Notice of Funds Availability (NOFA) Inviting Applications for Biorefineries, 70544-70567 [E8-27201]

Agencies

• DEPARTMENT OF AGRICULTURE
• Rural Business-Cooperative Service

[Federal Register Volume 73, Number 225 (Thursday, November 20, 2008)]
[Notices]
[Pages 70544-70567]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-27201]



Federal Register / Vol. 73, No. 225 / Thursday, November 20, 2008 / 
Notices

[[Page 70544]]


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DEPARTMENT OF AGRICULTURE

Rural Business-Cooperative Service


Notice of Funds Availability (NOFA) Inviting Applications for 
Biorefineries

AGENCY: Rural Business-Cooperative Service, USDA.

ACTION: Notice.

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SUMMARY: This notice announces the funds available for the BioRefinery 
Assistance Program (the ``Program'') to provide guaranteed loans for 
the development and construction of commercial-scale biorefineries or 
for the retrofitting of existing facilities using eligible technology 
for the development of advanced biofuels. In conjunction with this 
notice, USDA is publishing elsewhere in this issue an advanced notice 
of proposed rulemaking (ANPRM) seeking comments for the development of 
a proposed rule to implement the BioRefinery Assistance guaranteed loan 
program.

DATES: To be considered for funding in the first half of Fiscal Year 
2009, applications must be completed and submitted to the USDA Rural 
Development National Office by December 31, 2008. To be considered for 
funding in the second half of Fiscal Year 2009, complete applications 
must be submitted to the USDA Rural Development National Office between 
March 1, 2009 and April 30, 2009. Comments regarding the information 
collection requirements under the Paperwork Reduction Act of 1995 must 
be submitted on or before January 20, 2009.

ADDRESSES: Applications and forms may be obtained from:
     U.S. Department of Agriculture, Rural Development, Energy 
Branch, Attention: BioRefinery Assistance Program, 1400 Independence 
Avenue, SW., STOP 3225, Washington, DC 20250-3225.
     Agency Web site: https://www.rurdev.usda.gov. Follow 
instructions for obtaining the application and forms.
    Submit an original completed application with two copies to USDA's 
Rural Development National Office: Energy Branch, Attention: 
BioRefinery Assistance Program, 1400 Independence Avenue, SW., STOP 
3225, Washington, DC 20250-3225.

FOR FURTHER INFORMATION CONTACT: Energy Branch, Attention: BioRefinery 
Assistance Program, 1400 Independence Avenue, SW., Mail Stop 3225, 
Washington, DC 20250-3225. Telephone: 202-720-1400.

SUPPLEMENTARY INFORMATION:

Programs Affected

    This Program is listed in the Catalog of Federal Domestic 
Assistance under Number 10.865.

Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995, Rural 
Development is requesting emergency approval from OMB of the reporting 
and a recordkeeping requirement contained in this Notice and hereby 
opens a 60-day public comment period.
    Title: BioRefinery Assistance Program Guaranteed Loans.
    OMB Number: 0570-XXXX.
    Type of Request: Emergency Approval of a new collection.
    Expiration Date of Approval: Six months from date of OMB approval.
    Abstract: The collection of information is vital to Rural 
Development to make wise decisions regarding the eligibility of 
projects and borrowers in order to ensure compliance with the 
regulations and to ensure that the funds obtained from the Government 
are used appropriately (i.e., being used for the purposes for which the 
guaranteed loans were awarded). In sum, this collection of information 
is necessary in order to implement this Program.
    Rural Development has established ``Instructions for Application 
for Loan Guarantee in the Application Guide--Section 9003 BioRefinery 
Assistance Loan Guarantees'' that contains Form RD 4279-1 and full 
details of the application process. Eligible entities are strongly 
encouraged to consult the instructions guide when preparing 
applications for submission.
    All applicants requesting Federal funding must complete Form RD 
4279-1, ``Application for Loan Guarantee (Business and Industry and 
Section 9006 Program)''. Completed applications must include a proposal 
narrative and written evidence to collect needed information required 
by the Agency for reporting requirements. This includes but not limited 
to: Forms RD 1980-41, ``Guaranteed Loan Status Report''; RD 1980-44, 
``Guaranteed Loan Borrower Default Status''; RD 400-1, ``Equal 
Opportunity Agreement''; RD 400-4, ``Assurance Agreement''; RD 4279-3, 
``Conditional Commitment''; RD 449-30, ``Loan Note Guarantee Report of 
Loss''; RD 1980-43, ``Lender's Guaranteed Loan Payment to USDA''; RD 
4279-4 ``Lender's Agreement''; RD 1980-19, ``Guaranteed Loan Closing 
Report''; RD 4279-6, ``Assignment Guarantee Agreement''; RD 1940-20 
``Request for environmental Information''; RD 1940-Q, ``Certification 
for Contracts, Grants, and Loans'' (if loan exceeds $150,000); SF-LLL, 
``Disclosure of Lobbying Activities'' and AD-1047, ``Certification 
Regarding Debarment, Suspension, and Other Responsibility Matters.''
    The following estimates are based on the average over the first 
three years the program is in place.
    Estimate of Burden: Public reporting burden for this collection of 
information is estimated to average 4 hours per response.
    Respondents: Individuals, Indian tribes, units of State or local 
government, corporations, farm cooperatives, farmer cooperative 
organizations, associations of agricultural producers, National 
Laboratories, institutions of higher education, rural electric 
cooperatives, public power entities, and consortia of any of these 
entities.
    Estimated Number of Respondents: 10.
    Estimated Number of Responses per Respondent: 31.
    Estimated Number of Responses: 306.
    Estimated Total Annual Burden (hours) on Respondents: 1,281.
    Copies of this information collection may be obtained from Cheryl 
Thompson, Regulations and Paperwork Management Branch, Support Services 
Division, U.S. Department of Agriculture, Rural Development, STOP 0742, 
1400 Independence Ave., SW., Washington, DC 20250-0742 or by calling 
(202) 692-0043.

Comments

    Comments are invited on: (a) Whether the proposed collection of 
information is necessary for the proper performance of the functions of 
Rural Development, including whether the information will have 
practical utility; (b) the accuracy of the new Rural Development 
estimate of the burden of the proposed collection of information, 
including the validity of the methodology and assumptions used; (c) 
ways to enhance the quality, utility, and clarity of the information to 
be collected; and (d) ways to minimize the burden of the collection of 
information on those who are to respond, including through the use of 
appropriate automated, electronic, mechanical, or other technological 
collection techniques or other forms of information technology. 
Comments may be sent to Cheryl Thompson, Regulations and Paperwork 
Management Branch, U.S. Department of Agriculture, Rural Development, 
STOP 0742, 1400 Independence Ave., SW., Washington, DC 20250.
    Section 9003 of the Food, Conservation, and Energy Act of 2008

[[Page 70545]]

(2008 Farm Bill) and its accompanying Managers Report direct the 
Secretary to implement this program as soon as possible in fiscal year 
2009. As a result, the Agency has requested emergency approval from OMB 
of the information collection to implement this Notice. The Agency is 
soliciting comments with respect to this information collection and 
such comments will be considered and addressed in the final rule and in 
the information collection submission to OMB for the 3-year approval. 
All comments will also become a matter of public record.

E-Government Act Compliance

    Rural Development is committed to complying with the E-Government 
Act, to provide increased opportunities for citizens to access 
Government information and services electronically.

I. Background

    Section 9003 of the Food, Conservation, and Energy Act of 2008 
(2008 Farm Bill) is intended to assist in the development and 
construction of commercial-scale biorefineries and the retrofitting of 
existing facilities using eligible technology for the development of 
advanced biofuels. Consistent with Congressional intent, preference 
will be given to projects where first-of-a-kind technology will be 
deployed at the commercial scale. To that end, the program will promote 
the development of the first commercial scale biorefineries that do not 
rely on corn kernel starch as the feedstock or standard biodiesel 
technology.
    The Agency will make guarantees available on loans for eligible 
projects that will provide for the development, construction, and/or 
retrofitting of commercial biorefineries using eligible technology. 
Eligible technology is:
    (a) Any technology that is being adopted in a viable commercial-
scale operation of a biorefinery that produces an advanced biofuel, and
    (b) Any technology not described in paragraph (a) above that has 
been demonstrated to have technical and economic potential for 
commercial application in a biorefinery that produces an advanced 
biofuel.
    Over the life of the program, it is likely that guarantees will be 
awarded to projects that are first-of-a-kind and that may include 
projects with commercial applications that are expanded to new regions, 
modified to utilize different feedstocks, or substantially improved 
such that they represent a significant technological risk.
     The section 9003 program being implemented is similar, but 
not identical to, the guaranteed loan program for innovative 
technologies implemented by the U.S. Department of Energy under title 
XVII of the Energy Policy Act of 2005 (Pub. L. 109-58). The Agency is 
implementing the section 9003 as a separate program because the types 
of projects that would be ``good candidates'' for guaranteed loans 
under title XVII of the Energy Policy Act of 2005 would not likely be 
good candidates for guaranteed loans under section 9003, and vice-
versa.

A. Guaranteed Loan Funding

    The 2008 Farm Bill provides mandatory budget authority for this 
Program of $75 million in Fiscal Year 2009 to support loan guarantees 
based on credit subsidy scoring that is yet to be determined.
    The maximum principal amount of a loan guaranteed under this 
Program is $250 million; there is no minimum amount. The amount of a 
loan guaranteed under this Program will be reduced by the amount of 
other direct Federal funding that the eligible borrower receives for 
the same project.
    The maximum guarantee under this Program is 80 percent of the 
principal and interest due on a loan guaranteed under this Program if 
the loan amount is equal to or less than $80 million. If the loan 
amount is more than $80 million and less than $125 million, the maximum 
guarantee is 70 percent for the amount in excess of $80 million. If the 
loan amount is equal to or more than $125 million, the maximum 
guarantee is 60 percent for the entire loan amount.
    The amount of a loan guaranteed for a project under this Program 
will not exceed 80 percent of total eligible project costs. Thus, the 
amount of guaranteed loan funds that may be made available to an 
applicant for an eligible project will not exceed 64 percent of the 
total eligible project costs.
    The interest rate for the guaranteed loan will be negotiated 
between the lender and the applicant and shall be in line with interest 
rates on other similar government guaranteed loan programs. The 
interest rate may be either fixed or variable, as long as it is a legal 
rate, and shall be fully amortizing. The interest rate for both the 
guaranteed and unguaranteed portions of the loan must be of the same 
type (i.e., both fixed or both variable). The interest rate charged 
will be subject to Agency review and approval.
    The length of a loan guaranteed under this Program would be for a 
period of no more than 20 years or 85 percent of the useful life of the 
project, as determined by the lender and confirmed by the Agency, 
whichever is less. The length of the loan term would be required to be 
the same for both the guaranteed and unguaranteed portion of the loan.

B. Eligibility Requirements for Guarantee Assistance

    This Notice contains eligibility requirements for borrowers, 
projects, and lenders, as discussed below.
Borrower Eligibility
    To be eligible to receive a guaranteed loan under this Program, a 
borrower must be one of the following:
     Individual,
     Indian tribe,
     Unit of State or local government,
     Corporation,
     Farm cooperative,
     Farmer cooperative organization,
     Association of agricultural producers,
     National Laboratory,
     Institution of higher education,
     Rural electric cooperative,
     Public power entity, or
     Consortium of any of those entities.
Project Eligibility
    Projects eligible for loan guarantees under this Program must be 
located in a rural area and be for either:
     The development and construction of commercial-scale 
biorefineries using eligible technology, or
     The retrofitting of existing facilities, including, but 
not limited to, wood products facilities and sugar mills, with eligible 
technology.
    Eligible technology is defined as either:
     A technology that is being adopted in a viable commercial-
scale operation of a biorefinery that produces an advanced biofuel; or
     A technology not described in the previous paragraph that 
has been demonstrated to have technical and economic potential for 
commercial application in a biorefinery that produces an advanced 
biofuel.
Lender Eligibility
    Regulated or supervised lenders that meet the requirements 
specified in this Notice (see section I) may be eligible to participate 
in this Program.

C. Applications

    The lender must submit a separate application for each project for 
which a loan guarantee is sought under this Program. The contents of 
the application, including forms, certifications, and agreements, are 
very similar to what is required for the Business and Industry 
Guaranteed Loan Program and the Renewable Energy Systems and Energy 
Efficiency

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Improvements Guaranteed Loan Program. It is recommended that applicants 
refer to the application guide for this program (``Instructions for 
Application for Loan Guarantee--Section 9003 BioRefinery Assistance 
Loan Guarantees''), which can be found on the Agency's Web site.
    Because of factors of cost and complexity for eligible projects 
under this Program, the lender must include with the application a 
project-specific feasibility study, as defined in this Notice. The 
feasibility study must be prepared by a qualified consultant. The 
feasibility study must address, in part, both the technical and 
economic feasibility of the project.
    The Agency intends to accept applications twice during Fiscal Year 
2009 for consideration for funding under this Program. The first window 
for submitting applications begins on the publication date of this 
Notice and closes December 31, 2008. Therefore, it is imperative that 
applicants submit complete applications to the USDA Rural Development 
National Office by December 31, 2008, in order to be considered for 
funding in the first half of FY 2009. Applicants not selected in the 
first round may reapply during the second application window.
    The second window for submitting applications under this Program 
begins on March 1, 2009. Complete applications must be submitted to the 
USDA Rural Development National Office between March 1, 2009, and April 
30, 2009, to be considered for funding in the second half of FY 2009. 
Applications received after April 30, 2009, will not be considered for 
funding in FY 2009.
    In administering this program's budgetary authority for FY 2009, 
the Agency will allocate up to, but no more, than 50 percent of its FY 
2009 $75 million budgetary authority to fund applications received by 
the end of the first application window. Any funds not obligated to 
support applications submitted during the first application window will 
be available to support applications received during the second window. 
The Agency, therefore, will have a minimum of 50 percent of its FY 2009 
budgetary authority for this program available to support applications 
received during the second application window.
    Ineligible or incomplete applications will be returned to the 
applicant. If an application is determined to be ineligible for any 
reason, the Agency will inform the lender, in writing, of the reasons 
and provide any applicable appeal rights. The denial or rejection of an 
application under the Program may be appealed as provided in this 
Notice.

D. Evaluation of Guaranteed Loan Applications

    Submission of an application neither reserves funding nor ensures 
funding. The Agency will evaluate each application and make a 
determination as to whether the borrower is eligible, whether the 
lender is eligible, whether the proposed project is eligible, the 
credit-worthiness and technical merit of the project, and whether the 
proposed funding request complies with all applicable statutes and 
regulations. The evaluation will be based on the information provided 
by the lender and on other sources of information, such as recognized 
industry experts in the applicable technology field, as necessary.
    The Agency will score each application in order to prioritize each 
proposed project. The evaluation criteria that the Agency will use to 
score these projects are:
     Whether the borrower has established a market for the 
advanced biofuel and the byproducts produced.
     Whether the area in which the borrower proposes to place 
the biorefinery has other similar advanced biofuel facilities.
     Whether the borrower is proposing to use a feedstock not 
previously used in the production of advanced biofuels.
     Whether the borrower is proposing to work with producer 
associations or cooperatives.
     The level of financial participation by the borrower, 
including support from non-Federal and private sources. Such financial 
participation may take the form of direct financial support, technical 
support, and contributions of in-kind resources including such kinds of 
support from state government. Any direct Federal funding from other 
sources will reduce the amount of the loan that may be guaranteed under 
this program.
     Whether the borrower has established that the adoption of 
the process proposed in the application will have a positive impact on 
resource conservation, public health, and the environment.
     Whether the borrower can establish that, if adopted, the 
biofuels production technology proposed in the application will not 
have any significant negative impacts on existing manufacturing plants 
or other facilities that use similar feedstocks.
     The potential for rural economic development, including 
the number of local jobs created and inclusion of local banks or other 
capital sources in any proposed debt syndication.
     The level of local ownership proposed in the application.
     Whether the project can be replicated.
     The extent to which the project converts cellulosic 
biomass feedstocks into advanced biofuel.
     Whether the project is a first-of-a-kind technology, 
system, or process.
    Using these evaluation criteria, the Agency expects that existing 
biodiesel technology is unlikely to score high enough to be selected 
for a guaranteed loan under this NOFA.

II. Provisions for BioRefinery Assistance Loan Guarantees

    All guaranteed loan requests for this Program are subject to the 
provisions of this Notice as laid out in this section of the Notice.

A. Definitions

    The following definitions are applicable to this Notice.
    Advanced biofuel. Fuel derived from renewable biomass, other than 
corn kernel starch to include:
    (1) Biofuel derived from cellulose, hemicellulose, or lignin;
    (2) Biofuel derived from sugar and starch (other than ethanol 
derived from corn kernel starch);
    (3) Biofuel derived from waste material, including crop residue, 
other vegetative waste material, animal waste, food waste, and yard 
waste;
    (4) Diesel-equivalent fuel derived from renewable biomass, 
including vegetable oil and animal fat;
    (5) Biogas (including landfill gas and sewage waste treatment gas) 
produced through the conversion of organic matter from renewable 
biomass;
    (6) Butanol or other alcohols produced through the conversion of 
organic matter from renewable biomass; or
    (7) Other fuel derived from cellulosic biomass.
    Agency. The Rural Business-Cooperative Service or successor Agency 
assigned by the Secretary of Agriculture to administer the BioRefinery 
Assistance Program. References to the National Office, Finance Office, 
State Office or other Agency offices or officials should be read as 
prefaced by ``Agency'' or ``Rural Development'' as applicable.
    Association of agricultural producers. An organization that 
represents independent producers directly engaged in the production of 
agricultural products, including crops (including farming); livestock 
(including ranching); forestry products; hydroponics; nursery

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stock; or aquaculture, whereby 50 percent or greater of their gross 
income is derived from the operations; and whose mission includes 
working on behalf of such producers and the majority of whose 
membership and board of directors are comprised of agricultural 
producers.
    Arm's-length transaction. A transaction between ready, willing, and 
able disinterested parties who are not affiliated with or related to 
each other and have no security, monetary, or stockholder interest in 
each other.
    Assignment Guarantee Agreement. A signed, Agency-approved agreement 
between the Agency, the lender, and the holder setting forth the terms 
and conditions of an assignment of a guaranteed portion of a loan or 
any part thereof.
    Assurance agreement. A signed, Agency-approved agreement between 
the Agency and the lender that assures the Agency that the lender is in 
compliance with and will continue to be in compliance with Title VI of 
the Civil Rights Act of 1964, 7 CFR part 15, and Agency regulations 
promulgated thereunder.
    Biofuel. A fuel derived from renewable biomass.
    Biogas. Biomass converted to gaseous fuels.
    Biorefinery. A facility (including equipment and processes) that 
converts renewable biomass into biofuels and biobased products and may 
produce electricity.
    Borrower. The person that borrows, or seeks to borrow, money from 
the lender, including any party or parties liable for the guaranteed 
loan.
    Business plan. A comprehensive document that:
    (1) Describes clearly the borrower's ownership structure and 
management, including experience and succession planning;
    (2) Discusses, if applicable, the borrower's parent, affiliates, 
and subsidiaries, including their names and a description of the 
relationship;
    (3) Discusses how the borrower will operate the proposed project, 
including, at a minimum, a description of:
    (i) The business and its strategy;
    (ii) Possible vendors and models of major system components;
    (iii) The products and services to be provided;
    (iv) The availability of the resources (e.g., labor, raw materials, 
supplies) necessary to provide those products and services;
    (v) Site location and its relation to product distribution (e.g., 
rail lines or highways) and any land use or other permits necessary to 
operate the facility; and
    (vi) The market for the product and its competition, including any 
and all competitive threats and advantages;
    (4) Presents pro forma financial statements, including:
    (i) Balance sheet and income and expense for a period of not less 
than 3 years of stabilized operation, and
    (ii) Cash flows for the life of the project; and
    (5) Describes the proposed use of funds.
    Collateral. The asset(s) pledged by the borrower in support of the 
loan.
    Conditional Commitment. An Agency-approved form provided to the 
lender indicating the loan guarantee it has requested has been approved 
subject to the completion of all conditions and requirements contained 
therein.
    Deficiency balance. The balance remaining on a loan after all 
collateral has been liquidated.
    Deficiency judgment. A monetary judgment rendered by a court of 
competent jurisdiction after foreclosure and liquidation of all 
collateral securing the loan.
    Eligible borrower. An individual, Indian tribe, or unit of State or 
local government, including a corporation, farm cooperative, farmer 
cooperative organization, association of agricultural producers, 
National Laboratory, institution of higher education, rural electric 
cooperative, public power entity, or consortium of any of those 
entities.
    Eligible project costs. Those expenses approved by the Agency for 
the project as identified in paragraphs (g)(3)(i) through (ix) of 
Section Q of this NOFA.
    Eligible technology.
    (1) A technology that is being adopted in a viable commercial-scale 
operation of a biorefinery that produces an advanced biofuel; or
    (2) A technology not described in paragraph (1) of this definition 
that has been demonstrated to have technical and economic potential for 
commercial application in a biorefinery that produces an advanced 
biofuel.
    Fair market value. The price that could reasonably be expected for 
an asset in an arm's-length transaction under ordinary economic and 
business conditions.
    Farm cooperative. A farmer or rancher owned and controlled business 
from which benefits are derived and distributed equitably on the basis 
of use by each of the farmer or rancher owners.
    Farmer Cooperative Organization. A cooperative organization is a 
cooperative or an entity, not chartered as a cooperative, that operates 
as a cooperative in that it is owned and operated for the benefit of 
its members, including the manner in which it distributes its dividends 
and assets.
    Feasibility study. An analysis by a qualified consultant of the 
economic, market, technical, financial, and management capabilities of 
a proposed project or business in terms of its expectation for success.
    Finance Office. The office which maintains the Agency financial 
accounting records located in St. Louis, Missouri.
    Future recovery. Any funds collected by lender associated with a 
defaulted project, after final loss claim has been paid by USDA.
    Guaranteed loan. A loan made and serviced by a lender for which the 
Agency has issued a Loan Note Guarantee.
    Holder. A person or entity, other than the lender, who owns all or 
part of the guaranteed portion of the loan with no servicing 
responsibilities. When the single note option is used and the lender 
assigns a part of the guaranteed note to an assignee, the assignee 
becomes a holder only when the Agency receives notice and the 
transaction is completed through use of Form RD 4279-6, ``Assignment 
Guarantee Agreement,'' or predecessor form.
    Immediate family. Individuals who are closely related by blood, 
marriage, or adoption, or live within the same household, such as a 
spouse, parent, child, brother, sister, aunt, uncle, grandparent, 
grandchild, niece, or nephew.
    Indian tribe. This term has the meaning given it in section 4 of 
the Indian Self-Determination and Education Assistance Act (25 U.S.C. 
450b).
    Institution of higher education. This term has the meaning given it 
in section 102(a) of the Higher Education Act of 1965 (20 U.S.C. 
1002(a)).
    Intellectual property. Any and all intangible assets that consists 
of human knowledge and ideas including, without limitation, patents, 
copyrights, trademarks, service marks, and trade secrets.
    Lender. A regulated or supervised lender that meets the criteria 
specified in Section I of this NOFA.
    Lender's Agreement. The Agency approved signed form between the 
Agency and the lender setting forth the lender's loan responsibilities 
under an issued Loan Note Guarantee.
    Lender's analysis. The analysis and evaluation of the credit 
factors associated with each guarantee application to ensure loan 
repayment through the use of credit document procedures and an 
underwriting process that is consistent with industry

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standards and the lender's written policy and procedures.
    Liquidation value. A monetary value given to property that is sold 
or exchanges hands under forced or limiting conditions, such as 
bankruptcy.
    Loan agreement. The Agency approved agreement between the borrower 
and lender containing the terms and conditions of the loan and the 
responsibilities of the borrower and lender.
    Loan Note Guarantee. The Agency approved form containing the terms 
and conditions of the guarantee of an identified loan.
    Loan-to-cost. The ratio of the dollar amount of a loan to the 
dollar value of the actual eligible project cost adjusted for other 
debt, project obligations, or other factors as determined by USDA.
    Loan-to-value. The ratio of the dollar amount of a loan to the 
dollar value of the collateral pledged as security for the loan.
    Market value. The amount for which property would sell for its 
highest and best use in an arm's length transaction.
    Negligent loan servicing.
    (1) The failure of a lender to perform those services that a 
reasonably prudent lender would perform in originating, servicing, and 
liquidating its own portfolio of unguaranteed loans; or
    (2) The failure of the lender to perform its origination and 
servicing responsibilities in accordance with its origination and 
servicing policies and procedures in use by the lender at the time the 
loan is made.
    (3) The term includes the concepts of failure to act, not acting in 
a timely manner, or acting in a manner contrary to the manner in which 
a reasonably prudent lender would act.
    Offtake agreement. The terms and conditions governing the sale and 
transportation of biofuels, biobased products, and electricity produced 
by the borrower to another party.
    Parity. A lien position whereby two or more lenders share a 
security interest of equal priority in collateral. In the event of 
default, each lender will be affected on a pro rata basis.
    Participation. Sale of an interest in a loan by the lender wherein 
the lender retains the note, collateral securing the note, and all 
responsibility for loan servicing and liquidation.
    Person. Any individual, corporation, company, foundation, 
association, labor organization, firm, partnership, society, joint 
stock company, group of organizations, public body, or State or local 
government.
    Promissory Note. A legal instrument that a borrower signs promising 
to pay a specific amount of money at a stated time. ``Note'' or 
``Promissory Note'' shall also be construed to include ``Bond'' or 
other evidence of debt where appropriate.
    Protective advances. Advances made by the lender for the purpose of 
preserving and protecting the collateral where the debtor has failed 
to, and will not or can not, meet obligations to protect or preserve 
collateral.
    Qualified consultant. An independent, third-party possessing the 
knowledge, expertise, and experience to perform in an efficient, 
effective, and authoritative manner the specific task required.
    Qualified Intellectual Property. Any intellectual property included 
on current (within one year) audited balance sheets for which an audit 
opinion has been received that states the financial reports fairly 
represent the values therein and the reported value has been arrived at 
in accordance with Generally Accepted Accounting Principles (GAAP) 
standards for valuing intellectual property. The supporting work papers 
must be satisfactory to the Administrator.
    Regulated or supervised lender. A lender that is subject to 
examination or supervision by an appropriate agency of the United 
States or a State that supervises or regulates credit institutions.
    Renewable biomass.
    (1) Materials, pre-commercial thinnings, or invasive species from 
National Forest System land and public lands (as defined in section 103 
of the Federal Land Policy and Management Act of 1976 (43 U.S.C. 1702)) 
that:
    (i) Are byproducts of preventive treatments that are removed to 
reduce hazardous fuels; to reduce or contain disease or insect 
infestation; or to restore ecosystem health;
    (ii) Would not otherwise be used for higher-value products; and
    (iii) Are harvested in accordance with applicable law and land 
management plans and the requirements for old-growth maintenance, 
restoration, and management direction of paragraphs (2), (3), and (4) 
of subsection (e) of section 102 of the Healthy Forests Restoration Act 
of 2003 (16 U.S.C. 6512) and large-tree retention of subsection (f) of 
that section; or
    (2) Any organic matter that is available on a renewable or 
recurring basis from non-Federal land or land belonging to an Indian or 
Indian tribe that is held in trust by the United States or subject to a 
restriction against alienation imposed by the United States, including:
    (i) Renewable plant material, including feed grains; other 
agricultural commodities; other plants and trees; and algae; and
    (ii) Waste material, including crop residue; other vegetative waste 
material (including wood waste and wood residues); animal waste and 
byproducts (including fats, oils, greases, and manure); and food waste 
and yard waste.
    Renewable biomass agreement. The terms and conditions governing the 
sale and transportation of the renewable biomass to the borrower by 
another party.
    Retrofitting. The modification of a building or equipment to 
incorporate functions not included in the original design that allow 
for the production of advanced biofuels.
    Rural or rural area. Any area of a State not in a city or town that 
has a population of more than 50,000 inhabitants, according to the 
latest decennial census of the United States, and the contiguous and 
adjacent urbanized area. In determining which census blocks in an 
urbanized area are not in a rural area, the Agency shall exclude any 
cluster of census blocks that would otherwise be considered not in a 
rural area only because the cluster is adjacent to not more than 2 
census blocks that are otherwise considered not in a rural area under 
this definition. For the purposes of this definition, cities and towns 
are incorporated population centers with definite boundaries, local 
self government, and legal powers set forth in a charter granted by the 
State. For Puerto Rico, Census Designated Place, as defined by the U.S. 
Census Bureau, will be used as the equivalent to city or town. For the 
purpose of defining a rural area in the Republic of Palau, the 
Federated States of Micronesia, and the Republic of the Marshall 
Islands, the Agency shall determine what constitutes rural and rural 
area based on available population data.
    State. Any of the 50 States of the United States, the Commonwealth 
of Puerto Rico, the District of Columbia, the U.S. Virgin Islands, 
Guam, American Samoa, the Commonwealth of the Northern Mariana Islands, 
the Republic of Palau, the Federated States of Micronesia, and the 
Republic of the Marshall Islands.
    Subordination. An agreement between the lender and borrower whereby 
lien priorities on certain assets pledged to secure payment of the 
guaranteed loan will be reduced to a position junior to, or on parity 
with, the lien position of another loan (see paragraph (h)(1) in 
section O).
    Technical and economic potential. A technology not described in 
paragraph

[[Page 70549]]

(1) of the definition of ``eligible technology'' is considered to have 
demonstrated ``technical and economic potential'' for commercial 
application in a biorefinery that produces an advanced biofuel if each 
of the following conditions is met:
    (1) The advanced biofuel biorefinery's likely financial and 
production success is evidenced in a thorough evaluation including, but 
not limited to:
    (i) Feedstocks;
    (ii) Process engineering;
    (iii) Siting;
    (iv) Technology;
    (v) Energy production; and
    (vi) Financial and sensitivity review using a banking industry 
software analysis program with appropriate industry standards.
    (2) The evaluation in paragraph (1) of this definition is completed 
by an independent third-party expert in a feasibility study, technical 
report, or other analysis, each of which must be satisfactory to the 
Agency, that demonstrates the success of the project.
    (3) The advanced biofuel technology has at least a 12 month (four 
season) operating cycle at semi-work scale.
    Total project cost. The sum of all costs (including eligible and 
ineligible project costs) associated with a completed project.
    Transfer and assumption. The conveyance by a debtor to an assuming 
party of the assets, collateral, and liabilities of the loan in return 
for the assuming party's binding promise to pay the outstanding debt.
    Viable commercial-scale. An operation is considered to a viable 
commercial scale operation if it meets each of the following 
conditions:
    (1) Evidence that a proposed project's revenue will be sufficient 
to recover the full cost of the project over the term of the guaranteed 
loan, service debt, and result in an anticipated annual rate of return 
sufficient to encourage investors or lenders to provide funding for the 
project.
    (2) Such proposed project will be able to operate profitably 
without public and private sector subsidies upon completion of 
construction (volumetric excise tax is not included as a subsidy).
    (3) Contracts for feedstocks are adequate to address proposed off-
take from the biorefinery.
    (4) The proposed project demonstrates the ability to achieve market 
entry, suitable infrastructure to transport the advanced biofuel to its 
market is available, and general market competitiveness of the advanced 
biofuel technology and related products.
    (5) The project must demonstrate that it can be easily replicated 
and that replications can be sited at multiple facilities across a wide 
geographic area based on the proposed deployment plan.
    (6) The advanced biofuel technology has at least a 12 months (four 
seasons) operating history at semi-work scale, which demonstrates the 
ability to operate at a commercial scale.

B. Exception Authority

    Except as specified in paragraphs (a) through (d) of this section, 
the Administrator may, on a case-by-case basis, make exceptions to any 
requirement or provision of this Notice only when such an exception is 
in the best financial interests of the Federal Government and is 
otherwise not in conflict with applicable law.
    (a) Lender and borrower eligibility. No exception to lender or 
borrower eligibility can be made.
    (b) Project eligibility. No exception to project eligibility can be 
made.
    (c) Term length. No exception to the maximum length of the loan 
term can be made with respect to loan originations.
    (d) Rural area definition. No exception to the definition of rural 
area, as defined in this Notice, can be made.

C. Review or Appeals

    A person has review or appeal rights in accordance with 7 CFR part 
11.

D. Conflicts of Interest

    No conflict of interest or appearance of conflict of interest will 
be allowed. For purposes of this Notice, conflict of interest includes, 
but is not limited to, distribution or payment of guaranteed loan funds 
or award of project contracts to an individual owner, partner, 
stockholder, or beneficiary of the lender or borrower or an immediate 
family member of such an individual.

E. Oversight and Monitoring

    (a) General. The lender will cooperate fully with Agency oversight 
and monitoring of all lenders involved in any manner with any guarantee 
under this Program to ensure compliance with the provisions in this 
Notice. Such oversight and monitoring will include, but is not limited 
to, reviewing lender records and meeting with lenders.
    (b) Reports and notifications. The Agency will require lenders to 
submit to the Agency reports and notifications to facilitate the 
Agency's oversight and monitoring. These reports and notifications 
include, but are not necessarily limited to:
    (1) During construction, the lender will submit quarterly 
construction progress reports to the Agency. These reports will 
contain, at a minimum, construction milestone attainment, loan 
advances, and personnel hiring, training, and retention.
    (2) Periodic reports, to be submitted quarterly unless otherwise 
specified in the Conditional Commitment, regarding the condition of its 
Agency guaranteed loan portfolio (including borrower status and loan 
classification) and any material change in the general financial 
condition of the borrower since the last periodic report was submitted.
    (3) Monthly default reports, including borrower payment history, 
for each loan in monetary default using a form approved by the Agency.
    (4) Notification within 15 days of:
    (i) Any loan agreement violation by any borrower, including when a 
borrower is 30 days past due or is otherwise in default;
    (ii) Any permanent or temporary reduction in interest rate; and
    (iii) Any change in the loan classification of any loan made under 
this Notice.
    (5) If a lender receives a final loss payment, an annual report on 
its collection activities for each unsatisfied account for 3 years 
following payment of the final loss claim.

F. Forms, Regulations, and Instructions

    Copies of all forms, regulations, and instructions referenced in 
this Notice may be obtained through the Agency.
Basic Eligibility Requirements

G. Borrower Eligibility

    To be eligible for a guaranteed loan under this Program, a 
borrower: must meet each of the conditions specified in the following 
paragraphs, as applicable.
    (a) The borrower must be one of the following:
    (1) An individual;
    (2) An Indian tribe;
    (3) A unit of State or local government;
    (4) A corporation;
    (5) A farm cooperative;
    (6) A farmer cooperative organization;
    (7) An association of agricultural producers;
    (8) A National Laboratory;
    (9) An institution of higher education;
    (10) A rural electric cooperative;
    (11) A public power entity; or
    (12) A consortium of any of the above entities.
    (b) Individual borrowers must either:
    (1) Be citizens of the United States (U.S.), the Republic of Palau, 
the Federated States of Micronesia, the Republic of the Marshall 
Islands, or American Samoa, or
    (2) Reside in the U.S. after legal admittance for permanent 
residence.

[[Page 70550]]

    (c) Entities other than individuals must be at least 51 percent 
owned by persons who are either citizens as identified above or legally 
admitted permanent residents residing in the U.S.
    (d) Each borrower must have, or obtain, the legal authority 
necessary to construct, operate, and maintain the proposed facility and 
services and to obtain, give security for, and repay the proposed loan.
    (e) A borrower will be considered ineligible for a guarantee under 
this Program if either the borrower or any owner with more than 20 
percent ownership interest in the borrower:
    (i) Has an outstanding judgment obtained by the U.S. in a Federal 
Court (other than U.S. Tax Court),
    (ii) Is delinquent on the payment of Federal income taxes,
    (iii) Is delinquent on Federal debt, or
    (iv) Is debarred or suspended from receiving Federal assistance.

H. Project Eligibility

    Projects eligible for loan guarantees under this Program must meet 
the criteria specified in this section.
    (a) The project must be located in a rural area.
    (b) The project must be for either:
    (1) The development and construction of commercial-scale 
biorefineries using eligible technology or
    (2) The retrofitting of existing facilities, including, but not 
limited to, wood products facilities and sugar mills, with eligible 
technology.
    (c) The project must meet the financial metric criteria specified 
in paragraphs (c)(1) through (c)(3) of this section. These financial 
metric criteria shall be calculated from the realistic information in 
the pro forma statements or borrower financial statements of a typical 
operating year after the project is completed and stabilized.
    (1) A debt coverage ratio of 1.0 or higher;
    (2) A debt-to-tangible net worth ratio of 4:1 or lower for start-up 
businesses and of 9:1 or lower for existing businesses.
    (3) A loan-to-value ratio of no more than 1.0.

I. Lender Eligibility

    To be eligible to participate in this Program under this Notice, a 
lender must be a regulated or supervised lender and must maintain at 
all times the following minimum acceptable levels of capital:
     Total Risk-Based Capital ratio of 10 percent or higher;
     Tier 1 Risk-Based Capital ratio of 6 percent or higher; 
and
     Tier 1 Leverage Capital ratio of 5 percent or higher.
    If the regulated or supervised lender is a commercial bank or 
thrift, these levels would be based on those reflected in Call Reports 
and Thrift Financial Reports.
    Further, the Agency will approve loan guarantees only for lenders 
with adequate experience with similar projects and the expertise to 
make, secure, service, and collect loans approved under this Notice. 
Lenders debarred from other Federal credit programs will not be 
eligible under this program.

Basic Application Provisions

J. Loan Applications

    Applications for loan guarantees, which are to be filed with the 
USDA Rural Development National Office's Energy Branch as shown under 
ADDRESSES, must contain the items identified in the paragraphs (b)(1) 
through (18), organized pursuant to a Table of Contents in a chapter 
format.
    (a) Table of Contents.
    (b) Project Summary. Provide a concise summary of the proposed 
project and application information, project purpose and need, and 
project goals, including the following:
    (1) Title. Provide a descriptive title of the project.
    (2) Borrower eligibility. Describe how the borrower meets the 
eligibility criteria identified in Section II.G of this Notice.
    (3) Project eligibility. Describe how the project meets the 
eligibility criteria identified in Section II.H of this Notice. This 
description is to provide the reader with a frame of reference for 
reviewing the rest of the application. Clearly state whether the 
application is for the construction and development of a biorefinery or 
for the retrofitting of an existing facility and provide a brief 
description of the project. Provide results from demonstration or pilot 
facilities that prove the technology proposed to be used meets the 
definition of eligible technology. Additional project description 
information will be needed later in the application.
    (4) Matching funds. Submit a spreadsheet identifying sources, 
amounts, and status of matching funds. The spreadsheet must also 
include a directory of matching funds source contact information. 
Attach any applications, correspondence, or other written communication 
between applicant and matching fund source.
    (5) Application for Loan Guarantee. Completed Form RD 4279-1, 
``Application for Loan Guarantee'' (or successor form).
    (6) Environmental information. Form RD 1940-20, ``Request for 
Environmental Information''; omit the attachments specified in the 
instructions to the form; and attach an environmental information 
document completed pursuant to 7 CFR part 1940, subpart G, Exhibit H.
    (i) Civil Rights Impact Analysis. The Agency is responsible for 
ensuring that all requirements of RD Instruction 2006-P, ``Civil Rights 
Impact Analysis,'' with the addition of Executive Order 12898, 
Environmental Justice, are met and will complete the appropriate level 
of review in accordance with that instruction. When guaranteed loans 
are proposed, Agency employees will conduct a Civil Rights Impact 
Analysis (CRIA) with regard to environmental justice. The CRIA must be 
conducted and the analysis documented utilizing Form RD 2006-38, 
``Civil Rights Impact Analysis Certification.'' This must be done prior 
to loan approval, obligation of funds, or other commitments of agency 
resources, including issuance of a Conditional Commitment, whichever 
occurs first.
    (ii) Intergovernmental consultation. Intergovernmental consultation 
comments in accordance with RD Instruction 1940-J and 7 CFR, part 3015, 
subpart V.
    (7) Credit reports.
    (i) A personal credit report from an acceptable credit reporting 
company for a proprietor (owner), each partner, officer, director, key 
employee, and stockholder owning 20 percent or more interest in the 
applicant, except for those corporations listed on a major stock 
exchange. Credit reports are not required for elected and appointed 
officials when the applicant is a public body.
    (ii) Commercial credit reports obtained by the lender on the 
borrower and any parent, affiliate, and subsidiary firms.
    (8) Appraisals. Appraisals, accompanied by a copy of a Phase I 
Environmental Site Assessment (ESA) in accordance with ASTM standards. 
If the appraisal has not been completed when the application is filed, 
an estimated appraisal must be submitted with the application. In all 
cases, a completed appraisal consistent with paragraph (c) in section N 
must be submitted prior to the loan being closed.
    (9) Financial information. For all businesses, a current (not more 
than 90 days old) balance sheet; a pro forma balance sheet at startup; 
projected balance sheets and income and expense statements for a period 
of not less than 3 years of stabilized operation; and cash flow 
statements for the life of the

[[Page 70551]]

project. Projections should be supported by a list of assumptions 
showing the basis for the projections.
    (10) Credit rating. For loans of $125 million or more, an 
evaluation and credit rating of the total project's indebtedness, 
without consideration for a government guarantee, from a nationally 
recognized rating agency.
    (11) Lender's analysis. Lender's complete written analysis of the 
project, including:
    (i) A summary of the technology to be used in the project;
    (ii) The viability of such technology for the particular project 
application;
    (iii) Whether the project is retrofit or Greenfield;
    (iv) Borrower's management;
    (v) Repayment ability (including a cash-flow analysis);
    (vi) Sponsor's history of debt repayment;
    (vii) Necessity of any debt refinancing;
    (viii) The credit reports of the borrower, its principals, and any 
parent, affiliate, or subsidiary; and
    (ix) The credit analysis specified in Section II.N of this Notice.
    (12) Loan Agreement. A proposed loan agreement or a sample loan 
agreement with an attached list of the proposed loan agreement 
provisions. The loan agreement must be executed by the lender and 
borrower before the Agency issues a Loan Note Guarantee. The following 
requirements must be addressed in the loan agreement:
    (i) Prohibition against assuming liabilities or obligations of 
others;
    (ii) Restriction on dividend payments;
    (iii) Limitation on the purchase or sale of equipment and fixed 
assets;
    (iv) Limitation on compensation of officers and owners;
    (v) Financial covenants regarding working capital or current ratio 
requirement, and maximum debt-to-net worth ratio;
    (vi) Borrower change of control;
    (vii) Repayment and amortization of the loan;
    (viii) List of collateral and lien priority for the loan;
    (ix) Type and frequency of financial statements to be required for 
the duration of the loan;
    (x) A section for the later insertion of any additional 
requirements imposed by the Agency in its Conditional Commitment; and
    (xi) A section for the later insertion of any necessary mitigation 
measures by the borrower to avoid or reduce adverse environmental 
impacts from this proposal's construction or operation.
    (13) Business plan. Submit a business plan. Any or all of the 
requirements in the business plan may be omitted if the information is 
included in the feasibility study.
    (14) Feasibility study. Submit a feasibility study on the proposed 
project. Elements in an acceptable feasibility study include, but are 
not limited to, the elements outlined in Table 1. In addition, as part 
of the feasibility study, both a technical assessment and economic 
analysis of the project are required. These two assessments are 
discussed in detail in paragraphs (d) and (e) of this section.

                  Table 1--Feasibility Study Components
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                          (A) Executive Summary
------------------------------------------------------------------------
Introduction/Project Overview (Brief general overview of project
 location, size, etc.)
Economic feasibility determination.
Technical feasibility determination.
Market feasibility determination.
Financial feasibility determination.
Management feasibility determination.
Recommendations for implementation.
------------------------------------------------------------------------
                        (B) Economic Feasibility
------------------------------------------------------------------------
Information regarding project site;
Availability of trained or trainable labor;
Availability of infrastructure, including utilities, and rail, air and
 road service to the site.
Feedstock:
    Feedstock source management.
    Estimates of feedstock volumes and costs.
    Collection, Pre-Treatment, Transportation, and Storage.
Impacts on existing manufacturing plants or other facilities that use
 similar feedstock if the applicant's proposed biofuel production
 technology is adopted.
Project impact on resource conservation, public health, and the
 environment.
Overall economic impact of the project including any additional markets
 created for agricultural and forestry products and agricultural waste
 material and potential for rural economic development.
Feasibility/plans of project to work with producer associations or
 cooperatives including estimated amount of annual feedstock and biofuel
 and byproduct dollars from producer associations and cooperatives.
------------------------------------------------------------------------
                         (C) Market Feasibility
------------------------------------------------------------------------
Information on the sales organization and management;
Nature and extent of market and market area;
Marketing plans for sale of projected output--principal products and by-
 products;
Extent of competition including other similar facilities in the market
 area;
Commitments from customers or brokers--principal products and by-
 products.
Risks Related to the Advanced Biofuel Industry, including industry
 status.
------------------------------------------------------------------------
                        (D) Technical Feasibility
------------------------------------------------------------------------
Suitability of the selected site for the intended use including the
 information documents Form RD 1940-20 and required narrative in the 7
 CFR part 1940, subpart G Exhibit H format.

[[Page 70552]]

 
Report shall be based upon verifiable data and contain sufficient
 information and analysis so that a determination may be made on the
 technical feasibility of achieving the levels of income or production
 that are projected in the financial statements. Describe the scale of
 development for which the process technology has been proven, i.e., lab
 (or bench), pilot, or demonstration scale; and the specific volume of
 the process (expressed either as volume of feedstock processed--tons
 per unit of time, or as product--gallons per unit of time).
Report shall also identify any constraints or limitations in these
 financial projections and any other facility or design-related factors
 which might affect the success of the enterprise.
Report shall also identify and estimate project operation and
 development costs and specify the level of accuracy of these estimates
 and the assumptions on which these estimates have been based.
The Project engineer or architect is considered an independent party
 provided neither the principals of the firm nor any individual of the
 firm who participates in the technical feasibility report has a
 financial interest in the project if no other individual or firm with
 the expertise necessary to make such a determination is reasonably
 available to perform the function, an individual or firm that is not
 independent may be used.
Ability of the proposed system to be Commercially Replicated.
Supports the Renewable Fuel Standard established in the Energy
 Independence and Security Act of 2007.
Risks Related to:
    Construction of the Advanced Biofuel Plant.
    Advanced Biofuel Production.
    Regulation and Governmental Action.
------------------------------------------------------------------------
                        (E) Financial Feasibility
------------------------------------------------------------------------
Reliability of the financial projections and assumptions on which the
 financial statements are based including all sources of project
 capital, both private and public, such as Federal funds. Three years
 (minimum) projected Balance Sheets and Income Statements. Cash Flow
 projections for the life of the project.
Ability of the business to achieve the projected income and cash flow.
Assessment of the cost accounting system.
Availability of short-term credit or other means to meet seasonable
 business costs;
Adequacy of raw materials and supplies.
Sensitivity Analysis--including feedstock and energy costs, product/co-
 product prices.
Risks Related to:
    The Project.
    Applicant Financing Plan.
    The operational units.
    Tax Issues.
------------------------------------------------------------------------
                       (F) Management Feasibility
------------------------------------------------------------------------
Continuity and adequacy of management.
Projected total supply from members and non-members.
Projected competitive demand for raw materials.
Procurement plan and projected procurement costs.
Form of commitment of raw materials (marketing agreements, etc.).
Identify applicant and/or management's previous experience concerning
 the receipt of federal financial assistance, including amount of
 funding, date received, purpose, and outcome.
Risks Related to:
        Applicant as a Company (i.e. Development-Stage) Conflicts of
         Interest.
------------------------------------------------------------------------
                           (G) Qualifications
------------------------------------------------------------------------
A r[eacute]um[eacute] or statement of qualifications of the author of
 the feasibility study, including prior experience, should be submitted.
------------------------------------------------------------------------

    (15) Lender certifications.
    (i) A certification by the lender stating that it has completed a 
comprehensive analysis of the proposal, the borrower is eligible, the 
loan is for an eligible project, and there is reasonable assurance of 
repayment ability based on the borrower's history, projections and 
equity, and the collateral to be obtained.
    (ii) A certification by the lender that the proposed project will 
be in compliance with all applicable State and Federal environmental 
laws and regulations.
    (16) DUNS Number. A Dun and Bradstreet Universal Numbering System 
(DUNS) number.
    (17) Bioenergy experience. Identify applicant, including 
principals, prior experience in bioenergy projects and the receipt of 
Federal financial assistance, including amount of funding, date 
received, purpose, and outcome, for such projects.
    (18) Other. Any additional information required by the Agency.
    (c) Form modifications. The BioRefinery Assistance Program will be 
using the same forms as the Business and Industry and Section 9006 
programs with the understanding that:
    (1) All references in those forms to the Business and Industry 
program or the Section 9006 program in whatever manner, and whether 
referenced singularly or jointly, shall be deemed to be references to 
the BioRefinery Assistance Program described in this Notice, and
    (2) All references to the Business and Industry or Section 9006 
regulations in those forms in whatever manner, whether general or 
specific, whether singularly or jointly, and whether or not specific 
Code of Federal Regulation citations are used, shall be deemed to be a 
reference to the requirements of the BioRefinery Assistance Program 
described in this Notice. In addition, the following modifications are 
to be used for this Program.
    (i) Application for Loan Guarantee (Form RD 4279-1) is modified as 
described below.

[[Page 70553]]

    (A) Part A, Block 10, Type of Borrower, do not fill out if your 
entity is not listed.
    (B) Part A, Block 11. Instead of the SIC Code, fill in your NAICS.
    (C) Part A, Block 22 is not applicable.
    (D) Part A, Block 29, Financial Statements. Comply with the 
financial statement requirements in this Notice rather than in Block 
29.
    (E) Part A, Block 30, which deals with guarantors, is not 
applicable.
    (F) Part A, Block 33, Technical Report. Replace Technical Report 
with Feasibility Study, which will include a technical assessment of 
the project.
    (G) Part B, Block 17, which addresses equity. Do not fill in this 
block, but instead provide similar information according to the equity 
requirements contained in this Notice.
    (H) Part B, Block 22, which addresses the lender's analysis. Attach 
the lender's analysis as described in this Notice.
    (3) Lender's Agreement (Form RD 4279-4), Section I, Item B, is 
applicable with the addition that negligent servicing includes any 
instance where a lender fails to ensure that all environmental laws are 
being complied with by any person receiving guaranteed loan funds under 
this Program.
    (4) Loan Note Guarantee (Form RD 4279-5), Section 3, Full Faith and 
Credit, under Conditions of Guarantee is applicable with the addition 
that negligent servicing includes any instance where a lender fails to 
ensure that all environmental laws are being complied with by a person 
receiving guaranteed loan funds under this Program.
    (d) Technical Assessment. As part of the feasibility study, a 
detailed technical assessment is required for each project. The 
technical assessment must demonstrate that the project design, 
procurement, installation, startup, operation and maintenance of the 
project will operate or perform as specified over its useful life in a 
reliable and a cost effective manner, and must identify what the useful 
life of the project is. The technical assessment must also identify all 
necessary project agreements, demonstrate that those agreements will be 
in place on or before the time of loan closing, and demonstrate that 
necessary project equipment and services will be available over the 
useful life. All technical information provided must follow the format 
specified in paragraphs (d)(1) through (9) below. Supporting 
information may be submitted in other formats. Design drawings and 
process flow charts are encouraged as exhibits. A discussion of each 
topic identified in paragraphs (d)(1) through (9) is not necessary if 
the topic is not applicable to the specific project. Questions 
identified in the Agency's technical review of the project must be 
answered to the Agency's satisfaction before the application will be 
approved. All projects require the services of a professional engineer 
(PE).
    (1) Qualifications of project team. The project team will vary 
according to the complexity and scale of the project. The project team 
must have demonstrated expertise in similar advanced biofuel technology 
development, engineering, installation, and maintenance. Authoritative 
evidence that project team service providers have the necessary 
professional credentials or relevant experience to perform the required 
services for the development, construction, and retrofitting, as 
applicable, of technology for producing advanced biofuels must be 
provided. In addition, autho