Loan Guarantees for Projects That Employ Innovative Technologies, 63544-63560 [E9-28883]

Agencies

• DEPARTMENT OF ENERGY

[Federal Register Volume 74, Number 232 (Friday, December 4, 2009)]
[Rules and Regulations]
[Pages 63544-63560]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-28883]


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DEPARTMENT OF ENERGY

10 CFR Part 609

RIN 1901-AB27


Loan Guarantees for Projects That Employ Innovative Technologies

AGENCY: Office of the Chief Financial Officer, Department of Energy.

ACTION: Final rule.

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SUMMARY: On August 7, 2009, the Department of Energy (DOE or the 
Department) published a Notice of Proposed Rulemaking and Opportunity 
for Comment (NOPR) to make certain changes to the existing regulations 
for the loan guarantee program authorized by Section 1703 of Title XVII 
of the Energy Policy Act of 2005 (Title XVII or the Act). Section 1703 
of Title XVII authorizes the Secretary of Energy (Secretary) to make 
loan guarantees for projects that ``avoid, reduce, or sequester air 
pollutants or anthropogenic emissions of greenhouse gases; and employ 
new or significantly improved technologies as compared to commercial 
technologies in service in the United States at the time the guarantee 
is issued.'' Section 1703 of Title XVII also identifies ten categories 
of technologies and projects that are potentially eligible for loan 
guarantees. The two principal goals of section 1703 of Title XVII are 
to encourage commercial use in the United States of new or 
significantly improved energy-related technologies and to achieve 
substantial environmental benefits. DOE believes that commercial use of 
these technologies will help sustain and promote economic growth, 
produce a more stable and secure energy supply and economy for the 
United States, and improve the environment.
    Through experience gained implementing the loan guarantee program 
authorized by section 1703 of Title XVII, and information received from 
industry indicating the wide variety of ownership and financing 
structures which participants would like to employ in implementing 
projects seeking loan guarantees, DOE believes it is appropriate to 
make certain changes to the existing regulations to provide flexibility 
in the determination of an appropriate collateral package to secure 
guaranteed loan obligations, facilitate collateral sharing and related 
intercreditor arrangements with other project lenders, and to provide a 
more workable interpretation of certain statutory provisions regarding 
DOE's treatment of collateral, consistent with the intent and purposes 
of Title XVII. Having considered all of the comments submitted to DOE 
in response to the NOPR, the Department today is issuing this final 
rule.

DATES: This rule is effective December 4, 2009.

FOR FURTHER INFORMATION CONTACT: David G. Frantz, Director, Loan 
Guarantee Program Office, 1000 Independence Avenue, SW., Washington, DC 
20585-0121, e-mail: lgprogram@hq.doe.gov; or Susan S. Richardson, Chief 
Counsel for the Loan Guarantee Program, Office of the General Counsel, 
1000 Independence Avenue, SW., Washington, DC 20585-0121, e-mail: 
lgprogram@hq.doe.gov.

SUPPLEMENTARY INFORMATION:

I. Introduction and Background
II. Public Comments on the NOPR and DOE's Responses
    A. Definition of Eligible Project
    B. Definition of Intercreditor Agreement
    C. Shorter Amortization for Non-Guaranteed Obligations
    D. Opposition to the Rule Change
III. Regulatory Review
    A. Executive Order 12866
    B. National Environmental Policy Act of 1969
    C. Regulatory Flexibility Act
    D. Paperwork Reduction Act
    E. Unfunded Mandates Reform Act of 1995
    F. Treasury and General Government Appropriations Act, 1999
    G. Executive Order 13132
    H. Executive Order 12988
    I. Treasury and General Government Appropriations Act, 2001
    J. Executive Order 13211
    K. Congressional Notification
    L. Approval by the Office of the Secretary of Energy

I. Introduction and Background

    Today's final rule amends the regulations implementing the loan

[[Page 63545]]

guarantee program authorized by section 1703 of Title XVII of the 
Energy Policy Act of 2005 (42 U.S.C. 16511-16514) (referred to as Title 
XVII). Section 1703 of Title XVII authorizes the Secretary of Energy 
(Secretary), after consultation with the Secretary of the Treasury, to 
make loan guarantees for projects that ``(1) avoid, reduce, or 
sequester air pollutants or anthropogenic emissions of greenhouse 
gases; and (2) employ new or significantly improved technologies as 
compared to commercial technologies in service in the United States at 
the time the guarantee is issued.'' (42 U.S.C. 16513(a))
    On August 7, 2009, the Department published a Notice of Proposed 
Rulemaking and Opportunity for Comment (NOPR, 74 FR 39569) to make 
certain changes to the regulations for the Title XVII loan guarantee 
program.
    Section 1702 of Title XVII outlines general terms and conditions 
for loan guarantee agreements and directs the Secretary to include in 
loan guarantee agreements ``such detailed terms and conditions as the 
Secretary determines appropriate to (i) protect the interests of the 
United States in case of a default; and (ii) have available all the 
patents and technology necessary for any person selected, including the 
Secretary, to complete and operate the project. (42 U.S.C. 
16512(g)(2)(c)). Further, section 1702(d) addresses certain threshold 
requirements that must be met before the guaranty is made; and section 
1702(g) addresses the Secretary's rights in the case of default of the 
loan. Specifically, section 1702(d) of Title XVII states, under the 
heading ``Repayment'' and addressing ``Subordination,'' that ``[t]he 
[guaranteed] obligation shall be subject to the condition that the 
obligation is not subordinate to other financing.'' Further, when 
addressing the situation of default, section 1702(g)(2) of Title XVII 
states, with respect to ``subrogation'' and ``superiority of rights,'' 
that ``[t]he rights of the Secretary, with respect to any property 
acquired pursuant to a guarantee or related agreements, shall be 
superior to the rights of any other person with respect to the 
property.''
    On October 23, 2007, DOE issued a final rule implementing Title 
XVII. In that final rule, DOE interpreted the interplay between these 
two provisions of section 1702 such that both describe the rights the 
Secretary must secure as a condition of making a guarantee. This 
understanding is reflected in the text of the regulations which 
requires that the Secretary receive a first lien security interest in 
all project assets as an incident to making a guarantee. Moreover, this 
interpretation of the applicability of the superiority of rights 
provision as a required element of the Secretary's making a guarantee 
was embedded in the text of the rule and was made explicit in the 
preambles to the proposed and final rules implementing section 1703 of 
Title XVII.
    The Department has critically reexamined the statute, particularly 
its text and structure, and now concludes, as described below, that the 
interpretation of the statute requiring receipt of a first lien on all 
project assets is not one that it was legally compelled to adopt, and 
was not correct. A first lien on all project assets is better 
understood as one element that the Secretary may require for a 
particular project, but is not compelled by the statute to require. 
This final rule reflects what the Department has concluded is the 
correct interpretation of section 1702.
    First, it should be borne in mind that nowhere does section 1702 
itself require that the Secretary receive a first lien on all project 
assets as a condition of his ability to make a loan guarantee. Instead 
the statute requires only that the Secretary's guaranteed obligation 
``not be subordinate to other financing.'' In fact, section 1702 does 
not require that the lender or the Secretary receive any collateral as 
a statutory requirement for making a loan guarantee.
    Next, the ``first lien on all project assets'' requirement 
contained in the regulations seems traceable only to the ``superiority 
of rights'' provision contained in section 1702(g)(2)(B). The structure 
and wording of the statute, however, is indicative that section 
1702(g)'s provisions are designed to govern post-default rights of the 
Secretary, rather than to impose conditions that must be met at the 
time the Secretary determines to make a loan guarantee. So understood, 
the ``property acquired'' as to which the Secretary's rights ``shall be 
superior to the rights of any other person'' relates to property 
``acquired'' by the Secretary pursuant to his right of subrogation to 
the rights of the lender in any collateral or security interest.
    As a structural matter, it is notable that the ``superiority of 
rights'' provision appears within and under the heading ``subrogation'' 
contained in section 1702(g)(2). Consideration of the structure of the 
statute is aided by the various captions that introduce its various 
substantive provisions. In general, those captions--first 
``repayment,'' then ``subordination,'' then ``defaults,'' ``payment by 
the Secretary,'' ``subrogation,'' and then ``superiority of rights,'' 
reinforce the structural understanding of the statute as keying its 
particular provisions to the sequence of stages that are foreseeable in 
the loan guarantee relationship. So perceived, the topic of 
``superiority of rights'' would become germane only as a subset of the 
sequence that begins with a ``default'' and after ``payment by the 
Secretary.''
    It is also notable that the ``superiority of rights'' provision 
does not contain terms such as ``lien'', ``security interest'', 
``collateral'' or the like, which could lead one to conclude that the 
plain meaning of the provision is to require a first lien on all 
project assets. Instead, the provision uses the words ``any property 
acquired'' with ``acquired'' in the past tense, which would indicate 
that the provision is intended to apply to property that has actually 
been acquired rather than property that one may or is entitled to 
acquire (as in the granting of a lien or security interest in 
collateral), which further supports DOE's interpretation.
    Moreover, in reviewing applications for projects seeking a loan 
guarantee under section 1703 of Title XVII, DOE became aware that its 
original reading of the statute was in tension with the financing 
structure of many commercial transactions in the energy sector. For 
example, the tenancy in common ownership structure proposed for the 
next generation of nuclear generating facilities, under which multiple 
entities own undivided interests in a single facility, does not lend 
itself to the unitary project ownership anticipated by the regulations. 
In fact, tenancy in common is the typical form of ownership of utility 
grade power plants that are jointly owned by public power agencies, 
cooperative power systems and investor-owned utilities. Approximately 
one-third of all currently operating nuclear power reactors, and 
approximately one-third of all planned nuclear power reactors for which 
applications are pending at the Nuclear Regulatory Commission are 
jointly owned through tenancies in common. As such, each owner holds an 
undivided interest in the physical project assets, and each owner 
typically finances its investment in the project separately. In this 
scenario, DOE would not be guaranteeing a direct loan to a project 
company, and may be guaranteeing the loan obligations of only some but 
not all of the project owners. As a result, it may not be commercially 
feasible to obtain a lien on all project assets. Moreover, in certain 
circumstances, both in large infrastructure projects and in smaller

[[Page 63546]]

projects, creditworthy sponsors may be willing to offer a corporate 
lending structure in which DOE would rely on the balance sheet of the 
sponsor. In such a case, the credit of the sponsor may be sufficient to 
support a more modest pledge of assets.
    Additionally, in response to prior solicitations, DOE has received 
expressions of interest from Export Credit Agencies (ECAs) concerning 
their possible participation in eligible projects as co-lenders, co-
guarantors or insurers of loans. ECAs are governmental, quasi-
governmental, or private institutions supported by and acting on behalf 
of their host governments that facilitate financing for home country 
exporters doing business in other nations. In addition to ECAs, there 
is a variety of other potential sources of financing for power 
generation projects, including municipal bond financing. There also 
could be interest rate or commodity hedging agreements and, after 
completion, working capital facilities for project companies. The ECAs, 
and likely the other sources of financing, will expect to share, on a 
pari passu basis, in collateral pledged to secure the borrower's debt 
obligations.
    Thus, the interpretation of the statute contained in the October 
23, 2007, final rule effectively disqualifies from participation in 
Title XVII programs proposed energy production facilities that employ 
innovative technologies that are jointly owned through a tenants in 
common structure or where there are appropriate co-lenders or co-
guarantors who require a pari passu structure. DOE does not believe 
that a statute intended to encourage commercial use in the United 
States of new or significantly improved energy-related technologies 
would be written in a way as to make ineligible such industry 
participants.
    As stated and explained above, DOE has concluded that section 1702 
of Title XVII does not mandate that DOE receive a first lien position 
on all projects assets. In light of this interpretation of section 1702 
of Title XVII, DOE is issuing this final rule which amends the existing 
regulations. Specifically, to ensure that the loan guarantee program 
has the ability to respond to the kinds of structuring issues discussed 
above, this final rule deletes the requirement of a first priority lien 
on all project assets (and other pledged collateral) and leaves to the 
Secretary the determination of an appropriate collateral package, as 
well as intercreditor arrangements. Such a determination by the 
Secretary is contemplated by sections 1702(a) and 1702(g)(2)(C), and 
remains subject to the requirement of section 1702(d)(3) that the 
guaranteed obligation not be subordinate to other financing. The 
Department believes that having the flexibility to determine on a 
project-by-project basis the scope of the collateral package and 
whether pari passu lending is in the best interests of the United 
States, will enable the Department to reduce its exposure on individual 
projects, diversify its portfolio and maximize the benefits of the 
resources available for the loan guarantee program.

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

    The NOPR provided for the submission of comments through September 
8, 2009. DOE received from the public several requests to extend the 
comment period. In response to those requests for additional time to 
comment on the proposed rule, DOE extended the comment period by two 
weeks.
    DOE received timely comments on the NOPR from 2,123 interested 
parties (excluding requests for the extension of the comment period). 
DOE carefully reviewed all comments timely received on the NOPR.
    Many of the comments that were received address matters that are 
not related to the specific rule changes proposed in the NOPR and are 
therefore outside the scope of this rulemaking. While DOE reviewed all 
of those comments, DOE will not address in this final rule any comments 
that are not within the scope of this rulemaking.
    DOE summarizes below public comments received on the NOPR that are 
within the scope of this rulemaking, and discusses the Department's 
responses to those comments. In three cases, as described below, the 
Department made adjustments to the rule text as set forth in the NOPR. 
In addition, the Department made technical adjustments to the rule text 
in this final rule to implement more effectively the rule change and 
also made editorial and other corrections to the rule text that are not 
discussed in this preamble.

A. Definition of Eligible Project

    Public Comments: Section 609.2 of the regulations defines 
``Eligible Project'' to mean ``a project located in the United States 
that employs a New or Significantly Improved Technology that is not a 
Commercial Technology, and that meets all applicable requirements of 
section 1703 of the Act (42 U.S.C. 16513), the applicable solicitation 
and this part.'' Several commenters expressed the view that this 
definition should be amended to clarify that an ``Eligible Project'' 
may include an undivided interest (i.e., interest held as a tenant in 
common) in a project or facility. As mentioned in the preamble, tenancy 
in common is the typical form of ownership of utility grade power 
plants that are jointly owned by public power agencies, cooperative 
power systems and investor-owned utilities.
    DOE Response: DOE notes that the term ``project'', which is used in 
the definition of ``Eligible Project'', is not defined in Title XVII. 
DOE believes that the term ``project'' should be given its plain 
meaning to include any ``planned undertaking'', which would include any 
project consisting of an undivided interest (i.e., interest held as a 
tenant in common) in project assets or facilities. As such, DOE 
believes that it is unnecessary to amend the definition of ``Eligible 
Project'' to include any text referring to ``undivided interest'', 
``tenancy in common'' or the like. However, DOE has adjusted the rule 
text in Sections 609.4(b) and 609.6(b)(5) of the regulations to clarify 
that applicants may submit project proposals with respect to their 
undivided ownership interests in project assets or facilities.

B. Definition of Intercreditor Agreement

    Public Comments: Several commenters proposed technical changes to 
the definition of ``Intercreditor Agreement'' based on a concern that 
the definition may have been drafted too narrowly to accomplish one of 
the stated purposes of the rule change, which is to provide DOE with 
flexibility in the determination of appropriate collateral sharing and 
related intercreditor arrangements with other project lenders.
    DOE Response: DOE has carefully reviewed these proposed technical 
changes and, based on these comments as well as DOE's further review, 
has made technical adjustments to the definition of ``Intercreditor 
Agreement''. DOE believes that the modified definition of 
``Intercreditor Agreement'', as reflected in this final rule, provides 
the necessary flexibility to DOE while protecting the interests of the 
United States by requiring that any such agreement be ``in form and 
substance satisfactory to DOE''.

C. Shorter Amortization of Non-Guaranteed Obligations

    Public Comments: Section 609.10(d)(6) of the regulations provides 
that ``[t]he non-guaranteed portion of any Guaranteed Obligation must 
be repaid on a pro-rata basis, and may not be repaid on a shorter 
amortization schedule than the guaranteed portion.'' Several commenters 
expressed concern that this provision may prevent certain

[[Page 63547]]

credit providers, including Export Credit Agencies (ECAs) and other 
financial institutions, from participating in financings of Eligible 
Projects if such institutions require repayment on a shorter 
amortization schedule than the DOE-guaranteed loan. As indicated in the 
preamble, there exists a variety of potential sources of financing for 
power generation projects, including, but not limited to, ECAs.
    DOE Response: DOE has carefully reviewed this issue and recognizes 
that there may be a diversity of appropriate financing arrangements and 
circumstances, including but not limited to participation by ECAs and 
other financial institutions, for the types of projects potentially 
eligible for DOE loan guarantees. DOE also recognizes that increasing 
the number of financial institutions that can participate in financings 
of Eligible Projects may have the effect of diversifying project-
related risks. Accordingly, DOE has made adjustments to the text of 
Section 609.10(d)(6) of the regulations to permit shorter or faster 
amortization schedules for project-related financing or other credit 
arrangements (other than the Guaranteed Obligation), if DOE determines 
that the resulting financing structure of the project (1) allocates to 
DOE a reasonably proportionate share of the default risk, in light of 
(i) DOE's share of the total project financing, (ii) risk allocation 
among the credit providers, and (iii) internal and external credit 
enhancements; and (2) is appropriate to assure reasonable prospect of 
repayment of the principal of and interest on the DOE Guaranteed 
Obligation and to protect the interests of the United States in the 
case of default.

D. Opposition to the Rule Change

    Public Comments: DOE received comments from a number of commenters 
opposed to the development of nuclear energy in general. These 
commenters expressed concern that the rule change appears to be 
promulgated with only one interest in mind--that of the nuclear power 
industry--and are opposed to the rule change. These commenters also 
expressed concern that the rule change will add unnecessary risk, such 
as the risk that taxpayers' money will be lost by ``waiving'' DOE's 
first lien rights to collateral.
    DOE received a joint comment from a number of environmental and 
civic organizations (collectively, the ``Joint Comment'') that made a 
number of assertions, including: (1) That the rule change violates or 
is inconsistent with Title XVII of the Act, (2) that DOE has failed to 
explain why DOE's interpretations and rationales in the preamble to the 
2007 final rule with respect to the first lien issue are incorrect, (3) 
that the rule change does not provide DOE with a basis for establishing 
terms or conditions of loan guarantee agreements that provide ``a 
reasonable prospect of repayment of the principal and interest'' on a 
loan, (4) that the rule change unreasonably gives the Secretary 
unbridled discretion in establishing substitutions for the protection 
of a first lien, and (5) that by the rule change DOE will encourage 
risky investments and raise the potential for defaults.
    DOE received a comment from a self-described ``budget watchdog'' 
group expressing concern that the removal of the first lien requirement 
will weaken protections for the taxpayers and will jeopardize the 
recovery of taxpayer-provided loan guarantee funds.
    DOE received a comment from an environmental group that made a 
number of assertions, including (1) that the rule change conflicts with 
the statute, (2) that DOE's analysis is irrational and does not comport 
with the statute's plain language, (3) that there is insufficient 
evidence to support DOE's reasoning for the rule change, and (4) that 
the rule change will place taxpayer dollars at risk. In particular, the 
commenter asserted that the plain meaning of section 1702(d)(3) (which 
provides that ``the obligation shall be subject to the condition that 
the obligation is not subordinate to other financing'') is to require a 
first lien on collateral. This assertion is based on the reasoning that 
the word ``subordinate'' means ``inferior'' and therefore the meaning 
of the words ``not subordinate'' would be the antonym of 
``subordinate'' or ``inferior'' which is ``superior''.
    DOE Response: As explained in this preamble, DOE has concluded that 
section 1702 of Title XVII does not mandate that DOE receive a first 
lien position on all projects assets, and it is in light of this 
interpretation of section 1702 of Title XVII that DOE is issuing this 
final rule. DOE believes that the rule change, as reflected in this 
final rule, is correct as a matter of statutory interpretation and will 
facilitate the implementation of section 1703 of Title XVII.
    It should be noted that under section 1703(b) of Title XVII, 
Congress expressly provided for ten categories of projects that are 
eligible for DOE loan guarantees, and one of those categories is 
``advanced nuclear energy facilities.'' It should also be noted that 
the rule change, as reflected in this final rule, is not limited to any 
one particular energy sector or industry. DOE believes that this final 
rule will facilitate the financing of a variety of eligible projects, 
as authorized by Congress, across different energy sectors and 
industries.
    With respect to the comments regarding risk, it should be noted 
that the rule change, as reflected in this final rule, does not mean 
that DOE ``waives'' its right to require first lien rights in 
collateral for any project. Rather, it correctly leaves to the 
Secretary the determination of an appropriate financing structure, 
including a collateral package, credit support and intercreditor 
arrangements, for individual projects. DOE believes that this 
flexibility is in the best interests of the United States, as it gives 
the Department the ability to participate in projects that contain 
diversified funding sources. DOE believes that instead of increasing 
risk, this approach will likely reduce DOE's risk--by reducing DOE's 
exposure (i.e., the amount of the DOE-guaranteed loan) on individual 
projects that also receive financing from non DOE-guaranteed sources--
and consequently should help DOE diversify its portfolio.
    With respect to the Joint Comment, DOE responds as follows:
    (1) DOE believes that its interpretation of the Act, as reflected 
in the rule change, is correct as a matter of statutory interpretation 
and is consistent with the provisions, intent and purposes of the Act, 
for the reasons set forth above;
    (2) DOE believes that, in the preamble to the NOPR and above, it 
has adequately explained its reasoning behind the rule change, 
including why the interpretations and rationales provided in the 
preamble to the 2007 final rule were incorrect. Additionally, DOE 
believes that its straightforward interpretation of the Act, as 
expressed in this final rule, renders unnecessary the convoluted 
reasoning in the preamble to the 2007 final rule which concluded that 
while pari passu liens on project assets are prohibited by the statute, 
DOE may nevertheless agree to share the proceeds of collateral in a 
pari passu manner as long as DOE controls the disposition of all 
project assets. Under that strained reasoning, DOE may enter into 
intercreditor or other arrangements to share proceeds from the sale of 
project collateral with lenders or other holders of the non-guaranteed 
portion of the DOE-guaranteed loan facility, but without explanation as 
to why co-lenders or co-guarantors who provide separate credit 
facilities and do not participate in the DOE-guaranteed loan facility 
are excluded from making any

[[Page 63548]]

such intercreditor or other arrangements;
    (3) DOE does not believe that the rule change will prevent or 
hinder DOE from requiring an appropriate financing structure, including 
collateral arrangements and credit support, on any individual project 
in order to make the determination that there is ``a reasonable 
prospect of repayment of the principal and interest'' on the related 
loan. This requirement with respect to each loan guarantee will 
continue to be in effect. As explained above, the rule change does not 
``waive'' DOE's right to require first liens or otherwise require an 
appropriate collateral package and credit support for any project. It 
should also be noted that this final rule contains numerous criteria 
for the programmatic, technical and financial evaluation of loan 
guarantee applications;
    (4) DOE notes that section 1702(g)(2)(C) of Title XVII provides 
that ``a guarantee agreement shall include such detailed terms and 
conditions as the Secretary determines appropriate to (i) protect the 
interests of the United States in the case of default''. Accordingly, 
the Act gives the Secretary the discretion in determining what is 
``appropriate'' with respect to the ``detailed terms and conditions'' 
of a loan guarantee agreement in the case of default. As explained 
above, the rule change correctly provides the Secretary with the 
flexibility to determine appropriate terms and conditions, including 
collateral, credit support and intercreditor terms, for individual 
projects; and
    (5) DOE does not believe that the rule change itself will result in 
increased risk-taking or potential for defaults but rather, as 
explained above, the rule change will likely enhance the ability of DOE 
to reduce its risks.
    With respect to the comments from the ``budget watchdog'' group, 
the rule change, as explained above, does not ``waive'' DOE's right to 
require first liens or otherwise to require an appropriate collateral 
package and credit support on any project. DOE will continue to be 
required to determine that there is ``a reasonable prospect of 
repayment of the principal and interest'' for each DOE-guaranteed loan. 
DOE will also continue to require such terms and conditions for 
guarantee agreements as DOE determines appropriate to protect the 
interests of the United States in the case of default.
    With respect to the comment from the environmental group regarding 
the plain meaning of section 1702(d)(3), DOE notes that the plain 
meaning of ``not X'' does not necessarily mean the antonym or opposite 
of ``X''. For example, the phrase ``not less than'' does not simply 
mean ``greater than'' but should more properly be understood to mean 
``equal to or greater than.'' DOE believes that a pari passu (a Latin 
term meaning ``with equal step'') obligation is not a subordinate or 
inferior obligation.
    With respect to the other assertions by the environmental group, 
DOE reiterates its responses above and believes that they are 
adequately responsive to those assertions.

III. Regulatory Review

A. Executive Order 12866

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

B. National Environmental Policy Act of 1969

    Through the issuance of this final rule, DOE is making no decision 
relative to the approval of a loan guarantee for a particular proposed 
project. DOE has, therefore, determined that publication of this final 
rule is covered under the Categorical Exclusion found at paragraph A.6 
of Appendix A to Subpart D, 10 CFR part 1021, which applies to the 
establishment of procedural rulemakings. Accordingly, neither an 
environmental assessment nor an environmental impact statement is 
required at this time. However, appropriate NEPA project review will be 
conducted prior to execution of a Loan Guarantee Agreement.

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. As required 
by Executive Order 13272, ``Proper Consideration of Small Entities in 
Agency Rulemaking,'' 67 FR 53461 (August 16, 2002), DOE published 
procedures and policies on February 19, 2003, to ensure that the 
potential impacts of its rules on small entities are properly 
considered during the rulemaking process (68 FR 7990). DOE has made its 
procedures and policies available on the Office of the General 
Counsel's Web site: https://www.gc.doe.gov.
    DOE is not obliged to prepare a regulatory flexibility analysis for 
this rulemaking because there is no requirement to publish a general 
notice of proposed rulemaking for rules related to loans under the 
Administrative Procedure Act (5 U.S.C. 553(a)(2)).

D. Paperwork Reduction Act

    This final rule involves a collection of information previously 
approved by OMB under Control Number [1910-5134].

E. Unfunded Mandates Reform Act of 1995

    Title II of the Unfunded Mandates Reform Act of 1995 (Act) (2 
U.S.C. 1531 et seq.) requires each Federal agency, to the extent 
permitted by law, to prepare a written assessment of the effects of any 
Federal mandate in an agency rule that may result in the expenditure by 
State, local, and Tribal governments, in the aggregate, or by the 
private sector, of $100 million or more (adjusted annually for 
inflation) in any one year. The Act also requires a Federal agency to 
develop an effective process to permit timely input by elected 
officials of State, Tribal, or local governments on a proposed 
``significant intergovernmental mandate,'' and requires an agency plan 
for giving notice and opportunity to provide timely input to 
potentially affected small governments before establishing any 
requirements that might significantly or uniquely affect small 
governments.
    The term ``Federal mandate'' is defined in the Act to mean a 
Federal intergovernmental mandate or a Federal private sector mandate 
(2 U.S.C. 658(6)). Although the rule will impose certain requirements 
on non-Federal governmental and private sector applicants for loan 
guarantees, the Act's definitions of the terms ``Federal 
intergovernmental mandate'' and ``Federal private sector mandate'' 
exclude, among other things, any provision in legislation, statute, or 
regulation that is a condition of Federal assistance or a duty arising 
from participation in a voluntary program (2 U.S.C. 658(5) and (7), 
respectively). Today's final rule establishes requirements that persons 
voluntarily seeking loan guarantees for projects that would use certain 
new and improved energy technologies must satisfy as a condition of a 
Federal loan guarantee. Thus, this final rule falls under the 
exceptions in the definitions of ``Federal intergovernmental mandate'' 
and ``Federal private sector mandate'' for requirements that are a 
condition of

[[Page 63549]]

Federal assistance or a duty arising from participation in a voluntary 
program. The Act does not apply to this rulemaking.

F. Treasury and General Government Appropriations Act, 1999

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

G. Executive Order 13132

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

H. Executive Order 12988

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

I. Treasury and General Government Appropriations Act, 2001

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

J. Executive Order 13211

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

K. Congressional Notification

    As required by 5 U.S.C. 801, DOE will submit to Congress a report 
regarding the issuance of today's final rule prior to the effective 
date set forth at the outset of this notice. The report will state that 
it has been determined that this rule is a ``major rule'' as defined by 
5 U.S.C. 804(2).

L. Approval by the Office of the Secretary of Energy

    The Secretary of Energy has approved the issuance of this final 
rule.

List of Subjects in 10 CFR Part 609

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

    Issued in Washington, DC, on November 30, 2009.
Steve Isakowitz,
Chief Financial Officer.


0
For the reasons stated in the preamble, chapter II of title 10 of the 
Code of Federal Regulations is amended by revising part 609 to read as 
follows:

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

Sec.
609.1 Purpose and scope.
609.2 Definitions.
609.3 Solicitations.
609.4 Submission of Pre-Applications.
609.5 Evaluation of Pre-Applications.
609.6 Submission of Applications.
609.7 Programmatic, technical and financial evaluation of 
Applications.
609.8 Term Sheets and Conditional Commitments.
609.9 Closing on the Loan Guarantee Agreement.
609.10 Loan Guarantee Agreement.
609.11 Lender eligibility and servicing requirements.
609.12 Project costs.
609.13 Principal and interest assistance contract.
609.14 Full faith and credit and incontestability.
609.15 Default, demand, payment, and collateral liquidation.
609.16 Perfection of liens and preservation of collateral.
609.17 Audit and access to records.
609.18 Deviations.

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


Sec.  609.1  Purpose and scope.

    (a) This part sets forth the policies and procedures that DOE uses 
for receiving, evaluating, and, after consultation with the Department 
of the Treasury, approving applications for

[[Page 63550]]

loan guarantees to support Eligible Projects under Section 1703 of 
Title XVII of the Energy Policy Act of 2005, as amended.
    (b) Except as set forth in paragraph (c) of this section, this part 
applies to all Pre-Applications, Applications, Conditional Commitments 
and Loan Guarantee Agreements to support Eligible Projects under 
Section 1703 of Title XVII of the Energy Policy Act of 2005, as 
amended.
    (c) Sections 609.3, 609.4 and 609.5 of this part shall not apply to 
any Pre-Applications, Applications, Conditional Commitments or Loan 
Guarantee Agreements submitted, or entered into, as applicable, on or 
before December 31, 2007; provided, that DOE accepted the Pre-
Application and invited an Application pursuant to such Pre-
Application.
    (d) Part 1024 of chapter X of title 10 of the Code of Federal 
Regulations shall not apply to actions taken under this part.


Sec.  609.2  Definitions.

    Act means Title XVII of the Energy Policy Act of 2005 (42 U.S.C. 
16511-16514), as amended.
    Administrative Cost of Issuing a Loan Guarantee means the total of 
all administrative expenses that DOE incurs during:
    (1) The evaluation of a Pre-Application, if a Pre-Application is 
requested in a solicitation, and an Application for a loan guarantee;
    (2) The offering of a Term Sheet, executing the Conditional 
Commitment, negotiation, and closing of a Loan Guarantee Agreement; and
    (3) 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 any person, firm, corporation, company, 
partnership, association, society, trust, joint venture, joint stock 
company, or other business entity or governmental non-Federal entity 
that has submitted an Application to DOE and has the authority to enter 
into a Loan Guarantee Agreement with DOE under the Act.
    Application means a comprehensive written submission in response to 
a solicitation or a written invitation from DOE to apply for a loan 
guarantee pursuant to Sec.  609.6 of this part.
    Borrower means any Applicant who enters into a Loan Guarantee 
Agreement with DOE and issues Guaranteed Obligations.
    Commercial Technology means a technology in general use in the 
commercial marketplace in the United States at the time the Term Sheet 
is issued by DOE. A technology is in general use if it has been 
installed in and is being used in three or more commercial projects in 
the United States in the same general application as in the proposed 
project, and has been in operation in each such commercial project for 
a period of at least five years. The five-year period shall be 
measured, for each project, starting on the in service date of the 
project or facility employing that particular technology. For purposes 
of this section, commercial projects 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 Applicant, with the understanding of the parties that 
if the Applicant thereafter satisfies all specified and precedent 
funding obligations and all other contractual, statutory and regulatory 
requirements, or other requirements, DOE and the Applicant will execute 
a Loan Guarantee Agreement: 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 and/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 (2 U.S.C. 661a(5)(C)), 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:
    (1) Payments by the Government to cover defaults and delinquencies, 
interest subsidies, or other payments; less
    (2) Payments to the Government including origination and other 
fees, penalties, and recoveries; including the effects of changes in 
loan or debt terms resulting from the exercise by the Borrower, 
Eligible Lender or other Holder of an option included in the Loan 
Guarantee Agreement.
    DOE means the United States Department of Energy.
    Eligible lender means:
    (1) Any person or legal entity formed for the purpose of, or 
engaged in the business of, lending money, including, but not limited 
to, commercial banks, savings and loan institutions, insurance 
companies, factoring companies, investment banks, institutional 
investors, venture capital investment companies, trusts, or other 
entities designated as trustees or agents acting on behalf of 
bondholders or other lenders; and
    (2) Any person or legal entity that meets the requirements of Sec.  
609.11 of this part, as determined by DOE; or
    (3) The Federal Financing Bank.
    Eligible project means a project located in the United States that 
employs a New or Significantly Improved Technology that is not a 
Commercial Technology, and that meets all applicable requirements of 
section 1703 of the Act (42 U.S.C. 16513), the applicable solicitation 
and this part.
    Equity means cash contributed by the Borrowers and other 
principals. Equity does not include proceeds from the non-guaranteed 
portion of Title XVII loans, proceeds from any other non-guaranteed 
loans, or the value of any form of government assistance or support.
    Federal Financing Bank means an instrumentality of the United 
States government created by the Federal Financing Bank Act of 1973 (12 
U.S.C. 2281 et seq). The Bank is under the general supervision of the 
Secretary of the Treasury.
    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 or legal entity that owns a Guaranteed 
Obligation or has lawfully succeeded in due course to all or part of 
the rights, title, and interest in a Guaranteed Obligation, including 
any nominee or trustee empowered to act for the Holder or Holders.
    Intercreditor Agreement means any agreement or instrument among DOE 
and one or more other persons providing financing or other credit 
arrangements or that otherwise provides for rights of DOE, in each 
case, in form and substance satisfactory to DOE and entered into or 
accepted by DOE in connection with a DOE loan guarantee upon a 
determination by DOE that such agreement or instrument is reasonable 
and necessary to protect the interests of the United States, and 
addressing such matters as collateral sharing, priorities (subject 
always to Section 1702(d)(3) of Title XVII) and voting rights among 
creditors and other intercreditor arrangements, as such agreement or 
instrument may be amended or

[[Page 63551]]

modified from time to time with the consent of DOE.
    Loan Agreement means a written agreement between a Borrower and an 
Eligible Lender or other Holder containing the terms and conditions 
under which the Eligible Lender or other Holder will make loans to the 
Borrower to start and complete an Eligible Project.
    Loan Guarantee Agreement means a written agreement that, when 
entered into by DOE and a Borrower, an Eligible Lender or other Holder, 
pursuant to the Act, establishes the obligation of DOE to guarantee the 
payment of all or a portion of the principal and interest on specified 
Guaranteed Obligations of a Borrower to Eligible Lenders or other 
Holders subject to the terms and conditions specified in the Loan 
Guarantee Agreement.
    New or Significantly Improved Technology means a technology 
concerned with the production, consumption or transportation of energy 
and that is not a Commercial Technology, and that has either:
    (1) Only recently been developed, discovered or learned; or
    (2) Involves or constitutes one or more meaningful and important 
improvements in productivity or value, in comparison to Commercial 
Technologies in use in the United States at the time the Term Sheet is 
issued.
    OMB means the Office of Management and Budget in the Executive 
Office of the President.
    Pre-Application means a written submission in response to a DOE 
solicitation that broadly describes the project proposal, including the 
proposed role of a DOE loan guarantee in the project, and the 
eligibility of the project to receive a loan guarantee under the 
applicable solicitation, the Act and this part.
    Project costs means those costs, including escalation and 
contingencies, that are to be expended or accrued by Borrower and are 
necessary, reasonable, customary and directly related to the design, 
engineering, financing, construction, startup, commissioning and 
shakedown of an Eligible Project, as specified in Sec.  609.12 of this 
part. Project costs do not include costs for the items set forth in 
Sec.  609.12(c) of this part.
    Project Sponsor means any person, firm, corporation, company, 
partnership, association, society, trust, joint venture, joint stock 
company or other business entity that assumes substantial 
responsibility for the development, financing, and structuring of a 
project eligible for a loan guarantee 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, or the Applicant.
    Secretary means the Secretary of Energy or a duly authorized 
designee or successor in interest.
    Term Sheet means an offering document issued by DOE that specifies 
the detailed terms and conditions under which DOE may enter into a 
Conditional Commitment with the Applicant. A Term Sheet imposes no 
obligation on the Secretary to enter into a Conditional Commitment.
    United States means the several States, the District of Columbia, 
the Commonwealth of Puerto Rico, the Virgin Islands, Guam, American 
Samoa or any territory or possession of the United States of America.


Sec.  609.3  Solicitations.

    (a) DOE may issue solicitations to invite the submission of Pre-
Applications or Applications for loan guarantees for Eligible Projects. 
DOE must issue a solicitation before proceeding with other steps in the 
loan guarantee process including issuance of a loan guarantee. A 
Project Sponsor or Applicant may only submit one Pre-Application or 
Application for one project using a particular technology. A Project 
Sponsor or Applicant, in other words, may not submit a Pre-Application 
or Application for multiple projects using the same technology.
    (b) Each solicitation must include, at a minimum, the following 
information:
    (1) The dollar amount of loan guarantee authority potentially being 
made available by DOE in that solicitation;
    (2) The place and time for response submission;
    (3) The name and address of the DOE representative whom a potential 
Project Sponsor may contact to receive further information and a copy 
of the solicitation;
    (4) The form, format, and page limits applicable to the response 
submission;
    (5) The amount of the application fee (First Fee), if any, that 
will be required;
    (6) The programmatic, technical, financial and other factors the 
Secretary will use to evaluate response submissions, including the loan 
guarantee percentage requested by the Applicant and the relative 
weightings that DOE will use when evaluating those factors; and
    (7) Such other information as DOE may deem appropriate.


Sec.  609.4  Submission of Pre-Applications.

    In response to a solicitation requesting the submission of Pre-
Applications, either Project Sponsors or Applicants may submit Pre-
Applications to DOE. Pre-Applications must meet all requirements 
specified in the solicitation and this part. At a minimum, each Pre-
Application must contain all of the following:
    (a) A cover page signed by an individual with full authority to 
bind the Project Sponsor or Applicant that attests to the accuracy of 
the information in the Pre-Application, and that binds the Project 
Sponsor(s) or Applicant to the commitments made in the Pre-Application. 
In addition, the information requested in paragraphs (b) and (c) of 
this section should be submitted in a volume one and the information 
requested in paragraphs (d) through (h) of this section should be 
submitted in a volume two, to expedite the DOE review process.
    (b) An executive summary briefly encapsulating the key project 
features and attributes of the proposed project (for clarity, with 
respect to any project in which project assets or facilities are 
jointly owned by the Applicant and one or more other persons, each of 
whom owns an undivided ownership interest in such project assets or 
facilities, the Applicant may submit a project proposal with respect to 
its undivided ownership interest in such project assets or facilities);
    (c) A business plan which includes an overview of the proposed 
project, including:
    (1) A description of the Project Sponsor, including all entities 
involved, and its experience in project investment, development, 
construction, operation and maintenance;
    (2) A description of the new or significantly improved technology 
to be employed in the project, including:
    (i) A report detailing its successes and failures during the pilot 
and demonstration phases;
    (ii) The technology's commercial applications;
    (iii) The significance of the technology to energy use or emission 
control;
    (iv) How and why the technology is ``new'' or ``significantly 
improved'' compared to technology already in general use in the 
commercial marketplace in the United States;
    (v) Why the technology to be employed in the project is not in 
``general use;''
    (vi) The owners or controllers of the intellectual property 
incorporated in and utilized by such technologies; and
    (vii) The manufacturer(s) and licensee(s), if any, authorized to 
make the technology available in the United States, the potential for 
replication of

[[Page 63552]]

commercial use of the technology in the United States, and whether and 
how the technology is or will be made available in the United States 
for further commercial use;
    (3) The estimated amount, in reasonable detail, of the total 
Project Costs;
    (4) The timeframe required for construction and commissioning of 
the project;
    (5) A description of any primary off-take or other revenue-
generating agreements that will provide the primary sources of revenues 
for the project, including repayment of the debt obligations for which 
a guarantee is sought.
    (6) An overview of how the project complies with the eligibility 
requirements in section 1703 of the Act (42 U.S.C. 16513);
    (7) An outline of the potential environmental impacts of the 
project and how these impacts will be mitigated;
    (8) A description of the anticipated air pollution and/or 
anthropogenic greenhouse gas reduction benefits and how these benefits 
will be measured and validated; and
    (9) A list of all of the requirements contained in this part and 
the solicitation and where in the Pre-Application these requirements 
are addressed;
    (d) A financing plan overview describing:
    (1) The amount of equity to be invested and the sources of such 
equity;
    (2) The amount of the total debt obligations to be incurred and the 
funding sources of all such debt if available;
    (3) The amount of the Guaranteed Obligation as a percentage of 
total project debt; and as a percentage of total project cost; and
    (4) A financial model detailing the investments in and the cash 
flows generated and anticipated from the project over the project's 
expected life-cycle, including a complete explanation of the facts, 
assumptions, and methodologies in the financial model;
    (e) An explanation of what estimated impact the loan guarantee will 
have on the interest rate, debt term, and overall financial structure 
of the project;
    (f) Where the Federal Financing Bank is not the lender, a copy of a 
letter from an Eligible Lender or other Holder(s) expressing its 
commitment to provide, or interest in providing, the required debt 
financing necessary to construct and fully commission the project;
    (g) A copy of the equity commitment letter(s) from each of the 
Project Sponsors and a description of the sources for such equity; and
    (h) A commitment to pay the Application fee (First Fee), if invited 
to submit an Application.


Sec.  609.5  Evaluation of Pre-Applications.

    (a) Where Pre-Applications are requested in a solicitation, DOE 
will conduct an initial review of the Pre-Application to determine 
whether:
    (1) The proposal is for an Eligible Project;
    (2) The submission contains the information required by Sec.  609.4 
of this part; and
    (3) The submission meets all other requirements of the applicable 
solicitation.
    (b) If a Pre-Application fails to meet the requirements of 
paragraph (a) of this section, DOE may deem it non-responsive and 
eliminate it from further review.
    (c) If DOE deems a Pre-Application responsive, DOE will evaluate:
    (1) The commercial viability of the proposed project;
    (2) The technology to be employed in the project;
    (3) The relevant experience of the principal(s); and
    (4) The financial capability of the Project Sponsor (including 
personal and/or business credit information of the principal(s)).
    (d) After the evaluation described in subsection (c) of this 
section, DOE will determine if there is sufficient information in the 
Pre-Application to assess the technical and commercial viability of the 
proposed project and/or the financial capability of the Project Sponsor 
and to assess other aspects of the Pre-Application. DOE may ask for 
additional information from the Project Sponsor during the review 
process and may request one or more meetings with the Project Sponsor.
    (e) After reviewing a Pre-Application and other information 
acquired under paragraph (c) of this section, DOE may provide a written 
response to the Project Sponsor or Applicant either inviting the 
Applicant to submit an Application for a loan guarantee and specifying 
the amount of the Application filing fee (First Fee) or advising the 
Project Sponsor that the project proposal will not receive further 
consideration. Neither the Pre-Application nor any written or other 
feedback that DOE may provide in response to the Pre-Application 
eliminates the requirement for an Application.
    (f) No response by DOE to, or communication by DOE with, a Project 
Sponsor, or an Applicant submitting a Pre-Application or subsequent 
Application shall impose any obligation on DOE to enter into a Loan 
Guarantee Agreement.


Sec.  609.6  Submission of Applications.

    (a) In response to a solicitation or written invitation to submit 
an Application, an Applicant submitting an Application must meet all 
requirements and provide all information specified in the solicitation 
and/or invitation and this part.
    (b) 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 and the Project Sponsors;
    (2) Payment of the Application filing fee (First Fee) for the Pre-
Application, if any, and Application phase;
    (3) A detailed description of all material amendments, 
modifications, and additions made to the information and documentation 
provided in the Pre-Application, if a Pre-Application was requested in 
the solicitation, including any changes in the proposed project's 
financing structure or other terms;
    (4) A description of how and to what measurable extent the project 
avoids, reduces, or sequesters air pollutants and/or anthropogenic 
emissions of greenhouse gases, including how to measure and verify 
those benefits;
    (5) A description of the nature and scope of the proposed project, 
including:
    (i) Key milestones;
    (ii) Location of the project;
    (iii) Identification and commercial feasibility of the new or 
significantly improved technology(ies) to be employed in the project;
    (iv) How the Applicant intends to employ such technology(ies) in 
the project; and
    (v) How the Applicant intends to assure, to the extent possible, 
the further commercial availability of the technology(ies) in the 
United States;
    (vi) For clarity, with respect to any project in which project 
assets or facilities are jointly owned by the Applicant and one or more 
other persons, each of whom owns an undivided ownership interest in 
such project assets or facilities, the Applicant may submit a project 
proposal with respect to its undivided ownership interest in such 
project assets or facilities.
    (6) A detailed explanation of how the proposed project qualifies as 
an Eligible Project;
    (7) A detailed estimate of the total Project Costs together with a 
description of the methodology and assumptions used;

[[Page 63553]]

    (8) A detailed description of the engineering and design 
contractor(s), construction contractor(s), equipment supplier(s), and 
construction schedules for the project, including major activity and 
cost milestones as well as the performance guarantees, performance 
bonds, liquidated damages provisions, and equipment warranties to be 
provided;
    (9) A detailed description of the operations and maintenance 
provider(s), the plant operating plan, estimated staffing requirements, 
parts inventory, major maintenance schedule, estimated annual downtime, 
and performance guarantees and related liquidated damage provisions, if 
any;
    (10) A description of the management plan of operations to be 
employed in carrying out the project, and information concerning the 
management experience of each officer or key person associated with the 
project;
    (11) A detailed description of the project decommissioning, 
deconstruction, and disposal plan, and the anticipated costs associated 
therewith;
    (12) An analysis of the market for any product to be produced by 
the project, including relevant economics justifying the analysis, and 
copies of any contractual agreements for the sale of these products or 
assurance of the revenues to be generated from sale of these products;
    (13) 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 project over the 
term of the Loan Guarantee Agreement;
    (14) 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 project;
    (15) A copy of the financial closing checklist for the equity and 
debt to the extent available;
    (16) Applicant's business plan on which the project is based and 
Applicant's financial model presenting project p