement means any agreement or instrument (or amendment 
or modification thereof) among DOE and one or more other Persons 
providing financing or other credit arrangements to the Borrower or an 
Eligible Project) or that otherwise provides for rights of DOE in 
respect of a Borrower or in respect of an Eligible Project, in each 
case in form and substance satisfactory to DOE.
Loan Agreement means a written agreement between a Borrower and an 
Eligible Lender containing the terms and conditions under which the 
Eligible Lender will make a loan or loans to the Borrower for an 
Eligible Project.
Loan Guarantee Agreement means a written agreement that, when entered 
into by DOE and a Borrower, and, if applicable, an Eligible Lender, 
establishes the obligation of DOE to guarantee the payment of all or a 
portion of the principal of, and interest on, specified Guaranteed 
Obligations, subject to the terms and conditions specified in the Loan 
Guarantee Agreement.
New or Significantly Improved Technology means a technology, or a 
defined suite of technologies, concerned with the production, 
consumption, or transportation of energy and that is not a Commercial 
Technology, and that has either:

    (1) Only recently been developed, discovered, or learned; or
    (2) Involves or constitutes one or more meaningful and important 
improvements in productivity or value, in comparison to Commercial 
Technologies in use in the United States at the time the Term Sheet is 
issued.

OMB means the Office of Management and Budget in the Executive Office 
of the President.
Person means any natural person or any legally constituted entity, 
including a state or local government, tribe, corporation, company, 
voluntary association, partnership, limited liability company, joint 
venture, and trust.
Project Costs mean those costs, including escalation and contingencies, 
that are to be expended or accrued by a Borrower and are necessary, 
reasonable, customary and directly related to the design, engineering, 
financing, construction, startup, commissioning and shakedown of an 
Eligible Project, as specified in Sec.  609.10(a). Project Costs do not 
include costs for the items set forth in Sec.  609.10(b).
Project Sponsor means any Person that assumes substantial 
responsibility for the development, financing, and structuring of an 
Eligible Project and, if not the Applicant, owns or controls, by itself 
and/or through individuals in common or affiliated business entities, a 
five percent or greater interest in the proposed Eligible Project, the 
Borrower or the Applicant.
Risk-Based Charge means a charge that, together with the principal and 
interest on the guaranteed loan, or at such other times as DOE may 
determine, is payable on specified dates during the term of a 
Guaranteed Obligation.
Secretary means the Secretary of Energy or a duly authorized designee 
or successor in interest.

[[Page 90705]]

Solicitation means an announcement that DOE is accepting Applications 
that is widely disseminated to the public on the DOE Web site or 
otherwise, and which satisfies the requirements of Sec.  609.3(b).
Term Sheet means a written offer for the issuance of a loan guarantee, 
executed by the Secretary (or a DOE official authorized by the 
Secretary to execute such offer), delivered to the offeree, that sets 
forth the detailed terms and conditions under which DOE and the 
Applicant will execute a Loan Guarantee Agreement.
United States means the several States, the District of Columbia, the 
Commonwealth of Puerto Rico, the Virgin Islands, Guam, American Samoa 
and any territory or possession of the United States of America.
(b) Interpretations. This part shall be interpreted using the following 
guidelines.

    (1) The word ``discretion'' when used with reference to DOE, 
including the Secretary, means ``sole discretion.''
    (2) Defined terms in the singular shall include the plural and vice 
versa, and the masculine, feminine or neuter gender shall include all 
genders.
    (3) The word ``or'' is not exclusive.
    (4) References to laws by name or popular name are references to 
the version of such law appearing in the United States Code and include 
any amendment, supplement or modification of such law, and all 
regulations, rulings, and other laws promulgated thereunder.
    (5) References to information or documents required or allowed to 
be submitted to DOE mean information or documents that are marked as 
provided in 10 CFR 600.15(b). A document or information that is not 
marked as provided in 10 CFR 600.15(b) will not be considered as having 
been submitted to or received by DOE.
    (6) A reference to a Person includes such Person's successors and 
permitted assigns.
    (7) The words ``include,'' ``includes'' and ``including'' are not 
limiting and mean include, includes and including ``without 
limitation'' and ``without limitation by specification.''
    (8) The words ``hereof,'' ``herein'' and ``hereunder'' and words of 
similar import refer this part as a whole and not to any particular 
provision of this part.


Sec.  609.3  Solicitations.

    (a) DOE may invite the submission of Applications for loan 
guarantees for Eligible Projects pursuant to a Solicitation.
    (b) Each Solicitation must include, at a minimum, the following 
information:
    (1) The dollar amount of loan guarantee authority potentially being 
made available by DOE in that Solicitation;
    (2) The place and deadline for submission of Applications;
    (3) The name and address of the DOE representative whom a potential 
Applicant may contact to receive further information and a copy of the 
Solicitation;
    (4) The form, format, and page limits applicable to the 
Application;
    (5) The amount of the Application Fee and any other fees that will 
be required;
    (6) The programmatic, technical, financial and other factors that 
DOE will use to evaluate response submissions, and their relative 
weightings in that evaluation; and
    (7) Such other information as DOE may deem appropriate.
    (c) Using procedures as may be announced by DOE a potential 
Applicant may request a meeting with DOE to discuss its potential 
Application. At its discretion, DOE may meet with a potential 
Applicant, either in person or electronically, to discuss its potential 
Application. DOE may provide a potential Applicant with a preliminary 
response regarding whether its proposed Application may constitute an 
Eligible Project. DOE's responses to questions from potential 
Applicants and DOE's statements to potential Applicants are pre-
decisional and preliminary in nature. Any such responses and statements 
are subject in their entirety to any final action by DOE with respect 
to an Application submitted in accordance with Sec.  609.4.


Sec.  609.4  Submission of applications.

    (a) In response to a Solicitation, an Applicant must meet all 
requirements and provide all information specified in this part and the 
Solicitation in the manner and on or before the date specified therein. 
DOE may direct that Applications be submitted in more than one part; 
provided, that the parts of such Application, taken as a whole, satisfy 
the requirements of Sec.  609.4(c) and this part. In such event, 
subsequent parts of an Application may be filed only after DOE invites 
an Applicant to make an additional submission. The initial part of an 
Application may be used by DOE to determine the likelihood that the 
project proposed by an Applicant will be an Eligible Project, and to 
evaluate such project's readiness to proceed. If there have been any 
material amendments, modifications or additions made to the information 
previously submitted by an Applicant, the Applicant shall provide a 
detailed description thereof, including any changes in the proposed 
project's financing structure or other terms, promptly upon request by 
DOE. Where DOE has directed that an Application be submitted in parts, 
DOE may provide for payment of the Application Fee in parts.
    (b) An Applicant may submit only one Application for one proposed 
project using a particular technology. An Applicant may not submit an 
Application or Applications for multiple Eligible Projects using the 
same technology. An Applicant may submit Applications for multiple 
proposed projects using different technologies. For purposes of this 
paragraph (b), the term Applicant shall include the Project Sponsor and 
any subsidiaries or affiliates of the Project Sponsor.
    (c) An Application must include, at a minimum, the following 
information and materials:
    (1) A completed Application form signed by an individual with full 
authority to bind the Applicant, including the commitments and 
representations made in each part of the Application;
    (2) The applicable Application Fee;
    (3) A description of how and to what measurable extent the proposed 
project avoids, reduces, or sequesters air pollutants and/or 
anthropogenic emissions of greenhouse gases, including how to measure 
and verify those effects;
    (4) A description of the nature and scope of the proposed project, 
including:
    (i) Key project milestones;
    (ii) Location or locations of the proposed project;
    (iii) Identification and commercial feasibility of the New or 
Significantly Improved Technology to be deployed;
    (iv) How the Applicant intends to deploy such New or Significantly 
Improved Technology in the proposed project; and
    (v) How the Applicant intends to assure, to the extent possible, 
the further commercial availability of the New or Significantly 
Improved Technology in the United States.
    (5) An explanation of how the proposed project qualifies as a 
project within the category or categories of projects referred to in 
the Solicitation;
    (6) A detailed estimate of the total Project Costs together with a 
description of the methodology and assumptions used;
    (7) A detailed description of the engineering and design 
contractor(s), construction contractor(s), and equipment supplier(s);

[[Page 90706]]

    (8) The construction schedules for the proposed project, including 
major activity and cost milestones;
    (9) A description of the material terms and conditions of the 
development and construction contracts to include the performance 
guarantees, performance bonds, liquidated damages provisions, and 
equipment warranties;
    (10) A detailed description of the operations and maintenance 
provider(s), the plant operating plan, estimated staffing requirements, 
parts inventory, major maintenance schedule, estimated annual downtime, 
and performance guarantees and related liquidated damage provisions, if 
any;
    (11) A description of the management plan of operations to be 
employed in carrying out the proposed project, and information 
concerning the management experience of each officer or key person 
associated with the proposed project;
    (12) A detailed description of the proposed project 
decommissioning, deconstruction, and disposal plan, and the anticipated 
costs associated therewith;
    (13) An analysis of the market for any product (including but not 
limited to electricity and chemicals) to be produced by, or services to 
be provided by, the proposed project, including relevant economics 
justifying the analysis, and copies of
    (i) Any contracts for the sale of such products or the provision of 
such services, or
    (ii) Any other assurance of the revenues to be generated from sale 
of such products or provision of such services;
    (14) A detailed description of the overall financial plan for the 
proposed project, including all sources and uses of funding, equity and 
debt, and the liability of parties associated with the proposed project 
over the term of the Loan Guarantee Agreement;
    (15) A copy of all material agreements, whether entered into or 
proposed, relevant to the investment, design, engineering, financing, 
construction, startup commissioning, shakedown, operations and 
maintenance of the proposed project;
    (16) A copy of the financial closing checklist for the equity and 
debt to the extent available;
    (17) The Applicant's business plan on which the proposed project is 
based and Applicant's financial model with respect to the proposed 
project for the proposed term of the Guaranteed Obligations, including, 
as applicable, pro forma income statements, balance sheets, and cash 
flows. All such information and data must include assumptions made in 
their preparation and the range of revenue, operating cost, and credit 
assumptions considered;
    (18) Financial statements for the three immediately preceding 
fiscal years of the Applicant (or such shorter period as the Applicant 
has been in existence) that have been audited by an independent 
certified public accounting firm, including all associated 
certifications, notes and letters to management, as well as interim 
financial statements and notes for the current fiscal year for the 
Applicant and all other Persons the credit of which is material to the 
success of the transactions described in the Application;
    (19) A copy of all legal opinions, and other material reports, 
analyses, and reviews related to the proposed project that have been 
delivered prior to submission of any part of the Application;
    (20) An independent engineering report prepared by an engineer with 
experience in the industry and familiarity with similar projects. The 
report should address the proposed project's siting and permitting 
arrangements, engineering and design, contractual requirements, 
environmental compliance, testing, commissioning and operations, and 
maintenance;
    (21) A credit history of the Applicant and each Project Sponsor;
    (22) A preliminary credit assessment for the proposed project 
without a loan guarantee from a nationally recognized rating agency for 
projects where the estimated total Project Costs exceed $25 million. 
For proposed projects where the total estimated Project Costs are $25 
million or less and where conditions justify, in the sole discretion of 
the Secretary, DOE may require such an assessment;
    (23) A list showing the status of and estimated completion date of 
Applicant's required applications for federal, state, and local 
permits, authorizations or approvals to site, construct, and operate 
the proposed project;
    (24) A report containing an analysis of the potential environmental 
impacts of the proposed project that will enable DOE to--
    (i) Assess whether the proposed project will comply with all 
applicable environmental requirements; and
    (ii) Undertake and complete any necessary reviews under the 
National Environmental Policy Act of 1969;
    (25) A listing and description of the assets of or to be utilized 
for the benefit of the proposed project, and of any other asset that 
will serve as collateral pledged in respect of the Guaranteed 
Obligations, including appropriate data as to the value of such assets 
and the useful life of any physical assets. With respect to real 
property assets listed, an appraisal that is consistent with the 
``Uniform Standards of Professional Appraisal Practice,'' promulgated 
by the Appraisal Standards Board of the Appraisal Foundation, and 
performed by licensed or certified appraisers, is required;
    (26) An analysis demonstrating that, at the time of the 
Application, there is a reasonable prospect that Borrower will be able 
to repay the Guaranteed Obligations (including interest) according to 
their terms, and a complete description of the operational and 
financial assumptions and methodologies on which this demonstration is 
based; and
    (27) If proposed project assets or facilities are or will be 
jointly owned by the Applicant and one or more other Persons, each of 
which owns an undivided ownership interest in such proposed project 
assets or facilities, a description of the Applicant's rights and 
obligations in respect of its undivided ownership interest in such 
proposed project assets or facilities.
    (d) During the Application evaluation process pursuant to Sec.  
609.5, DOE may request additional information, potentially including a 
preliminary credit rating or credit assessment, with respect to the 
proposed project.
    (e) DOE will not consider any part of any Application or the 
Application as a whole complete unless the Application Fee (or the 
required portion of the Application Fee related to a particular part of 
the Application) has been paid. An Application Fee paid in connection 
with one Application is not transferable to another Application. Except 
in the discretion of DOE, no portion of the Application Fee is 
refundable;
    (f) DOE has no obligation to evaluate an Application that is not 
complete, and may proceed with such evaluation, or a partial 
evaluation, only in its discretion.
    (g) Unless an Applicant requests an extension and such an extension 
is granted by DOE in its discretion, an Application may be rejected if 
it is not complete within four years from the date of submission (or 
date of submission of the first part thereof, in the case of 
Applications made in more than one part).
    (h) Upon making a determination to engage independent consultants 
or outside counsel with respect to an Application, DOE will proceed to 
evaluate and process such Application only following execution by an 
Applicant or Project Sponsor, as appropriate, of an agreement 
satisfactory

[[Page 90707]]

to DOE to pay the fees and expenses charged by the independent 
consultants and outside legal counsel.


Sec.  609.5  Programmatic, technical and financial evaluation of 
applications.

    (a) In reviewing completed Applications, and in prioritizing and 
selecting those as to which a Term Sheet should be offered, DOE will 
apply the criteria set forth in the Act, any applicable Solicitation, 
and this part. Applications will be considered in a competitive 
process, i.e. each Application will be evaluated against other 
Applications responsive to the Solicitation. Applications will be 
denied if:
    (1) The proposed project is not an Eligible Project;
    (2) The applicable technology is not ready to be deployed 
commercially in the United States, cannot yield a commercially viable 
product or service in the use proposed in the Application, does not 
have the potential to be deployed in other commercial projects in the 
United States, or is not or will not be available for further 
commercial use in the United States;
    (3) The Person proposed to issue the loan or purchase other debt 
obligations constituting the Guaranteed Obligations is not an Eligible 
Lender;
    (4) The proposed project is for demonstration, research, or 
development;
    (5) Significant Equity for the proposed project will not be 
provided by the date of issuance of the Guaranteed Obligations, or such 
later time as DOE in its discretion may determine; or
    (6) The proposed project does not present a reasonable prospect of 
repayment of the Guaranteed Obligations.
    (b) If an Application has not been denied pursuant to Sec.  
609.5(a), DOE will evaluate the proposed Project based on the criteria 
set forth in the Act, any applicable Solicitation and the following:
    (1) To what measurable extent the proposed project avoids, reduces, 
or sequesters air pollutants or anthropogenic emissions of greenhouses 
gases, or contributes to the avoidance, reduction or sequestration of 
air pollutants or anthropogenic emissions of greenhouse gases;
    (2) To what extent the technology to be deployed in the proposed 
project--
    (i) Is ready to be deployed commercially in the United States, can 
be replicated, yields a commercially viable product or service in the 
use proposed in the proposed project, has potential to be deployed in 
other commercial projects in the United States, and is or will be 
available for further commercial use in the United States; and
    (ii) Constitutes an important improvement in technology, as 
compared to available Commercial Technologies, used to avoid, reduce or 
sequester air pollutants or anthropogenic emissions of greenhouse 
gases;
    (3) To what extent the Applicant has a plan to advance or assist in 
the advancement of that technology into the commercial marketplace in 
the United States;
    (4) The extent to which the level of proposed support in the 
Application is consistent with a reasonable prospect of repayment of 
the Guaranteed Obligations by considering, among other factors:
    (i) The extent to which the requested amount of the loan guarantee, 
the requested amount of Guaranteed Obligations and, if applicable, the 
expected amount of any other financing or credit arrangements, are 
reasonable relative to the nature and scope of the proposed project;
    (ii) The total amount and nature of the Project Costs and the 
extent to which Project Costs are to be funded by Guaranteed 
Obligations; and
    (iii) The feasibility of the proposed project and likelihood that 
it will produce sufficient revenues to service its debt obligations 
over the life of the loan guarantee and assure timely repayment of 
Guaranteed Obligations;
    (5) The likelihood that the proposed project will be ready for full 
commercial operations in the time frame stated in the Application;
    (6) The amount of Equity committed and to be committed to the 
proposed project by the Borrower, the Project Sponsor, and other 
Persons;
    (7) Whether there is sufficient evidence that the Borrower will 
diligently implement the proposed project, including initiating and 
completing the proposed project in a timely manner;
    (8) Whether and to what extent the Applicant will rely upon other 
Federal and non-Federal Government assistance such as grants, tax 
credits, or other loan guarantees to support the financing, 
construction, and operation of the proposed project and how such 
assistance will impact the proposed project;
    (9) The levels of safeguards provided to the Federal Government in 
the event of default through collateral, warranties, and other 
assurance of repayment described in the Application, including the 
nature of any anticipated intercreditor arrangements;
    (10) The Applicant's, or the relevant contractor's, capacity and 
expertise to operate the proposed project successfully, based on 
factors such as financial soundness, management organization, and the 
nature and extent of corporate and individual experience;
    (11) The ability of the proposed Borrower to ensure that the 
proposed project will comply with all applicable laws and regulations, 
including all applicable environmental statutes and regulations;
    (12) The levels of market, regulatory, legal, financial, 
technological, and other risks associated with the proposed project and 
their appropriateness for a loan guarantee provided by DOE;
    (13) Whether the Application contains sufficient information, 
including a detailed description of the nature and scope of the 
proposed project and the nature, scope, and risk coverage of the loan 
guarantee sought to enable DOE to perform a thorough assessment of the 
proposed project; and
    (14) Such other criteria that DOE deems relevant in evaluating the 
merits of an Application.
    (c) After DOE completes its review and evaluation of a proposed 
project pursuant to Sec.  609.5(b) and this part, DOE will notify the 
Applicant in writing of its determination whether to proceed with due 
diligence and negotiation of a Term Sheet in accordance with Sec.  
609.6. DOE will proceed only if it determines that the proposed project 
is highly qualified and suitable for a Guarantee. Upon written 
confirmation from the Applicant that it desires to proceed, DOE and the 
Applicant will commence negotiations.
    (d) A determination by DOE not to proceed with a proposed project 
following evaluation pursuant to Sec.  609.5(b) shall be final and non-
appealable, but shall not prejudice the Applicant or other affected 
Persons from applying for a Guarantee in respect of a different 
proposed project pursuant to another, separate Application.


Sec.  609.6  Term sheets and conditional commitments.

    (a) DOE, after negotiation of a Term Sheet with an Applicant, may 
offer such Term Sheet to an Applicant or such other Person that is an 
affiliate of the Applicant and that is acceptable to DOE. DOE's offer 
of a Term Sheet shall be in writing and signed by the Contracting 
Officer. DOE's negotiation of a Term Sheet imposes no obligation on the 
Secretary to offer a Term Sheet to the Applicant.
    (b) DOE shall terminate its negotiations of a Term Sheet if it has 
not offered a Term Sheet in respect of an

[[Page 90708]]

Eligible Project within four years after the date of the written 
notification set forth in Sec.  609.5(c), unless extended in writing in 
the discretion of the Contracting Officer.
    (c) If and when the offeree specified in a Term Sheet satisfies all 
terms and conditions for acceptance of the Term Sheet, including 
written acceptance thereof and payment of all fees specified in Sec.  
609.11(f) and therein to be paid at or prior to acceptance of the Term 
Sheet, the Term Sheet shall become a Conditional Commitment. Each 
Conditional Commitment shall include an expiration date no more than 
two years from the date it is issued, unless extended in writing in the 
discretion of the Contracting Officer. When and if all of the terms and 
conditions specified in the Conditional Commitment have been met, DOE 
and the Applicant may enter into a Loan Guarantee Agreement.
    (d) If, subsequent to execution of a Conditional Commitment, the 
financing arrangements of the Borrower, or in respect of an Eligible 
Project, change from those described in the Conditional Commitment, the 
Applicant shall promptly provide updated financing information in 
writing to DOE. All such updated information shall be deemed to be 
information submitted in connection with an Application and shall be 
subject to Sec.  609.4(b). Based on such updated information, DOE may 
take one or more of the following actions:
    (1) Determine that such changes are not material to the Borrower, 
the Eligible Project or DOE;
    (2) Amend the Conditional Commitment accordingly;
    (3) Postpone the expected closing date of the associated Loan 
Guarantee Agreement; or
    (4) Terminate the Conditional Commitment.


Sec.  609.7  Closing on the loan guarantee agreement.

    (a) Subsequent to entering into a Conditional Commitment with an 
Applicant, DOE, after consultation with the Applicant, will set a 
closing date for execution of a Loan Guarantee Agreement.
    (b) Prior to or on the closing date of a Loan Guarantee Agreement, 
DOE will ensure that:
    (1) One of the following has occurred:
    (i) An appropriation for the Credit Subsidy Cost has been made;
    (ii) The Secretary has received from the Borrower payment in full 
for the Credit Subsidy Cost and deposited the payment into the 
Treasury; or
    (iii) A combination of one or more appropriations under paragraph 
(b)(1)(i) of this section and one or more payments from the Borrower 
under paragraph (b)(1)(ii) of this section has been made that is equal 
to the Credit Subsidy Cost;
    (2) Pursuant to section 1702(h) of the Act, DOE has received from 
the Applicant the remainder of the Facility Fee referred to in Sec.  
609.11(b);
    (3) OMB has reviewed and approved DOE's calculation of the Credit 
Subsidy Cost of the Guarantee;
    (4) The Department of the Treasury has been consulted as to the 
terms and conditions of the Loan Guarantee Agreement;
    (5) The Loan Guarantee Agreement and related documents contain all 
terms and conditions DOE deems reasonable and necessary to protect the 
interest of the United States;
    (6) Each holder of the Guaranteed Obligations is an Eligible 
Lender, and the servicer of the Guaranteed Obligations meets the 
servicing performance requirements of Sec.  609.9(b);
    (7) DOE has determined the principal amount of the Guaranteed 
Obligations expected to be issued in respect of the Eligible Project, 
as estimated at the time of issuance, will not exceed 80 percent of the 
Project Costs of the Eligible Project;
    (8) All conditions precedent specified in the Conditional 
Commitment are either satisfied or waived by the Contracting Officer 
and all other applicable contractual, statutory, and regulatory 
requirements have been satisfied or waived by the Contracting Officer. 
If the counterparty to the Conditional Commitment has not satisfied all 
such terms and conditions on or prior to the closing date of the Loan 
Guarantee Agreement, the Secretary may, in his discretion, set a new 
closing date, or terminate the Conditional Commitment; and
    (9) Where the total Project Costs for an Eligible Project are 
projected to exceed $25 million, the Applicant must provide a credit 
rating from a nationally recognized rating agency reflecting the 
revised Conditional Commitment for the project without a Federal 
guarantee. Where total Project Costs are projected to be $25 million or 
less, the Secretary may, on a case-by-case basis, require a credit 
rating. If a credit rating is required, an updated rating must be 
provided to the Secretary not later than 30 days prior to closing.


Sec.  609.8  Loan guarantee agreement.

    (a) Only a Loan Guarantee Agreement executed by the Contracting 
Officer can obligate DOE to issue a Guarantee in respect of Guaranteed 
Obligations.
    (b) DOE is not bound by oral representations.
    (c) Each Loan Guarantee Agreement shall contain the following 
requirements and conditions, and shall not be executed until the 
Contracting Officer determines that the following requirements and 
conditions are satisfied:
    (1) The Federal Financing Bank shall be the only Eligible Lender in 
transactions where DOE guarantees 100 percent (but not less than 100 
percent) of the principal and interest of the Guaranteed Obligations 
issued under a Loan Guarantee Agreement.
    (i) Where DOE guarantees more than 90 percent of the Guaranteed 
Obligation, the guaranteed portion cannot be separated from or 
``stripped'' from the non-guaranteed portion of the Guaranteed 
Obligation if the loan is participated, syndicated or otherwise resold 
in the secondary market; and
    (ii) Where DOE guarantees 90 percent or less of the Guaranteed 
Obligation, the guaranteed portion may be separated from or 
``stripped'' from the non-guaranteed portion of the Guaranteed 
Obligation, if the loan is participated, syndicated or otherwise resold 
in the secondary debt market;
    (2) The Borrower shall be obligated to make full repayment of the 
principal and interest on the Guaranteed Obligations and other debt of 
a Borrower over a period of up to the lesser of 30 years or 90 percent 
of the projected useful life of the Eligible Project's major physical 
assets, as calculated in accordance with U.S. generally accepted 
accounting principles and practices. The non-guaranteed portion (if 
any) of any Guaranteed Obligations must be repaid pro rata, and on the 
same amortization schedule, with the guaranteed portion.
    (3) If any financing or credit arrangement of the Borrower or 
relating to the Eligible Project, other than the Guaranteed 
Obligations, has an amortization period shorter than that of the 
Guaranteed Obligations, DOE shall have determined that the resulting 
financing structure allocates to DOE a reasonably proportionate share 
of the default risk, in light of:
    (i) DOE's share of the total debt financing of the Borrower,
    (ii) Risk allocation among the credit providers to the Borrower, 
and
    (iii) Internal and external credit enhancements.
    (4) The loan guarantee does not finance, either directly or 
indirectly tax-exempt debt obligations, consistent with the 
requirements of section 149(b) of the Internal Revenue Code;
    (5) The principal amount of the Guaranteed Obligations, when 
combined with funds from other sources

[[Page 90709]]

committed and available to the Borrower, shall be sufficient to pay for 
expected Project Costs (including adequate contingency amounts), the 
applicable items specified in Sec.  609.10(b), and otherwise to carry 
out the Eligible Project;
    (6) There shall be a reasonable prospect of repayment by the 
Borrower of the principal of and interest on the Guaranteed Obligations 
and all of its other debt obligations;
    (7) The Borrower shall pledge collateral or surety determined by 
DOE to be necessary to secure the repayment of the Guaranteed 
Obligations. Such collateral or security may include Eligible Project 
assets and assets not related to the Eligible Project;
    (8) The Loan Guarantee Agreement and related documents shall 
include detailed terms and conditions that DOE deems necessary and 
appropriate to protect the interests of the United States in the case 
of default, including ensuring availability of all relevant 
intellectual property rights, technical data including software, and 
technology necessary for DOE or any Person selected by DOE, to 
complete, operate, convey, and dispose of the defaulted Borrower or the 
Eligible Project;
    (9) The Guaranteed Obligations shall not be subordinate to other 
financing. Guaranteed Obligations are not subordinate to other 
financing if the lien on property securing the Guaranteed Obligations, 
together with liens that are pari passu with such lien, if any, take 
priority or precedence over other charges or encumbrances upon the same 
property and must be satisfied before such other charges are entitled 
to participate in proceeds of the property's sale. In DOE's discretion, 
Guaranteed Obligations may share a lien position with other financing;
    (10) There is satisfactory evidence that the Borrower will 
diligently pursue the Eligible Project and is willing, competent, and 
capable of performing its obligations under the Loan Guarantee 
Agreement and the loan documentation relating to its other debt 
obligations;
    (11) The Borrower shall have paid all fees and expenses due to DOE 
or the U.S. Government, including such amount of the Credit Subsidy 
Cost as may be due and payable from the Borrower pursuant to the 
Conditional Commitment, upon execution of the Loan Guarantee Agreement;
    (12) The Borrower, any Eligible Lender, and each other relevant 
party shall take, and be obligated to continue to take, those actions 
necessary to perfect and maintain liens on collateral in respect of the 
Guaranteed Obligations;
    (13) DOE or its representatives shall have access to the offices of 
the Borrower and the Eligible Project site at all reasonable times in 
order to monitor the--
    (i) Performance by the Borrower of its obligations under the Loan 
Guarantee Agreement; and
    (ii) Performance of the Eligible Project;
    (14) DOE and Borrower have reached an agreement regarding the 
information that will be made available to DOE and the information that 
will be made publicly available;
    (15) The Borrower shall have filed applications for or obtained any 
required regulatory approvals for the Eligible Project and is in 
compliance, or promptly will be in compliance, where appropriate, with 
all Federal, state, and local regulatory requirements;
    (16) The Borrower shall have no delinquent Federal debt;
    (17) The Project Sponsors have made or will make a significant 
Equity investment in the Borrower or the Eligible Project, and will 
maintain control of the Borrower or the Eligible Project as agreed in 
the LGA; and
    (18) The Loan Guarantee Agreement and related agreements shall 
include such other terms and conditions as DOE deems necessary or 
appropriate to protect the interests of the United States.
    (d) The Loan Guarantee Agreement shall provide that, in the event 
of a default by the Borrower:
    (1) Interest on the Guaranteed Obligations shall accrue at the rate 
stated in the Loan Guarantee Agreement or the Loan Agreement, until DOE 
makes full payment of the defaulted Guaranteed Obligations and, except 
when such Guaranteed Obligations are funded through the Federal 
Financing Bank, DOE shall not be required to pay any premium, default 
penalties, or prepayment penalties; and
    (2) The holder of collateral pledged in respect of the Guaranteed 
Obligations shall be obligated to take such actions as DOE may 
reasonably require to provide for the care, preservation, protection, 
and maintenance of such collateral so as to enable the United States to 
achieve maximum recovery.
    (e)(1) An Eligible Lender or other Holder may sell, assign or 
transfer a Guaranteed Obligation to another Eligible Lender that meets 
the requirements of Sec.  609.9. Such latter Eligible Lender shall be 
required to assume all servicing, monitoring and reporting requirements 
as provided in the Loan Guarantee Agreement. Any transfer of the 
servicing, monitoring, and reporting functions shall be subject to the 
prior written approval of DOE.
    (2) The Secretary, or the Secretary's designee or contractual 
agent, for the purpose of identifying Holders with the right to receive 
payment under the Guaranteed Obligations, shall include in the Loan 
Guarantee Agreement or related documents a procedure for tracking and 
identifying Holders of Guaranteed Obligations. Any contractual agent 
approved by the Secretary to perform this function may transfer or 
assign this responsibility only with the Secretary's prior written 
approval.
    (f) Each Loan Guarantee Agreement shall require the Borrower to 
make representations and warranties, agree to covenants, and satisfy 
conditions precedent to closing and to each disbursement that, in each 
case, relate to its compliance with the Davis-Bacon Act and the Cargo 
Preference Act.
    (g) The Applicant, the Borrower or the Project Sponsor must 
estimate, calculate, record, and provide to DOE any time DOE requests 
such information and at the times provided in the Loan Guarantee 
Agreement all costs incurred in the design, engineering, financing, 
construction, startup, commissioning and shakedown of the Eligible 
Project in accordance with generally accepted accounting principles and 
practices.


Sec.  609.9  Lender servicing requirements.

    (a) When reviewing and evaluating a proposed Eligible Project, all 
Eligible Lenders (other than the Federal Financing Bank) shall at all 
times exercise the level of care and diligence that a reasonable and 
prudent lender would exercise when reviewing, evaluating and disbursing 
a loan made by it without a Federal guarantee.
    (b) Loan servicing duties shall be performed by an Eligible Lender, 
DOE, or another qualified loan servicer approved by DOE. When 
performing its servicing duties, the loan servicer shall at all times 
exercise the level of care and diligence that a reasonable and prudent 
lender would exercise when servicing a loan made without a Federal 
guarantee, including:
    (1) During the construction period, monitoring the satisfaction of 
all of the conditions precedent to all loan disbursements, as provided 
in the Loan Guarantee Agreement, Loan Agreement or related documents;
    (2) During the operational phase, monitoring and servicing the 
Guaranteed Obligations and collection of the outstanding principal and 
accrued interest as well as undertaking to ensure that the collateral 
package

[[Page 90710]]

securing the Guaranteed Obligations remains uncompromised; and
    (3) Until the Guaranteed Obligation has been repaid, providing 
annual or more frequent financial and other reports on the status and 
condition of the Guaranteed Obligations and the Eligible Project, and 
promptly notifying DOE if it becomes aware of any problems or 
irregularities concerning the Eligible Project or the ability of the 
Borrower to make payment on the Guaranteed Obligations or its other 
debt obligations.


Sec.  609.10  Project costs.

    (a) Project Costs include:
    (1) Costs of acquisition, lease, or rental of real property, 
including engineering fees, surveys, title insurance, recording fees, 
and legal fees incurred in connection with land acquisition, lease or 
rental, site improvements, site restoration, access roads, and fencing;
    (2) Costs of engineering, architectural, legal and bond fees, and 
insurance paid in connection with construction of the facility;
    (3) Costs of equipment purchases, including a reasonable reserve of 
spare parts to the extent required;
    (4) Costs to provide facilities and services related to safety and 
environmental protection;
    (5) Costs of financial, legal, and other professional services, 
including services necessary to obtain required licenses and permits 
and to prepare environmental reports and data;
    (6) Costs of issuing Eligible Project debt, such as fees, 
transaction, and costs referred to in Sec.  609.10(a)(5), and other 
customary charges imposed by Eligible Lenders;
    (7) Costs of necessary and appropriate insurance and bonds of all 
types including letters of credit and any collateral required therefor;
    (8) Costs of design, engineering, startup, commissioning and 
shakedown;
    (9) Costs of obtaining licenses to intellectual property necessary 
to design, construct, and operate the Eligible Project;
    (10) To the extent required by the Loan Guarantee Agreement and not 
intended or available for any cost referred to in Sec.  609.10(b), 
costs of funding any reserve fund, including without limitation, a debt 
service reserve, a maintenance reserve, and a contingency reserve for 
cost overruns during construction; provided that proceeds of a 
Guaranteed Loan deposited to any reserve fund shall not be removed from 
such fund except to pay Project Costs, to pay principal of the 
Guaranteed Loan, or otherwise to be used as provided in the Loan 
Guarantee Agreement;
    (11) Capitalized interest necessary to meet market requirements and 
other carrying costs during construction; and
    (12) Other necessary and reasonable costs.
    (b) Project Costs do not include:
    (1) Fees and commissions charged to Borrower, including finder's 
fees, for obtaining Federal or other funds;
    (2) Parent corporation or other affiliated entity's general and 
administrative expenses, and non-Eligible Project related parent 
corporation or affiliated entity assessments, including organizational 
expenses;
    (3) Goodwill, franchise, trade, or brand name costs;
    (4) Dividends and profit sharing to stockholders, employees, and 
officers;
    (5) Research, development, and demonstration costs of readying an 
innovative technology for employment in a commercial project;
    (6) Costs that are excessive or are not directly required to carry 
out the Eligible Project, as determined by DOE;
    (7) Expenses incurred after startup, commissioning, and shakedown 
before the facility, or, in DOE's discretion, any portion of the 
facility, has been placed in service;
    (8) Borrower-paid Credit Subsidy Costs, the Administrative Cost of 
Issuing a Loan Guarantee, and any other fee collected by DOE; and
    (9) Operating costs.


Sec.  609.11  Fees and charges.

    (a) Unless explicitly authorized by statute, no funds obtained from 
the Federal Government, or from a loan or other instrument guaranteed 
by the Federal Government, may be used to pay for the Credit Subsidy 
Cost, the Application Fee, the Facility Fee, the Guarantee Fee, the 
maintenance fee and any other fees charged by or paid to DOE relating 
to the Act or any Guarantee thereunder.
    (b) DOE may charge Applicants a non-refundable Facility Fee, with a 
portion being payable on or prior to the date on which the Applicant 
executes the Commitment Letter and the remainder being payable on or 
prior to the closing date for the Loan Guarantee Agreement.
    (c) In order to encourage and supplement private lending activity 
DOE may collect from Borrowers for deposit in the United States 
Treasury a non-refundable Risk-Based Charge which, together with the 
interest rate on the Guaranteed Obligation that LPO determines to be 
appropriate, will take into account the prevailing rate of interest in 
the private sector for similar loans and risks. The Risk-Based Charge 
shall be paid at such times and in such manner as may be determined by 
DOE, but no less frequently than once each year, commencing with 
payment of a pro-rated payment on the date the Guarantee is issued. The 
amount of the Risk-Based Charge will be specified in the Loan Guarantee 
Agreement.
    (d) DOE may collect a maintenance fee to cover DOE's administrative 
expenses, other than extraordinary expenses, incurred in servicing and 
monitoring a Loan Guarantee Agreement. The maintenance fee shall accrue 
from the date of execution of the Loan Guarantee Agreement through the 
date of payment in full of the related Guaranteed Obligations. If DOE 
determines to collect a maintenance fee, it shall be paid by the 
Borrower each year (or portion thereof) in advance in the amount 
specified in the applicable Loan Guarantee Agreement.
    (e) In the event a Borrower or an Eligible Project experiences 
difficulty relating to technical, financial, or legal matters or other 
events (e.g., engineering failure or financial workouts), the Borrower 
shall be liable as follows:
    (1) If such difficulty requires DOE to incur time or expenses 
beyond those customarily expended to monitor and administer performing 
loans, DOE may collect an extraordinary expenses fee from the Borrower 
that will reimburse DOE for such time and expenses, as determined by 
DOE; and
    (2) For all fees and expenses of DOE's independent consultants and 
outside counsel, to the extent that such fees and expenses are elected 
to be paid by DOE notwithstanding the provisions of paragraphs (f) and 
(g) of this section.
    (f) Each Applicant, Borrower or Project Sponsor, as applicable, 
shall be responsible for the payment of all fees and expenses charged 
by DOE's independent consultants and outside legal counsel in 
connection with an Application, Conditional Commitment or Loan 
Guarantee Agreement, as applicable. Upon making a determination to 
engage independent consultants or outside counsel with respect to an 
Application, DOE will proceed to evaluate and process such Application 
only following execution by an Applicant or Project Sponsor, as 
appropriate, of an agreement satisfactory to DOE to pay the fees and 
expenses charged by the independent consultants and outside legal 
counsel. Appropriate provisions regarding payment of such fees and 
expenses shall also be included in each Term Sheet and Loan Guaranty 
Agreement or, upon a determination by DOE, in other appropriate 
agreements.

[[Page 90711]]

    (g) Notwithstanding payment by Applicant, Borrower or Project 
Sponsor, all services rendered by an independent consultant or outside 
legal counsel to DOE in connection with an Application, Conditional 
Commitment or Loan Guarantee Agreement shall be solely for the benefit 
of DOE (and such other creditors as DOE may agree in writing). DOE may 
require, in its discretion, the payment of an advance retainer to such 
independent consultants or outside legal counsel as security for the 
collection of the fees and expenses charged by the independent 
consultants and outside legal counsel. In the event an Applicant, 
Borrower or Project Sponsor fails to comply with the provisions of such 
payment agreement, DOE in its discretion, may stop work on or terminate 
an Application, a Conditional Commitment or a Loan Guarantee Agreement, 
or may take such other remedial measures in its discretion as it deems 
appropriate.
    (h) DOE shall not be financially liable under any circumstances to 
any independent consultant or outside counsel for services rendered in 
connection with an Application, Conditional Commitment or Loan 
Guarantee Agreement except to the extent DOE has previously entered 
into an express written agreement to pay for such services.


Sec.  609.12  Full faith and credit and incontestability.

    The full faith and credit of the United States is pledged to the 
payment of principal and interest of Guaranteed Obligations pursuant to 
Guarantees issued in accordance with the Act and this Part. The 
issuance by DOE of a Guarantee shall be conclusive evidence that it has 
been properly obtained; that the underlying loan qualified for such 
Guarantee; and that, but for fraud or material misrepresentation by the 
Holder, such Guarantee shall be legal, valid, binding and enforceable 
against DOE in accordance with its terms.


Sec.  609.13  Default, demand, payment, and foreclosure on collateral.

    (a) If a Borrower defaults in making a required payment of 
principal or interest on a Guaranteed Obligation and such default has 
not been cured within the applicable grace period, the Holder may make 
written demand for payment upon the Secretary in accordance with the 
terms of the applicable Guarantee. If a Borrower defaults in making a 
required payment of principal or interest on a Guaranteed Obligation 
and such default has not been cured within the applicable grace period, 
the Secretary shall notify the Attorney General.
    (b) Subject to the terms of the applicable Guarantee, the Secretary 
shall make payment within 60 days after receipt of written demand for 
payment from the Holder, provided that the demand for payment complies 
in all respects with the terms of the applicable Guarantee. Interest 
shall accrue to the Holder at the rate stated in the promissory note 
evidencing the Guaranteed Obligation, without giving effect to the 
Borrower's default in making a required payment of principal or 
interest on the applicable Guarantee Obligation or any other default by 
the Borrower, until the Guaranteed Obligation has been fully paid by 
DOE. Payment by the Secretary on the applicable Guarantee does not 
change Borrower's obligations under the promissory note evidencing the 
Guaranteed Obligation, Loan Guarantee Agreement, Loan Agreement or 
related documents, including an obligation to pay default interest.
    (c) Following payment by the Secretary pursuant to the applicable 
Guarantee, upon demand by DOE, the Holder shall transfer and assign to 
the Secretary (or his designee or agent) the promissory note evidencing 
the Guaranteed Obligation, all rights and interests of the Holder in 
the Guaranteed Obligation, and all rights and interests of the Holder 
in respect of the Guaranteed Obligation, except to the extent that the 
Secretary determines that such promissory note or any of such rights 
and interests shall not be transferred and assigned to the Secretary. 
Such transfer and assignment shall include, without limitation, all of 
the liens, security and collateral rights of the Holder (or his 
designee or agent) in respect of the Guaranteed Obligation.
    (d) Following payment by the Secretary pursuant to a Guarantee or 
other default of a Guaranteed Obligation, the Secretary is authorized 
to protect and foreclose on the collateral, take action to recover 
costs incurred by, and all amounts owed to, the United States as a 
result of the defaulted Guarantee Obligation, and take such other 
action necessary or appropriate to protect the interests of the United 
States. In respect of any such authorized actions that involve a 
judicial proceeding or other judicial action, the Secretary shall act 
through the Attorney General. The foregoing provisions of this 
paragraph shall not relieve the Secretary from its obligations pursuant 
to any applicable Intercreditor Agreement. Nothing in this paragraph 
shall limit the Secretary from exercising any rights or remedies 
pursuant to the terms of the Loan Guarantee Agreement.
    (e) The cash proceeds received as a result of any foreclosure on 
the collateral, or other action, shall be distributed in accordance 
with the Loan Guarantee Agreement (subject to any applicable 
Intercreditor Agreement).
    (f) The Loan Guarantee Agreement shall provide that cash proceeds 
received by the Secretary (or his designee or agent) as a result of any 
foreclosure on the collateral or other action shall be applied in the 
following order of priority:
    (1) Toward the pro rata payment of any costs and expenses 
(including unpaid fees, fees and expenses of counsel, contractors and 
agents, and liabilities and advances made or incurred) of the 
Secretary, the Attorney General, the Holder, a collateral agent or 
other responsible person of any of them (solely in their individual 
capacities as such and not on behalf of or for the benefit of their 
principals), incurred in connection with any authorized action 
following payment by the Secretary pursuant to a Guarantee or other 
default of a Guaranteed Obligation, or as otherwise permitted under the 
Loan Agreement or Loan Guarantee Agreement.
    (2) To pay all accrued and unpaid fees due and payable to the 
Secretary, the Attorney General, the Holder, a collateral agent or 
other responsible person of any of them on a pro rata basis in respect 
of the Guaranteed Obligation;
    (3) To pay all accrued and unpaid interest due and payable to the 
Secretary, the Attorney General, the Holder, a collateral agent or 
other responsible person of any of them on a pro rata basis in respect 
of the Guaranteed Obligation;
    (4) To pay all unpaid principal of the Guaranteed Obligation;
    (5) To pay all other obligations of the Borrower under the Loan 
Guarantee Agreement, the Loan Agreement and related documents that are 
remaining after giving effect to the preceding provisions and are then 
due and payable; and;
    (6) To pay to the Borrower, or its successors and assigns, or as a 
court of competent jurisdiction may direct, any cash proceeds then 
remaining following the application of all payment described above.
    (g) No action taken by the Holder or its agent or designee in 
respect of any collateral will affect the rights of any person, 
including the Secretary, having an interest in the Guaranteed 
Obligations or other debt obligations, to pursue, jointly or severally, 
legal action against the Borrower or other liable

[[Page 90712]]

persons, for any amounts owing in respect of the Guaranteed Obligation 
or other applicable debt obligations.
    (h) In the event that the Secretary considers it necessary or 
desirable to protect or further the interest of the United States in 
connection with exercise of rights as a lien holder or recovery of 
deficiencies due under the Guaranteed Obligation, the Secretary may 
take such action as he determines to be appropriate under the 
circumstances.
    (i) Nothing in this part precludes, nor shall any provision of this 
part be construed to preclude, the Secretary from purchasing any 
collateral or Holder's or other Person's interest in the Eligible 
Project upon foreclosure of the collateral.
    (j) Nothing in this part precludes, nor shall any provision of this 
part be construed to preclude, forbearance by any Holder with the 
consent of the Secretary for the benefit of the Borrower and the United 
States.
    (k) The Holder and the Secretary may agree to a formal or informal 
plan of reorganization in respect of the Borrower, to include a 
restructuring of the Guaranteed Obligation and other applicable debt of 
the Borrower on such terms and conditions as the Secretary determines 
are in the best interest of the United States.


Sec.  609.14  Preservation of collateral.

    (a) If the Secretary exercises his right under the Loan Guarantee 
Agreement to require the holder of pledged collateral to take such 
actions as the Secretary (subject to any applicable Intercreditor 
Agreement) may reasonably require to provide for the care, 
preservation, protection, and maintenance of such collateral so as to 
enable the United States to achieve maximum recovery from the 
collateral, the Secretary shall, subject to compliance with the 
Antideficiency Act, 31 U.S.C. 1341 et seq., reimburse the holder of 
such collateral for reasonable and appropriate expenses incurred in 
taking actions required by the Secretary (unless otherwise provided in 
applicable agreements). Except as provided in Sec.  609.13, no party 
may waive or relinquish, without the consent of the Secretary, any such 
collateral to which the United States would be subrogated upon payment 
under the Loan Guarantee Agreement.
    (b) In the event of a default, the Secretary may enter into such 
contracts as he determines are required or appropriate, taking into 
account the term of any applicable Intercreditor Agreement, to care 
for, preserve, protect or maintain collateral pledged in respect of 
Guaranteed Obligations. The cost of such contracts may be charged to 
the Borrower.


Sec.  609.15   Audit and access to records.

    Each Loan Guarantee Agreement and related documents shall provide 
that:
    (a) The Eligible Lender, or DOE in conjunction with the Federal 
Financing Bank where loans are funded by the Federal Financing Bank or 
other Holder or other party servicing the Guaranteed Obligations, as 
applicable, and the Borrower, shall keep such records concerning the 
Eligible Project as are necessary, including the Application, Term 
Sheet, Conditional Commitment, Loan Guarantee Agreement, Credit 
Agreement, mortgage, note, disbursement requests and supporting 
documentation, financial statements, audit reports of independent 
accounting firms, lists of all Eligible Project assets and non-Eligible 
Project assets pledged in respect of the Guaranteed Obligations, all 
off-take and other revenue producing agreements, documentation for all 
Eligible Project indebtedness, income tax returns, technology 
agreements, documentation for all permits and regulatory approvals and 
all other documents and records relating to the Borrower or the 
Eligible Project, as determined by the Secretary, to facilitate an 
effective audit and performance evaluation of the Eligible Project; and
    (b) The Secretary and the Comptroller General, or their duly 
authorized representatives, shall have access, for the purpose of audit 
and examination, to any pertinent books, documents, papers and records 
of the Borrower, Eligible Lender or DOE or other Holder or other party 
servicing the Guaranteed Obligation, as applicable. Such inspection may 
be made during regular office hours of the Borrower, Eligible Lender or 
DOE or other Holder, or other party servicing the Eligible Project and 
the Guaranteed Obligations, as applicable, or at any other time 
mutually convenient.


Sec.  609.16  Deviations.

    (a) To the extent that the requirements under this part are not 
specified by the Act or other applicable statutes, DOE may authorize 
deviations from the requirements of this part upon:
    (1) Either receipt from the Applicant, Borrower or Project Sponsor, 
as applicable, of--
    (i) A written request that the Secretary deviate from one or more 
requirements; and
    (ii) A supporting statement briefly describing one or more 
justifications for such deviation; or
    (iii) A determination by the Secretary in his discretion to 
undertake a deviation;
    (2) A finding by the Secretary that such deviation supports program 
objectives and the special circumstances stated in the request make 
such deviation clearly in the best interest of the Government; and
    (3) If the waiver would constitute a substantial change in the 
financial terms of the Loan Guarantee Agreement and related documents, 
consultation by DOE with OMB and the Secretary of the Treasury.
    (b) If a deviation under this section results in an increase in the 
applicable Credit Subsidy Cost, such increase shall be funded either by 
additional fees paid by or on behalf of the Borrower or, if an 
appropriation is available by means of an appropriations act. The 
Secretary has discretion to determine how the cost of a deviation is 
funded.

[FR Doc. 2016-30006 Filed 12-14-16; 8:45 am]
BILLING CODE 6450-01-P



                                                              Federal Register / Vol. 81, No. 241 / Thursday, December 15, 2016 / Rules and Regulations                                            90699

                                             limited to, chips, ice cream, crackers,                  requirement. Such documentation can                   to food when the applicant firm fails to
                                             cupcakes, cookies, popcorn, pastries,                    be achieved through verifying                         meet Criterion A per paragraph (b)(1)(ii)
                                             and candy, and other food items that                     information, when requested by FNS,                   or Criterion B per paragraph (b)(1)(iii) of
                                             complement or supplement meals, such                     such as invoices and receipts in order to             this section so long as the applicant firm
                                             as, but not limited to, coffee, tea, cocoa,              prove that the firm had ordered and/or                meets all other SNAP authorization
                                             carbonated and uncarbonated drinks,                      received a sufficient amount of required              requirements. In determining whether
                                             condiments, spices, salt, and sugar.                     staple foods up to 21 calendar days                   an applicant is located in such an area,
                                             Items shall not be classified as accessory               prior to the date of the store visit.                 FNS may consider access factors such
                                             food exclusively based on packaging                      Failure to provide verifying information              as, but not limited to, the distance from
                                             size but rather based on the                             related to stock when requested may                   the applicant firm to the nearest
                                             aforementioned definition and as                         result in denial or withdrawal of                     currently SNAP authorized firm and
                                             determined by FNS. A food product                        authorization. Failure to cooperate with              transportation options. In determining
                                             containing an accessory food item as its                 store visits shall result in the denial or            whether to authorize an applicant
                                             main ingredient shall be considered an                   withdrawal of authorization.                          despite its failure to meet Criterion A
                                             accessory food item. Accessory food                      *      *     *     *     *                            and Criterion B, FNS will also consider
                                             items shall not be considered staple                        (C) Offer a variety of staple foods                factors such as, but not limited to, the
                                             foods for purposes of determining the                    which means different types of foods                  extent of the applicant firm’s stocking
                                             eligibility of any firm.                                 within each staple food category. For                 deficiencies in meeting Criterion A and
                                             *     *      *    *      *                               example: Apples, cabbage, tomatoes,                   Criterion B and whether the store
                                                                                                      bananas, pumpkins, broccoli, and                      furthers the purposes of the Program.
                                             PART 278—PARTICIPATION OF                                grapes in the vegetables or fruits                    Such considerations will be conducted
                                             RETAIL FOOD STORES WHOLESALE                             category; or cow milk, almond milk, soy               during the application process as
                                             FOOD CONCERNS AND INSURED                                yogurt, soft cheese, butter, sour cream,              described in paragraph (a) of this
                                             FINANCIAL INSTITUTIONS                                   and cow milk yogurt in the dairy                      section.
                                                                                                      products category; or rice, bagels, pitas,            *      *    *     *     *
                                             ■ 3. In § 278.1:                                         bread, pasta, oatmeal, and whole wheat                   (q) * * *
                                             ■ a. Amend the last sentence in                          flour in the bread or cereals category; or               (5) Public disclosure of firms
                                             paragraph (b)(1)(i)(A) by removing the                   chicken, beans, nuts, beef, pork, eggs,               sanctioned for SNAP violations. FNS
                                             word ‘‘two’’ and adding in its place the                 and tuna in the meat, poultry, or fish                may disclose information to the public
                                             word ‘‘three’’.                                          category. Variety of foods is not to be               when a retail food store has been
                                             ■ b. Revise paragraph (b)(1)(ii)(A);                     interpreted as different brands, nutrient             disqualified or otherwise sanctioned for
                                             ■ c. Amend the first sentence in                         values (e.g., low sodium and lite),                   violations of the Program after the time
                                             paragraph (b)(1)(ii)(B) by removing the                  flavorings (e.g., vanilla and chocolate),             for administrative and judicial appeals
                                             word ‘‘two’’ and adding in its place the                 packaging types or styles (e.g., canned               has expired. This information is limited
                                             word ‘‘three’’.                                          and frozen) or package sizes of the same              to the name and address of the store, the
                                             ■ d. Revise paragraph (b)(1)(ii)(C);                     or similar foods. Similar food items                  owner(s’) name(s) and information
                                             ■ e. Revise the fourth sentence in                       such as, but not limited to, tomatoes and             about the sanction itself. FNS may
                                             paragraph (b)(1)(iv);                                    tomato juice, different types of rice,                continue to disclose this information for
                                             ■ f. Redesignate paragraph (b)(6) as
                                                                                                      whole milk and skim milk, ground beef                 as long as the duration of the sanction.
                                             paragraph (b)(7);                                        and beefsteak, or different types of
                                             ■ g. Add new paragraph (b)(6).
                                                                                                                                                            In the event that a sanctioned firm is
                                                                                                      apples (e.g., Empire, Jonagold, and                   assigned a civil penalty in lieu of a
                                             ■ h. Add paragraph (q)(5).
                                                                                                      McIntosh), shall count as depth of stock              period of disqualification, as described
                                               The additions and revisions read as                    but shall not each be counted as more
                                             follows:                                                                                                       in § 278.6(a), FNS may continue to
                                                                                                      than one staple food variety for the                  disclose this information for as long as
                                             § 278.1 Approval of retail food stores and               purpose of determining the number of                  the duration of the period of
                                             wholesale food concerns.                                 varieties in any staple food category.                disqualification or until the civil
                                             *      *    *     *     *                                Accessory foods shall not be counted as               penalty has been paid in full, whichever
                                               (b) * * *                                              staple foods for purposes of determining              is longer.
                                               (1) * * *                                              eligibility to participate in SNAP as a               *      *    *     *     *
                                               (ii) * * *                                             retail food store.
                                                                                                                                                              Dated: December 7, 2016.
                                               (A) Offer for sale and normally                        *      *     *     *     *
                                                                                                         (iv) * * * In addition, firms that are             Audrey Rowe,
                                             display in a public area, qualifying
                                             staple food items on a continuous basis,                 considered to be restaurants, that is,                Acting Under Secretary, Food, Nutrition and
                                                                                                      firms that have more than 50 percent of               Consumer Services.
                                             evidenced by having, on any given day
                                             of operation, no fewer than seven                        their total gross sales in foods cooked or            [FR Doc. 2016–29837 Filed 12–14–16; 8:45 am]
                                             different varieties of food items in each                heated on-site by the retailer before or              BILLING CODE 3410–30–P
                                             of the four staple food categories with a                after purchase; and hot and/or cold
                                             minimum depth of stock of three                          prepared foods not intended for home
                                             stocking units for each qualifying staple                preparation or consumption, including                 DEPARTMENT OF ENERGY
                                             variety and at least one variety of                      prepared foods that are consumed on
                                             perishable foods in at least three staple                the premises or sold for carryout, shall              10 CFR Part 609
                                             food categories. Documentation to                        not qualify for participation as retail
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                                             determine if a firm stocks a sufficient                  food stores under Criterion A or                      RIN 1901–AB38
                                             amount of required staple foods to offer                 B. * * *
                                                                                                                                                            Loan Guarantees for Projects That
                                             them for sale on a continuous basis may                  *      *     *     *     *                            Employ Innovative Technologies
                                             be required in cases where it is not clear                  (6) Need for access. FNS will consider
                                             that the firm has made reasonable                        whether the applicant firm is located in              AGENCY:Loan Programs Office,
                                             stocking efforts to meet the stocking                    an area with significantly limited access             Department of Energy.


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                                             90700            Federal Register / Vol. 81, No. 241 / Thursday, December 15, 2016 / Rules and Regulations

                                             ACTION:   Final rule.                                    IV. Approval of the Office of the Secretary              The final rule eliminates the pre-
                                                                                                                                                            application process and codifies
                                             SUMMARY:    The Department of Energy                     I. Introduction and Background                        procedures that divide the application
                                             (DOE or the Department) publishes a                                                                            into two parts.
                                             final rule to amend the existing                            This final rule amends the regulations
                                                                                                      implementing the loan guarantee                          The final rule revises the definition of
                                             regulations for the loan guarantee                                                                             Eligible Project to explicitly state that a
                                             program authorized by Title XVII of the                  program authorized by Title XVII of the
                                                                                                      Energy Policy Act of 2005 (42 U.S.C.                  project may be located at two or more
                                             Energy Policy Act of 2005 (Title XVII or                                                                       locations in the United States if the
                                             the Act). Section 1703 of Title XVII                     16511–16514) (referred to as Title XVII).
                                                                                                      Section 1703 of Title XVII (section 1703)             project is comprised of installations or
                                             (section 1703) authorizes the Secretary                                                                        facilities employing a single New or
                                             of Energy (Secretary) to make loan                       authorizes the Secretary of Energy
                                                                                                      (Secretary) to make loan guarantees for               Significantly Improved Technology that
                                             guarantees for projects that avoid,                                                                            is deployed pursuant to an integrated
                                             reduce, or sequester air pollutants or                   projects that: (1) Avoid, reduce, or
                                                                                                      sequester air pollutants or                           and comprehensive business plan.
                                             anthropogenic emissions of greenhouse                                                                             The final rule provides for the use of
                                             gases. Such projects must also employ                    anthropogenic emissions of greenhouse
                                                                                                      gases; and (2) employ new or                          Risk-Based Charges. Use of Risk-Based
                                             new or significantly improved                                                                                  Charges is permitted pursuant to the
                                             technologies as compared to commercial                   significantly improved technologies as
                                                                                                      compared to commercial technologies in                grant of authority to the Secretary in
                                             technologies in service in the United                                                                          Section 1702(a) to determine the terms
                                             States at the time the guarantee is                      service in the United States at the time
                                                                                                      the guarantee is issued. (42 U.S.C                    and conditions of the Title XVII loan
                                             issued. The two principal goals of                                                                             guarantee program.
                                             section 1703 are to encourage                            16513(a)).
                                                                                                         Section 1702 of Title XVII (section                   The final rule increases clarity and
                                             commercial use in the United States of                                                                         transparency. For example: Definitions
                                             new or significantly improved energy-                    1702) authorizes the Secretary, after
                                                                                                      consultation with the Secretary of the                have been clarified, shortened where
                                             related technologies and to achieve                                                                            possible, and added; specific references
                                             substantial environmental benefits.                      Treasury, to enter into loan guarantees
                                                                                                      on such terms and conditions as he or                 to the Cargo Preference Act and the
                                             Section 1703 also identifies ten                                                                               Davis Bacon Act have been added; an
                                             categories of technologies and projects                  she determines to be appropriate, in
                                                                                                      accordance with the provisions of                     introductory section on how the rule is
                                             that are potentially eligible for loan                                                                         to be interpreted has been added; and
                                             guarantees. Commercial use of these                      section 1702. Section 1702 also directs
                                                                                                      the Secretary to include in loan                      various provisions of the existing rule
                                             technologies is expected to help sustain                                                                       have been re-organized to more-
                                             and promote economic growth, produce                     guarantees ‘‘such detailed terms and
                                                                                                      conditions as the Secretary determines                appropriate places in the rule.
                                             a more stable and secure energy supply                                                                            DOE received comments on the
                                             and economy for the United States, and                   appropriate to (i) protect the interests of
                                                                                                      the United States in the case of a                    proposed rule, which are summarized in
                                             improve the environment.                                                                                       Section II of this final rule. DOE also
                                                As a result of experience gained                      default; and (ii) have available all the
                                                                                                      patents and technology necessary for                  provides its responses and explains any
                                             implementing the loan guarantee                                                                                changes to the proposal made in
                                             program authorized by section 1703,                      any person selected, including the
                                                                                                      Secretary, to complete and operate the                response to the comments received. (For
                                             and information received from program                                                                          additional background on DOE’s
                                             participants, including applicants,                      project.’’ (42 U.S.C. 16512(g)(2)(c)).
                                                                                                         On October 3, 2016, the Department                 experience in implementing the loan
                                             borrowers, sponsors, and lenders, as                                                                           guarantee program and the history of its
                                             well as various energy industry groups,                  published a proposed rule and request
                                                                                                      for comment on amendments to the                      implementing regulations, please see
                                             DOE finalizes amendments to the                                                                                the proposed rule.)
                                             existing regulations to provide increased                regulations for the Title XVII loan
                                             clarity and transparency, reduce                         guarantee program. (81 FR 67924) The                  II. Public Comments on the NOPR and
                                             paperwork, and provide a more                            proposed rule also provides additional                DOE’s Responses
                                             workable interpretation of certain                       background on DOE’s experience in
                                                                                                      implementing the loan guarantee                       A. Competition With Potential Future
                                             statutory provisions in light of DOE’s                                                                         Applications
                                             experience with operation of the Title                   program and the history of its
                                             XVII program.                                            implementing regulations. In this final                  Public comment: One commenter
                                             DATES: This rule is effective on January
                                                                                                      rule, DOE adopts the changes set forth                requests clarification and revision of the
                                             17, 2017.                                                in the proposed rule, except where DOE                proposed changes in § 609.5(a) to the
                                                                                                      made changes in consideration of                      competitive process for evaluating
                                             FOR FURTHER INFORMATION CONTACT:
                                                                                                      comments received on the proposal. In                 completed Applications, which would
                                             Mark S. Westergard, Assistant Chief                      Section II of this final rule, DOE                    require completed Applications to be
                                             Counsel Regulatory Affairs, Loan                         summarizes the comments received, and                 evaluated against potential projects that
                                             Programs Office, United States                           provides its responses to those                       may become the subject of an
                                             Department of Energy, 1000                               comments and a discussion of the                      Application. The commenter is
                                             Independence Avenue SW.,                                 changes made to the proposal in this                  concerned that the proposed changed
                                             Washington, DC 20585–0121, (202) 287–                    final rule.                                           will delay the Application process and
                                             5621, email: lgprogram@hq.doe.gov.                          In this final rule, DOE adopts the                 put otherwise qualified projects in
                                             SUPPLEMENTARY INFORMATION:                               proposed rule changes that clarify the                ‘‘limbo’’ while the DOE awaits the filing
                                             I. Introduction and Background                           circumstances under which potential                   of Applications that may be filed on
                                             II. Public Comments on the NOPR and DOE’s                applicants may communicate with DOE                   other projects. In the commenter’s view,
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                                                   Responses                                          prior to submitting an application. DOE               this may result in a longer and more
                                                A. Competition with Potential Future                  expects that the changes will increase                opaque process, because fewer projects
                                                   Applications
                                                B. Risk-Based Charge                                  transparency and result in more                       would be able to withstand the
                                                C. Section 609.8(c)(2) and section                    applications by qualified applicants                  additional timing delays, as well as in
                                                   609.8(c)(3)                                        with respect to potential eligible                    greater market uncertainty about the
                                             III. Regulatory Review                                   projects.                                             DOE loan guarantee program.


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                                                              Federal Register / Vol. 81, No. 241 / Thursday, December 15, 2016 / Rules and Regulations                                      90701

                                               DOE Response: DOE notes that                           sufficiently reflect creditworthiness or              related financing or other credit
                                             applications are reviewed against all                    specific risks arising from individual                arrangements not guaranteed by DOE.
                                             other applications filed within the same                 transactions. The Risk-Based Charge,                  See 74 FR 63544, 63546, Section II.C.
                                             round. For that reason DOE does not                      while distinct from the fee for the Credit            Shorter Amortization of Non-
                                             believe the proposed change would                        Subsidy Cost, may incidentally affect                 Guaranteed Obligations. DOE has
                                             delay the application process or put                     that fee by increasing expected inflows               reviewed the issue in response to the
                                             otherwise qualified projects in ‘‘limbo.’’               to the United States that are considered              comment and has determined that the
                                             Nevertheless, DOE agrees that the                        in calculating the amount of the fee. In              provisions established in the 2009 rule
                                             proposed change could cause a more                       that respect, taking into account the                 address the concern while at the same
                                             opaque process and market uncertainty                    time value of money, the Risk-Based                   time protecting the interests of the
                                             regarding, among other matters, whether                  Charge can be viewed as affecting the                 United States. For that reason, DOE has
                                             a project will be competed against                       time of payment rather than the amount                determined that no change in the
                                             potential projects that may become the                   of payment based on the                               existing language of the final rule is
                                             subject of an application. The proposal                  creditworthiness of the borrower and                  warranted.
                                             to consider potential future                             the expectations regarding probability of                Other Changes: While reviewing the
                                             Applications is inconsistent with                        repayment. After factoring in the Risk-               proposed rule in response to public
                                             competing filed Applications against all                 Based Charge, DOE does not expect the                 comments, DOE found certain areas in
                                             other Applications filed within the same                 present value of the interest amounts                 the proposed rule that should be
                                             round. For those reasons DOE has                         expected to be paid by the borrower as                modified consistent with DOE’s intent
                                             decided to withdraw the proposed                         the cost of the loan should be                        to increase transparency and clarity. On
                                             change to the competitive process                        significantly different than the interest             further consideration, DOE determined
                                             which would allow consideration of                       amounts that would be paid without the                that its treatment of the prohibition in
                                             potential projects during the                            Risk-Based Charge.                                    Section 149(b) of the Internal Revenue
                                             competition.                                                                                                   Code in § 609.8(c)(4) created ambiguity
                                                                                                      C. Section 609.8(c)(2) and Section
                                             B. Risk-Based Charge                                     609.8(c)(3)                                           and made application of the provision
                                                                                                                                                            more complicated. Therefore, DOE
                                                Public comments: Both commenters                         Public comment: One commenter                      eliminated the changes in the proposed
                                             requested clarification regarding the                    requested clarification of what it views              rule and restored the language of the
                                             ‘‘Risk-based-charge’’ which they believe                 as an apparent inconsistency between                  existing rule to tie the rule to the
                                             is duplicative of other existing fees. The               §§ 609.8(c)(2) and 609.8(c)(3) of the
                                                                                                                                                            requirements of law as they related to
                                             commenters urge DOE not to impose                        proposed rule. The commenter stated
                                                                                                                                                            tax-exempt debt obligation financing.
                                             this additional fee on recipients of                     that § 609.8(c)(2) appears to require that
                                                                                                                                                            Finally, DOE clarified a provision
                                             DOE’s Title XVII loan guarantees.                        the guaranteed and nonguaranteed
                                                One commenter also pointed out that                                                                         relating to communications with
                                                                                                      portions of a loan partially guaranteed
                                             the Title XVII loan guarantee program                                                                          applicants by deleting a sentence that
                                                                                                      by DOE be repaid pro rata, and on the
                                             currently charges two fees to                                                                                  was unclear and not required by law.
                                                                                                      same amortization schedule. Section
                                             compensate DOE for the credit risk it                    609.8(c)(3) appears to the commenter to               III. Regulatory Review
                                             assumes. First, the program charges a                    provide for exceptions to this
                                             ‘‘Credit-Based Interest Rate Spread’’                                                                          A. Executive Order 12866
                                                                                                      requirement under certain conditions.
                                             based on the credit rating of the                           The commenter also requested that                    This final rule has been determined to
                                             Applicant’s project. Second, the                         DOE modify § 609.8 to allow for                       be a significant regulatory action under
                                             program charges a ‘‘Credit Subsidy Fee’’                 commercial co-lenders to provide                      Executive Order 12866, ‘‘Regulatory
                                             to directly compensate the United States                 structured loan facilities that would                 Planning and Review,’’ 58 FR 51735
                                             for the specific credit risk of the                      have the same amortization schedule as                (October 4, 1993). Accordingly, this
                                             applicant’s project. The commenter                       the guaranteed portion of the facility but            action was subject to review under that
                                             requested clarification that the reference               with a shorter loan tenor and a related               Executive Order by the Office of
                                             to a ‘‘Risk-based charge’’ means the                     refinancing requirement at maturity of                Information and Regulatory Affairs
                                             ‘‘Credit Based Interest Rate Spread’’,                   the structured loan facility.                         (OIRA) of the Office of Management and
                                             and that the program is not intending to                    DOE Response: DOE does not view                    Budget (OMB).
                                             impose a new fee and increase the                        §§ 609.8(c)(2) and 609.8(c)(3) as
                                             interest rate spreads beyond the current                 inconsistent. Section 609.8(c)(2) deals               B. National Environmental Policy Act
                                             spreads.                                                 with the guaranteed and nonguaranteed                   DOE has determined that this final
                                                DOE Response: Section 1702(e) of                      portions of loans partially guaranteed by             rule is covered under the Categorical
                                             Title XVII requires the Secretary to                     DOE. Section 609.8(c)(3) deals with                   Exclusion found in DOE’s National
                                             establish interest rates that do not                     financing or credit arrangements not                  Environmental Policy Act regulations at
                                             exceed a level that the Secretary                        guaranteed by DOE.                                    paragraph A.5 of appendix A to subpart
                                             determines appropriate, taking into                         The commenter’s request for a shorter              D, 10 CFR part 1021, which applies to
                                             account the prevailing rate of interest in               loan tenor in connection with certain                 rulemaking that amends an existing rule
                                             the private sector for similar loans and                 commercial loan products is similar to                or regulation which does not change the
                                             risks. In the proposed rule, DOE                         a comment DOE received in response to                 environmental effect of the rule or
                                             proposed a ‘‘Risk-Based Charge’’ that,                   a proposed rule to amend the Title XVII               regulation being amended.
                                             taking into account all interest and                     regulations published in 2009. (74 FR
                                             interest-related costs, is intended to                   39569, Aug. 7, 2009) In the final rule,               C. Regulatory Flexibility Act
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                                             make DOE’s charges and costs                             published on December 4, 2009, DOE                      The Regulatory Flexibility Act (5
                                             consistent with the commercial markets                   made adjustments, retained by the                     U.S.C. 601 et seq.) requires preparation
                                             and other federal credit programs. Thus,                 proposed rulemaking and subject to the                of an initial regulatory flexibility
                                             the Risk-Based Charge will be used only                  same conditions set forth in the current              analysis for any rule that by law must
                                             to the extent the aggregate of other                     rule, to permit shorter or faster                     be proposed for public comment, unless
                                             interest-related charges do not                          amortization schedules for project-                   the agency certifies that the rule, if


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                                             90702            Federal Register / Vol. 81, No. 241 / Thursday, December 15, 2016 / Rules and Regulations

                                             promulgated, will not have a significant                 governmental and private sector                       Reform,’’ 61 FR 4729 (February 7, 1996),
                                             economic impact on a substantial                         applicants for loan guarantees, the Act’s             imposes on Executive agencies the
                                             number of small entities. As required by                 definitions of the terms ‘‘Federal                    general duty to adhere to the following
                                             Executive Order 13272, ‘‘Proper                          intergovernmental mandate’’ and                       requirements: (1) Eliminate drafting
                                             Consideration of Small Entities in                       ‘‘Federal private sector mandate’’                    errors and ambiguity; (2) write
                                             Agency Rulemaking,’’ 67 FR 53461                         exclude among other things, any                       regulations to minimize litigation; and
                                             (August 16, 2002), DOE published                         provision in legislation, statute, or                 (3) provide a clear legal standard for
                                             procedures and policies on February 19,                  regulation that is a condition of Federal             affected conduct rather than a general
                                             2003, to ensure that the potential                       assistance or a duty arising from                     standard and promote simplification
                                             impacts of its rules on small entities are               participation in a voluntary program.                 and burden reduction. With regard to
                                             properly considered during the                           The final rule would establish                        the review required by section 3(a),
                                             rulemaking process (68 FR 7990). DOE                     requirements that persons voluntarily                 section 3(b) of Executive Order 12988
                                             has made its procedures and policies                     seeking loan guarantees for projects that             specifically requires that Executive
                                             available on the Office of General                       would use certain new and improved                    agencies make every reasonable effort to
                                             Counsel’s Web site: http://                              energy technologies must satisfy as a                 ensure that the regulation: (1) Clearly
                                             www.energy.gov/gc/downloads/                             condition of a Federal loan guarantee.                specifies the preemptive effect, if any;
                                             executive-order-13272-consideration-                     Thus, the final rule falls under the                  (2) clearly specifies any effect on
                                             small-entities-agency-rulemaking.                        exceptions in the definitions of ‘‘Federal            existing Federal law or regulation; (3)
                                               DOE is not obligated to prepare a                      intergovernmental mandate’’ and                       provides a clear legal standard for
                                             regulatory flexibility analysis for this                 ‘‘Federal private sector mandate’’ for                affected conduct while promoting
                                             rulemaking because there is not a                        requirements that are a condition of                  simplification and burden reduction; (4)
                                             requirement to publish a general notice                  Federal assistance or a duty arising from             specifies the retroactive effect, if any; (5)
                                             of proposed rulemaking for rules related                 participation in a voluntary program.                 adequately defines key terms; and (6)
                                             to loans under the Administrative                        The Act does not apply to this                        addresses other important issues
                                             Procedure Act (5 U.S.C. 553(a)(2)).                      rulemaking.                                           affecting clarity and general
                                                                                                                                                            draftsmanship under any guidelines
                                             D. Paperwork Reduction Act                               F. Treasury and General Government
                                                                                                                                                            issued by the Attorney General. Section
                                                Information collection requirements                   Appropriations Act, 1999                              3(c) of Executive Order 12988 requires
                                             for the DOE regulations at 10 CFR part                      Section 654 of the Treasury and                    Executive agencies to review regulations
                                             609 have been submitted for approval to                  General Government Appropriations                     in light of applicable standards in
                                             OMB pursuant to the Paperwork                            Act, 1999 (Pub. L. 105–277) requires                  section 3(a) and section 3(b) to
                                             Reduction Act of 1995 (44 U.S.C. 3501                    Federal agencies to issue a Family                    determine whether they are met or it is
                                             et seq.) and the procedure implementing                  Policymaking Assessment for any                       unreasonable to meet one or more of
                                             that Act (5 CFR 1320.1 et seq.) under                    proposed rule that may affect family                  them. DOE has completed the required
                                             OMB Control Number 1910–5134. The                        well-being. The final rule would not                  review and determined that, to the
                                             revised recordkeeping and reporting                      have any impact on the autonomy or                    extent permitted by law, the final rule
                                             requirements associated with this                        integrity of the family as an institution.            meets the relevant standards of
                                             rulemaking are not mandatory until the                   Accordingly, DOE has concluded that it                Executive Order 12988.
                                             information collection is approved by                    is not necessary to prepare a Family
                                             OMB.                                                     Policymaking Assessment.                              I. Treasury and General Government
                                                Public reporting burden for the                                                                             Appropriations Act, 2001
                                             revised requirements in this final rule is               G. Executive Order 13132                                 The Treasury and General
                                             estimated to average 130 hours per                          Executive Order 13132, ‘‘Federalism,’’             Government Appropriations Act, 2001
                                             response, including the time for                         64 FR 43255 (August 4, 1999) imposes                  (44 U.S.C. 3516 note) provides for
                                             reviewing instructions, searching                        certain requirements on agencies                      agencies to review most disseminations
                                             existing data sources, gathering and                     formulating and implementing policies                 of information to the public under
                                             maintaining the data needed, and                         or regulations that preempt State law or              guidelines established by each agency
                                             completing and reviewing the collection                  that have federalism implications.                    pursuant to general guidelines issued by
                                             of information. All responses are                        Agencies are required to examine the                  OMB.
                                             expected to be collected electronically.                 constitutional and statutory authority                   OMB’s guidelines were published at
                                                Notwithstanding any other provision                   supporting any action that would limit                67 FR 8452 (February 22, 2002), and
                                             of law, a person is not required to                      the policymaking discretion of the                    DOE’s guidelines were published at 67
                                             respond to a collection of information                   States and carefully assess the necessity             FR 62446 (October 7, 2002). DOE has
                                             unless it displays a currently valid OMB                 for such actions. DOE has examined this               reviewed this final rule under the OMB
                                             control number.                                          final rule and has determined that it                 and DOE guidelines and has concluded
                                                                                                      would not preempt State law and would                 that it is consistent with applicable
                                             E. Unfunded Mandates Reform Act of
                                                                                                      not have a substantial direct effect on               policies in those guidelines.
                                             1995
                                                                                                      the States, on the relationship between
                                                The Unfunded Mandates Reform Act                                                                            J. Executive Order 13211
                                                                                                      the national government and the States,
                                             of 1995 (Act) (Pub. L. 104–4) generally                  or on the distribution of power and                      Executive Order 13211, ‘‘Actions
                                             requires Federal agencies to examine                     responsibilities among the various                    Concerning Regulations That
                                             closely the impacts of regulatory actions                levels of government. No further action               Significantly Affect Energy Supply,
                                             on State, local, and tribal governments.                                                                       Distribution, or Use,’’ 66 FR 28355 (May
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                                                                                                      is required by Executive Order 13132.
                                             The term ‘‘Federal mandate’’ is defined                                                                        22, 2001) requires Federal agencies to
                                             in the Act to mean a Federal                             H. Executive Order 12988                              prepare and submit to the OMB, a
                                             intergovernmental mandate or a Federal                     With respect to the review of existing              Statement of Energy Effects for any
                                             private sector mandate. Although the                     regulations and the promulgation of                   proposed significant energy action. A
                                             final rule would impose certain                          new regulations, section 3(a) of                      ‘‘significant energy action’’ is defined as
                                             requirements on non-Federal                              Executive Order 12988, ‘‘Civil Justice                any action by an agency that


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                                                              Federal Register / Vol. 81, No. 241 / Thursday, December 15, 2016 / Rules and Regulations                                         90703

                                             promulgated or is expected to lead to                    PART 609—LOAN GUARANTEES FOR                            Sponsor, that submits an Application
                                             promulgation of a final rule, and that:                  PROJECTS THAT EMPLOY                                    to DOE.
                                             (1) Is a significant regulatory action                   INNOVATIVE TECHNOLOGIES                               Application means a written submission
                                             under Executive Order 12866, or any                                                                              of materials responsive to a
                                                                                                      Sec.                                                    Solicitation that satisfies § 609.4.
                                             successor order; and (2) is likely to have               609.1 Purpose and scope.
                                             a significant adverse effect on the                                                                            Application Fee means the fee or fees
                                                                                                      609.2 Definitions and interpretation.                   required to be paid by an Applicant
                                             supply, distribution, or use of energy, or               609.3 Solicitations.                                    in connection with submission of an
                                             (3) is designated by the Administrator of                609.4 Submission of applications.
                                                                                                      609.5 Programmatic, technical and financial
                                                                                                                                                              Application and specified in a
                                             OIRA as a significant energy action. For                                                                         Solicitation. The Application Fee
                                             any proposed significant energy action,                       evaluation of applications.
                                                                                                      609.6 Term sheets and conditional                       does not include the Credit Subsidy
                                             the agency must give a detailed                                                                                  Cost.
                                                                                                           commitments.
                                             statement of any adverse effects on                      609.7 Closing on the loan guarantee                   Attorney General means the Attorney
                                             energy supply, distribution, or use                           agreement.                                         General of the United States.
                                             should the proposal be implemented,                      609.8 Loan guarantee agreement.                       Borrower means any Person that enters
                                             and of reasonable alternatives to the                    609.9 Lender servicing requirements.                    into a Loan Guarantee Agreement
                                             action and their expected benefits on                    609.10 Project costs.                                   with DOE and issues Guaranteed
                                             energy supply, distribution, and use.                    609.11 Fees and charges.                                Obligations.
                                                                                                      609.12 Full faith and credit and                      Cargo Preference Act means the Cargo
                                             This regulatory action would not have a                       incontestability.
                                             significant adverse effect on the supply,                                                                        Preference Act of 1954, 46 U.S.C.
                                                                                                      609.13 Default, demand, payment, and
                                             distribution, or use of energy and has                        collateral liquidation.                            55305, as amended.
                                             not been designated by OIRA as a                         609.14 Preservation of collateral.                    Commercial Technology means a
                                             significant energy action, and is                        609.15 Audit and access to records.                     technology in general use in the
                                                                                                      609.16 Deviations.                                      commercial marketplace in the United
                                             therefore not a significant energy action.
                                                                                                                                                              States at the time the Term Sheet is
                                             Accordingly, DOE has not prepared a                        Authority: 42 U.S.C. 7254, 16511–16514.
                                                                                                                                                              offered by DOE. A technology is in
                                             Statement of Energy Effects.
                                                                                                      § 609.1   Purpose and scope.                            general use if it is being used in three
                                             K. Executive Order 12630                                   (a) This part sets forth the policies                 or more facilities that are in
                                                                                                      and procedures that DOE uses for                        commercial operation in the United
                                                The Department has determined,                        receiving, evaluating, and approving                    States for the same general purpose as
                                             under Executive Order 12630,                             applications for loan guarantees to                     the proposed project, and has been
                                             ‘‘Governmental Actions and Interference                  support Eligible Projects under section                 used in each such facility for a period
                                             with Constitutionally Protected Property                 1703 of the Energy Policy Act of 2005                   of at least five years. The five-year
                                             Rights,’’ 53 FR 8859 (March 18, 1988),                   (Act).                                                  period for each facility shall start on
                                             that this rule would not result in any                     (b) This part applies to all                          the in-service date of the facility
                                             takings which might require                              Applications, Conditional                               employing that particular technology
                                             compensation under the Fifth                             Commitments, and Loan Guarantee                         or, in the case of a retrofit of a facility
                                             Amendment to the United States                           Agreements.                                             to employ a particular technology, the
                                             Constitution.                                              (c) Part 1024 of chapter X of title 10                date the facility resumes commercial
                                                                                                      of the Code of Federal Regulations shall                operation following completion and
                                             L. Congressional Notification                            not apply to actions taken under this                   testing of the retrofit. For purposes of
                                                                                                      part.                                                   this section, facilities that are in
                                               As required by 5 U.S.C. 801, DOE will
                                                                                                                                                              commercial operation include
                                             report to Congress on the promulgation                   § 609.2   Definitions and interpretation.               projects that have been the recipients
                                             of this rule prior to its effective date.                  (a) Definitions. When used in this part               of a loan guarantee from DOE under
                                             The report will state that it has been                   the following words have the following                  this part.
                                             determined that the rule is not a ‘‘major                meanings.                                             Conditional Commitment means a Term
                                             rule’’ as defined by 5 U.S.C. 804(2).                    Act means Title XVII of the Energy                      Sheet offered by DOE and accepted by
                                                                                                        Policy Act of 2005 (42 U.S.C. 16511–                  the offeree of the Term Sheet, all in
                                             IV. Approval of the Office of the
                                                                                                        16514), as amended.                                   accordance with § 609.6(c); provided,
                                             Secretary                                                Administrative Cost of Issuing a Loan                   that the Secretary may terminate a
                                               The Secretary of Energy has approved                     Guarantee means the total of all                      Conditional Commitment for any
                                             publication of this final rule.                            administrative expenses that DOE                      reason at any time prior to the
                                                                                                        incurs during:                                        execution of the Loan Guarantee
                                             List of Subjects in 10 CFR Part 609                        (1) The evaluation of an Application                  Agreement; and provided, further,
                                                                                                      for a loan guarantee;                                   that the Secretary may not delegate
                                               Administrative practice and                              (2) The negotiation and offer of a                    this authority to terminate a
                                             procedure, Energy, Loan programs, and                    Term Sheet;                                             Conditional Commitment.
                                             Reporting and recordkeeping                                (3) The negotiation of a Loan                       Contracting Officer means the Secretary
                                             requirements.                                            Guarantee Agreement and related                         of Energy or a DOE official authorized
                                               Issued in Washington, DC, on December 6,               documents, including the issuance of a                  by the Secretary to enter into,
                                             2016.                                                    Guarantee; and                                          administer or terminate DOE Loan
                                                                                                        (4) The servicing and monitoring of a
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                                             Mark A. McCall,                                                                                                  Guarantee Agreements and related
                                                                                                      Loan Guarantee Agreement, including                     contracts on behalf of DOE.
                                             Executive Director, Loan Programs Office.
                                                                                                      during the construction, startup,                     Credit Subsidy Cost has the same
                                               For the reasons stated in the                          commissioning, shakedown, and                           meaning as ‘‘cost of a loan guarantee’’
                                             preamble, DOE revises part 609 of                        operational phases of an Eligible Project.              in section 502(5)(C) of the Federal
                                             chapter II of title 10 of the Code of                    Applicant means a Person, including a                   Credit Reform Act of 1990, which is
                                             Federal Regulations as set forth below:                    prospective Borrower or Project                       the net present value, at the time the


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                                             90704            Federal Register / Vol. 81, No. 241 / Thursday, December 15, 2016 / Rules and Regulations

                                                Loan Guarantee Agreement is                             (3) Satisfies all applicable                        Loan Guarantee Agreement means a
                                                executed, of the following estimated                  requirements of section 1703 of the Act,                 written agreement that, when entered
                                                cash flows, discounted to the point of                the applicable Solicitation, and this                    into by DOE and a Borrower, and, if
                                                disbursement:                                         part.                                                    applicable, an Eligible Lender,
                                                (1) Payments by the Government to                     Equity means cash contributed to the                     establishes the obligation of DOE to
                                             cover defaults and delinquencies,                          permanent capital stock (or                            guarantee the payment of all or a
                                             interest subsidies, or other payments;                     equivalent) of the Borrower or the                     portion of the principal of, and
                                             less                                                       Eligible Project by the shareholders or                interest on, specified Guaranteed
                                                (2) Payments to the Government                          other owners of the Borrower or the                    Obligations, subject to the terms and
                                             including origination and other fees,                      Eligible Project. Equity does not                      conditions specified in the Loan
                                             penalties, and recoveries; including the                   include proceeds from the non-                         Guarantee Agreement.
                                             effects of changes in loan or debt terms                   guaranteed portion of a Guaranteed                  New or Significantly Improved
                                             resulting from the exercise by the                         Obligation, proceeds from any other                    Technology means a technology, or a
                                             Borrower, Eligible Lender or other                         non-guaranteed loan or obligation, or                  defined suite of technologies,
                                             Holder of an option included in the                        the value of any government                            concerned with the production,
                                             Loan Guarantee Agreement.                                  assistance or support.                                 consumption, or transportation of
                                                                                                      Facility Fee means the fee, to be paid in                energy and that is not a Commercial
                                             Davis-Bacon Act means the statute                                                                                 Technology, and that has either:
                                                referenced in section 1702(k) of the                    the amount and in the manner
                                                                                                        provided in the Term Sheet, to cover                   (1) Only recently been developed,
                                                Act.
                                                                                                        the Administrative Cost of Issuing a                discovered, or learned; or
                                             DOE means the United States
                                                                                                        Loan Guarantee for the period from                     (2) Involves or constitutes one or more
                                                Department of Energy.                                                                                       meaningful and important
                                             Eligible Lender means either:                              the Borrower’s acceptance of the Term
                                                                                                        Sheet through issuance of the                       improvements in productivity or value,
                                                (1) Any Person formed for the purpose
                                                                                                        Guarantee.                                          in comparison to Commercial
                                             of, or engaged in the business of,                                                                             Technologies in use in the United States
                                             lending money that, as determined by                     Federal Financing Bank means an
                                                                                                                                                            at the time the Term Sheet is issued.
                                             DOE in each case, is:                                      instrumentality of the United States
                                                (i) Not debarred or suspended from                      government created by the Federal                   OMB means the Office of Management
                                             participation in a Federal government                      Financing Bank Act of 1973, under                      and Budget in the Executive Office of
                                                                                                        the general supervision of the                         the President.
                                             contract or participation in a non-
                                                                                                        Secretary of the Treasury.                          Person means any natural person or any
                                             procurement activity (under a set of
                                                                                                                                                               legally constituted entity, including a
                                             uniform regulations implemented for                      Guarantee means the undertaking of the
                                                                                                                                                               state or local government, tribe,
                                             numerous agencies, such as DOE, at 2                       United States of America, acting
                                                                                                                                                               corporation, company, voluntary
                                             CFR part 180);                                             through the Secretary pursuant to
                                                                                                                                                               association, partnership, limited
                                                (ii) Not delinquent on any Federal                      Title XVII of the Energy Policy Act of
                                                                                                                                                               liability company, joint venture, and
                                             debt or loan;                                              2005, to pay in accordance with the
                                                                                                                                                               trust.
                                                (iii) Legally authorized and                            terms thereof, principal and interest               Project Costs mean those costs,
                                             empowered to enter into loan guarantee                     of a Guaranteed Obligation.                            including escalation and
                                             transactions authorized by the Act and                   Guaranteed Obligation means any loan                     contingencies, that are to be expended
                                             these regulations;                                         or other debt obligation of the                        or accrued by a Borrower and are
                                                (iv) Able to demonstrate experience in                  Borrower for an Eligible Project for                   necessary, reasonable, customary and
                                             originating and servicing loans for                        which DOE guarantees all or any part                   directly related to the design,
                                             commercial projects similar in size and                    of the payment of principal and                        engineering, financing, construction,
                                             scope to the Eligible Project, or able to                  interest under a Loan Guarantee                        startup, commissioning and
                                             procure such experience through                            Agreement entered into pursuant to                     shakedown of an Eligible Project, as
                                             contracts acceptable to DOE; and                           the Act.                                               specified in § 609.10(a). Project Costs
                                                (v) Able to demonstrate experience as                 Holder means any Person that holds a                     do not include costs for the items set
                                             the lead lender or underwriter by                          promissory note made by the                            forth in § 609.10(b).
                                             presenting evidence of its participation                   Borrower evidencing the Guaranteed                  Project Sponsor means any Person that
                                             in large commercial projects or energy-                    Obligation (or his designee or agent).                 assumes substantial responsibility for
                                             related projects or other relevant                       Intercreditor Agreement means any                        the development, financing, and
                                             experience, or able to procure such                        agreement or instrument (or                            structuring of an Eligible Project and,
                                             experience through contracts acceptable                    amendment or modification thereof)                     if not the Applicant, owns or controls,
                                             to DOE; or                                                 among DOE and one or more other                        by itself and/or through individuals in
                                                (2) The Federal Financing Bank.                         Persons providing financing or other                   common or affiliated business
                                             Eligible Project means a project that:                     credit arrangements to the Borrower                    entities, a five percent or greater
                                                (1) Is located in the United States at                  or an Eligible Project) or that                        interest in the proposed Eligible
                                             one location, except that the project may                  otherwise provides for rights of DOE                   Project, the Borrower or the
                                             be located at two or more locations in                     in respect of a Borrower or in respect                 Applicant.
                                             the United States if the project is                        of an Eligible Project, in each case in             Risk-Based Charge means a charge that,
                                             comprised of installations or facilities                   form and substance satisfactory to                     together with the principal and
                                             employing a single New or Significantly                    DOE.                                                   interest on the guaranteed loan, or at
                                             Improved Technology that is deployed                     Loan Agreement means a written
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                                                                                                                                                               such other times as DOE may
                                             pursuant to an integrated and                              agreement between a Borrower and an                    determine, is payable on specified
                                             comprehensive business plan. An                            Eligible Lender containing the terms                   dates during the term of a Guaranteed
                                             Eligible Project in more than one                          and conditions under which the                         Obligation.
                                             location is a single Eligible Project;                     Eligible Lender will make a loan or                 Secretary means the Secretary of Energy
                                                (2) Deploys a New or Significantly                      loans to the Borrower for an Eligible                  or a duly authorized designee or
                                             Improved Technology; and                                   Project.                                               successor in interest.


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                                                              Federal Register / Vol. 81, No. 241 / Thursday, December 15, 2016 / Rules and Regulations                                        90705

                                             Solicitation means an announcement                          (1) The dollar amount of loan                      changes in the proposed project’s
                                                that DOE is accepting Applications                    guarantee authority potentially being                 financing structure or other terms,
                                                that is widely disseminated to the                    made available by DOE in that                         promptly upon request by DOE. Where
                                                public on the DOE Web site or                         Solicitation;                                         DOE has directed that an Application be
                                                otherwise, and which satisfies the                       (2) The place and deadline for                     submitted in parts, DOE may provide for
                                                requirements of § 609.3(b).                           submission of Applications;                           payment of the Application Fee in parts.
                                             Term Sheet means a written offer for the                    (3) The name and address of the DOE                   (b) An Applicant may submit only
                                                issuance of a loan guarantee, executed                representative whom a potential                       one Application for one proposed
                                                by the Secretary (or a DOE official                   Applicant may contact to receive further              project using a particular technology.
                                                authorized by the Secretary to execute                information and a copy of the                         An Applicant may not submit an
                                                such offer), delivered to the offeree,                Solicitation;                                         Application or Applications for
                                                that sets forth the detailed terms and                   (4) The form, format, and page limits              multiple Eligible Projects using the
                                                conditions under which DOE and the                    applicable to the Application;                        same technology. An Applicant may
                                                Applicant will execute a Loan                            (5) The amount of the Application Fee              submit Applications for multiple
                                                Guarantee Agreement.                                  and any other fees that will be required;             proposed projects using different
                                             United States means the several States,                     (6) The programmatic, technical,
                                                                                                                                                            technologies. For purposes of this
                                                the District of Columbia, the                         financial and other factors that DOE will
                                                                                                                                                            paragraph (b), the term Applicant shall
                                                Commonwealth of Puerto Rico, the                      use to evaluate response submissions,
                                                                                                                                                            include the Project Sponsor and any
                                                Virgin Islands, Guam, American                        and their relative weightings in that
                                                                                                                                                            subsidiaries or affiliates of the Project
                                                Samoa and any territory or possession                 evaluation; and
                                                                                                                                                            Sponsor.
                                                of the United States of America.                         (7) Such other information as DOE
                                                                                                      may deem appropriate.                                    (c) An Application must include, at a
                                             (b) Interpretations. This part shall be                                                                        minimum, the following information
                                                interpreted using the following                          (c) Using procedures as may be
                                                                                                      announced by DOE a potential                          and materials:
                                                guidelines.
                                                                                                      Applicant may request a meeting with                     (1) A completed Application form
                                                (1) The word ‘‘discretion’’ when used                                                                       signed by an individual with full
                                                                                                      DOE to discuss its potential
                                             with reference to DOE, including the                                                                           authority to bind the Applicant,
                                                                                                      Application. At its discretion, DOE may
                                             Secretary, means ‘‘sole discretion.’’                                                                          including the commitments and
                                                (2) Defined terms in the singular shall               meet with a potential Applicant, either
                                                                                                      in person or electronically, to discuss its           representations made in each part of the
                                             include the plural and vice versa, and                                                                         Application;
                                             the masculine, feminine or neuter                        potential Application. DOE may provide
                                                                                                      a potential Applicant with a preliminary                 (2) The applicable Application Fee;
                                             gender shall include all genders.
                                                (3) The word ‘‘or’’ is not exclusive.                 response regarding whether its proposed                  (3) A description of how and to what
                                                (4) References to laws by name or                     Application may constitute an Eligible                measurable extent the proposed project
                                             popular name are references to the                       Project. DOE’s responses to questions                 avoids, reduces, or sequesters air
                                             version of such law appearing in the                     from potential Applicants and DOE’s                   pollutants and/or anthropogenic
                                             United States Code and include any                       statements to potential Applicants are                emissions of greenhouse gases,
                                             amendment, supplement or                                 pre-decisional and preliminary in                     including how to measure and verify
                                             modification of such law, and all                        nature. Any such responses and                        those effects;
                                             regulations, rulings, and other laws                     statements are subject in their entirety                 (4) A description of the nature and
                                             promulgated thereunder.                                  to any final action by DOE with respect               scope of the proposed project,
                                                (5) References to information or                      to an Application submitted in                        including:
                                             documents required or allowed to be                      accordance with § 609.4.                                 (i) Key project milestones;
                                             submitted to DOE mean information or                     § 609.4   Submission of applications.                    (ii) Location or locations of the
                                             documents that are marked as provided                                                                          proposed project;
                                                                                                         (a) In response to a Solicitation, an
                                             in 10 CFR 600.15(b). A document or                                                                                (iii) Identification and commercial
                                                                                                      Applicant must meet all requirements
                                             information that is not marked as                                                                              feasibility of the New or Significantly
                                                                                                      and provide all information specified in
                                             provided in 10 CFR 600.15(b) will not                                                                          Improved Technology to be deployed;
                                                                                                      this part and the Solicitation in the
                                             be considered as having been submitted                                                                            (iv) How the Applicant intends to
                                                                                                      manner and on or before the date
                                             to or received by DOE.                                                                                         deploy such New or Significantly
                                                (6) A reference to a Person includes                  specified therein. DOE may direct that
                                                                                                      Applications be submitted in more than                Improved Technology in the proposed
                                             such Person’s successors and permitted                                                                         project; and
                                             assigns.                                                 one part; provided, that the parts of
                                                                                                      such Application, taken as a whole,                      (v) How the Applicant intends to
                                                (7) The words ‘‘include,’’ ‘‘includes’’                                                                     assure, to the extent possible, the further
                                             and ‘‘including’’ are not limiting and                   satisfy the requirements of § 609.4(c)
                                                                                                      and this part. In such event, subsequent              commercial availability of the New or
                                             mean include, includes and including                                                                           Significantly Improved Technology in
                                             ‘‘without limitation’’ and ‘‘without                     parts of an Application may be filed
                                                                                                      only after DOE invites an Applicant to                the United States.
                                             limitation by specification.’’
                                                                                                      make an additional submission. The                       (5) An explanation of how the
                                                (8) The words ‘‘hereof,’’ ‘‘herein’’ and
                                                                                                      initial part of an Application may be                 proposed project qualifies as a project
                                             ‘‘hereunder’’ and words of similar
                                                                                                      used by DOE to determine the                          within the category or categories of
                                             import refer this part as a whole and not
                                                                                                      likelihood that the project proposed by               projects referred to in the Solicitation;
                                             to any particular provision of this part.
                                                                                                      an Applicant will be an Eligible Project,                (6) A detailed estimate of the total
                                             § 609.3   Solicitations.                                 and to evaluate such project’s readiness              Project Costs together with a description
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                                               (a) DOE may invite the submission of                   to proceed. If there have been any                    of the methodology and assumptions
                                             Applications for loan guarantees for                     material amendments, modifications or                 used;
                                             Eligible Projects pursuant to a                          additions made to the information                        (7) A detailed description of the
                                             Solicitation.                                            previously submitted by an Applicant,                 engineering and design contractor(s),
                                               (b) Each Solicitation must include, at                 the Applicant shall provide a detailed                construction contractor(s), and
                                             a minimum, the following information:                    description thereof, including any                    equipment supplier(s);


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                                             90706            Federal Register / Vol. 81, No. 241 / Thursday, December 15, 2016 / Rules and Regulations

                                                (8) The construction schedules for the                and the range of revenue, operating cost,             Obligations, including appropriate data
                                             proposed project, including major                        and credit assumptions considered;                    as to the value of such assets and the
                                             activity and cost milestones;                               (18) Financial statements for the three            useful life of any physical assets. With
                                                (9) A description of the material terms               immediately preceding fiscal years of                 respect to real property assets listed, an
                                             and conditions of the development and                    the Applicant (or such shorter period as              appraisal that is consistent with the
                                             construction contracts to include the                    the Applicant has been in existence)                  ‘‘Uniform Standards of Professional
                                             performance guarantees, performance                      that have been audited by an                          Appraisal Practice,’’ promulgated by the
                                             bonds, liquidated damages provisions,                    independent certified public accounting               Appraisal Standards Board of the
                                             and equipment warranties;                                firm, including all associated                        Appraisal Foundation, and performed
                                                (10) A detailed description of the                    certifications, notes and letters to                  by licensed or certified appraisers, is
                                             operations and maintenance provider(s),                  management, as well as interim                        required;
                                             the plant operating plan, estimated                      financial statements and notes for the                   (26) An analysis demonstrating that,
                                             staffing requirements, parts inventory,                  current fiscal year for the Applicant and             at the time of the Application, there is
                                             major maintenance schedule, estimated                    all other Persons the credit of which is              a reasonable prospect that Borrower will
                                             annual downtime, and performance                         material to the success of the                        be able to repay the Guaranteed
                                             guarantees and related liquidated                        transactions described in the                         Obligations (including interest)
                                             damage provisions, if any;                               Application;                                          according to their terms, and a complete
                                                (11) A description of the management                     (19) A copy of all legal opinions, and             description of the operational and
                                             plan of operations to be employed in                     other material reports, analyses, and                 financial assumptions and
                                             carrying out the proposed project, and                   reviews related to the proposed project               methodologies on which this
                                             information concerning the management                    that have been delivered prior to                     demonstration is based; and
                                             experience of each officer or key person                 submission of any part of the                            (27) If proposed project assets or
                                             associated with the proposed project;                    Application;                                          facilities are or will be jointly owned by
                                                (12) A detailed description of the                       (20) An independent engineering                    the Applicant and one or more other
                                             proposed project decommissioning,                        report prepared by an engineer with                   Persons, each of which owns an
                                             deconstruction, and disposal plan, and                   experience in the industry and                        undivided ownership interest in such
                                             the anticipated costs associated                         familiarity with similar projects. The                proposed project assets or facilities, a
                                             therewith;                                               report should address the proposed                    description of the Applicant’s rights and
                                                (13) An analysis of the market for any                project’s siting and permitting                       obligations in respect of its undivided
                                             product (including but not limited to                    arrangements, engineering and design,                 ownership interest in such proposed
                                             electricity and chemicals) to be                         contractual requirements,                             project assets or facilities.
                                             produced by, or services to be provided                  environmental compliance, testing,                       (d) During the Application evaluation
                                             by, the proposed project, including                      commissioning and operations, and                     process pursuant to § 609.5, DOE may
                                             relevant economics justifying the                        maintenance;                                          request additional information,
                                             analysis, and copies of                                     (21) A credit history of the Applicant             potentially including a preliminary
                                                (i) Any contracts for the sale of such                and each Project Sponsor;                             credit rating or credit assessment, with
                                             products or the provision of such                           (22) A preliminary credit assessment               respect to the proposed project.
                                             services, or                                             for the proposed project without a loan                  (e) DOE will not consider any part of
                                                (ii) Any other assurance of the                       guarantee from a nationally recognized                any Application or the Application as a
                                             revenues to be generated from sale of                    rating agency for projects where the                  whole complete unless the Application
                                             such products or provision of such                       estimated total Project Costs exceed $25              Fee (or the required portion of the
                                             services;                                                million. For proposed projects where                  Application Fee related to a particular
                                                (14) A detailed description of the                    the total estimated Project Costs are $25             part of the Application) has been paid.
                                             overall financial plan for the proposed                  million or less and where conditions                  An Application Fee paid in connection
                                             project, including all sources and uses                  justify, in the sole discretion of the                with one Application is not transferable
                                             of funding, equity and debt, and the                     Secretary, DOE may require such an                    to another Application. Except in the
                                             liability of parties associated with the                 assessment;                                           discretion of DOE, no portion of the
                                             proposed project over the term of the                       (23) A list showing the status of and              Application Fee is refundable;
                                             Loan Guarantee Agreement;                                estimated completion date of                             (f) DOE has no obligation to evaluate
                                                (15) A copy of all material                           Applicant’s required applications for                 an Application that is not complete, and
                                             agreements, whether entered into or                      federal, state, and local permits,                    may proceed with such evaluation, or a
                                             proposed, relevant to the investment,                    authorizations or approvals to site,                  partial evaluation, only in its discretion.
                                             design, engineering, financing,                          construct, and operate the proposed                      (g) Unless an Applicant requests an
                                             construction, startup commissioning,                     project;                                              extension and such an extension is
                                             shakedown, operations and                                   (24) A report containing an analysis of            granted by DOE in its discretion, an
                                             maintenance of the proposed project;                     the potential environmental impacts of                Application may be rejected if it is not
                                                (16) A copy of the financial closing                  the proposed project that will enable                 complete within four years from the
                                             checklist for the equity and debt to the                 DOE to—                                               date of submission (or date of
                                             extent available;                                           (i) Assess whether the proposed                    submission of the first part thereof, in
                                                (17) The Applicant’s business plan on                 project will comply with all applicable               the case of Applications made in more
                                             which the proposed project is based and                  environmental requirements; and                       than one part).
                                             Applicant’s financial model with                            (ii) Undertake and complete any                       (h) Upon making a determination to
                                             respect to the proposed project for the                                                                        engage independent consultants or
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                                                                                                      necessary reviews under the National
                                             proposed term of the Guaranteed                          Environmental Policy Act of 1969;                     outside counsel with respect to an
                                             Obligations, including, as applicable,                      (25) A listing and description of the              Application, DOE will proceed to
                                             pro forma income statements, balance                     assets of or to be utilized for the benefit           evaluate and process such Application
                                             sheets, and cash flows. All such                         of the proposed project, and of any other             only following execution by an
                                             information and data must include                        asset that will serve as collateral                   Applicant or Project Sponsor, as
                                             assumptions made in their preparation                    pledged in respect of the Guaranteed                  appropriate, of an agreement satisfactory


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                                                              Federal Register / Vol. 81, No. 241 / Thursday, December 15, 2016 / Rules and Regulations                                       90707

                                             to DOE to pay the fees and expenses                      States, and is or will be available for                  (10) The Applicant’s, or the relevant
                                             charged by the independent consultants                   further commercial use in the United                  contractor’s, capacity and expertise to
                                             and outside legal counsel.                               States; and                                           operate the proposed project
                                                                                                         (ii) Constitutes an important                      successfully, based on factors such as
                                             § 609.5 Programmatic, technical and                      improvement in technology, as                         financial soundness, management
                                             financial evaluation of applications.
                                                                                                      compared to available Commercial                      organization, and the nature and extent
                                                (a) In reviewing completed                            Technologies, used to avoid, reduce or                of corporate and individual experience;
                                             Applications, and in prioritizing and                    sequester air pollutants or                              (11) The ability of the proposed
                                             selecting those as to which a Term Sheet                 anthropogenic emissions of greenhouse                 Borrower to ensure that the proposed
                                             should be offered, DOE will apply the                    gases;                                                project will comply with all applicable
                                             criteria set forth in the Act, any                          (3) To what extent the Applicant has               laws and regulations, including all
                                             applicable Solicitation, and this part.                  a plan to advance or assist in the                    applicable environmental statutes and
                                             Applications will be considered in a                     advancement of that technology into the               regulations;
                                             competitive process, i.e. each                           commercial marketplace in the United                     (12) The levels of market, regulatory,
                                             Application will be evaluated against                    States;                                               legal, financial, technological, and other
                                             other Applications responsive to the                        (4) The extent to which the level of               risks associated with the proposed
                                             Solicitation. Applications will be                       proposed support in the Application is                project and their appropriateness for a
                                             denied if:                                               consistent with a reasonable prospect of              loan guarantee provided by DOE;
                                                (1) The proposed project is not an                    repayment of the Guaranteed                              (13) Whether the Application contains
                                             Eligible Project;                                        Obligations by considering, among other               sufficient information, including a
                                                (2) The applicable technology is not                  factors:                                              detailed description of the nature and
                                             ready to be deployed commercially in                        (i) The extent to which the requested              scope of the proposed project and the
                                             the United States, cannot yield a                        amount of the loan guarantee, the                     nature, scope, and risk coverage of the
                                             commercially viable product or service                   requested amount of Guaranteed                        loan guarantee sought to enable DOE to
                                             in the use proposed in the Application,                  Obligations and, if applicable, the                   perform a thorough assessment of the
                                             does not have the potential to be                        expected amount of any other financing                proposed project; and
                                             deployed in other commercial projects                    or credit arrangements, are reasonable                   (14) Such other criteria that DOE
                                             in the United States, or is not or will not              relative to the nature and scope of the               deems relevant in evaluating the merits
                                             be available for further commercial use                  proposed project;                                     of an Application.
                                             in the United States;                                       (ii) The total amount and nature of the               (c) After DOE completes its review
                                                (3) The Person proposed to issue the                  Project Costs and the extent to which                 and evaluation of a proposed project
                                             loan or purchase other debt obligations                  Project Costs are to be funded by                     pursuant to § 609.5(b) and this part,
                                             constituting the Guaranteed Obligations                  Guaranteed Obligations; and                           DOE will notify the Applicant in writing
                                             is not an Eligible Lender;                                  (iii) The feasibility of the proposed              of its determination whether to proceed
                                                (4) The proposed project is for                       project and likelihood that it will                   with due diligence and negotiation of a
                                             demonstration, research, or                              produce sufficient revenues to service                Term Sheet in accordance with § 609.6.
                                             development;                                             its debt obligations over the life of the             DOE will proceed only if it determines
                                                (5) Significant Equity for the proposed               loan guarantee and assure timely                      that the proposed project is highly
                                             project will not be provided by the date                 repayment of Guaranteed Obligations;                  qualified and suitable for a Guarantee.
                                             of issuance of the Guaranteed                               (5) The likelihood that the proposed               Upon written confirmation from the
                                             Obligations, or such later time as DOE                   project will be ready for full commercial             Applicant that it desires to proceed,
                                             in its discretion may determine; or                      operations in the time frame stated in                DOE and the Applicant will commence
                                                (6) The proposed project does not                     the Application;                                      negotiations.
                                             present a reasonable prospect of                            (6) The amount of Equity committed                    (d) A determination by DOE not to
                                             repayment of the Guaranteed                              and to be committed to the proposed                   proceed with a proposed project
                                             Obligations.                                             project by the Borrower, the Project                  following evaluation pursuant to
                                                (b) If an Application has not been                    Sponsor, and other Persons;                           § 609.5(b) shall be final and non-
                                             denied pursuant to § 609.5(a), DOE will                     (7) Whether there is sufficient                    appealable, but shall not prejudice the
                                             evaluate the proposed Project based on                   evidence that the Borrower will                       Applicant or other affected Persons from
                                             the criteria set forth in the Act, any                   diligently implement the proposed                     applying for a Guarantee in respect of a
                                             applicable Solicitation and the                          project, including initiating and                     different proposed project pursuant to
                                             following:                                               completing the proposed project in a                  another, separate Application.
                                                (1) To what measurable extent the                     timely manner;
                                             proposed project avoids, reduces, or                        (8) Whether and to what extent the                 § 609.6 Term sheets and conditional
                                             sequesters air pollutants or                             Applicant will rely upon other Federal                commitments.
                                             anthropogenic emissions of greenhouses                   and non-Federal Government assistance                   (a) DOE, after negotiation of a Term
                                             gases, or contributes to the avoidance,                  such as grants, tax credits, or other loan            Sheet with an Applicant, may offer such
                                             reduction or sequestration of air                        guarantees to support the financing,                  Term Sheet to an Applicant or such
                                             pollutants or anthropogenic emissions                    construction, and operation of the                    other Person that is an affiliate of the
                                             of greenhouse gases;                                     proposed project and how such                         Applicant and that is acceptable to DOE.
                                                (2) To what extent the technology to                  assistance will impact the proposed                   DOE’s offer of a Term Sheet shall be in
                                             be deployed in the proposed project—                     project;                                              writing and signed by the Contracting
                                                (i) Is ready to be deployed                              (9) The levels of safeguards provided
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                                                                                                                                                            Officer. DOE’s negotiation of a Term
                                             commercially in the United States, can                   to the Federal Government in the event                Sheet imposes no obligation on the
                                             be replicated, yields a commercially                     of default through collateral, warranties,            Secretary to offer a Term Sheet to the
                                             viable product or service in the use                     and other assurance of repayment                      Applicant.
                                             proposed in the proposed project, has                    described in the Application, including                 (b) DOE shall terminate its
                                             potential to be deployed in other                        the nature of any anticipated                         negotiations of a Term Sheet if it has not
                                             commercial projects in the United                        intercreditor arrangements;                           offered a Term Sheet in respect of an


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                                             90708            Federal Register / Vol. 81, No. 241 / Thursday, December 15, 2016 / Rules and Regulations

                                             Eligible Project within four years after                 payments from the Borrower under                         (c) Each Loan Guarantee Agreement
                                             the date of the written notification set                 paragraph (b)(1)(ii) of this section has              shall contain the following requirements
                                             forth in § 609.5(c), unless extended in                  been made that is equal to the Credit                 and conditions, and shall not be
                                             writing in the discretion of the                         Subsidy Cost;                                         executed until the Contracting Officer
                                             Contracting Officer.                                        (2) Pursuant to section 1702(h) of the             determines that the following
                                                (c) If and when the offeree specified                 Act, DOE has received from the                        requirements and conditions are
                                             in a Term Sheet satisfies all terms and                  Applicant the remainder of the Facility               satisfied:
                                             conditions for acceptance of the Term                    Fee referred to in § 609.11(b);                          (1) The Federal Financing Bank shall
                                             Sheet, including written acceptance                         (3) OMB has reviewed and approved                  be the only Eligible Lender in
                                             thereof and payment of all fees specified                DOE’s calculation of the Credit Subsidy               transactions where DOE guarantees 100
                                             in § 609.11(f) and therein to be paid at                 Cost of the Guarantee;                                percent (but not less than 100 percent)
                                             or prior to acceptance of the Term                          (4) The Department of the Treasury                 of the principal and interest of the
                                             Sheet, the Term Sheet shall become a                     has been consulted as to the terms and                Guaranteed Obligations issued under a
                                             Conditional Commitment. Each                             conditions of the Loan Guarantee                      Loan Guarantee Agreement.
                                             Conditional Commitment shall include                     Agreement;                                               (i) Where DOE guarantees more than
                                             an expiration date no more than two                         (5) The Loan Guarantee Agreement                   90 percent of the Guaranteed Obligation,
                                             years from the date it is issued, unless                 and related documents contain all terms               the guaranteed portion cannot be
                                             extended in writing in the discretion of                 and conditions DOE deems reasonable                   separated from or ‘‘stripped’’ from the
                                             the Contracting Officer. When and if all                 and necessary to protect the interest of              non-guaranteed portion of the
                                             of the terms and conditions specified in                 the United States;                                    Guaranteed Obligation if the loan is
                                             the Conditional Commitment have been                        (6) Each holder of the Guaranteed                  participated, syndicated or otherwise
                                             met, DOE and the Applicant may enter                     Obligations is an Eligible Lender, and                resold in the secondary market; and
                                             into a Loan Guarantee Agreement.                         the servicer of the Guaranteed                           (ii) Where DOE guarantees 90 percent
                                                (d) If, subsequent to execution of a                  Obligations meets the servicing                       or less of the Guaranteed Obligation, the
                                             Conditional Commitment, the financing                    performance requirements of § 609.9(b);               guaranteed portion may be separated
                                             arrangements of the Borrower, or in                         (7) DOE has determined the principal               from or ‘‘stripped’’ from the non-
                                             respect of an Eligible Project, change                   amount of the Guaranteed Obligations                  guaranteed portion of the Guaranteed
                                             from those described in the Conditional                  expected to be issued in respect of the               Obligation, if the loan is participated,
                                             Commitment, the Applicant shall                          Eligible Project, as estimated at the time            syndicated or otherwise resold in the
                                             promptly provide updated financing                       of issuance, will not exceed 80 percent               secondary debt market;
                                             information in writing to DOE. All such                  of the Project Costs of the Eligible                     (2) The Borrower shall be obligated to
                                             updated information shall be deemed to                   Project;                                              make full repayment of the principal
                                             be information submitted in connection                      (8) All conditions precedent specified             and interest on the Guaranteed
                                             with an Application and shall be subject                 in the Conditional Commitment are                     Obligations and other debt of a
                                             to § 609.4(b). Based on such updated                     either satisfied or waived by the                     Borrower over a period of up to the
                                             information, DOE may take one or more                    Contracting Officer and all other                     lesser of 30 years or 90 percent of the
                                             of the following actions:                                applicable contractual, statutory, and                projected useful life of the Eligible
                                                (1) Determine that such changes are                   regulatory requirements have been                     Project’s major physical assets, as
                                             not material to the Borrower, the                        satisfied or waived by the Contracting                calculated in accordance with U.S.
                                             Eligible Project or DOE;                                 Officer. If the counterparty to the                   generally accepted accounting
                                                (2) Amend the Conditional                             Conditional Commitment has not                        principles and practices. The non-
                                             Commitment accordingly;                                  satisfied all such terms and conditions               guaranteed portion (if any) of any
                                                (3) Postpone the expected closing date                on or prior to the closing date of the                Guaranteed Obligations must be repaid
                                             of the associated Loan Guarantee                         Loan Guarantee Agreement, the                         pro rata, and on the same amortization
                                             Agreement; or                                            Secretary may, in his discretion, set a               schedule, with the guaranteed portion.
                                                (4) Terminate the Conditional                         new closing date, or terminate the                       (3) If any financing or credit
                                             Commitment.                                              Conditional Commitment; and                           arrangement of the Borrower or relating
                                                                                                         (9) Where the total Project Costs for an           to the Eligible Project, other than the
                                             § 609.7 Closing on the loan guarantee                    Eligible Project are projected to exceed              Guaranteed Obligations, has an
                                             agreement.                                               $25 million, the Applicant must provide               amortization period shorter than that of
                                               (a) Subsequent to entering into a                      a credit rating from a nationally                     the Guaranteed Obligations, DOE shall
                                             Conditional Commitment with an                           recognized rating agency reflecting the               have determined that the resulting
                                             Applicant, DOE, after consultation with                  revised Conditional Commitment for the                financing structure allocates to DOE a
                                             the Applicant, will set a closing date for               project without a Federal guarantee.                  reasonably proportionate share of the
                                             execution of a Loan Guarantee                            Where total Project Costs are projected               default risk, in light of:
                                             Agreement.                                               to be $25 million or less, the Secretary                 (i) DOE’s share of the total debt
                                               (b) Prior to or on the closing date of                 may, on a case-by-case basis, require a               financing of the Borrower,
                                             a Loan Guarantee Agreement, DOE will                     credit rating. If a credit rating is                     (ii) Risk allocation among the credit
                                             ensure that:                                             required, an updated rating must be                   providers to the Borrower, and
                                               (1) One of the following has occurred:                 provided to the Secretary not later than                 (iii) Internal and external credit
                                               (i) An appropriation for the Credit                    30 days prior to closing.                             enhancements.
                                             Subsidy Cost has been made;                                                                                       (4) The loan guarantee does not
                                                                                                      § 609.8   Loan guarantee agreement.
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                                               (ii) The Secretary has received from                                                                         finance, either directly or indirectly tax-
                                             the Borrower payment in full for the                       (a) Only a Loan Guarantee Agreement                 exempt debt obligations, consistent with
                                             Credit Subsidy Cost and deposited the                    executed by the Contracting Officer can               the requirements of section 149(b) of the
                                             payment into the Treasury; or                            obligate DOE to issue a Guarantee in                  Internal Revenue Code;
                                               (iii) A combination of one or more                     respect of Guaranteed Obligations.                       (5) The principal amount of the
                                             appropriations under paragraph (b)(1)(i)                   (b) DOE is not bound by oral                        Guaranteed Obligations, when
                                             of this section and one or more                          representations.                                      combined with funds from other sources


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                                                              Federal Register / Vol. 81, No. 241 / Thursday, December 15, 2016 / Rules and Regulations                                          90709

                                             committed and available to the                              (13) DOE or its representatives shall              and reporting functions shall be subject
                                             Borrower, shall be sufficient to pay for                 have access to the offices of the                     to the prior written approval of DOE.
                                             expected Project Costs (including                        Borrower and the Eligible Project site at                (2) The Secretary, or the Secretary’s
                                             adequate contingency amounts), the                       all reasonable times in order to monitor              designee or contractual agent, for the
                                             applicable items specified in                            the—                                                  purpose of identifying Holders with the
                                             § 609.10(b), and otherwise to carry out                     (i) Performance by the Borrower of its             right to receive payment under the
                                             the Eligible Project;                                    obligations under the Loan Guarantee                  Guaranteed Obligations, shall include in
                                                (6) There shall be a reasonable                       Agreement; and                                        the Loan Guarantee Agreement or
                                             prospect of repayment by the Borrower                       (ii) Performance of the Eligible                   related documents a procedure for
                                             of the principal of and interest on the                  Project;                                              tracking and identifying Holders of
                                             Guaranteed Obligations and all of its                       (14) DOE and Borrower have reached                 Guaranteed Obligations. Any
                                             other debt obligations;                                  an agreement regarding the information                contractual agent approved by the
                                                (7) The Borrower shall pledge                         that will be made available to DOE and                Secretary to perform this function may
                                             collateral or surety determined by DOE                   the information that will be made                     transfer or assign this responsibility
                                             to be necessary to secure the repayment                  publicly available;                                   only with the Secretary’s prior written
                                             of the Guaranteed Obligations. Such                         (15) The Borrower shall have filed                 approval.
                                             collateral or security may include                       applications for or obtained any                         (f) Each Loan Guarantee Agreement
                                             Eligible Project assets and assets not                   required regulatory approvals for the                 shall require the Borrower to make
                                             related to the Eligible Project;                         Eligible Project and is in compliance, or             representations and warranties, agree to
                                                (8) The Loan Guarantee Agreement
                                                                                                      promptly will be in compliance, where                 covenants, and satisfy conditions
                                             and related documents shall include
                                                                                                      appropriate, with all Federal, state, and             precedent to closing and to each
                                             detailed terms and conditions that DOE
                                                                                                      local regulatory requirements;                        disbursement that, in each case, relate to
                                             deems necessary and appropriate to
                                                                                                         (16) The Borrower shall have no                    its compliance with the Davis-Bacon
                                             protect the interests of the United States
                                                                                                      delinquent Federal debt;                              Act and the Cargo Preference Act.
                                             in the case of default, including
                                             ensuring availability of all relevant                       (17) The Project Sponsors have made                   (g) The Applicant, the Borrower or the
                                             intellectual property rights, technical                  or will make a significant Equity                     Project Sponsor must estimate,
                                             data including software, and technology                  investment in the Borrower or the                     calculate, record, and provide to DOE
                                             necessary for DOE or any Person                          Eligible Project, and will maintain                   any time DOE requests such information
                                             selected by DOE, to complete, operate,                   control of the Borrower or the Eligible               and at the times provided in the Loan
                                             convey, and dispose of the defaulted                     Project as agreed in the LGA; and                     Guarantee Agreement all costs incurred
                                             Borrower or the Eligible Project;                           (18) The Loan Guarantee Agreement                  in the design, engineering, financing,
                                                (9) The Guaranteed Obligations shall                  and related agreements shall include                  construction, startup, commissioning
                                             not be subordinate to other financing.                   such other terms and conditions as DOE                and shakedown of the Eligible Project in
                                             Guaranteed Obligations are not                           deems necessary or appropriate to                     accordance with generally accepted
                                             subordinate to other financing if the lien               protect the interests of the United                   accounting principles and practices.
                                             on property securing the Guaranteed                      States.
                                                                                                         (d) The Loan Guarantee Agreement                   § 609.9    Lender servicing requirements.
                                             Obligations, together with liens that are
                                             pari passu with such lien, if any, take                  shall provide that, in the event of a                    (a) When reviewing and evaluating a
                                             priority or precedence over other                        default by the Borrower:                              proposed Eligible Project, all Eligible
                                             charges or encumbrances upon the same                       (1) Interest on the Guaranteed                     Lenders (other than the Federal
                                             property and must be satisfied before                    Obligations shall accrue at the rate                  Financing Bank) shall at all times
                                             such other charges are entitled to                       stated in the Loan Guarantee Agreement                exercise the level of care and diligence
                                             participate in proceeds of the property’s                or the Loan Agreement, until DOE                      that a reasonable and prudent lender
                                             sale. In DOE’s discretion, Guaranteed                    makes full payment of the defaulted                   would exercise when reviewing,
                                             Obligations may share a lien position                    Guaranteed Obligations and, except                    evaluating and disbursing a loan made
                                             with other financing;                                    when such Guaranteed Obligations are                  by it without a Federal guarantee.
                                                (10) There is satisfactory evidence                   funded through the Federal Financing                     (b) Loan servicing duties shall be
                                             that the Borrower will diligently pursue                 Bank, DOE shall not be required to pay                performed by an Eligible Lender, DOE,
                                             the Eligible Project and is willing,                     any premium, default penalties, or                    or another qualified loan servicer
                                             competent, and capable of performing                     prepayment penalties; and                             approved by DOE. When performing its
                                             its obligations under the Loan Guarantee                    (2) The holder of collateral pledged in            servicing duties, the loan servicer shall
                                             Agreement and the loan documentation                     respect of the Guaranteed Obligations                 at all times exercise the level of care and
                                             relating to its other debt obligations;                  shall be obligated to take such actions               diligence that a reasonable and prudent
                                                (11) The Borrower shall have paid all                 as DOE may reasonably require to                      lender would exercise when servicing a
                                             fees and expenses due to DOE or the                      provide for the care, preservation,                   loan made without a Federal guarantee,
                                             U.S. Government, including such                          protection, and maintenance of such                   including:
                                             amount of the Credit Subsidy Cost as                     collateral so as to enable the United                    (1) During the construction period,
                                             may be due and payable from the                          States to achieve maximum recovery.                   monitoring the satisfaction of all of the
                                             Borrower pursuant to the Conditional                        (e)(1) An Eligible Lender or other                 conditions precedent to all loan
                                             Commitment, upon execution of the                        Holder may sell, assign or transfer a                 disbursements, as provided in the Loan
                                             Loan Guarantee Agreement;                                Guaranteed Obligation to another                      Guarantee Agreement, Loan Agreement
                                                (12) The Borrower, any Eligible                       Eligible Lender that meets the                        or related documents;
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                                             Lender, and each other relevant party                    requirements of § 609.9. Such latter                     (2) During the operational phase,
                                             shall take, and be obligated to continue                 Eligible Lender shall be required to                  monitoring and servicing the
                                             to take, those actions necessary to                      assume all servicing, monitoring and                  Guaranteed Obligations and collection
                                             perfect and maintain liens on collateral                 reporting requirements as provided in                 of the outstanding principal and
                                             in respect of the Guaranteed                             the Loan Guarantee Agreement. Any                     accrued interest as well as undertaking
                                             Obligations;                                             transfer of the servicing, monitoring,                to ensure that the collateral package


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                                             90710            Federal Register / Vol. 81, No. 241 / Thursday, December 15, 2016 / Rules and Regulations

                                             securing the Guaranteed Obligations                      used as provided in the Loan Guarantee                loans and risks. The Risk-Based Charge
                                             remains uncompromised; and                               Agreement;                                            shall be paid at such times and in such
                                               (3) Until the Guaranteed Obligation                       (11) Capitalized interest necessary to             manner as may be determined by DOE,
                                             has been repaid, providing annual or                     meet market requirements and other                    but no less frequently than once each
                                             more frequent financial and other                        carrying costs during construction; and               year, commencing with payment of a
                                             reports on the status and condition of                      (12) Other necessary and reasonable                pro-rated payment on the date the
                                             the Guaranteed Obligations and the                       costs.                                                Guarantee is issued. The amount of the
                                             Eligible Project, and promptly notifying                    (b) Project Costs do not include:                  Risk-Based Charge will be specified in
                                             DOE if it becomes aware of any                              (1) Fees and commissions charged to                the Loan Guarantee Agreement.
                                             problems or irregularities concerning                    Borrower, including finder’s fees, for                   (d) DOE may collect a maintenance
                                             the Eligible Project or the ability of the               obtaining Federal or other funds;                     fee to cover DOE’s administrative
                                             Borrower to make payment on the                             (2) Parent corporation or other                    expenses, other than extraordinary
                                             Guaranteed Obligations or its other debt                 affiliated entity’s general and                       expenses, incurred in servicing and
                                             obligations.                                             administrative expenses, and non-                     monitoring a Loan Guarantee
                                                                                                      Eligible Project related parent                       Agreement. The maintenance fee shall
                                             § 609.10   Project costs.                                corporation or affiliated entity                      accrue from the date of execution of the
                                               (a) Project Costs include:                             assessments, including organizational                 Loan Guarantee Agreement through the
                                               (1) Costs of acquisition, lease, or                    expenses;                                             date of payment in full of the related
                                             rental of real property, including                          (3) Goodwill, franchise, trade, or                 Guaranteed Obligations. If DOE
                                             engineering fees, surveys, title                         brand name costs;                                     determines to collect a maintenance fee,
                                             insurance, recording fees, and legal fees                   (4) Dividends and profit sharing to                it shall be paid by the Borrower each
                                             incurred in connection with land                         stockholders, employees, and officers;                year (or portion thereof) in advance in
                                             acquisition, lease or rental, site                          (5) Research, development, and                     the amount specified in the applicable
                                             improvements, site restoration, access                   demonstration costs of readying an                    Loan Guarantee Agreement.
                                             roads, and fencing;                                      innovative technology for employment                     (e) In the event a Borrower or an
                                               (2) Costs of engineering, architectural,               in a commercial project;                              Eligible Project experiences difficulty
                                             legal and bond fees, and insurance paid                     (6) Costs that are excessive or are not            relating to technical, financial, or legal
                                             in connection with construction of the                   directly required to carry out the                    matters or other events (e.g., engineering
                                             facility;                                                Eligible Project, as determined by DOE;               failure or financial workouts), the
                                               (3) Costs of equipment purchases,                         (7) Expenses incurred after startup,
                                                                                                                                                            Borrower shall be liable as follows:
                                             including a reasonable reserve of spare                  commissioning, and shakedown before
                                             parts to the extent required;                                                                                     (1) If such difficulty requires DOE to
                                                                                                      the facility, or, in DOE’s discretion, any
                                               (4) Costs to provide facilities and                                                                          incur time or expenses beyond those
                                                                                                      portion of the facility, has been placed
                                             services related to safety and                                                                                 customarily expended to monitor and
                                                                                                      in service;
                                             environmental protection;                                   (8) Borrower-paid Credit Subsidy                   administer performing loans, DOE may
                                               (5) Costs of financial, legal, and other               Costs, the Administrative Cost of Issuing             collect an extraordinary expenses fee
                                             professional services, including services                a Loan Guarantee, and any other fee                   from the Borrower that will reimburse
                                             necessary to obtain required licenses                    collected by DOE; and                                 DOE for such time and expenses, as
                                             and permits and to prepare                                  (9) Operating costs.                               determined by DOE; and
                                             environmental reports and data;                                                                                   (2) For all fees and expenses of DOE’s
                                               (6) Costs of issuing Eligible Project                  § 609.11    Fees and charges.                         independent consultants and outside
                                             debt, such as fees, transaction, and costs                 (a) Unless explicitly authorized by                 counsel, to the extent that such fees and
                                             referred to in § 609.10(a)(5), and other                 statute, no funds obtained from the                   expenses are elected to be paid by DOE
                                             customary charges imposed by Eligible                    Federal Government, or from a loan or                 notwithstanding the provisions of
                                             Lenders;                                                 other instrument guaranteed by the                    paragraphs (f) and (g) of this section.
                                               (7) Costs of necessary and appropriate                 Federal Government, may be used to                       (f) Each Applicant, Borrower or
                                             insurance and bonds of all types                         pay for the Credit Subsidy Cost, the                  Project Sponsor, as applicable, shall be
                                             including letters of credit and any                      Application Fee, the Facility Fee, the                responsible for the payment of all fees
                                             collateral required therefor;                            Guarantee Fee, the maintenance fee and                and expenses charged by DOE’s
                                               (8) Costs of design, engineering,                      any other fees charged by or paid to                  independent consultants and outside
                                             startup, commissioning and shakedown;                    DOE relating to the Act or any                        legal counsel in connection with an
                                               (9) Costs of obtaining licenses to                     Guarantee thereunder.                                 Application, Conditional Commitment
                                             intellectual property necessary to                         (b) DOE may charge Applicants a non-                or Loan Guarantee Agreement, as
                                             design, construct, and operate the                       refundable Facility Fee, with a portion               applicable. Upon making a
                                             Eligible Project;                                        being payable on or prior to the date on              determination to engage independent
                                               (10) To the extent required by the                     which the Applicant executes the                      consultants or outside counsel with
                                             Loan Guarantee Agreement and not                         Commitment Letter and the remainder                   respect to an Application, DOE will
                                             intended or available for any cost                       being payable on or prior to the closing              proceed to evaluate and process such
                                             referred to in § 609.10(b), costs of                     date for the Loan Guarantee Agreement.                Application only following execution by
                                             funding any reserve fund, including                        (c) In order to encourage and                       an Applicant or Project Sponsor, as
                                             without limitation, a debt service                       supplement private lending activity                   appropriate, of an agreement satisfactory
                                             reserve, a maintenance reserve, and a                    DOE may collect from Borrowers for                    to DOE to pay the fees and expenses
                                             contingency reserve for cost overruns                    deposit in the United States Treasury a               charged by the independent consultants
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                                             during construction; provided that                       non-refundable Risk-Based Charge                      and outside legal counsel. Appropriate
                                             proceeds of a Guaranteed Loan                            which, together with the interest rate on             provisions regarding payment of such
                                             deposited to any reserve fund shall not                  the Guaranteed Obligation that LPO                    fees and expenses shall also be included
                                             be removed from such fund except to                      determines to be appropriate, will take               in each Term Sheet and Loan Guaranty
                                             pay Project Costs, to pay principal of the               into account the prevailing rate of                   Agreement or, upon a determination by
                                             Guaranteed Loan, or otherwise to be                      interest in the private sector for similar            DOE, in other appropriate agreements.


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                                                              Federal Register / Vol. 81, No. 241 / Thursday, December 15, 2016 / Rules and Regulations                                       90711

                                                (g) Notwithstanding payment by                        Secretary shall notify the Attorney                   any rights or remedies pursuant to the
                                             Applicant, Borrower or Project Sponsor,                  General.                                              terms of the Loan Guarantee Agreement.
                                             all services rendered by an independent                     (b) Subject to the terms of the                       (e) The cash proceeds received as a
                                             consultant or outside legal counsel to                   applicable Guarantee, the Secretary                   result of any foreclosure on the
                                             DOE in connection with an Application,                   shall make payment within 60 days after               collateral, or other action, shall be
                                             Conditional Commitment or Loan                           receipt of written demand for payment                 distributed in accordance with the Loan
                                             Guarantee Agreement shall be solely for                  from the Holder, provided that the                    Guarantee Agreement (subject to any
                                             the benefit of DOE (and such other                       demand for payment complies in all                    applicable Intercreditor Agreement).
                                             creditors as DOE may agree in writing).                  respects with the terms of the applicable                (f) The Loan Guarantee Agreement
                                             DOE may require, in its discretion, the                  Guarantee. Interest shall accrue to the               shall provide that cash proceeds
                                             payment of an advance retainer to such                   Holder at the rate stated in the                      received by the Secretary (or his
                                             independent consultants or outside                       promissory note evidencing the                        designee or agent) as a result of any
                                             legal counsel as security for the                        Guaranteed Obligation, without giving                 foreclosure on the collateral or other
                                             collection of the fees and expenses                      effect to the Borrower’s default in                   action shall be applied in the following
                                             charged by the independent consultants                   making a required payment of principal                order of priority:
                                             and outside legal counsel. In the event                  or interest on the applicable Guarantee                  (1) Toward the pro rata payment of
                                             an Applicant, Borrower or Project                        Obligation or any other default by the                any costs and expenses (including
                                             Sponsor fails to comply with the                         Borrower, until the Guaranteed                        unpaid fees, fees and expenses of
                                             provisions of such payment agreement,                    Obligation has been fully paid by DOE.                counsel, contractors and agents, and
                                             DOE in its discretion, may stop work on                  Payment by the Secretary on the                       liabilities and advances made or
                                             or terminate an Application, a                           applicable Guarantee does not change                  incurred) of the Secretary, the Attorney
                                             Conditional Commitment or a Loan                         Borrower’s obligations under the                      General, the Holder, a collateral agent or
                                             Guarantee Agreement, or may take such                    promissory note evidencing the                        other responsible person of any of them
                                             other remedial measures in its                           Guaranteed Obligation, Loan Guarantee                 (solely in their individual capacities as
                                             discretion as it deems appropriate.                      Agreement, Loan Agreement or related                  such and not on behalf of or for the
                                                                                                      documents, including an obligation to                 benefit of their principals), incurred in
                                                (h) DOE shall not be financially liable                                                                     connection with any authorized action
                                             under any circumstances to any                           pay default interest.
                                                                                                                                                            following payment by the Secretary
                                             independent consultant or outside                           (c) Following payment by the
                                                                                                                                                            pursuant to a Guarantee or other default
                                             counsel for services rendered in                         Secretary pursuant to the applicable
                                                                                                                                                            of a Guaranteed Obligation, or as
                                             connection with an Application,                          Guarantee, upon demand by DOE, the
                                                                                                                                                            otherwise permitted under the Loan
                                             Conditional Commitment or Loan                           Holder shall transfer and assign to the
                                                                                                                                                            Agreement or Loan Guarantee
                                             Guarantee Agreement except to the                        Secretary (or his designee or agent) the
                                                                                                                                                            Agreement.
                                             extent DOE has previously entered into                   promissory note evidencing the
                                                                                                                                                               (2) To pay all accrued and unpaid fees
                                             an express written agreement to pay for                  Guaranteed Obligation, all rights and
                                                                                                                                                            due and payable to the Secretary, the
                                             such services.                                           interests of the Holder in the
                                                                                                                                                            Attorney General, the Holder, a
                                                                                                      Guaranteed Obligation, and all rights
                                             § 609.12 Full faith and credit and                                                                             collateral agent or other responsible
                                                                                                      and interests of the Holder in respect of
                                             incontestability.                                                                                              person of any of them on a pro rata basis
                                                                                                      the Guaranteed Obligation, except to the
                                                                                                                                                            in respect of the Guaranteed Obligation;
                                                The full faith and credit of the United               extent that the Secretary determines that                (3) To pay all accrued and unpaid
                                             States is pledged to the payment of                      such promissory note or any of such                   interest due and payable to the
                                             principal and interest of Guaranteed                     rights and interests shall not be                     Secretary, the Attorney General, the
                                             Obligations pursuant to Guarantees                       transferred and assigned to the                       Holder, a collateral agent or other
                                             issued in accordance with the Act and                    Secretary. Such transfer and assignment               responsible person of any of them on a
                                             this Part. The issuance by DOE of a                      shall include, without limitation, all of             pro rata basis in respect of the
                                             Guarantee shall be conclusive evidence                   the liens, security and collateral rights             Guaranteed Obligation;
                                             that it has been properly obtained; that                 of the Holder (or his designee or agent)                 (4) To pay all unpaid principal of the
                                             the underlying loan qualified for such                   in respect of the Guaranteed Obligation.              Guaranteed Obligation;
                                             Guarantee; and that, but for fraud or                       (d) Following payment by the                          (5) To pay all other obligations of the
                                             material misrepresentation by the                        Secretary pursuant to a Guarantee or                  Borrower under the Loan Guarantee
                                             Holder, such Guarantee shall be legal,                   other default of a Guaranteed                         Agreement, the Loan Agreement and
                                             valid, binding and enforceable against                   Obligation, the Secretary is authorized               related documents that are remaining
                                             DOE in accordance with its terms.                        to protect and foreclose on the                       after giving effect to the preceding
                                                                                                      collateral, take action to recover costs              provisions and are then due and
                                             § 609.13 Default, demand, payment, and                   incurred by, and all amounts owed to,
                                             foreclosure on collateral.                                                                                     payable; and;
                                                                                                      the United States as a result of the                     (6) To pay to the Borrower, or its
                                               (a) If a Borrower defaults in making a                 defaulted Guarantee Obligation, and                   successors and assigns, or as a court of
                                             required payment of principal or                         take such other action necessary or                   competent jurisdiction may direct, any
                                             interest on a Guaranteed Obligation and                  appropriate to protect the interests of               cash proceeds then remaining following
                                             such default has not been cured within                   the United States. In respect of any such             the application of all payment described
                                             the applicable grace period, the Holder                  authorized actions that involve a                     above.
                                             may make written demand for payment                      judicial proceeding or other judicial                    (g) No action taken by the Holder or
                                             upon the Secretary in accordance with                    action, the Secretary shall act through               its agent or designee in respect of any
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                                             the terms of the applicable Guarantee. If                the Attorney General. The foregoing                   collateral will affect the rights of any
                                             a Borrower defaults in making a                          provisions of this paragraph shall not                person, including the Secretary, having
                                             required payment of principal or                         relieve the Secretary from its obligations            an interest in the Guaranteed
                                             interest on a Guaranteed Obligation and                  pursuant to any applicable Intercreditor              Obligations or other debt obligations, to
                                             such default has not been cured within                   Agreement. Nothing in this paragraph                  pursue, jointly or severally, legal action
                                             the applicable grace period, the                         shall limit the Secretary from exercising             against the Borrower or other liable


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                                             90712            Federal Register / Vol. 81, No. 241 / Thursday, December 15, 2016 / Rules and Regulations

                                             persons, for any amounts owing in                        of Guaranteed Obligations. The cost of                  (iii) A determination by the Secretary
                                             respect of the Guaranteed Obligation or                  such contracts may be charged to the                  in his discretion to undertake a
                                             other applicable debt obligations.                       Borrower.                                             deviation;
                                                (h) In the event that the Secretary                                                                           (2) A finding by the Secretary that
                                             considers it necessary or desirable to                   § 609.15    Audit and access to records.              such deviation supports program
                                             protect or further the interest of the                      Each Loan Guarantee Agreement and                  objectives and the special circumstances
                                             United States in connection with                         related documents shall provide that:                 stated in the request make such
                                             exercise of rights as a lien holder or                      (a) The Eligible Lender, or DOE in                 deviation clearly in the best interest of
                                             recovery of deficiencies due under the                   conjunction with the Federal Financing                the Government; and
                                             Guaranteed Obligation, the Secretary                     Bank where loans are funded by the                      (3) If the waiver would constitute a
                                             may take such action as he determines                    Federal Financing Bank or other Holder                substantial change in the financial terms
                                             to be appropriate under the                              or other party servicing the Guaranteed               of the Loan Guarantee Agreement and
                                             circumstances.                                           Obligations, as applicable, and the                   related documents, consultation by DOE
                                                (i) Nothing in this part precludes, nor               Borrower, shall keep such records                     with OMB and the Secretary of the
                                             shall any provision of this part be                      concerning the Eligible Project as are                Treasury.
                                             construed to preclude, the Secretary                     necessary, including the Application,                   (b) If a deviation under this section
                                             from purchasing any collateral or                        Term Sheet, Conditional Commitment,                   results in an increase in the applicable
                                             Holder’s or other Person’s interest in the               Loan Guarantee Agreement, Credit                      Credit Subsidy Cost, such increase shall
                                             Eligible Project upon foreclosure of the                 Agreement, mortgage, note,                            be funded either by additional fees paid
                                             collateral.                                              disbursement requests and supporting                  by or on behalf of the Borrower or, if an
                                                (j) Nothing in this part precludes, nor               documentation, financial statements,                  appropriation is available by means of
                                             shall any provision of this part be                      audit reports of independent accounting               an appropriations act. The Secretary has
                                             construed to preclude, forbearance by                    firms, lists of all Eligible Project assets           discretion to determine how the cost of
                                             any Holder with the consent of the                       and non-Eligible Project assets pledged               a deviation is funded.
                                             Secretary for the benefit of the Borrower                in respect of the Guaranteed                          [FR Doc. 2016–30006 Filed 12–14–16; 8:45 am]
                                             and the United States.                                   Obligations, all off-take and other                   BILLING CODE 6450–01–P
                                                (k) The Holder and the Secretary may                  revenue producing agreements,
                                             agree to a formal or informal plan of                    documentation for all Eligible Project
                                             reorganization in respect of the                         indebtedness, income tax returns,                     DEPARTMENT OF COMMERCE
                                             Borrower, to include a restructuring of                  technology agreements, documentation
                                             the Guaranteed Obligation and other                      for all permits and regulatory approvals              Bureau of Industry and Security
                                             applicable debt of the Borrower on such                  and all other documents and records
                                             terms and conditions as the Secretary                    relating to the Borrower or the Eligible              15 CFR Part 744
                                             determines are in the best interest of the               Project, as determined by the Secretary,
                                             United States.                                           to facilitate an effective audit and                  [Docket No. 161110999–6999–01]
                                                                                                      performance evaluation of the Eligible                RIN 0694–AH21
                                             § 609.14   Preservation of collateral.
                                                                                                      Project; and
                                                (a) If the Secretary exercises his right                 (b) The Secretary and the Comptroller              Addition of Certain Persons to the
                                             under the Loan Guarantee Agreement to                    General, or their duly authorized                     Entity List
                                             require the holder of pledged collateral                 representatives, shall have access, for
                                             to take such actions as the Secretary                                                                          AGENCY:  Bureau of Industry and
                                                                                                      the purpose of audit and examination,                 Security, Commerce.
                                             (subject to any applicable Intercreditor                 to any pertinent books, documents,
                                             Agreement) may reasonably require to                                                                           ACTION: Final rule.
                                                                                                      papers and records of the Borrower,
                                             provide for the care, preservation,                      Eligible Lender or DOE or other Holder                SUMMARY:   This final rule amends the
                                             protection, and maintenance of such                      or other party servicing the Guaranteed               Export Administration Regulations
                                             collateral so as to enable the United                    Obligation, as applicable. Such                       (EAR) by adding seven persons to the
                                             States to achieve maximum recovery                       inspection may be made during regular                 Entity List. The seven persons who are
                                             from the collateral, the Secretary shall,                office hours of the Borrower, Eligible                added to the Entity List have been
                                             subject to compliance with the                           Lender or DOE or other Holder, or other               determined by the U.S. Government to
                                             Antideficiency Act, 31 U.S.C. 1341 et                    party servicing the Eligible Project and              be acting contrary to the national
                                             seq., reimburse the holder of such                       the Guaranteed Obligations, as                        security or foreign policy interests of the
                                             collateral for reasonable and appropriate                applicable, or at any other time                      United States. These seven persons will
                                             expenses incurred in taking actions                      mutually convenient.                                  be listed on the Entity List under the
                                             required by the Secretary (unless
                                                                                                                                                            destination of Pakistan.
                                             otherwise provided in applicable                         § 609.16    Deviations.
                                             agreements). Except as provided in                                                                             DATES: This rule is effective December
                                                                                                        (a) To the extent that the requirements
                                             § 609.13, no party may waive or                          under this part are not specified by the              15, 2016.
                                             relinquish, without the consent of the                   Act or other applicable statutes, DOE                 FOR FURTHER INFORMATION CONTACT:
                                             Secretary, any such collateral to which                  may authorize deviations from the                     Chair, End-User Review Committee,
                                             the United States would be subrogated                    requirements of this part upon:                       Office of the Assistant Secretary, Export
                                             upon payment under the Loan                                (1) Either receipt from the Applicant,              Administration, Bureau of Industry and
                                             Guarantee Agreement.                                     Borrower or Project Sponsor, as                       Security, Department of Commerce,
                                                (b) In the event of a default, the                                                                          Phone: (202) 482–5991, Email: ERC@
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                                                                                                      applicable, of—
                                             Secretary may enter into such contracts                    (i) A written request that the Secretary            bis.doc.gov.
                                             as he determines are required or                         deviate from one or more requirements;                SUPPLEMENTARY INFORMATION:
                                             appropriate, taking into account the                     and
                                             term of any applicable Intercreditor                       (ii) A supporting statement briefly                 Background
                                             Agreement, to care for, preserve, protect                describing one or more justifications for               The Entity List (Supplement No. 4 to
                                             or maintain collateral pledged in respect                such deviation; or                                    part 744) identifies entities and other


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Document Created: 2016-12-15 01:10:41
Document Modified: 2016-12-15 01:10:41
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionRules and Regulations
ActionFinal rule.
DatesThis rule is effective on January 17, 2017.
ContactMark S. Westergard, Assistant Chief Counsel Regulatory Affairs, Loan Programs Office, United States Department of Energy, 1000 Independence Avenue SW., Washington, DC 20585-0121, (202) 287-5621, email: [email protected]
FR Citation81 FR 90699 
RIN Number1901-AB38
CFR AssociatedAdministrative Practice and Procedure; Energy; Loan Programs and Reporting and Recordkeeping Requirements

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