2020-29278. Policies and Procedures for Loan Guarantees for Projects That Employ Innovative Technologies and for Direct Loans Under the Advanced Technology Vehicles Manufacturing Program  

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    AGENCY:

    Loan Programs Office, U.S. Department of Energy.

    ACTION:

    Final rule.

    SUMMARY:

    The U.S. Department of Energy (DOE) Loan Programs Office (LPO) establishes amended policies and procedures for the issuance of DOE loan guarantees pursuant to the Title XVII Start Printed Page 3748Program and funding awards and loans pursuant to the Advanced Technology Vehicles Manufacturing Program in accordance with the Executive order of September 30, 2020, entitled “Addressing the Threat to the Domestic Supply Chain from Reliance on Critical Minerals from Foreign Adversaries”. The rule will establish revised policies and procedures for receiving, evaluating, and approving applications for loan guarantees, funding awards and loans from DOE. The rule will refine the definition of “Eligible Project” and address the use of Preliminary Term sheets and conditional commitments, as well as the payment of costs and fees by non-Federal third parties.

    DATES:

    This rule is effective on January 15, 2021.

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    FOR FURTHER INFORMATION CONTACT:

    Mr. John Lushetsky, Senior Advisor, Loan Programs Office, Loan Guarantee Program, U.S. Department of Energy LP 10, 1000 Independence Avenue SW, Washington, DC 20585, (202) 586-2678, or by email to: john.lushetsky@hq.doe.gov.

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    SUPPLEMENTARY INFORMATION:

    Table of Contents

    I. Introduction and Background

    II. Discussion of Final Rule

    III. Regulatory Review

    I. Introduction and Background

    DOE issues this final rule to update regulations in accordance with the requirements of Executive Order 13953, “Addressing the Threat to the Domestic Supply Chain from Reliance on Critical Minerals from Foreign Adversaries,” 85 FR 62539 (Sept. 30, 2020). Executive Order 13953 establishes policy pertaining to lending activities by LPO pursuant to Title XVII of the Energy Policy Act of 2005, as amended (42 U.S.C. 16511, et seq.) (“Title XVII”), and Section 136 of the Energy Independence and Security Act of 2007, as amended (42 U.S.C. 17013) (the “ATVM Statute”), as they apply to “Critical Minerals,” “Critical Minerals Production,” and related activities, including activities related to minerals more broadly. Executive Order 13953 requires that DOE update the relevant regulation in accordance with the policy presented in the Executive order.

    II. Discussion of Final Rule

    Executive Order 13953 requires that DOE LPO establish amended policies and procedures for the issuance of DOE loan guarantees, in order to provide financial support to eligible projects that will support a domestic supply chain for critical minerals and critical minerals production. The rule will establish revised policies and procedures for receiving, evaluating, and approving applications for loan guarantees from DOE. The rule will revise the definition of Eligible Project, for both the Title XVII and ATVM Programs, consistent with E.O. 13953 and address the use of Preliminary Term sheets and conditional commitments, as well as the payment of costs and fees by non-Federal third parties. These changes will facilitate the accessibility and availability of loan guarantees from DOE to potential applicants in both the critical minerals space, as well as traditional innovative projects. These changes also will allow for the use of Preliminary Term sheets between DOE and potential applicants in the critical minerals space and other innovative projects. The use of Preliminary Term Sheets will aid potential applicants in obtaining their offtake agreements, while negotiating with DOE for a potential loan guarantee, subject to conditions required by DOE. The final rule will also clarify that payment by non-Federal third parties of costs and fees associated with a loan guarantee will be permissible, where necessary, to support the applicant. As required by Executive Order 13953, these changes will make DOE loan guarantees more available and accessible to critical minerals projects.

    III. Regulatory Review

    A. Executive Order 12866

    This final rule is not a “significant regulatory action” under Executive Order 12866, “Regulatory Planning and Review.” 58 FR 51735 (October 4, 1993). The rule revises the definition of Eligible Project consistent with E.O. 13953 and clarifies DOE's procedures for the review of applications to LPO for loan guarantees under the Title XVII Program and funding awards and loans under the ATVM Program.

    B. Executive Orders 13771 and 13777

    On January 30, 2017, the President issued Executive Order 13771, “Reducing Regulation and Controlling Regulatory Costs.” See 82 FR 9339 (January 30, 2017). E.O. 13771 states that the policy of the executive branch is to be prudent and financially responsible in the expenditure of funds, from both public and private sources. E.O. 13771 states that it is essential to manage the costs associated with the governmental imposition of private expenditures required to comply with Federal regulations.

    Additionally, on February 24, 2017, the President issued Executive Order 13777, “Enforcing the Regulatory Reform Agenda.” The order required the head of each agency designate an agency official as its Regulatory Reform Officer (RRO). Each RRO oversees the implementation of regulatory reform initiatives and policies to ensure that agencies effectively carry out regulatory reforms, consistent with applicable law. Further, E.O. 13777 requires the establishment of a regulatory task force at each agency. The regulatory task force is required to make recommendations to the agency head regarding the repeal, replacement, or modification of existing regulations, consistent with applicable law. At a minimum, each regulatory reform task force must attempt to identify regulations that:

    (i) Eliminate jobs, or inhibit job creation;

    (ii) Are outdated, unnecessary, or ineffective;

    (iii) Impose costs that exceed benefits;

    (iv) Create a serious inconsistency or otherwise interfere with regulatory reform initiatives and policies;

    (v) Are inconsistent with the requirements of Information Quality Act, or the guidance issued pursuant to that Act, in particular those regulations that rely in whole or in part on data, information, or methods that are not publicly available or that are insufficiently transparent to meet the standard for reproducibility; or

    (vi) Derive from or implement Executive orders or other Presidential directives that have been subsequently rescinded or substantially modified.

    Finally, on March 28, 2017, the President signed Executive Order 13783, entitled “Promoting Energy Independence and Economic Growth.” Among other things, E.O. 13783 requires the heads of agencies to review all existing regulations, orders, guidance documents, policies, and any other similar agency actions (collectively, agency actions) that potentially burden the development or use of domestically produced energy resources, with particular attention to oil, natural gas, coal, and nuclear energy resources. Such review does not include agency actions that are mandated by law, necessary for the public interest, and consistent with the policy set forth elsewhere in that order.

    DOE concludes that this final rule is consistent with the directives set forth in these Executive orders. This final rule is expected to be an E.O. 13771 deregulatory action. The provisions in this final rule, as described in section II, revise the definition of Eligible Project consistent with E.O. 13953 and establish amended policies and procedures for the issuance of DOE loan guarantees, Start Printed Page 3749funding awards and loans in accordance with Executive Order 13953 and for receiving, evaluating, and approving applications for loan guarantees from DOE.

    C. Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires preparation of an initial regulatory flexibility analysis for any rule that by law must be proposed for public comment, unless the agency certifies that the rule, if promulgated, will not have a significant economic impact on a substantial number of small entities. Because a notice of proposed rulemaking is not required for this action pursuant to 5 U.S.C. 553, or any other law, no regulatory flexibility analysis has been prepared for this final rule.

    In addition, DOE notes that the rule would clarify DOE's policies and procedures for processing applications for loan guarantees, funding awards, and loans, and would not impose a burden on applicants, including small entities. Specifically, these changes will facilitate the accessibility and availability of loan guarantees, funding awards, and loans from DOE to potential applicants in the critical minerals space, as well as for traditional innovative projects. The changes also will allow for the use of Preliminary Term sheets between DOE and potential applicants in the critical minerals space and for other innovative projects. The use of Preliminary Term Sheets will aid potential applicants in obtaining their offtake agreements, while negotiating with DOE for a potential loan guarantee, subject to conditions required by DOE. The final rule will clarify that payment by non-Federal third parties of costs and fees associated with a loan guarantee will be permissible, where necessary, to support the applicant.

    D. Paperwork Reduction Act

    The final rule would impose no new information or record keeping requirements. Accordingly, Office of Management and Budget (OMB) clearance is not required under the Paperwork Reduction Act. (44 U.S.C. 3501 et seq.). The information collection necessary to administer DOE loan guarantees for projects that employ innovative technologies under 10 CFR part 609 is subject to OMB approval under the Paperwork Reduction Act (PRA), 44 U.S.C. 3501 et seq. The information collection provisions of this part were previously approved by OMB under OMB Control No. 1910-5134.

    Notwithstanding any other provision of the law, no person is required to respond to, nor shall any person be subject to a penalty for failure to comply with, a collection of information subject to the requirements of the PRA, unless that collection of information displays a currently valid OMB Control Number.

    E. National Environmental Policy Act

    DOE has determined that this final rule will be covered under the Categorical Exclusion found in DOE's National Environmental Policy Act regulations at paragraph A5 of appendix A to subpart D, 10 CFR part 1021, which applies to a rulemaking that amends an existing rule or regulation and that does not change the environmental effect of the rule or regulation being amended. Accordingly, neither an environmental assessment nor an environmental impact statement is required.

    F. Executive Order 13132

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

    G. Executive Order 12988

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

    H. Unfunded Mandates Reform Act of 1995

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) requires each Federal agency to assess the effects of Federal regulatory actions on State, local, and Tribal governments and the private sector. Public Law 104-4, sec. 201 (codified at 2 U.S.C. 1531). For a regulatory action likely to result in a rule that may cause the expenditure by State, local, and Tribal governments, in the aggregate, or by the private sector of $100 million or more in any one year (adjusted annually for inflation), section 202 of UMRA requires a Federal agency to publish a written statement that estimates the resulting costs, benefits, and other effects on the national economy. (2 U.S.C. 1532(a), (b)). The UMRA also requires a Federal agency to develop an effective process to permit timely input by elected officers of State, local, and Tribal governments on a “significant intergovernmental mandate,” and requires an agency plan for giving notice and opportunity for timely input to potentially affected small governments before establishing any requirements that might significantly or uniquely affect them. On March 18, 1997, DOE published a statement of policy on its process for intergovernmental consultation under UMRA. 62 FR 12820. DOE's policy statement is also available at http://energy.gov/​sites/​prod/​files/​gcprod/​documents/​umra_​97.pdf. UMRA sections 202 and 205 do not apply to this action because they apply only to rules for which a general notice of proposed rulemaking is published. Nevertheless, DOE has determined that this final rule does not contain a Federal intergovernmental mandate, nor is it expected to require expenditures of $100 million or more in any one year by the private sector.Start Printed Page 3750

    I. Treasury and General Government Appropriations Act, 1999

    Section 654 of the Treasury and General Government Appropriations Act, 1999, 5 U.S.C. 601 note, requires Federal agencies to issue a Family Policymaking Assessment for any rulemaking that may affect family well-being. While this final rule will apply to individuals who may be members of a family, the rule will not have any impact on the autonomy or integrity of the family as an institution. Accordingly, DOE has concluded that it is not necessary to prepare a Family Policymaking Assessment.

    J. Treasury and General Government Appropriations Act, 2001

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

    K. Executive Order 13211

    Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use,” 66 FR 28355 (May 22, 2001), requires Federal agencies to prepare and submit to the Office of Information and Regulatory Affairs (OIRA), Office of Management and Budget, a Statement of Energy Effects for any proposed significant energy action. A “significant energy action” is defined as any action by an agency that promulgated or is expected to lead to promulgation of a final rule, and that: (1) Is a significant regulatory action under Executive Order 12866, or any successor order; and (2) is likely to have a significant adverse effect on the supply, distribution, or use of energy, or (3) is designated by the Administrator of OIRA as a significant energy action. For any proposed significant energy action, the agency must give a detailed statement of any adverse effects on energy supply, distribution, or use should the proposal be implemented, and of reasonable alternatives to the action and their expected benefits on energy supply, distribution, and use. This regulatory action will not have a significant adverse effect on the supply, distribution, or use of energy and is therefore not a significant energy action. Accordingly, DOE has not prepared a Statement of Energy Effects.

    L. Administrative Procedure Act

    In accordance with 5 U.S.C. 553(b), the Administrative Procedure Act, DOE generally publishes a proposed rule and solicits public comment on it before issuing the rule in final. DOE also generally provides at least a 30-day delay in effective date for final rules pursuant to 5 U.S.C. 553(d). This rulemaking, as a matter relating to loans, is exempt from the requirement to publish a notice of proposed rulemaking under 5 U.S.C. 553(a)(2). In addition, Executive Order 13953 specifically directs DOE to consider LPO loan guarantees, funding awards, and loans involving critical minerals projects and supply chains, and such projects that otherwise satisfy the requirements of Title XVII and the ATVM Statute are already accepted, and deemed to be, “Eligible Projects” by DOE under applicable law and regulations.

    M. Congressional Notification

    As required by 5 U.S.C. 801, DOE will submit to Congress a report regarding the issuance of this final rule prior to the effective date set forth at the outset of this rulemaking. The report will state that it has been determined that the rule is not a “major rule” as defined by 5 U.S.C. 801(2).

    N. Approval of the Office of the Secretary

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

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    List of Subjects

    10 CFR Part 609

    • Administrative practice and procedure
    • Energy
    • Loan programs
    • Reporting and recordkeeping requirements

    10 CFR Part 611

    • Administrative practice and procedure
    • Loan programs-energy
    • Reporting and recordkeeping requirements
    End List of Subjects

    Signing Authority

    This document of the Department of Energy was signed on December 31, 2020, by Steven E. Winberg, Acting Under Secretary of Energy, pursuant to delegated authority from the Secretary of Energy. That document with the original signature and date is maintained by DOE. For administrative purposes only, and in compliance with requirements of the Office of the Federal Register, the undersigned DOE Federal Register Liaison Officer has been authorized to sign and submit the document in electronic format for publication, as an official document of the Department of Energy. This administrative process in no way alters the legal effect of this document upon publication in the Federal Register.

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    Signed in Washington, DC, on December 31, 2020.

    Treena V. Garrett,

    Federal Register Liaison Officer, U.S. Department of Energy.

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    For the reasons stated in the preamble, DOE amends parts 609 and 611 of chapter II of title 10 of the Code of Federal Regulations as set forth below:

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    1. Part 609 is revised to read as follows:

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    PART 609—LOAN GUARANTEES FOR PROJECTS THAT EMPLOY INNOVATIVE TECHNOLOGIES

    609.1
    Purpose and scope.
    609.2
    Definitions and interpretation.
    609.3
    Solicitations.
    609.4
    Submission of applications.
    609.5
    Programmatic, technical, and financial evaluation of applications.
    609.6
    Term sheets and conditional commitments.
    609.7
    Closing on the loan guarantee agreement.
    609.8
    Loan guarantee agreement.
    609.9
    Lender servicing requirements.
    609.10
    Project costs.
    609.11
    Fees and charges.
    609.12
    Full faith and credit and incontestability.
    609.13
    Default, demand, payment, and foreclosure on collateral.
    609.14
    Preservation of collateral.
    609.15
    Audit and access to records.
    609.16
    Deviations.
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    Authority: 42 U.S.C. 16511-16514.

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    Purpose and scope.

    (a) This part sets forth the policies and procedures that DOE uses for receiving, evaluating, and approving applications for loan guarantees to support Eligible Projects under section 1703 of the Energy Policy Act of 2005 (Act).

    (b) This part applies to all Applications, Conditional Commitments, and Loan Guarantee Agreements.

    (c) Part 1024 of chapter X of title 10 of the Code of Federal Regulations shall not apply to actions taken under this part.

    (d) This part incorporates the policies set forth in Executive Order 13953 (“Executive Order Addressing the Threat to the Domestic Supply Chain from Reliance on Critical Minerals from Foreign Adversaries,” dated September Start Printed Page 375120, 2020), and Executive Order 13817 (“A Federal Strategy to Ensure Secure and Reliable Supplies of Critical Minerals,” dated December 20, 2017), as amended.

    Definitions and interpretation.

    (a) Definitions. When used in this part the following words have the following meanings.

    Act means Title XVII of the Energy Policy Act of 2005 (42 U.S.C. 16511-16514), as amended.

    Administrative Cost of Issuing a Loan Guarantee means the total of all administrative expenses that DOE incurs during:

    (i) The evaluation of an Application for a loan guarantee;

    (ii) The negotiation and offer of a Term Sheet;

    (iii) The negotiation of a Loan Guarantee Agreement and related documents, including the issuance of a Guarantee; and

    (iv) The servicing and monitoring of a Loan Guarantee Agreement, including during the construction, startup, commissioning, shakedown, and operational phases of an Eligible Project.

    Applicant means a Person, including a prospective Borrower or Project Sponsor, that submits an Application to DOE.

    Application means a written submission of materials responsive to a Solicitation that satisfies § 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 § 609.6(c); provided, that the Secretary may terminate a Conditional Commitment for any reason at any time prior to the execution of the Loan Guarantee Agreement; and provided, further, that the Secretary may not delegate this authority to terminate a Conditional Commitment.

    Contracting Officer means the Secretary of Energy or a DOE official authorized by the Secretary to enter into, administer or terminate DOE Loan Guarantee Agreements and related contracts on behalf of DOE.

    Credit Subsidy Cost has the same meaning as “cost of a loan guarantee” in section 502(5)(C) of the Federal Credit Reform Act of 1990, which is the net present value, at the time the Loan Guarantee Agreement is executed, of the following estimated cash flows, discounted to the point of disbursement:

    (i) Payments by the Government to cover defaults and delinquencies, interest subsidies, or other payments; less

    (ii) Payments to the Government including origination and other fees, penalties, and recoveries; including the effects of changes in loan or debt terms resulting from the exercise by the Borrower, Eligible Lender, or other Holder of an option included in the Loan Guarantee Agreement.

    Davis-Bacon Act means the statute referenced in section 1702(k) of the Act.

    DOE means the United States Department of Energy.

    Eligible Lender means either:

    (i) Any Person formed for the purpose of, or engaged in the business of, lending money that, as determined by DOE in each case, is:

    (A) Not debarred or suspended from participation in a Federal Government contract or participation in a non-procurement activity (under a set of uniform regulations implemented for numerous agencies, such as DOE, at 2 CFR part 180);

    (B) Not delinquent on any Federal debt or loan;

    (C) Legally authorized and empowered to enter into loan guarantee transactions authorized by the Act and this part;

    (D) Able to demonstrate experience in originating and servicing loans for commercial projects similar in size and scope to the Eligible Project, or able to procure such experience through contracts acceptable to DOE; and

    (E) Able to demonstrate experience as the lead lender or underwriter by presenting evidence of its participation in large commercial projects or energy-related projects or other relevant experience, or able to procure such experience through contracts acceptable to DOE; or

    (ii) The Federal Financing Bank.

    Eligible Project means a project that:

    (i) Is located in the United States at one location, except that the project may be located at two or more locations in the United States if the project is comprised of installations or facilities employing a single New or Significantly Improved Technology that is deployed pursuant to an integrated and comprehensive business plan. An Eligible Project in more than one location is a single Eligible Project;

    (ii) Deploys a New or Significantly Improved Technology; and

    (iii) Satisfies all applicable requirements of section 1703 of the Act, the applicable Solicitation, and this part. For purposes of this paragraph (iii):

    (A) Eligible Projects may include manufacturing, recycling, processing, reprocessing, remediation, or reuse of materials, components, or subcomponents involving critical minerals, critical minerals production, or the supply chain for such materials, as set forth in Executive Order 13953 (“Executive Order Addressing the Threat to the Domestic Supply Chain from Reliance on Critical Minerals from Foreign Adversaries,” dated September 20, 2020), and Executive Order 13817 (“A Federal Strategy to Ensure Secure and Reliable Supplies of Critical Minerals,” dated December 20, 2017), as amended, to the extent such critical minerals-related activities are eligible under section 1703 of the Act; and

    (B) Some avoidance, reduction, or sequestration of air pollutants or anthropogenic emissions of greenhouse gases by a proposed project, or facilitated by such project, where applicable, shall be deemed to satisfy the requirement of section 1703(a)(1).

    Equity means cash contributed to the permanent capital stock (or equivalent) of the Borrower or the Eligible Project by the shareholders or other owners of the Borrower or the Eligible Project. Equity does not include proceeds from the non-guaranteed portion of a Guaranteed Obligation, proceeds from any other non-guaranteed loan or obligation, or the value of any government assistance or support.Start Printed Page 3752

    Facility Fee means the fee, to be paid in the amount and in the manner provided in the Term Sheet, to cover the Administrative Cost of Issuing a Loan Guarantee for the period from the Borrower's acceptance of the Term Sheet through issuance of the Guarantee.

    Federal Financing Bank means an instrumentality of the United States Government created by the Federal Financing Bank Act of 1973, under the general supervision of the Secretary of the Treasury.

    Guarantee means the undertaking of the United States of America, acting through the Secretary pursuant to Title XVII of the Energy Policy Act of 2005, to pay in accordance with the terms thereof, principal and interest of a Guaranteed Obligation.

    Guaranteed Obligation means any loan or other debt obligation of the Borrower for an Eligible Project for which DOE guarantees all or any part of the payment of principal and interest under a Loan Guarantee Agreement entered into pursuant to the Act.

    Holder means any Person that holds a promissory note made by the Borrower evidencing the Guaranteed Obligation (or his designee or agent).

    Intercreditor Agreement means any agreement or instrument (or amendment or modification thereof) among DOE and one or more other Persons providing financing or other credit arrangements to the Borrower or an Eligible Project) or that otherwise provides for rights of DOE in respect of a Borrower or in respect of an Eligible Project, in each case in form and substance satisfactory to DOE.

    Loan Agreement means a written agreement between a Borrower and an Eligible Lender containing the terms and conditions under which the Eligible Lender will make a loan or loans to the Borrower for an Eligible Project.

    Loan Guarantee Agreement means a written agreement that, when entered into by DOE and a Borrower, and, if applicable, an Eligible Lender, establishes the obligation of DOE to guarantee the payment of all or a portion of the principal of, and interest on, specified Guaranteed Obligations, subject to the terms and conditions specified in the Loan Guarantee Agreement.

    New or Significantly Improved Technology means a technology, or a defined suite of technologies, concerned with the production, consumption, or transportation of energy and that is not a Commercial Technology, and that has either:

    (i) Only recently been developed, discovered, or learned; or

    (ii) Involves or constitutes one or more meaningful and important improvements in productivity or value, in comparison to Commercial Technologies in use in the United States at the time the Term Sheet is issued.

    OMB means the Office of Management and Budget in the Executive Office of the President.

    Person means any natural person or any legally constituted entity, including a state or local government, tribe, corporation, company, voluntary association, partnership, limited liability company, joint venture, and trust.

    Preliminary Term Sheet means the principal terms upon which DOE and the Applicant have agreed to in writing that will serve as the basis for a Loan Agreement or Loan Guarantee Agreement, following a determination by DOE that such Application adequately describes an Eligible Project, or a project that has a reasonable likelihood of becoming an Eligible Project, consistent with § 609.4(a)).

    Project Costs mean those costs, including escalation and contingencies, that are to be expended or accrued by a Borrower and are necessary, reasonable, customary, and directly related to the design, engineering, financing, construction, startup, commissioning, and shakedown of an Eligible Project, as specified in § 609.10(a). Project Costs do not include costs for the items set forth in § 609.10(b).

    Project Sponsor means any Person that assumes substantial responsibility for the development, financing, and structuring of an Eligible Project and, if not the Applicant, owns or controls, by itself and/or through individuals in common or affiliated business entities, a five percent or greater interest in the proposed Eligible Project, the Borrower, or the Applicant.

    Risk-Based Charge means a charge that, together with the principal and interest on the guaranteed loan, or at such other times as DOE may determine, is payable on specified dates during the term of a Guaranteed Obligation.

    Secretary means the Secretary of Energy or a duly authorized designee or successor in interest.

    Solicitation means an announcement that DOE is accepting Applications that is widely disseminated to the public on the DOE website or otherwise.

    Term Sheet means a written offer for the issuance of a loan guarantee, executed by the Secretary (or a DOE official authorized by the Secretary to execute such offer), delivered to the offeree, that sets forth the detailed terms and conditions under which DOE and the Applicant will execute a Loan Guarantee Agreement.

    United States means the several States, the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, American Samoa, and any territory or possession of the United States of America.

    (b) Interpretations. This part shall be interpreted using the following guidelines.

    (1) The word “discretion” when used with reference to DOE, including the Secretary, means “sole discretion.”

    (2) Defined terms in the singular shall include the plural and vice versa, and the masculine, feminine, or neuter gender shall include all genders.

    (3) The word “or” is not exclusive.

    (4) References to laws by name or popular name are references to the version of such law appearing in the United States Code and include any amendment, supplement, or modification of such law, and all regulations, rulings, and other laws promulgated thereunder.

    (5) References to information or documents required or allowed to be submitted to DOE mean information or documents that are marked as provided in 10 CFR 600.15(b). A document or information that is not marked as provided in 10 CFR 600.15(b) will not be considered as having been submitted to or received by DOE.

    (6) A reference to a Person includes such Person's successors and permitted assigns.

    (7) The words “include,” “includes,” and “including” are not limiting and mean include, includes and including “without limitation” and “without limitation by specification.”

    (8) The words “hereof,” “herein,” and “hereunder” and words of similar import refer this part as a whole and not to any particular provision of this part.

    Solicitations.

    DOE may invite the submission of Applications for loan guarantees for Eligible Projects pursuant to a Solicitation.

    (a) Each Solicitation must include, at a minimum, the following information:

    (1) The dollar amount of loan guarantee authority potentially being made available by DOE in that Solicitation;

    (2) The place for submission of Applications;

    (3) The name and address of the DOE representative whom a potential Applicant may contact to receive further information and a copy of the Solicitation;

    (4) The form, format, and page limits applicable to the Application;Start Printed Page 3753

    (5) The amount of the Application Fee and any other fees that will be required;

    (6) The programmatic, technical, financial, and other factors that DOE will use to evaluate response submissions, and their relative weightings in that evaluation; and

    (7) Such other information as DOE may deem appropriate.

    (b) Using procedures as may be announced by DOE a potential Applicant may request a meeting with DOE to discuss its potential Application. At its discretion, DOE may meet with a potential Applicant, either in person or electronically, to discuss its potential Application. DOE may provide a potential Applicant with a preliminary response regarding whether its proposed Application may constitute an Eligible Project. DOE's responses to questions from potential Applicants and DOE's statements to potential Applicants are pre-decisional and preliminary in nature. Any such responses and statements are subject in their entirety to any final action by DOE with respect to an Application submitted in accordance with § 609.4.

    Submission of applications.

    (a) In response to a Solicitation, an Applicant must meet all requirements and provide all information specified in this part and the Solicitation in the manner and on or before the date specified in the Solicitation. DOE may direct that Applications be submitted in more than one part; provided, that the parts of such Application, taken as a whole, satisfy the requirements of paragraph (d) of this section and this part. In such event, subsequent parts of an Application may be filed only after DOE invites an Applicant to make an additional submission. If DOE directs that Applications be submitted in more than one part, the initial part of an Application shall contain information sufficient for DOE to determine that the project proposed by an Applicant will be, or may reasonably become, an Eligible Project, and to evaluate such project's readiness to proceed. If there have been any material amendments, modifications, or additions made to the information previously submitted by an Applicant, the Applicant shall provide a detailed description thereof, including any changes in the proposed project's financing structure or other terms, promptly upon request by DOE. Where DOE has directed that an Application be submitted in parts, DOE may provide for payment of the Application Fee in parts.

    (b) An Applicant may submit only one Application for one proposed project using a particular technology. An Applicant may not submit an Application or Applications for multiple Eligible Projects using the same technology. An Applicant may submit Applications for multiple proposed projects using different technologies. For purposes of this paragraph (b), the term Applicant shall include the Project Sponsor and any subsidiaries or affiliates of the Project Sponsor.

    (c) The open application period shall be rolling, and DOE may accept Applications at any time.

    (d) An Application must include, at a minimum, the following information and materials:

    (1) A completed Application form signed by an individual with full authority to bind the Applicant, including the commitments and representations made in each part of the Application;

    (2) The applicable Application Fee;

    (3) A description of how, and to what measurable extent, the proposed project avoids, reduces, or sequesters air pollutants and/or anthropogenic emissions of greenhouse gases at any level, including how to measure and verify those effects; there is not a minimum threshold of avoidance, reduction, or sequestration of air pollutants and/or anthropogenic emissions of greenhouse gases that a proposed project must show to be accepted so long as some reduction is reasonably demonstrated;

    (4) A description of the nature and scope of the proposed project (with preliminary information where appropriate), including:

    (i) Key project milestones;

    (ii) Location or locations of the proposed project;

    (iii) Identification and commercial feasibility of the New or Significantly Improved Technology to be deployed;

    (iv) How the Applicant intends to deploy such New or Significantly Improved Technology in the proposed project; and

    (v) How the Applicant intends to assure, to the extent possible, the further commercial availability of the New or Significantly Improved Technology in the United States;

    (5) An explanation of how the proposed project qualifies as a project within the category or categories of projects referred to in the Solicitation;

    (6) A detailed estimate of the total Project Costs together with a description of the methodology and assumptions used;

    (7) A detailed description of the engineering and design contractor(s), construction contractor(s), and equipment supplier(s);

    (8) The construction schedules for the proposed project, including major activity and cost milestones;

    (9) A description of the material terms and conditions of the development and construction contracts to include the performance guarantees, performance bonds, liquidated damages provisions, and equipment warranties;

    (10) A detailed description of the operations and maintenance provider(s), the proposed project operating plan, estimated staffing requirements, parts inventory, major maintenance schedule, estimated annual downtime, and performance guarantees and related liquidated damage provisions, if any;

    (11) A description of the management plan of operations to be employed in carrying out the proposed project, and information concerning the management experience of each officer or key person associated with the proposed project;

    (12) A detailed description of the proposed project decommissioning, deconstruction, and disposal plan, and the anticipated costs associated therewith;

    (13) An analysis of the market for any product (including but not limited to electricity and chemicals) to be produced by, or services to be provided by, the proposed project, including relevant economics justifying the analysis, and copies of:

    (i) Any contracts, or draft contracts reflecting the current state of actual negotiations between relevant parties, for the sale of such products or the provision of such services; or

    (ii) Any other assurance of the revenues to be generated from sale of such products or provision of such services;

    (14) A detailed description of the overall financial plan for the proposed project, including all sources and uses of funding, equity and debt, and the liability of parties associated with the proposed project over the term of the Loan Guarantee Agreement;

    (15) A copy of all material agreements, whether entered into or proposed, relevant to the investment, design, engineering, financing, construction, startup commissioning, shakedown, operations, and maintenance of the proposed project;

    (16) A copy of the financial closing checklist for the equity and debt to the extent available;

    (17) The Applicant's business plan on which the proposed project is based and Applicant's financial model with respect to the proposed project for the proposed term of the Guaranteed Obligations, including, as applicable, pro forma income statements, balance sheets, and cash flows. All such Start Printed Page 3754information and data must include assumptions made in their preparation and the range of revenue, operating cost, and credit assumptions considered;

    (18) Financial statements for the three immediately preceding fiscal years of the Applicant (or such shorter period as the Applicant has been in existence) that have been audited by an independent certified public accounting firm, including all associated certifications, notes and letters to management, as well as interim financial statements and notes for the current fiscal year for the Applicant and all other Persons the credit of which is material to the success of the transactions described in the Application;

    (19) A copy of all legal opinions, and other material reports, analyses, and reviews related to the proposed project that have been delivered prior to submission of any part of the Application;

    (20) An engineering report prepared by an engineer with experience in the industry and familiarity with similar projects. The report should address the proposed project's siting and permitting arrangements, engineering and design, contractual requirements, environmental compliance, testing, commissioning and operations, and maintenance;

    (21) A credit history of the Applicant and each Project Sponsor;

    (22) A preliminary credit assessment for the proposed project without a loan guarantee from a nationally recognized rating agency for projects where the estimated total Project Costs exceed $25 million. For proposed projects where the total estimated Project Costs are $25 million or less and where conditions justify, in the sole discretion of the Secretary, DOE may require such an assessment;

    (23) A list showing the status of and estimated completion date of Applicant's required applications for Federal, state, and local permits, authorizations or approvals to site, construct, and operate the proposed project;

    (24) A report containing an analysis of the potential environmental impacts of the proposed project that will enable DOE to—

    (i) Assess whether the proposed project will comply with all applicable environmental requirements; and

    (ii) Undertake and complete any necessary reviews under the National Environmental Policy Act of 1969;

    (25) A listing and description of the assets of or to be utilized for the benefit of the proposed project, and of any other asset that will serve as collateral pledged in respect of the Guaranteed Obligations, including appropriate data as to the value of such assets and the useful life of any physical assets. With respect to real property assets listed, an appraisal that is consistent with the “Uniform Standards of Professional Appraisal Practice,” promulgated by the Appraisal Standards Board of the Appraisal Foundation, and performed by licensed or certified appraisers, is required;

    (26) An analysis demonstrating that, at the time of the Application, there is a reasonable prospect that Borrower will be able to repay the Guaranteed Obligations (including interest) according to their terms, and a complete description of the operational and financial assumptions and methodologies on which this demonstration is based; and

    (27) If proposed project assets or facilities are or will be jointly owned by the Applicant and one or more other Persons, each of which owns an undivided ownership interest in such proposed project assets or facilities, a description of the Applicant's rights and obligations in respect of its undivided ownership interest in such proposed project assets or facilities.

    (e) During the Application evaluation process pursuant to § 609.5, DOE may request additional information, potentially including a preliminary credit rating or credit assessment, with respect to the proposed project.

    (f) DOE will not consider any part of any Application or the Application as a whole complete unless the Application Fee (or the required portion of the Application Fee related to a particular part of the Application) has been paid. An Application Fee paid in connection with one Application is not transferable to another Application. Except in the discretion of DOE, no portion of the Application Fee is refundable.

    (g) DOE has no obligation to evaluate an Application that is not complete, and may proceed with such evaluation, or a partial evaluation, only in its discretion.

    (h) Unless an Applicant requests an extension and such an extension is granted by DOE in its discretion, an Application may be rejected if it is not complete within four years from the date of submission (or date of submission of the first part thereof, in the case of Applications made in more than one part).

    (i) Upon making a determination to engage independent consultants or outside counsel with respect to an Application, DOE will proceed to evaluate and process such Application only following execution by an Applicant or Project Sponsor, as appropriate, of an agreement satisfactory to DOE to pay the fees and expenses charged by the independent consultants and outside legal counsel.

    (j) Following a determination by DOE that an Application or, if applicable, the initial part of an Application, adequately describes an Eligible Project, or a project that may reasonably become an Eligible Project, DOE may offer a Preliminary Term Sheet to be utilized by an Applicant for the purpose of obtaining its third party contracts or offtake agreements, or for any other lawful purpose that may reasonably assist an Applicant in obtaining the information or conditional agreements required to complete an Application, subject to any terms and conditions required by DOE and applicable law. DOE may issue a Preliminary Term Sheet only if it determines that an Applicant has shown in an Application or, if applicable, the initial part of an Application, a reasonable likelihood of being able to satisfy the requirements of the Act and enter into a Conditional Commitment, but for the lack of a Preliminary Term Sheet. The Applicant shall be responsible for payment of any fees assessed or costs incurred by DOE that are associated with the issuance of the Preliminary Term Sheet. Notwithstanding any provision of a Preliminary Term Sheet to the contrary, the issuance of a Preliminary Term Sheet shall impose no obligation on DOE to proceed with an Application, or to enter into a Conditional Commitment, which matters shall be governed exclusively by the Act and the requirements set forth in § 609.5. Further, DOE may, in its sole discretion, terminate or rescind a Preliminary Term Sheet should an Applicant fail to meet any of the terms and conditions required therein.

    (k) At any time in the lending process, the Secretary of Energy may exercise his deviation authority under § 609.16 to make such deviations from this part as he may deem to be in the best interests of DOE, where such deviation supports program objectives and the special circumstances stated in any deviation request are clearly in the best interests of the Government.

    (l) DOE shall respond, in writing, to any inquiry by an Applicant about the status of its Application within ten (10) business days of receipt of such request.

    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 Start Printed Page 3755applicable Solicitation, and this part. Applications will be considered in a competitive process, i.e. each Application will be evaluated against other Applications responsive to the Solicitation. At any time, DOE may request additional information or supporting documentation from an Applicant. Applications will be denied if:

    (1) The proposed project is not an Eligible Project, however, DOE may provide an Applicant with a reasonable opportunity to correct or amend any Application in order to meet the conditions for an Eligible Project;

    (2) The applicable technology is not ready to be deployed commercially in the United States, cannot yield a commercially viable product or service in the use proposed in the Application, does not have the potential to be deployed in other commercial projects in the United States, or is not or will not be available for further commercial use in the United States;

    (3) The Person proposed to issue the loan or purchase other debt obligations constituting the Guaranteed Obligations is not an Eligible Lender;

    (4) The proposed project is for demonstration, research, or development;

    (5) Significant Equity for the proposed project will not be provided by the date of issuance of the Guaranteed Obligations, or such later time as DOE in its discretion may determine; or

    (6) The proposed project does not present a reasonable prospect of repayment of the Guaranteed Obligations.

    (b) If an Application has not been denied pursuant to paragraph (a) of this section, DOE will evaluate the proposed project based on the criteria set forth in the Act, any applicable Solicitation, and the following:

    (1) To what measurable extent the proposed project avoids, reduces, or sequesters air pollutants or anthropogenic emissions of greenhouses gases, as applicable, or contributes to the avoidance, reduction or sequestration of air pollutants or anthropogenic emissions of greenhouse gases;

    (2) To what extent the technology to be deployed in the proposed project—

    (i) Is ready to be deployed commercially in the United States, can be replicated, yields a commercially viable product or service in the use proposed in the proposed project, has potential to be deployed in other commercial projects in the United States, and is or will be available for further commercial use in the United States; and

    (ii) Constitutes an important improvement in technology, as compared to available Commercial Technologies, used to avoid, reduce or sequester air pollutants or anthropogenic emissions of greenhouse gases, as applicable;

    (3) To what extent the Applicant has a plan to advance or assist in the advancement of that technology into the commercial marketplace in the United States;

    (4) The extent to which the level of proposed support in the Application is consistent with a reasonable prospect of repayment of the Guaranteed Obligations by considering, among other factors:

    (i) The extent to which the requested amount of the loan guarantee, the requested amount of Guaranteed Obligations and, if applicable, the expected amount of any other financing or credit arrangements, are reasonable relative to the nature and scope of the proposed project;

    (ii) The total amount and nature of the Project Costs and the extent to which Project Costs are to be funded by Guaranteed Obligations; and

    (iii) The feasibility of the proposed project and likelihood that it will produce sufficient revenues to service its debt obligations over the life of the loan guarantee and assure timely repayment of Guaranteed Obligations;

    (5) The likelihood that the proposed project will be ready for full commercial operations in the time frame stated in the Application;

    (6) The amount of Equity committed and to be committed to the proposed project by the Borrower, the Project Sponsor, and other Persons;

    (7) Whether there is sufficient evidence that the Borrower will diligently implement the proposed project, including initiating and completing the proposed project in a timely manner;

    (8) Whether and to what extent the Applicant will rely upon other Federal and non-Federal Government assistance such as grants, tax credits, or other loan guarantees to support the financing, construction, and operation of the proposed project and how such assistance will impact the proposed project;

    (9) The levels of safeguards provided to the Federal Government in the event of default through collateral, warranties, and other assurance of repayment described in the Application, including the nature of any anticipated intercreditor arrangements;

    (10) The Applicant's, or the relevant contractor's, capacity and expertise to operate the proposed project successfully, based on factors such as financial soundness, management organization, and the nature and extent of corporate and individual experience;

    (11) The ability of the proposed Borrower to ensure that the proposed project will comply with all applicable laws and regulations, including all applicable environmental statutes and regulations;

    (12) The levels of market, regulatory, legal, financial, technological, and other risks associated with the proposed project and their appropriateness for a loan guarantee provided by DOE;

    (13) Whether the Application contains sufficient information, including a detailed description of the nature and scope of the proposed project and the nature, scope, and risk coverage of the loan guarantee sought to enable DOE to perform a thorough assessment of the proposed project; and

    (14) Such other criteria that DOE deems relevant in evaluating the merits of an Application.

    (c) After DOE completes its review and evaluation of a proposed project pursuant to paragraph (b) of this section and this part, DOE will notify the Applicant in writing of its determination whether to proceed with due diligence and negotiation of a Term Sheet in accordance with § 609.6. DOE will proceed only if it determines that the proposed project is highly qualified and suitable for a Guarantee. Upon written confirmation from the Applicant that it desires to proceed, DOE and the Applicant will commence negotiations.

    (d) DOE shall provide all Applicants with a reasonable opportunity to correct or amend any Application in order to meet the criteria set forth in this part or any other conditions required by DOE, prior to any denial of such Application. A determination by DOE not to proceed with a proposed project following evaluation pursuant to paragraph (b) of this section shall be final and non-appealable, but shall not prejudice the Applicant or other affected Persons from applying for a Guarantee in respect of a different proposed project pursuant to another, separate Application. Prior to DOE's denial of any Application, DOE shall advise the Applicant in writing, not less than ten (10) business days prior to the effective date of such denial, and set forth the reasons for such proposed denial along with a list of items that may be corrected or amended by the Applicant in order to satisfy the requirements that would create an Eligible Application, if such items can be corrected or appropriately amended. If requested by any Applicant, DOE shall meet with such Applicant in order Start Printed Page 3756to address questions or concerns raised by the Applicant.

    Term sheets and conditional commitments.

    (a) DOE, after negotiation of a Term Sheet with an Applicant, may offer such Term Sheet to an Applicant or such other Person that is an affiliate of the Applicant and that is acceptable to DOE. DOE's offer of a Term Sheet shall be in writing and signed by the Contracting Officer. DOE's negotiation of a Term Sheet imposes no obligation on the Secretary to offer a Term Sheet to the Applicant.

    (b) DOE shall terminate its negotiations of a Term Sheet if it has not offered a Term Sheet in respect of an Eligible Project within four years after the date of the written notification set forth in § 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 § 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 § 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.

    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 § 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 § 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.

    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 Start Printed Page 3757to the Eligible Project, other than the Guaranteed Obligations, has an amortization period shorter than that of the Guaranteed Obligations, DOE shall have determined that the resulting financing structure allocates to DOE a reasonably proportionate share of the default risk, in light of:

    (i) DOE's share of the total debt financing of the Borrower;

    (ii) Risk allocation among the credit providers to the Borrower; and

    (iii) Internal and external credit enhancements.

    (4) The loan guarantee does not finance, either directly or indirectly tax-exempt debt obligations, consistent with the requirements of section 149(b) of the Internal Revenue Code.

    (5) The principal amount of the Guaranteed Obligations, when combined with funds from other sources committed and available to the Borrower, shall be sufficient to pay for expected Project Costs (including adequate contingency amounts), the applicable items specified in § 609.10(b), and otherwise to carry out the Eligible Project.

    (6) There shall be a reasonable prospect of repayment by the Borrower of the principal of and interest on the Guaranteed Obligations and all of its other debt obligations.

    (7) The Borrower shall pledge collateral or surety determined by DOE to be necessary to secure the repayment of the Guaranteed Obligations. Such collateral or security may include Eligible Project assets and assets not related to the Eligible Project.

    (8) The Loan Guarantee Agreement and related documents shall include detailed terms and conditions that DOE deems necessary and appropriate to protect the interests of the United States in the case of default, including ensuring availability of all relevant intellectual property rights, technical data including software, and technology necessary for DOE or any Person selected by DOE, to complete, operate, convey, and dispose of the defaulted Borrower or the Eligible Project.

    (9) The Guaranteed Obligations shall not be subordinate to other financing. Guaranteed Obligations are not subordinate to other financing if the lien on property securing the Guaranteed Obligations, together with liens that are pari passu with such lien, if any, take priority or precedence over other charges or encumbrances upon the same property and must be satisfied before such other charges are entitled to participate in proceeds of the property's sale. In DOE's discretion, Guaranteed Obligations may share a lien position with other financing.

    (10) There is satisfactory evidence that the Borrower will diligently pursue the Eligible Project and is willing, competent, and capable of performing its obligations under the Loan Guarantee Agreement and the loan documentation relating to its other debt obligations.

    (11) The Borrower shall have paid all fees and expenses due to DOE or the U.S. Government, including such amount of the Credit Subsidy Cost as may be due and payable from the Borrower pursuant to the Conditional Commitment, upon execution of the Loan Guarantee Agreement.

    (12) The Borrower, any Eligible Lender, and each other relevant party shall take, and be obligated to continue to take, those actions necessary to perfect and maintain liens on collateral in respect of the Guaranteed Obligations.

    (13) DOE or its representatives shall have access to the offices of the Borrower and the Eligible Project site at all reasonable times in order to monitor the—

    (i) Performance by the Borrower of its obligations under the Loan Guarantee Agreement; and

    (ii) Performance of the Eligible Project.

    (14) DOE and Borrower have reached an agreement regarding the information that will be made available to DOE and the information that will be made publicly available.

    (15) The Borrower shall have filed applications for or obtained any required regulatory approvals for the Eligible Project and is in compliance, or promptly will be in compliance, where appropriate, with all Federal, state, and local regulatory requirements.

    (16) The Borrower shall have no delinquent Federal debt.

    (17) The Project Sponsors have made or will make a significant Equity investment in the Borrower or the Eligible Project, and will maintain control of the Borrower or the Eligible Project as agreed in the Loan Guarantee Agreement.

    (18) The Loan Guarantee Agreement and related agreements shall include such other terms and conditions as DOE deems necessary or appropriate to protect the interests of the United States.

    (d) The Loan Guarantee Agreement shall provide that, in the event of a default by the Borrower:

    (1) Interest on the Guaranteed Obligations shall accrue at the rate stated in the Loan Guarantee Agreement or the Loan Agreement, until DOE makes full payment of the defaulted Guaranteed Obligations and, except when such Guaranteed Obligations are funded through the Federal Financing Bank, DOE shall not be required to pay any premium, default penalties, or prepayment penalties; and

    (2) The holder of collateral pledged in respect of the Guaranteed Obligations shall be obligated to take such actions as DOE may reasonably require to provide for the care, preservation, protection, and maintenance of such collateral so as to enable the United States to achieve maximum recovery.

    (e)(1) An Eligible Lender or other Holder may sell, assign or transfer a Guaranteed Obligation to another Eligible Lender that meets the requirements of § 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.

    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.Start Printed Page 3758

    (b) Loan servicing duties shall be performed by an Eligible Lender, DOE, or another qualified loan servicer approved by DOE. When performing its servicing duties, the loan servicer shall at all times exercise the level of care and diligence that a reasonable and prudent lender would exercise when servicing a loan made without a Federal guarantee, including:

    (1) During the construction period, monitoring the satisfaction of all of the conditions precedent to all loan disbursements, as provided in the Loan Guarantee Agreement, Loan Agreement, or related documents;

    (2) During the operational phase, monitoring and servicing the Guaranteed Obligations and collection of the outstanding principal and accrued interest as well as undertaking to ensure that the collateral package securing the Guaranteed Obligations remains uncompromised; and

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

    Project costs.

    (a) Project Costs include:

    (1) Costs of acquisition, lease, or rental of real property, including engineering fees, surveys, title insurance, recording fees, and legal fees incurred in connection with land acquisition, lease or rental, site improvements, site restoration, access roads, and fencing;

    (2) Costs of engineering, architectural, legal and bond fees, and insurance paid in connection with construction of the facility;

    (3) Costs of equipment purchases, including a reasonable reserve of spare parts to the extent required;

    (4) Costs to provide facilities and services related to safety and environmental protection;

    (5) Costs of financial, legal, and other professional services, including services necessary to obtain required licenses and permits and to prepare environmental reports and data;

    (6) Costs of issuing Eligible Project debt, such as fees, transaction, and costs referred to in paragraph (a)(5) of this section, and other customary charges imposed by Eligible Lenders;

    (7) Costs of necessary and appropriate insurance and bonds of all types including letters of credit and any collateral required therefor;

    (8) Costs of design, engineering, startup, commissioning, and shakedown;

    (9) Costs of obtaining licenses to intellectual property necessary to design, construct, and operate the Eligible Project;

    (10) To the extent required by the Loan Guarantee Agreement and not intended or available for any cost referred to in paragraph (b) of this section, costs of funding any reserve fund, including without limitation, a debt service reserve, a maintenance reserve, and a contingency reserve for cost overruns during construction; provided that proceeds of a Guaranteed Loan deposited to any reserve fund shall not be removed from such fund except to pay Project Costs, to pay principal of the Guaranteed Loan, or otherwise to be used as provided in the Loan Guarantee Agreement;

    (11) Capitalized interest necessary to meet market requirements and other carrying costs during construction; and

    (12) Other necessary and reasonable costs, including, without limitation, previously acquired real estate, equipment, or other materials, and any engineering, construction, make-ready, design, permitting, or other work completed on an existing facility or project.

    (b) Project Costs do not include:

    (1) Fees and commissions charged to Borrower, including finder's fees, for obtaining Federal or other funds;

    (2) Parent corporation or other affiliated entity's general and administrative expenses, and non-Eligible Project related parent corporation or affiliated entity assessments, including organizational expenses;

    (3) Goodwill, franchise, trade, or brand name costs;

    (4) Dividends and profit sharing to stockholders, employees, and officers;

    (5) Research, development, and demonstration costs of readying an innovative technology for employment in a commercial project;

    (6) Costs that are excessive or are not directly required to carry out the Eligible Project, as determined by DOE;

    (7) Expenses incurred after startup, commissioning, and shakedown of the facility, or, in DOE's discretion, any portion of the facility that has completed startup, commissioning, and shakedown;

    (8) Borrower-paid Credit Subsidy Costs, the Administrative Cost of Issuing a Loan Guarantee, and any other fee collected by DOE; and

    (9) Operating costs.

    Fees and charges.

    (a) Unless explicitly authorized by statute, no funds obtained from the Federal Government, or from a loan or other instrument guaranteed by the Federal Government, may be used to pay for the Credit Subsidy Cost, the Application Fee, the Facility Fee, the Guarantee Fee, the maintenance fee, and any other fees charged by or paid to DOE relating to the Act or any Guarantee thereunder. An applicant may, at any time, use non-Federal monies to pay the Credit Subsidy Cost or DOE fees.

    (b) DOE may charge Applicants a non-refundable Facility Fee, with a portion being payable on or prior to the date on which the Applicant executes the Commitment Letter and the remainder being payable on or prior to the closing date for the Loan Guarantee Agreement.

    (c) In order to encourage and supplement private lending activity DOE may collect from Borrowers for deposit in the United States Treasury a non-refundable Risk-Based Charge which, together with the interest rate on the Guaranteed Obligation that LPO determines to be appropriate, will take into account the prevailing rate of interest in the private sector for similar loans and risks. The Risk-Based Charge shall be paid at such times and in such manner as may be determined by DOE, but no less frequently than once each year, commencing with payment of a pro-rated payment on the date the Guarantee is issued. The amount of the Risk-Based Charge will be specified in the Loan Guarantee Agreement.

    (d) DOE may collect a maintenance fee to cover DOE's administrative expenses, other than extraordinary expenses, incurred in servicing and monitoring a Loan Guarantee Agreement. The maintenance fee shall accrue from the date of execution of the Loan Guarantee Agreement through the date of payment in full of the related Guaranteed Obligations. If DOE determines to collect a maintenance fee, it shall be paid by the Borrower each year (or portion thereof) in advance in the amount specified in the applicable Loan Guarantee Agreement.

    (e) In the event a Borrower or an Eligible Project experiences difficulty relating to technical, financial, or legal matters or other events (e.g., engineering failure or financial workouts), the Borrower shall be liable as follows:

    (1) If such difficulty requires DOE to incur time or expenses beyond those customarily expended to monitor and administer performing loans, DOE may collect an extraordinary expenses fee from the Borrower that will reimburse Start Printed Page 3759DOE for such time and expenses, as determined by DOE; and

    (2) For all fees and expenses of DOE's independent consultants and outside counsel, to the extent that such fees and expenses are elected to be paid by DOE notwithstanding the provisions of paragraphs (f) and (g) of this section.

    (f) Each Applicant, Borrower, or Project Sponsor, as applicable, shall be responsible for the payment of all fees and expenses charged by DOE's independent consultants and outside legal counsel in connection with an Application, Conditional Commitment, or Loan Guarantee Agreement, as applicable. Upon making a determination to engage independent consultants or outside counsel with respect to an Application, DOE will proceed to evaluate and process such Application only following execution by an Applicant or Project Sponsor, as appropriate, of an agreement satisfactory to DOE to pay the fees and expenses charged by the independent consultants and outside legal counsel. Appropriate provisions regarding payment of such fees and expenses shall also be included in each Term Sheet and Loan Guaranty Agreement or, upon a determination by DOE, in other appropriate agreements.

    (g) Notwithstanding payment by Applicant, Borrower, or Project Sponsor, all services rendered by an independent consultant or outside legal counsel to DOE in connection with an Application, Conditional Commitment, or Loan Guarantee Agreement shall be solely for the benefit of DOE (and such other creditors as DOE may agree in writing). DOE may require, in its discretion, the payment of an advance retainer to such independent consultants or outside legal counsel as security for the collection of the fees and expenses charged by the independent consultants and outside legal counsel. In the event an Applicant, Borrower, or Project Sponsor fails to comply with the provisions of such payment agreement, DOE in its discretion, may stop work on or terminate an Application, a Conditional Commitment, or a Loan Guarantee Agreement, or may take such other remedial measures in its discretion as it deems appropriate.

    (h) DOE shall not be financially liable under any circumstances to any independent consultant or outside counsel for services rendered in connection with an Application, Conditional Commitment, or Loan Guarantee Agreement except to the extent DOE has previously entered into an express written agreement to pay for such services.

    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.

    Default, demand, payment, and foreclosure on collateral.

    (a) If a Borrower defaults in making a required payment of principal or interest on a Guaranteed Obligation and such default has not been cured within the applicable grace period, the Holder may make written demand for payment upon the Secretary in accordance with the terms of the applicable Guarantee. If a Borrower defaults in making a required payment of principal or interest on a Guaranteed Obligation and such default has not been cured within the applicable grace period, the Secretary shall notify the Attorney General.

    (b) Subject to the terms of the applicable Guarantee, the Secretary shall make payment within 60 days after receipt of written demand for payment from the Holder, provided that the demand for payment complies in all respects with the terms of the applicable Guarantee. Interest shall accrue to the Holder at the rate stated in the promissory note evidencing the Guaranteed Obligation, without giving effect to the Borrower's default in making a required payment of principal or interest on the applicable Guarantee Obligation or any other default by the Borrower, until the Guaranteed Obligation has been fully paid by DOE. Payment by the Secretary on the applicable Guarantee does not change Borrower's obligations under the promissory note evidencing the Guaranteed Obligation, Loan Guarantee Agreement, Loan Agreement, or related documents, including an obligation to pay default interest.

    (c) Following payment by the Secretary pursuant to the applicable Guarantee, upon demand by DOE, the Holder shall transfer and assign to the Secretary (or his designee or agent) the promissory note evidencing the Guaranteed Obligation, all rights and interests of the Holder in the Guaranteed Obligation, and all rights and interests of the Holder in respect of the Guaranteed Obligation, except to the extent that the Secretary determines that such promissory note or any of such rights and interests shall not be transferred and assigned to the Secretary. Such transfer and assignment shall include, without limitation, all of the liens, security, and collateral rights of the Holder (or his designee or agent) in respect of the Guaranteed Obligation.

    (d) Following payment by the Secretary pursuant to a Guarantee or other default of a Guaranteed Obligation, the Secretary is authorized to protect and foreclose on the collateral, take action to recover costs incurred by, and all amounts owed to, the United States as a result of the defaulted Guarantee Obligation, and take such other action necessary or appropriate to protect the interests of the United States. In respect of any such authorized actions that involve a judicial proceeding or other judicial action, the Secretary shall act through the Attorney General. The foregoing provisions of this paragraph (d) shall not relieve the Secretary from its obligations pursuant to any applicable Intercreditor Agreement. Nothing in this paragraph (d) shall limit the Secretary from exercising any rights or remedies pursuant to the terms of the Loan Guarantee Agreement.

    (e) The cash proceeds received as a result of any foreclosure on the collateral, or other action, shall be distributed in accordance with the Loan Guarantee Agreement (subject to any applicable Intercreditor Agreement).

    (f) The Loan Guarantee Agreement shall provide that cash proceeds received by the Secretary (or his designee or agent) as a result of any foreclosure on the collateral or other action shall be applied in the following order of priority:

    (1) Toward the pro rata payment of any costs and expenses (including unpaid fees, fees and expenses of counsel, contractors and agents, and liabilities and advances made or incurred) of the Secretary, the Attorney General, the Holder, a collateral agent, or other responsible person of any of them (solely in their individual capacities as such and not on behalf of or for the benefit of their principals), incurred in connection with any authorized action following payment by the Secretary pursuant to a Guarantee or other default of a Guaranteed Obligation, or as otherwise permitted under the Loan Agreement or Loan Guarantee Agreement;

    (2) To pay all accrued and unpaid fees due and payable to the Secretary, the Attorney General, the Holder, a collateral agent, or other responsible Start Printed Page 3760person of any of them on a pro rata basis in respect of the Guaranteed Obligation;

    (3) To pay all accrued and unpaid interest due and payable to the Secretary, the Attorney General, the Holder, a collateral agent, or other responsible person of any of them on a pro rata basis in respect of the Guaranteed Obligation;

    (4) To pay all unpaid principal of the Guaranteed Obligation;

    (5) To pay all other obligations of the Borrower under the Loan Guarantee Agreement, the Loan Agreement, and related documents that are remaining after giving effect to the preceding provisions and are then due and payable; and

    (6) To pay to the Borrower, or its successors and assigns, or as a court of competent jurisdiction may direct, any cash proceeds then remaining following the application of all payment described in paragraphs (f)(1) through (5) of this section.

    (g) No action taken by the Holder or its agent or designee in respect of any collateral will affect the rights of any person, including the Secretary, having an interest in the Guaranteed Obligations or other debt obligations, to pursue, jointly or severally, legal action against the Borrower or other liable persons, for any amounts owing in respect of the Guaranteed Obligation or other applicable debt obligations.

    (h) In the event that the Secretary considers it necessary or desirable to protect or further the interest of the United States in connection with exercise of rights as a lien holder or recovery of deficiencies due under the Guaranteed Obligation, the Secretary may take such action as he determines to be appropriate under the circumstances.

    (i) Nothing in this part precludes, nor shall any provision of this part be construed to preclude, the Secretary from purchasing any collateral or Holder's or other Person's interest in the Eligible Project upon foreclosure of the collateral.

    (j) Nothing in this part precludes, nor shall any provision of this part be construed to preclude, forbearance by any Holder with the consent of the Secretary for the benefit of the Borrower and the United States.

    (k) The Holder and the Secretary may agree to a formal or informal plan of reorganization in respect of the Borrower, to include a restructuring of the Guaranteed Obligation and other applicable debt of the Borrower on such terms and conditions as the Secretary determines are in the best interest of the United States.

    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 § 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.

    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.

    Deviations.

    (a) Whenever permitted by applicable law, the Secretary may authorize deviations from the requirements of this part upon:

    (1) Either receipt from the Applicant, Borrower, or Project Sponsor, as applicable, of—

    (i) A written request that the Secretary deviate from one or more requirements; and

    (ii) A supporting statement briefly describing one or more justifications for such deviation; or

    (iii) A determination by the Secretary in his discretion to undertake a deviation;

    (2) A finding by the Secretary that such deviation supports program objectives and the special circumstances stated in the request make such deviation clearly in the best interest of the Government; and

    (3) If the waiver would constitute a substantial change in the financial terms of the Loan Guarantee Agreement and related documents, DOE shall consult with OMB and the Secretary of the Treasury.

    (b) If a deviation under this section results in an increase in the applicable Credit Subsidy Cost, such increase shall be funded either by additional fees paid by the Borrower or on behalf of the Borrower by any third party or, if an appropriation is available, by means of an appropriations act. The Secretary has discretion to determine how the cost of a deviation is funded. The Secretary may waive, alter, or amend, through a deviation, all or any part of the Application Fee, the Facility Fee, the Guarantee Fee, the maintenance fee, and any other fees associated with any Application, or allow for alternative plans to pay such fees over time or through any other means agreed upon by DOE and the Applicant.

    End Part Start Part Start Printed Page 3761

    PART 611—ADVANCED TECHNOLOGY VEHICLES MANUFACTURING ASSISTANCE PROGRAM

    End Part Start Amendment Part

    2. The authority citation for part 611 continues to read as follows:

    End Amendment Part Start Authority

    Authority: Pub. L. 110-140 (42 U.S.C. 17013), Pub. L. 110-329.

    End Authority Start Amendment Part

    3. Section 611.2 is revised to read as follows:

    End Amendment Part
    Definitions.

    The definitions contained in this section apply to provisions contained in both this subpart and subpart B of this part.

    Adjusted average fuel economy means a harmonic production weighted average of the combined fuel economy of all vehicles in a fleet, which were subject to CAFE.

    Advanced technology vehicle means a passenger automobile or light truck that meets—

    (1) The Bin 5 Tier II emission standard established in regulations issued by the Administrator of the Environmental Protection Agency under section 202(i) of the Clean Air Act (the Act) (42 U.S.C. 7521(i)), as of the date of application, or a lower-numbered Bin emission standard;

    (2) Any new emission standard in effect for fine particulate matter prescribed by the Administrator under the Act (42 U.S.C. 7401 et seq.), as of the date of application; and

    (3) At least 125 percent of the harmonic production weighted average combined fuel economy, for vehicles with substantially similar attributes in model year 2005.

    Agreement means the contractual loan arrangement between DOE and a Borrower for a loan made by and through the Federal Financing Bank with the full faith and credit of the United States Government on the principal and interest.

    Applicant means a party that submits a substantially complete application pursuant to this part.

    Application means the compilation of the materials required by this part to be submitted to DOE by an Applicant. One Application can include requests for one or more loans and one or more projects. However, an Application covering more than one project must contain complete and separable information with respect to each project.

    Automobile is used as that term is defined in 49 CFR part 523.

    Borrower means an Applicant that receives a loan under the program under this part.

    CAFE means the Corporate Average Fuel Economy program of the Energy Policy and Conservation Act, 49 U.S.C. 32901 et seq.

    Combined fuel economy means the combined city/highway miles per gallon values, as are reported in accordance with section 32904 of title 49, United States Code. If CAFE compliance data is not available, the combined average fuel economy of a vehicle must be demonstrated through the use of a peer-reviewed model.

    DOE or Department means the United States Department of Energy.

    Eligible Facility means a manufacturing facility in the United States that produces qualifying advanced technology vehicles, or qualifying components.

    Eligible Project means:

    (1) Reequipping, expanding, or establishing a manufacturing facility in the United States to produce qualifying advanced technology vehicles, or qualifying components; or

    (2) Engineering integration performed in the United States for qualifying advanced technology vehicles and qualifying components; or

    (3) Manufacturing, recycling, processing, reprocessing, remediation, or reuse of materials, components, or subcomponents involving critical minerals, critical minerals production, or the supply chain for such materials, as set forth in Executive Order 13953 (“Executive Order Addressing the Threat to the Domestic Supply Chain from Reliance on Critical Minerals from Foreign Adversaries,” dated September 20, 2020), and Executive Order 13817 (“A Federal Strategy to Ensure Secure and Reliable Supplies of Critical Minerals,” dated December 20, 2017), as amended.

    Engineering integration costs are the costs of engineering tasks relating to—

    (1) Incorporating qualifying components into the design of advanced technology vehicles; and

    (2) Designing tooling and equipment and developing manufacturing processes and material suppliers for production facilities that produce qualifying components or advanced technology vehicles.

    Equivalent vehicle means a light-duty vehicle of the same vehicle classification as specified in 10 CFR part 523.

    Financially viable means a reasonable prospect that the Applicant will be able to make payments of principal and interest on the loan as and when such payments become due under the terms of the loan documents, and that the Applicant has a net present value that is positive, taking all costs, existing and future, into account.

    Grantee means an entity awarded a grant made pursuant to section 136 of the Energy Independence and Security Act of 2007 and this part.

    Light-duty vehicle means passenger automobiles and light trucks.

    Light truck is used as that term is defined in 49 CFR part 523.

    Loan Documents mean the Agreement and all other instruments, and all documentation among DOE, the Borrower, and the Federal Financing Bank evidencing the making, disbursing, securing, collecting, or otherwise administering the loan [references to loan documents also include comparable agreements, instruments, and documentation for other financial obligations for which a loan is requested or issued].

    Model year is defined as that term is defined in 49 U.S.C. 32901.

    Passenger automobile is used as that term is defined in 49 CFR part 523.

    Qualifying components means components that the DOE determines are:

    (1) Designed for advanced technology vehicles; and

    (2) Installed for the purpose of meeting the performance requirements of advanced technology vehicles; or

    (3) Involving critical minerals, as set forth in Executive Order 13953 (“Executive Order Addressing the Threat to the Domestic Supply Chain from Reliance on Critical Minerals from Foreign Adversaries,” dated September 20, 2020), and Executive Order 13817 (“A Federal Strategy to Ensure Secure and Reliable Supplies of Critical Minerals,” dated December 20, 2017), as amended, as a component of advanced technology vehicles.

    Secretary means the United States Secretary of Energy.

    Security means all property, real or personal, tangible or intangible, required by the provisions of the Loan Documents to secure repayment of any indebtedness of the Borrower under the Loan Documents.

    End Supplemental Information

    [FR Doc. 2020-29278 Filed 1-14-21; 8:45 am]

    BILLING CODE 6450-01-P

Document Information

Effective Date:
1/15/2021
Published:
01/15/2021
Department:
Energy Department
Entry Type:
Rule
Action:
Final rule.
Document Number:
2020-29278
Dates:
This rule is effective on January 15, 2021.
Pages:
3747-3761 (15 pages)
RINs:
1910-AA54
Topics:
Administrative practice and procedure, Energy, Loan programs, Loan programs-energy, Reporting and recordkeeping requirements
PDF File:
2020-29278.pdf
Supporting Documents:
» Policies and Procedures for Loan Guarantees: Projects that Employ Innovative Technologies and for Direct Loans under the Advanced Technology Vehicles Manufacturing Program
CFR: (17)
10 CFR 609.1
10 CFR 609.2
10 CFR 609.3
10 CFR 609.4
10 CFR 609.5
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