Rural Energy for America Program-Grants and Guaranteed Loans, 22043-22094 [2013-07273]

Agencies

• DEPARTMENT OF AGRICULTURE
• Rural Business-Cooperative Service
• Rural Utilities Service

[Federal Register Volume 78, Number 71 (Friday, April 12, 2013)]
[Proposed Rules]
[Pages 22043-22094]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-07273]



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Vol. 78

Friday,

No. 71

April 12, 2013

Part II





Department of Agriculture





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Rural Business-Cooperative Service





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Rural Utilities Service





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 7 CFR Part 4280





 Rural Energy for America Program--Grants and Guaranteed Loans; 
Proposed Rule

Federal Register / Vol. 78, No. 71 / Friday, April 12, 2013 / 
Proposed Rules

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DEPARTMENT OF AGRICULTURE

Rural Business-Cooperative Service

Rural Utilities Service

7 CFR Part 4280

RIN 0570-AA76


Rural Energy for America Program--Grants and Guaranteed Loans

AGENCY: Rural Business-Cooperative Service and Rural Utilities Service, 
USDA.

ACTION: Proposed rule.

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SUMMARY: Rural Development, a mission area within the U.S. Department 
of Agriculture, is proposing grant and guaranteed loan programs for 
renewable energy systems and energy efficiency improvement projects as 
provided in the Food, Conservation, and Energy Act of 2008. The 
proposed rule will revise the Rural Energy for America Program (REAP) 
found in 7 CFR part 4280, subpart B.

DATES: Comments on the proposed rule must be received on or before June 
11, 2013. The comment period for the information collection under the 
Paperwork Reduction Act of 1995 continues through June 11, 2013.

ADDRESSES: You may submit comments to this rule by any of the following 
methods:
     Federal eRulemaking Portal: https://www.regulations.gov. 
Follow the instructions for submitting comments.
     Mail: Submit written comments via the U.S. Postal Service 
to the Branch Chief, Regulations and Paperwork Management Branch, U.S. 
Department of Agriculture, STOP 0742, 1400 Independence Avenue SW., 
Washington, DC 20250-0742.
     Hand Delivery/Courier: Submit written comments via Federal 
Express Mail or other courier service requiring a street address to the 
Branch Chief, Regulations and Paperwork Management Branch, U.S. 
Department of Agriculture, 300 7th Street SW., 7th Floor, Washington, 
DC 20024.
    All written comments will be available for public inspection during 
regular work hours at the 300 7th Street SW., 7th Floor address listed 
above.

FOR FURTHER INFORMATION CONTACT: Kelley Oehler, Branch Chief, Energy 
Division, U.S. Department of Agriculture, 1400 Independence Avenue SW., 
Stop 3225, Washington, DC 20250-3201; telephone (202) 720-6819.

SUPPLEMENTARY INFORMATION:

EXECUTIVE SUMMARY

I. Purpose of the Regulatory Action

    This proposed rule will revise 7 CFR part 4280, subpart B to 
include changes that the Agency had previously identified, but did not 
include in the April 2011 Interim Rule. The Agency did not include 
these changes in order to expedite the implementation of the Food, 
Conservation, and Energy Act of 2008 (2008 Farm Bill) program 
modifications and to improve the administration of the program via an 
updated regulation rather than, in part, through Federal Register 
notices. This proposed rule fulfills our commitment to implement 
changes that were not included in the April 2011 Interim Rule.
    The Agency is authorized under Section 9001 of the 2008 Farm Bill 
and Section 9007 of the amended Farm Security and Rural Investment Act 
of 2002 to continue providing to agricultural producers and rural small 
businesses loan guarantees and grants for the development and 
construction of renewable energy systems and energy efficiency 
improvement projects. The 2008 Farm Bill also authorized the Agency to 
provide grants specifically for energy audits, renewable energy 
development assistance, and renewable energy system feasibility 
studies.

II. Summary of Major Provisions of the Regulatory Action

    The major substantive changes being proposed, along with a brief 
justification for each, are presented below.
     Project eligibility. The Agency is proposing to allow the 
purchase of refurbished renewable energy systems and the retrofitting 
of an existing renewable energy system as eligible projects under this 
subpart. These changes allow the Agency to provide funds to such 
projects in recognition of the maturation of the renewable energy 
industry, wherein earlier generations of systems are now being 
refurbished or retrofitted with more energy efficient components. To 
illustrate the difference between retrofitting and refurbishing, 
consider the following wind turbine example. A wind turbine would be 
considered retrofitted if new blades were put on to improve the 
efficiency of the turbine. If, however, the turbine is taken off site 
to a factory to have its gears and other worn parts replaced, it would 
be considered refurbished.
    For energy efficiency improvement projects, the Agency is proposing 
several changes, including ensuring that energy efficiency improvements 
use less energy on an annual basis than the original building and/or 
equipment they improve or replace in order to be eligible for program 
funding. These changes are being proposed to provide clarification and 
achieve consistency in the administration of the program.
     Technical reports. Changes being proposed for technical 
reports include simplifying the energy efficiency improvement technical 
report; simplifying the technical report for renewable energy system 
projects with total project costs of $200,000 or less; revising 
provisions associated with what is required for an energy assessment 
and an energy audit; providing for a single technical report option for 
renewable energy systems submitted through the process for applications 
for projects with total project costs of $200,000 or less; and 
eliminating the distinction between large and small solar and wind 
projects in preparing the technical reports. The Agency is proposing 
these changes to reduce overall burden for the program and streamline 
the application process.
     Applications. The proposed rule incorporates three grant 
application processes--one for projects with total project costs 
greater than $200,000; one for projects with total project costs of 
$200,000 or less (but more than $80,000); and one for projects with 
total project costs of $80,000 or less. The three application processes 
require different amounts of paperwork. With the proposed changes, the 
smaller the total project costs, the lesser amount of paperwork and 
burden associated with the process. The Agency is proposing these 
changes to reduce overall burden for the program and to streamline the 
grant application process by requesting documentation for a complete 
application based on total project costs.
     Scoring criteria. The Agency is proposing to modify 
several elements of the scoring criteria including eliminating the 
technical merit and commercial availability criteria; adding a 
criterion based on energy generated per dollar requested; modifying the 
size of the agricultural producer/small business criterion; and 
modifying the environmental benefits criterion. These changes are being 
proposed to make the scoring more objective and to better align the 
scoring metrics with the goals of the program.
     Pre-commercial technology. The Agency is proposing to 
remove pre-commercial technology as an eligible technology. As 
proposed, only commercially available technologies would be eligible 
for grants and guaranteed loans. The Agency is making this change to 
avoid overlap with the Biorefinery Assistance guaranteed loan program.

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     Energy audit requirement threshold for Energy Efficiency 
Improvements (EEI) applications. The Agency is proposing to raise the 
threshold for requiring an energy audit (versus an energy assessment) 
from $50,000 to $200,000 in total project cost. The Agency is proposing 
this change because experience with the program shows that the 
information provided in an energy assessment for these projects is 
sufficient for the Agency to assess the merits of the EEI project. 
Additionally, this change makes it unnecessary for an applicant to 
incur the cost of a full energy audit for a $50,000 project when an 
energy assessment provides sufficient information for the Agency to 
evaluate the project.
     Energy analysis. The Agency is proposing to allow for an 
energy efficiency improvement project with total project costs of 
$80,000 or less to conduct an energy analysis instead of an energy 
assessment or an energy audit. The Agency is proposing this because the 
information provided by an energy analysis for these size projects is 
sufficient for the Agency to assess the merits of the EEI project, 
while at the same time reducing the costs to the applicant as an energy 
analysis is less costly than an energy assessment.
     Competing guaranteed loan only applications. The Agency is 
proposing to implement for guaranteed loan-only applications a 
quarterly competition. Guaranteed loan-only applications that achieve a 
minimum priority score would compete for available funds on the first 
business day of the second month of each Federal fiscal quarter. 
Guaranteed loan-only applications that do not achieve the minimum 
priority score would only be able to compete for funding during the 
last quarter of the Federal fiscal year. The change to quarterly awards 
is intended to make this part of REAP more appealing to lenders and 
prospective borrowers by ensuring funds are available all year, while 
competing the loan applications is intended to help ensure the most 
worthwhile projects receive priority for funding.

III. Summary of Benefits and Costs

    A Regulatory Impact Analysis (RIA) was undertaken to examine the 
benefits and costs of the proposed changes to the Interim Rule for 
REAP. The RIA calculated a net cost savings due to proposed 
improvements in the implementation of the REAP program.
    The estimate of benefits under the proposed rule are not expected 
to differ significantly from those that would have occurred under the 
Interim Rule for REAP. However, the net savings afforded to applicants 
and to the federal government as a result of streamlining and reduced 
burden will result in positive net benefits. Using the estimate of cost 
changes per application and the estimate of the number of applications 
will be affected by this rulemaking, the net benefits of this rule are 
estimated to be approximately $3.7 million in Fiscal Year 2013.
    In addition, these changes are not expected to affect the nature 
and size of the environmental and energy impacts of the REAP program. 
While there are expected to be job benefits from REAP funding, these 
jobs were not quantified.

Background Information

Executive Order 12866
    This proposed rule has been reviewed under Executive Order (EO) 
12866 and has been determined to be economically significant by the 
Office of Management and Budget. The EO defines a ``significant 
regulatory action'' as one that is likely to result in a rule that may: 
(1) Have an annual effect on the economy of $100 million or more or 
adversely affect, in a material way, the economy, a sector of the 
economy, productivity, competition, jobs, the environment, public 
health or safety, or State, local, or tribal governments or 
communities; (2) Create a serious inconsistency or otherwise interfere 
with an action taken or planned by another agency; (3) Materially alter 
the budgetary impact of entitlements, grants, user fees, or loan 
programs or the rights and obligations of recipients thereof; or (4) 
Raise novel legal or policy issues arising out of legal mandates, the 
President's priorities, or the principles set forth in this EO.
    The Agency conducted a benefit-cost analysis to fulfill the 
requirements of EO 12866. In this analysis, the Agency identifies 
potential benefits and costs of REAP to lenders, borrowers, and the 
Agency. The analysis contains quantitative estimates of the burden to 
the public and the Federal government and qualitative descriptions of 
the expected economic, environmental, and energy impacts associated 
with REAP.
Unfunded Mandates Reform Act
    Title II of the Unfunded Mandates Reform Act 1995 (UMRA) (Pub. L. 
104-4) establishes requirements for Federal agencies to assess the 
effects of their regulatory actions on State, local, and tribal 
governments and the private sector. Under section 202 of the UMRA, 
Rural Development generally must prepare a written statement, including 
a cost-benefit analysis, for proposed and final rules with ``Federal 
mandates'' that may result in expenditures to State, local, or tribal 
governments, in the aggregate, or to the private sector of $100 million 
or more in any one year. When such a statement is needed for a rule, 
section 205 of the UMRA generally requires Rural Development to 
identify and consider a reasonable number of regulatory alternatives 
and adopt the least costly, more cost-effective, or least burdensome 
alternative that achieves the objectives of the rule.
    This proposed rule contains no Federal mandates (under the 
regulatory provisions of Title II of the UMRA) for State, local, and 
tribal governments or the private sector. Thus, this rule is not 
subject to the requirements of sections 202 and 205 of the UMRA.
Environmental Impact Statement
    Under this program, the Agency conducts a National Environmental 
Policy Act of 1969 (NEPA), 42 U.S.C. 4321 et seq., review for each 
application received. To date, no significant environmental impacts 
have been reported, and Findings of No Significant Impact (FONSI) have 
been issued for each approved application. Taken collectively, the 
applications show no potential for significant adverse cumulative 
effects.
    This document has been reviewed in accordance with 7 CFR part 1940, 
subpart G, ``Environmental Program.'' Rural Development has determined 
that this action does not constitute a major Federal action 
significantly affecting the quality of the human environment, and in 
accordance with NEPA, an Environmental Impact Statement is not 
required. Grant and guaranteed loan applications will be reviewed 
individually to determine compliance with NEPA.
Executive Order 12988, Civil Justice Reform
    This proposed rule has been reviewed under EO 12988, Civil Justice 
Reform. In accordance with this rule: (1) All State and local laws and 
regulations that are in conflict with this rule will be preempted; (2) 
no retroactive effect will be given to this rule; and (3) 
administrative proceedings in accordance with 7 CFR part 11 must be 
exhausted before bringing suit in court challenging action taken under 
this rule unless those regulations specifically allow bringing suit at 
an earlier time.
Executive Order 13132, Federalism
    It has been determined, under EO 13132, Federalism, that this 
proposed rule does not have sufficient federalism implications to 
warrant the preparation of a Federalism Assessment. The

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provisions contained in the proposed rule will not have a substantial 
direct effect on States or their political subdivisions or on the 
distribution of power and responsibilities among the various government 
levels.
Regulatory Flexibility Act
    The Regulatory Flexibility Act (5 U.S.C. 601-612) (RFA) generally 
requires an agency to prepare a regulatory flexibility analysis of any 
rule subject to notice and comment rulemaking requirements under the 
Administrative Procedure Act or any other statute unless the agency 
certifies that the rule will not have an economically significant 
impact on a substantial number of small entities. Small entities 
include small businesses, small organizations, and small governmental 
jurisdictions.
    In compliance with the RFA, Rural Development has determined that 
this action, while mostly affecting small entities, will not have a 
significant economic impact on a substantial number of these small 
entities. Rural Development made this determination based on the fact 
that this regulation only impacts those who choose to participate in 
the program. Small entity applicants will not be affected to a greater 
extent than large entity applicants.
Executive Order 13211, Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use
    The regulatory impact analysis conducted for this proposed rule 
meets the requirements for EO 13211, which states that an agency 
undertaking regulatory actions related to energy supply, distribution, 
or use is to prepare a Statement of Energy Effects. This analysis finds 
that this proposed rule will not have any adverse impacts on energy 
supply, distribution, or use.
Executive Order 12372, Intergovernmental Review of Federal Programs
    This program is not subject to the provisions of EO 12372, which 
require intergovernmental consultation with State and local officials.
Executive Order 13175, Consultation and Coordination With Indian Tribal 
Governments
    This EO imposes requirements on Rural Development in the 
development of regulatory policies that have Tribal implications or 
preempt Tribal laws. Rural Development has determined that the proposed 
rule has substantial direct effects on one or more Indian Tribe(s) or 
on either the relationship or the distribution of powers and 
responsibilities between the Federal Government and the Indian Tribes. 
This rule was included in the USDA Joint Agency Regional Consultations 
that consolidated consultation efforts of 70 rules from the 2008 Farm 
Bill. USDA Rural Development sent senior level agency staff to seven 
regional locations and reached out to Tribal leadership in each region 
to consult on this proposed rule. Upon completion of the consultation 
process, USDA Rural Development analyzed the feedback and incorporated 
input from the consultation into this regulation.
    For example, with the intent to increase Tribal participation in 
the program, the definition of a small business in this rule includes 
Tribal corporations chartered under Section 17 of the Indian 
Reorganization Act (25 U.S.C. 477) or other Tribal business entities 
that have similar structures and relationships with their Tribal 
governments as determined by the Agency. The Agency shall determine the 
small business status of such a Tribal entity without regard to the 
resources of the Tribal government.
    USDA will respond in a timely and meaningful manner to all Tribal 
government requests for consultation concerning this rule. The policies 
contained in this rule do not have implications that preempt Tribal 
law.

Programs Affected

    The Catalog of Federal Domestic Assistance program number assigned 
to the affected program is 10.868, Rural Energy for America Program.
Paperwork Reduction Act
    In accordance with the Paperwork Reduction Act of 1995, USDA Rural 
Development will seek the Office of Management and Budget (OMB) 
approval of the reporting and recordkeeping requirements contained in 
this rule and hereby open a 60-day public comment period.
    Title: Rural Energy for America Program.
    Type of Request: New collection.
    Abstract: Rural Development is providing grants and guaranteed 
loans for the construction or retrofitting of renewable energy systems 
and to make energy efficiency improvements; grants for energy audits; 
grants for renewable energy development assistance; and grants for 
feasibility studies for renewable energy systems. This financial 
assistance is contained in 7 CFR part 4280, subpart B.
    The collection of information is vital for Rural Development to 
make wise decisions regarding the eligibility of projects and borrowers 
in order to ensure compliance with the regulations and that the funds 
obtained from the Government are used appropriately (e.g., used for the 
purposes for which the guaranteed loans were awarded). The type of 
information required depends on the type of financial assistance being 
sought, as summarized below.
    1. Renewable energy systems (RES) and energy efficiency 
improvements (EEI) grants. Persons seeking RES or EEI grants under this 
program will have to submit applications applicable to the size of 
their proposed projects. The information to be included is similar, but 
applications for projects with total project costs of $200,000 or less 
require less information to be submitted than applications for projects 
with total project costs of more than $200,000. Similarly, applications 
for projects with total project costs of $80,000 or less require still 
less information to be submitted than the other applications.
    All applications require certain forms and certifications, 
applicant information (or, in the case of applications for projects 
with total project costs of $80,000 or less, a certification that the 
applicant is eligible), project information (or, in the case of 
applications for projects with total project costs of $80,000 or less, 
a certification that the project is eligible), information on previous 
grants and guaranteed loans received under REAP, information on 
environmental benefits, and matching funds, and a technical report. 
Applications for projects with total project costs of more than 
$200,000 also require financial information on the applicant and any 
affiliated companies, and, if the application is for a renewable energy 
system with total project costs of more than $200,000, a feasibility 
study for the renewable energy system. Information in the application 
will be used to determine applicant and project eligibility, including 
if the project has technical merit.
    Between grant approval and completion of project construction, 
grantees are required to submit semiannual performance reports, with a 
final project development report due once the project has been 
constructed.
    Once the project has been completed, annual reports are required on 
the project. For a renewable energy system project, the outcome project 
performance report is required annually for 3 years following its 
completion. For an energy efficiency improvement project, the outcome 
project performance report is required annually for 2 years following 
its completion.

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    2. Renewable energy systems and energy efficiency improvements 
guaranteed loans. With one major exception, persons seeking loan 
guarantees under this program will have to submit applications that 
include the information required for grant applications of similar 
total project costs. For example, loan guarantee requests for total 
project costs of $200,000 or less would follow the application 
requirements of grants with total project costs of $200,000 or less 
(but more than $80,000). The major exception is in regards to the 
forms, certifications, and agreements required for loan guarantee 
applications, which include, but are not limited to, the lender's 
analysis, appraisals, commercial credit reports on the borrower, and 
proposed loan agreement. The information included in applications for 
loan guarantee will be used to determine applicant and project 
eligibility and to ensure that funds are used for projects that are 
likely to be financially sound.
    Once a project has been approved and the loan has been guaranteed, 
lenders must submit periodic reports on the status of their loan 
portfolios and, when applicable, bimonthly default reports. In 
addition, lenders are required to conduct annual inspections of each 
completed project.
    3. Renewable energy system feasibility study grants. Persons 
seeking a renewable energy system feasibility study grant will have to 
submit certain standard forms; the primary North American Industry 
Classification System (NAICS) code applicable to the applicant's 
operation if known or a description of the operation in enough detail 
for the Agency to determine the primary NAICS code; certification that 
the applicant is a legal entity in good standing (as applicable), and 
operating in accordance with the laws of the state(s) where the 
applicant has a place of business; a proposed scope of work; 
certification that the applicant has not received any other Federal or 
State assistance for a feasibility study for the same renewable energy 
system project that is the subject of the application; if the applicant 
is a rural small business, certification that the feasibility study 
grant will be for a renewable energy system project that is located in 
a rural area; and certification associated with financial information 
to determine the applicant's size. The information included in 
applications will be used to determine applicant and project 
eligibility and to ensure that funds are used for viable projects. 
Beginning the first full year after the feasibility study has been 
completed, a grantee is required to submit an outcome project 
performance report annually for 2 years on the status of the renewable 
energy system for which the feasibility study was completed.
    4. Energy audit and renewable energy development assistance grants. 
Entities seeking an energy audit or renewable energy development 
assistance grant will have to submit certain standard forms; 
certification that the applicant is a legal entity in good standing (as 
applicable), and operating in accordance with the laws of the state(s) 
where the applicant has a place of business; and a proposed scope of 
work. The information included in applications for the grant will be 
used to determine applicant and project eligibility and to ensure that 
funds are used for viable projects.
    While the project activities are being completed, grantees must 
submit semi-annual performance reports, which will, in part, compare 
actual accomplishments to the objectives, and a list of recipients. A 
final performance report is also required. Lastly, an outcome project 
performance report is required 1 year after submittal of the final 
performance report.
Estimate of Burden for Entire REAP Rule
    The following estimates are based on the average over the first 3 
years the program has been in place.
    Estimate of Burden: Public reporting burden for this collection of 
information is estimated to average 3.9 hours per response.
    Respondents: Agricultural producers; rural small businesses; units 
of State, tribal, or local government; instrumentalities of a State, 
tribal, or local government; land-grant colleges (including 1994 land-
grant Tribal Colleges and Universities and 1890 land-grant Historically 
Black Colleges and Universities); universities, or other institutions 
of higher education; rural electric cooperatives; and public power 
entities.
    Estimated Number of Respondents: 3,957.
    Estimated Number of Responses per Respondent: 14.8.
    Estimated Number of Responses: 58,399.
    Estimated Total Annual Burden (hours) on Respondents: 219,347.
    Copies of this information collection can be obtained from Jeanne 
Jacobs, Regulations and Paperwork Management Branch, Support Services 
Division, U.S. Department of Agriculture, Rural Development, STOP 0742, 
1400 Independence Ave., SW., Washington, DC 20250-0742 or by calling 
(202) 692-0040.

Comments

    Comments are invited on: (a) Whether the proposed collection of 
information is necessary for the proper performance of the functions of 
Rural Development, including whether the information will have 
practical utility; (b) the accuracy of the new Rural Development 
estimate of the burden of the proposed collection of information, 
including the validity of the methodology and assumptions used; (c) 
ways to enhance the quality, utility, and clarity of the information to 
be collected; and (d) ways to minimize the burden of the collection of 
information on those who are to respond, including through the use of 
appropriate automated, electronic, mechanical, or other technological 
collection techniques or other forms of information technology. 
Comments may be sent to Jeanne Jacobs, Regulations and Paperwork 
Management Branch, U.S. Department of Agriculture, Rural Development, 
STOP 0742, 1400 Independence Ave., SW., Washington, DC 20250. All 
responses to this proposed rule will be summarized and included in the 
request for OMB approval. All comments will also become a matter of 
public record.
E-Government Act Compliance
    Rural Development is committed to complying with the E-Government 
Act, to promote the use of the Internet and other information 
technologies to provide increased opportunities for citizen access to 
Government information and services, and for other purposes.

I. Background

    Rural Development administers a multitude of Federal programs for 
the benefit of rural America, ranging from housing and community 
facilities to infrastructure and business development. Its mission is 
to increase economic opportunity and improve the quality of life in 
rural communities by providing the leadership, infrastructure, venture 
capital, and technical support that enables rural communities to 
prosper. To achieve its mission, Rural Development provides financial 
support (including direct loans, grants, and loan guarantees) and 
technical assistance to help enhance the quality of life and provide 
the foundation for economic development in rural areas.
    In response to the Farm Security and Rural Investment Act of 2002 
(FSRIA), which established the Renewable Energy Systems and Energy 
Efficiency Improvements Program under Title IX,

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Section 9006, Rural Business-Cooperative Service (RBS) promulgated a 
rule (70 FR 41264, July 18, 2005) establishing the renewable energy 
systems and energy efficiency improvements program (7 CFR part 4280, 
subpart B) for making grants, loan guarantees, and direct loans to 
farmers and ranchers (agricultural producers) or rural small businesses 
to purchase renewable energy systems and make energy efficiency 
improvements. Renewable energy sources eligible for funding included 
bioenergy, anaerobic digesters, electric geothermal, direct geothermal, 
solar, hydrogen, and wind.
    Since it established the program, RBS has funded, through FY 2008, 
over 2,000 projects. Of these, nearly 1,700 projects have received 
grant-only funds totaling approximately $115 million. Another 327 
projects received grants and guaranteed loans, totaling approximately 
$62.9 million in grant and loan funds combined, while 9 projects 
received only guaranteed loans totaling approximately $71 million.
    Section 9001 of the Food, Conservation, and Energy Act of 2008 
(2008 Farm Bill) amended Title IX of the FSRIA. Under the 2008 Farm 
Bill and Section 9007 of the amended FSRIA, the Agency is authorized to 
continue providing to agricultural producers and rural small businesses 
loan guarantees and grants for the development and construction of 
renewable energy systems and energy efficiency improvement projects. In 
addition to the current set of renewable energy projects eligible for 
funding, the 2008 Farm Bill expands the program to include two new 
renewable energy technologies: hydroelectric and ocean energy. Further, 
the 2008 Farm Bill authorizes the Agency to provide grants specifically 
for energy audits, renewable energy development assistance, and 
renewable energy system feasibility studies. This newly expanded 
program is referred to as REAP, which continues the Agency's assistance 
to the adoption of both renewable energy systems and energy efficiency 
improvements through Federal government loan guarantees and grants.
    On April 14, 2011, Rural Development published an Interim Rule for 
REAP (76 FR 21110). The Interim Rule established a consolidated REAP 
program by including each part of the program in a single subpart. Up 
to then, only the RES and EEI grant and guaranteed loan program 
requirements had been implemented under 7 CFR part 4280, subpart B and, 
for requirements established by the 2008 Farm Bill, through Federal 
Register notices. Since the 2008 Farm Bill, the requirements for RES 
feasibility study grants and for energy audit and renewable energy 
development assistance grants had been implemented through a series of 
Federal Register notices. For the RES feasibility studies, these 
notices were published on May 26, 2009 (74 FR 24769) and August 6, 2010 
(75 FR 47525). For energy audits and renewable energy development 
assistance, these notices were published on March 11, 2009 (74 FR 
10533) and May 27, 2010 (75 FR 29706).
    As noted in the April 14, 2011, Federal Register notice, the Agency 
indicated that it would publish a proposed rule following publication 
of the Interim Rule. This notice fulfills that intent.

II. Discussion of Proposed Rule for REAP

    In this section, the proposed rule for REAP is described. As has 
been noted, the Agency is proposing to revise 7 CFR part 4280, subpart 
B. The following paragraphs discuss the proposed changes, first by 
identifying several of the more significant changes and then discussing 
changes by sections.

A. Summary of Significant Changes

    The Agency is proposing a number of revisions to 7 CFR part 4280, 
subpart B based, in part, on its effort to streamline and improve the 
program. The major substantive changes being proposed are summarized 
below.
    1. Project eligibility. The Agency is proposing to allow the 
purchase of a refurbished renewable energy system and the retrofitting 
of an existing renewable energy system as eligible projects for a RES 
or EEI grant, guaranteed loan or combination guaranteed loan and grant 
project. In addition, the Agency is clarifying several eligible 
projects and associated project costs, including:
     Making energy efficiency improvements that will use less 
energy on an annual basis than the original building and/or equipment 
that it will improve or replace;
     Replacing multiple pieces of equipment with one piece of 
equipment that will use less energy on an annual basis; and
     Constructing a new energy efficient building only when the 
building is used for the same purpose as the existing building, it will 
be more cost effective to construct a new building, and the new 
building will use less energy on an annual basis than improving the 
existing building.
    In all cases, the applicant must demonstrate that less energy is 
used on an annual basis as documented in an energy analysis, 
assessment, or audit as applicable.
    2. Technical reports. Numerous changes are being proposed for 
technical reports including, but not limited to, the following: 
simplifying the energy efficiency improvement technical report; 
simplifying the technical report for renewable energy system projects 
with total project costs of $200,000 or less; revising provisions 
associated with what is required for an energy assessment and an energy 
audit; providing for a single technical report option for renewable 
energy systems submitted through the process for applications for 
projects with total project costs of $200,000 or less; and eliminating 
the distinction between large and small solar and wind projects in 
preparing the technical reports.
    3. Applications. The Agency is proposing changes to RES and EEI 
applications that are intended to reduce overall burden for the program 
and streamline the grant application process by requesting 
documentation for a complete application based on total project costs. 
Specifically, the proposed rule has defined three grant application 
processes to include projects with total project costs greater than 
$200,000, projects with total project costs of $200,000 or less (but 
more than $80,000), and projects with total project costs of $80,000 or 
less. With the proposed changes, the smaller the total project costs, 
the lesser amount of paperwork and burden associated with the process.
     Applications for projects with total project costs of less 
than $200,000. In addition to compiling applicable provisions into a 
single section within the rule, the Agency is proposing to remove the 
requirement that the Agency has to sign off on all procurement 
contracts for projects with total project costs of less than $200,000 
(referred to in 7 CFR part 4280, subpart B as ``simplified'' 
applications).
     Applications for projects with total project costs of 
$80,000 or less. The Agency is proposing a new application process for 
projects with total project costs of $80,000 or less. These provisions 
are intended to reduce the application burden for these smaller 
projects from the current provisions in the Interim Rule, while still 
providing the Agency sufficient information to determine applicant and 
project eligibility and to evaluate and score the applications. The 
Agency is proposing the $80,000 threshold based on the set-aside for 
projects seeking grants of $20,000 or less and the maximum grant 
portion that the Agency can provide of 25 percent of the total project 
costs. For

[[Page 22049]]

more information on how these new provisions differ from the provisions 
for these applications under the Interim Rule for REAP, please see the 
discussion on ``Grant applications for projects with total project 
costs of $80,000 or less'' later in this preamble.
    4. Scoring criteria. The Agency is proposing to modify several 
elements of the scoring criteria including eliminating the technical 
merit and commercial availability criteria; adding a criterion based on 
energy generated per dollar requested; modifying the size of the 
agricultural producer/small business criterion; and modifying the 
environmental benefits criterion. For a more detailed accounting of the 
changes being proposed to the scoring criteria, please see discussion 
for Table 1 under the ``Section by section discussion of revisions to 
the RES and EEI Grant and Guaranteed Loan Program'' later in this 
preamble.
    5. Pre-commercial technology. The Agency is proposing to remove 
pre-commercial technology as an eligible technology. As proposed, only 
commercially available technologies would be eligible for grants and 
guaranteed loans.
    6. Energy audit requirement threshold for EEI applications. The 
Agency is proposing to raise the threshold for requiring an energy 
audit (versus an energy assessment) from $50,000 to $200,000 in total 
project cost.
    7. Construction planning and performing development. The Agency is 
proposing a major reorganization and clarification of these provisions 
to address confusion under 7 CFR part 4280, subpart B and to provide 
greater consistency in its implementation by each state.
    8. Competing guaranteed loan applications. The Agency is proposing 
to establish new procedures for competing guaranteed loan applications. 
Major features of the new procedures are:
     Establishing quarterly competitions for guaranteed loan-
only applications;
     Establishing each year a minimum score to determine 
whether an application is competed in each quarter (only those 
applications that score at or above the minimum score) or only in the 
last quarter of the Federal fiscal year (those applications that score 
below the minimum score and all other applications that were not 
funded);
     Procedures for making awards when there are insufficient 
funds available; and
     Limiting the number of competitions each application can 
participate for funding--four quarters for applications that score at 
or above the minimum score and only the last quarter of the Federal 
fiscal year for applications that score below the minimum score and all 
other applications that were not funded.
    The proposed procedures are intended to encourage more guaranteed 
loan applications by making awards throughout the year. This allows 
potential applicants more flexibility in preparing and submitting their 
applications. Further, the Agency is encouraging better projects by 
establishing a minimum score.
Section by Section Discussion of Revisions to the RES and EEI Grant and 
Guaranteed Loan Program
Purpose (Sec.  4280.101)
    The only change being proposed to this section is the removal of 
the reference to ``in rural areas'' because certain projects proposed 
by agricultural producers may be eligible for REAP funds even though 
the project is located in a non-rural area. The Agency is proposing 
this change for two reasons.
    First, the Agency has determined that there are a number of 
agricultural producers that operate in non-rural areas that can benefit 
from REAP. Such agricultural producers may include commercial nurseries 
and truck farms (the growing of one or more crops on a scale necessary 
for shipment to distant markets) that are located near urban areas.
    Second, to the extent the authorizing statutes allow, the Agency 
wanted REAP to be consistent with the Biorefinery Assistance Program, 
the Repowering Assistance Program, and the Advanced Biofuel Payment 
Program. The three programs do not include a rural area requirement in 
their respective interim rules published in February 2011.
Organization of This Subpart (Sec.  4280.102)
    The purpose of this section continues to be providing the reader 
with an overview of the organization of the subpart. The section has 
been updated to reflect the changes in the rule.
Definitions (Sec.  4280.103)
    The Agency is revising or deleting some of the definitions, as well 
as cross-referencing Sec.  4279.2 for guaranteed loan terms. The Agency 
is also proposing to define several new terms.
Revised Terms
     Anaerobic digester project. The primary revision to this 
term is replacing ``waste'' with ``or other Renewable Biomass'' in 
order to clarify that human waste is an eligible feedstock to anaerobic 
digesters.
     Bioenergy project. This term is being updated to refer to 
``Renewable Biomass'' and is being revised by removing the last portion 
of the definition referring to anaerobic digesters, which the Agency 
determined is unnecessary to define the term.
     Blended liquid transportation fuel. This term is being 
clarified by recasting the last part of the definition to refer to 
Federal or State requirements, whichever of the two is higher.
     Capacity. This term is being clarified by replacing 
``load'' with ``output rate'' and replacing ``meet'' with ``attain.''
     Commercially available. This term is being revised to: (1) 
clarify that the proven operating history has to be for at least one 
year and warranties are only required on major parts, and (2) add a 
provision for technologies currently only available outside the United 
States to qualify as commercially available.
     Design/build method. This term is being revised by 
replacing ``prime contractor'' with ``contractor.''
     Eligible project costs. This term is being revised by 
including costs that are eligible to be paid or guaranteed with program 
funds as part of eligible project costs.
     Energy assessment. This term is being revised in three 
ways. First, ``experienced energy assessor, certified energy manager, 
or professional engineer'' is being replaced with ``Energy Auditor, 
Energy Assessor, or an individual supervised by either an Energy 
Assessor or Energy Auditor.'' Second, the assessment of energy ``use'' 
is being added. Third, the details of what constitutes an energy 
assessment are being revised and moved from the definition section to 
Section C of Appendix A of this subpart.
     Energy assessor. This term is being revised as to who 
qualifies as an energy assessor under this subpart and to require that 
the energy assessor must be a qualified consultant.
     Energy audit. This term is being revised in two ways. 
First, ``certified energy manager or professional engineer'' is being 
replaced with ``energy auditor.'' Second, the details of what 
constitutes an energy audit are being revised and moved from the 
definition section to Section B of Appendix A of this subpart.
     Energy auditor. The term is being revised as to who 
qualifies as an energy auditor under this subpart and to require that 
the energy auditor must be a qualified consultant.
     Energy efficiency improvement. This term is being revised 
by adding ``or replacement of''; by replacing ``a facility, building, 
or process'' with ``an

[[Page 22050]]

existing building and/or equipment''; and by replacing ``reduce energy 
consumption, or reduce energy consumed per square foot'' with ``reduces 
energy consumption on an annual basis.''
     Feasibility study. This term is being revised by adding 
``conducted by a qualified consultant.''
     Financial feasibility. This term is being revised by 
referring to ``sufficient income'' rather than ``the income.''
     Geothermal electric generation. This term is being 
clarified by referring to ``thermal energy from a geothermal source'' 
and by removing ``high pressure steam for'' because it is not needed.
     Hydroelectric energy. The term being defined in the 
proposed rule is now ``hydroelectric source'' to conform to the 
terminology in the 2008 Farm Bill. In addition, the definition has been 
clarified to refer to it as a ``Renewable Energy System producing 
electricity.'' Lastly, the definition now includes reference to 
hydroelectric sources with a rated power of 30 megawatts or less, 
rather than having a separate definition for small hydropower.
     Hydrogen project. This definition is being edited for 
clarification.
     Instrumentality. Examples have been added to the 
definition.
     Interconnection agreement. This term is being revised by 
adding ``A contract containing'' to the beginning of the definition.
     Matching funds. This term is being clarified by referring 
to total eligible project costs instead of eligible project costs.
     Passive investor. This term is being clarified by 
replacing ``arrangement'' with ``agreement.''
     Qualified consultant. This term is being expanded by 
incorporating from the definition of ``qualified party'' the concept of 
an independent third-party.
     Renewable biomass. The definition for renewable biomass is 
provided to the Agency by the 2008 Farm Bill. This term is being 
clarified to identify it includes ``other biodegradable waste'' and to 
state that waste material does not include unsegregated solid waste.
     Renewable energy site assessment. This definition is being 
revised through editing and presentation to be consistent with the 
technical report requirements contained in Sections A through C of 
Appendix B for renewable energy system applications submitted with a 
total project cost of $200,000 or less.
     Rural Business Cooperative Service Grant Agreement (Form 
RD 4280-2) or successor form. This term is being redefined as ``Grant 
Agreement'' and is being updated to reflect the new name of the form.
     Simple payback. This term is being revised in several 
ways.
    Reference to ``(including REAP grants)'' in several equations is 
being removed because the phrase is unnecessary.
    The calculation of energy saved or replaced is being revised. The 
applicant is to calculate the actual average annual total energy used 
in the original building and/or equipment, as applicable, prior to the 
RES or EEI project over the most recent 36 months of operation or, if 
in operation less than 36 months, over the length of ownership. Next, 
the applicant is to calculate the projected average annual total energy 
that would have been used in the original building and/or equipment, as 
applicable, for this same 36-month period if the proposed project had 
been in place over that time period. The difference between these two 
values for the applicable time period represents the amount of energy 
saved or replaced. The Agency notes that the value of the price of 
energy used in the calculation of simple payback is to be calculated 
for this same 36-month period or period of ownership, if less than 36 
months.
    The adjustment for energy efficiency equipment based on the ratio 
of capacity is being removed. However, there may be projects where 
multiple pieces of equipment are being replaced by one piece of 
equipment. The applicant must demonstrate in an energy analysis, 
assessment, or audit, as applicable, that the average annual total 
energy used by the one piece of equipment is less than the combined 
average annual total energy used by the multiple pieces of equipment.
    The calculation of simple payback for flexible fuel pumps is being 
revised to specify that only the flexible fuel pump cost, revenue, and 
expenses are to be included in the calculation. In addition, income is 
now ``average net income'' and is based on all energy-related revenue 
streams.
     Small business. This term is being revised by removing 
reference to providing service to rural consumers ``on a cost-of-
service basis without support from public funds or subsidy from the 
Government authority establishing the district.''
Added Terms
     Complete application. This term is being added to clarify 
the timeframe for when eligible project costs can begin to be incurred.
     Federal fiscal year. This term is being added to ensure 
clarity in implementing the subpart.
     Energy analysis. This term is being added because the 
Agency is proposing to allow for an energy efficiency improvement 
project with total project costs of $80,000 or less to conduct an 
energy analysis instead of an energy assessment or an energy audit. In 
addition, the details of what constitutes an energy analysis have been 
added to Sec.  4280.119(b)(3)(iii). The Agency notes that an energy 
analysis covers the same areas as an energy assessment, but will have 
less detail than an energy assessment, as provided in Appendix A of 
this subpart.
     Hybrid. This term is being added because the program now 
specifically addresses projects in which more than one renewable 
technology is proposed.
     Immediate family. This term is being added to conform to a 
proposed change, as discussed later, replacing ``close relative'' with 
``immediate family.''
     Inspector. This term is being added to clarify who can 
perform inspections required under the subpart.
     Retrofitting. This term is being added because the rule 
addresses retrofitting as an eligible project purpose.
     Rural Small Business. This term is being added to clarify 
the applicability of certain sections of the rule.
Deleted Terms
    The following terms are being deleted because they are already 
defined in Sec.  4279.2 of this part and the Agency has determined 
there is no reason for the terms to be defined differently between 
regulations.
     Borrower.
     Holder.
     Interim financing.
     Lender.
     Participation.
     Promissory note.
    The following terms are being deleted because they are no longer 
used in this subpart.
     Existing business.
     Fair market value of equity in real property.
     Hydropower.
     Large solar, electric.
     Large solar, thermal.
     Large wind system.
     Necessary capital improvement.
     Post-application.
     Pre-commercial technology.
     Qualified party.
     Simplified application.
     Small hydropower.
     Small solar, electric.
     Small solar, thermal.
     Small wind system.
     Spreadsheet.
     Very small business.
Exception Authority (Sec.  4280.104)
    This section is being revised to focus consideration of the 
application of

[[Page 22051]]

requirement or provision on the financial interest of the Federal 
government when evaluating whether to make an exception.
Review or Appeal Rights (Sec.  4280.105)
    This section is being revised, in part, to conform with recent 
energy title rulemakings to be simpler and to identify the availability 
of a review of an Agency decision and, in part, to clarify which 
parties may appeal an adverse decision associated with a guaranteed 
loan loss payment and with a combined funding application.
Conflicts of Interest (Sec.  4280.106)
    This section is being revised to clarify and provide examples of 
conflict of interest situations dealing with the receipt of Federal 
awards, matching funds, and procurement contracts. In addition, a new 
paragraph specifically addressing assistance to Agency employees and 
their relatives and associates has been included. The Agency is adding 
this provision to provide greater transparency and accountability in 
government.
Laws That Contain Other Compliance Requirements (Sec.  4280.108)
    Several references have been moved or deleted as follows:
     Reference to equal employment opportunity is being 
relocated from this section to the Construction Planning and Performing 
Development section (see Sec.  4280.124(a)(2)).
     Reference to the Equal Credit Opportunity Act at the end 
of paragraph (a) of this section is being removed because it duplicates 
reference to it earlier in the paragraph and thus is unnecessary.
     Reference to the Americans with Disabilities Act as a 
separate, stand alone paragraph was removed because it is adequately 
covered elsewhere in this section and in the Construction Planning and 
Performing Development section (see Sec.  4280.124(d)(2)).
     Reference to Executive Order 12898, which addresses the 
Agency's conduct of a Civil Rights Impact Analysis, is being removed 
because it is internal Agency policy and as such it is unnecessary to 
include it in a rule.
    With regard to 7 CFR 4280.108(e), Environmental analysis, the 
Agency is proposing that, if the applicant takes any actions or incurs 
any obligations that would either limit the range of alternatives to be 
considered or that would have an adverse effect on the environment 
prior to the Agency completing the environmental review, such action or 
obligation ``may'' (rather than ``will'') result in the project being 
determined by the Agency to be ineligible. This change is not intended 
to limit any NEPA requirements. Actions taken by an applicant prior to 
Agency review that have an adverse effect on the environment, would be 
a basis for the Agency to determine the project ineligible for funding. 
Further, the Agency is proposing to clarify this provision by changing 
``during the time of application or application review'' to ``prior to 
the Agency completing the environmental review.'' Lastly, because this 
provision addresses any project's eligibility, it has been moved to the 
project eligibility section for each program.
General Applicant, Application, and Funding Provisions (Sec.  4280.110)
    Several changes are being proposed for this section. Paragraph (b) 
is being added to address application submittal. Previously, 
application windows were identified through the issuance of notices in 
the Federal Register. As proposed, all applications (grants, guaranteed 
loans, and combination grants and guaranteed loans) may be submitted at 
any time throughout the year except for energy audit and renewable 
energy development assistance applications. The Agency will select 
grant and combination grant and guaranteed loan applications based on 
the grant application's score and subject to available funding.
    All guaranteed loan-only applications will be scored. Applications 
that are ready for funding and that score at or above the minimum score 
will be competed on a quarterly basis, with higher scoring applications 
receiving priority. Applications ready for funding, but that score 
below the minimum score and all other applications that were not funded 
will only be competed during the last quarter of the Federal fiscal 
year.
    Paragraph (c) is being added to set limits on the number of 
applications an applicant can submit each Federal fiscal year. 
Specifically, an applicant can submit only one application for a 
renewable energy system project, one application for an energy 
efficiency improvement project, and one application for a renewable 
energy system feasibility study project. Thus, for example, an 
applicant cannot submit applications for two renewable energy system 
projects in the same Federal fiscal year. This provision clarifies the 
Agency's intent in implementing the program to provide for a greater 
distribution of funds by limiting an applicant to one application for 
each of the three types of projects each Federal fiscal year. An 
applicant will still, however, be allowed to submit a total of three 
applications, one for each type of project.
    Paragraph (d), currently 7 CFR 4280.116(a)(1), is being clarified 
to refer to ``types of funding requests'' rather than to ``types of 
funding applications.'' In addition, the Agency is moving these 
provisions to this section because they are more appropriately placed 
in the general section of the rule than in the RES/EEI grant section.
    Paragraph (e) is being added to address modifications to 
applications once they have been submitted to the Agency, how the date 
of record is affected, and how the Agency will consider the modified 
application for selection.
    In addition to retitling paragraph (f) to ``Incomplete 
applications,'' the provisions associated with incomplete applications 
are being clarified.
    Paragraph (h) is being added to address provisions common to the 
technical reports submitted with the application--the level of detail 
each is to provide; modifications to the technical report prior to the 
applicant's selection of a final design, equipment vendor, or 
contractor; and hybrid projects. For the most part, these provisions 
are the same as found in 7 CFR 4280, subpart B, but have been brought 
together in this paragraph.
    Paragraph (i) addresses technical merit. The Agency will determine 
the technical merit of all applications submitted under this subpart, 
except for renewable energy system feasibility study grant applications 
and energy audit and renewable energy development assistance grant 
applications.
    While projects that are without technical merit are still 
ineligible, the Agency is proposing to replace scoring the technical 
merit of a project with a process for determining whether the project 
has or does not have technical merit. Under the Interim Rule, technical 
merit is a criterion used to score and rank applications to determine 
which projects are funded. The Agency has determined based on its 
experience with REAP applications that this criterion is too subjective 
and has determined that it is in the best interest of the program not 
to continue using it to score applications. However, the very nature of 
REAP is such that only projects that have ``technical merit'' be 
eligible for funding. Thus, the Agency is proposing to revise the 
regulation such that each proposed project will be determined by the 
Agency either to have technical merit or not to have technical merit.
    The Agency will make the technical merit determination based on the

[[Page 22052]]

information provided in the application, including the technical report 
whose purpose is to provide the details of the proposed project. The 
Agency will examine such items in the technical report as prior 
performance data of the system, experience of the installation team, 
resource data, and the engineering of the system in making its decision 
on technical merit.
    If the information in the application is insufficient to allow the 
Agency to make a technical merit determination, the application will be 
considered incomplete. If the Agency determines that an application is 
incomplete, it will notify the applicant of the elements that made the 
application incomplete. The applicant will be given an opportunity to 
provide the missing information. If the applicant provides the missing 
information on or before the last applicable application deadline, the 
Agency will continue considering the application for funding as 
described in the subpart. However, if the applicant provides the 
missing information after the last applicable application deadline, the 
Agency will only consider the application for funding in subsequent 
funding cycles as described in the subpart.
    Paragraph (j) has been added to clarify that all grants awarded 
under this subpart must be completed within 2 years from the date the 
Grant Agreement was signed by the Agency unless otherwise approved by 
the Agency. All grant funds must be returned to the Agency if the 
grantee does not meet the requirements of the Grant Agreement.
Notifications (Sec.  4280.111)
    Three changes are being made to this section. First, the paragraph 
addressing ineligible applications was integrated into the paragraph 
addressing eligibility notifications. Second, reference is being made 
to lenders to make this section applicable to guaranteed loan 
applications. Third, paragraph (c), which is titled ``Awards'' is being 
retitled ``Disposition of applications.'' This change is being made to 
clarify that this paragraph applies to not only applications selected 
for award, but to applications that are not selected for award. The 
Agency is also proposing to add a provision to this paragraph that it 
will include any applicable appeal or review rights in its notification 
to applicants whose applications are not funded.
Renewable Energy System and Energy Efficiency Improvements Grants
Applicant Eligibility (Sec.  4280.112)
    This section provides the criteria the Agency will use to determine 
whether an applicant is eligible to receive an RES or EEI grant under 
this subpart, including identifying situations in which an applicant 
will be determined to be ineligible.
    Paragraph (b) addresses ownership and control requirements. While a 
similar provision is found in 7 CFR part 4280, subpart B under project 
eligibility, the proposed rule clarifies and expands these 
requirements. It requires ownership and site ownership or control for 
the project at the time of application and, if an award is made, for 
the useful life of the project as described in the grant agreement.
    Paragraph (c) addresses revenues and expenses. While a similar 
provision is found in 7 CFR part 4280, subpart B under project 
eligibility, the proposed rule clarifies and expands these 
requirements. It requires that the applicant have available at the time 
of application satisfactory sources of revenue in an amount sufficient 
to provide for the operation, management, maintenance, and any debt 
service of the project for the useful life of the project. In addition, 
the applicant must control the revenues and expenses of the project, 
including its operation and maintenance, for which the assistance is 
sought.
    Paragraph (d) is new and clarifies that applicants are required to 
have the legal authority necessary to apply for and carry out the 
purpose of the grant. This specific provision has been part of 
administering the program, but it is not easily identifiable in 7 CFR 
part 4280, subpart B.
    Paragraph (e) is new and clarifies that applicants are required to 
follow the Universal identifier and SAM requirements of 2 CFR unless 
exempt under 2 CFR 25.110.
Project Eligibility (Sec.  4280.113)
    This section provides the criteria the Agency will use to determine 
whether a project is eligible to receive an RES or EEI grant under this 
subpart. These provisions of the proposed rule are similar to 7 CFR 
part 4280, subpart B, but there are several differences to note.
    With regard to project eligibility, the Agency is proposing several 
changes. For renewable energy systems, the Agency is clarifying that 
funds can be used to purchase ``new'' or ``Refurbished'' renewable 
energy systems. In addition, the Agency is proposing to allow funds to 
be used to retrofit existing renewable energy systems.
    The Agency is proposing to include as an eligible energy efficiency 
improvement project, the construction of a new energy efficient 
building only when the building is used for the same purpose, and based 
on an energy audit or energy assessment, as applicable, it will be more 
cost effective to construct a new building and will provide more energy 
savings than improving the existing building.
    The Agency is removing pre-commercial technology from being 
eligible; all projects must now be for commercially available 
technologies. The Agency is making this change to avoid overlap with 
the Biorefinery Assistance guaranteed loan program.
    The Agency is adding the conditions that must be met for the 
construction of a new energy efficiency improvement building in order 
to be an eligible project. Specifically, such construction would be an 
eligible project only when the building is used for the same purpose, 
it will be more cost effective to construct a new building, and it will 
use less energy on an annual basis than improving the existing 
building. The Agency is adding a new eligibility criterion addressing 
duplicative grant applications. Specifically, as proposed, if the 
proposed energy efficiency improvement would duplicate the same energy 
efficiency improvement that had previously received funds under this 
subpart, then the proposed improvement is ineligible. For example, an 
applicant received a grant to replace the windows in a warehouse with 
more energy efficient windows. Shortly thereafter, the applicant 
decides to replace the new windows. An application for replacing the 
new windows would be ineligible for REAP funding.
    As noted above, the Agency is relocating the ownership and control 
and revenue provisions of 7 CFR 4280.113(f) through (h) from the 
project eligibility section to the applicant eligibility section.
    The separate technical feasibility provision is removed because an 
application has to pass a technical merit review as discussed 
previously (which technical feasibility is part of) in order to be 
considered for funding.
RES/EEI Grant Funding (Sec.  4280.115)
    This section addresses four areas associated with grant funding, as 
summarized below.
    Maximum grant assistance (paragraph (a)(3)). While the maximum 
amount that an individual or entity can receive in a Federal fiscal 
year is not

[[Page 22053]]

changing (it remains at $750,000), the Agency is clarifying that this 
maximum amount applies to all grant assistance received under this 
subpart, including energy audit, renewable energy development 
assistance, and feasibility study grants.
    Matching funds (paragraph (b)). The Agency is clarifying that the 
applicant is responsible for securing the remainder of the total 
project costs not covered by grant funds rather than just total 
eligible project costs and modifying the text found in paragraph (b)(2) 
of this section to clarify that equity raised from the sale of Federal 
tax credits is an acceptable form of passive third-party contributions.
    Eligible project costs (paragraph (c)). The Agency is proposing 
several changes to the eligible project costs.
    In addition to the cost being an ``integral component,'' the Agency 
is allowing as an alternative that the cost can be ``directly related 
to and its use and purpose is limited to'' the renewable energy system 
or energy efficiency improvement.
    The Agency is replacing the term ``post-application'' with ``after 
a Complete Application has been received'' for clarity in determining 
the eligibility of certain project costs.
    With regard to the purchase and installation of equipment, the 
Agency is removing reference to ``remanufactured'' equipment and 
relocating the exceptions for agricultural tillage equipment, used 
equipment, and vehicles to the ineligible project costs section.
    The Agency is removing the provision associated with pro-rating 
eligible project costs based for energy efficiency improvement projects 
that have a greater capacity than the existing building and/or 
equipment being replaced. Under the proposed rule, no such pro-rating 
would be used.
    The Agency is clarifying that the permit fees referred to are 
construction permit fees.
    The Agency is clarifying that eligible project costs for 
professional service fees are those fees incurred for qualified 
consultants, contractors, installers, and other third-party services.
    Reference to energy analyses, energy assessments, energy audits, 
technical reports, and feasibility studies has been moved to the 
eligible project costs section for guaranteed loans. These items are no 
longer considered as eligible project costs for grants. Because these 
items are needed as part of a complete grant application, costs 
incurred before the complete application is submitted to the Agency are 
considered ineligible project costs.
    The Agency has relocated from eligible project cost provisions, the 
construction of a new energy efficiency facility to the project 
eligibility section.
    Ineligible project costs (paragraph (d)). To provide clarity on 
what costs would not be eligible for funding, the Agency developed a 
paragraph specifically addressing ineligible project costs.
Grant Applications--General (Sec.  4280.116)
    This is a new section to clarify that under paragraph (a), separate 
applications are to be submitted for renewable energy system and energy 
efficiency improvement projects and also only an original application 
needs to be submitted. Under the current 7 CFR part 4280, subpart B, 
separate applications for renewable energy system and energy efficiency 
improvement projects are not discussed and an original and a copy of 
the application are required.
    Paragraph (b) of this section states which section of the rule 
applies to applications with total project costs of greater than 
$200,000, applications with total project costs of $200,000 or less 
(but more than $80,000), and applications with total project costs of 
$80,000 or less. Lastly, paragraph (c) of this section addresses how 
the Agency will evaluate each application. This paragraph is very 
similar to the paragraph (a) of 7 CFR 4280.117, but adds a reference to 
the technical merit of the project and having complete application 
documentation.
Grant Applications for Projects With Total Project Costs Greater Than 
$200,000 (Sec.  4280.117)
    Certifications are being required in place of documentation and 
some of the forms only need to be submitted at the time of award 
because they are not needed at the time of application. The Agency is 
also proposing to remove the provision requiring a Table of Contents 
with clear pagination and chapter identification.
    To clarify their applicability, the Agency is adding a new 
paragraph (f) to identify the construction planning and performing 
development provisions that are applicable to these grant applications 
by cross-referencing Sec.  4280.124.
Grant Applications for Projects With Total Project Costs of $200,000 or 
Less (Sec.  4280.118)
    This section incorporates the criteria for submitting such 
applications, which are currently found in 7 CFR 4280.114.
    Under paragraph (a), the Agency is proposing that only commercially 
available projects be eligible for REAP (paragraph (a)(2) of Sec.  
4280.118 cross references the requirements of Sec.  4280.113 and more 
specifically to Sec.  4280.113(b) which requires the project to be 
``Commercially Available''). In addition, because the Agency is 
proposing that all projects awarded grants under REAP be completed 
within 2 years, the criterion requiring such applicants to complete 
projects within 2 years is also no longer needed.
    The Agency is proposing changes to the content for these 
applications (see paragraph (b)), including moving forms not needed at 
the application stage to the award stage.
    The primary change being proposed for construction planning and 
performing development is allowing for small acquisition and 
construction procedures to be utilized and not requiring the need for 
applicant to get Agency approval on contracts (see paragraph (c)).
    The Agency is proposing a new process that clearly identifies the 
payment process for projects (see paragraph (d) of this section).
Grant Applications for RES and EEI Projects With Total Project Costs of 
$80,000 or Less (Sec.  4280.119)
    This section identifies the contents of an application for projects 
with total project costs of $80,000 or less. A technical report is 
still required for this application process; however, it can be 
submitted as a narrative rather than a separate report like under the 
other two application processes in the proposed rule. Energy efficiency 
improvement projects applying under this process will have to provide 
36 months of data for total energy used and projected and the total 
cost of the energy as well as projected.
    The structure of this section parallels that for applications for 
projects with total project costs of less than $200,000. Paragraph (a) 
identifies the criteria for submitting applications for projects with 
total project costs of $80,000 or less. These criteria are identical to 
those for submitting applications for projects with total project costs 
of $200,000 or less, except for the threshold (i.e., $80,000 versus 
$200,000).
    Application content is presented in paragraph (b). In general, the 
Agency is proposing to simplify the application by requiring the 
applicant to certify to a number of items (e.g., applicant eligibility, 
project eligibility) rather than submit information with the 
application. The following identify specific differences associated 
with

[[Page 22054]]

these applications compared to the applications for the other two 
tiers:

 Certify that the applicant meets the criteria for submitting a 
``$80,000 or less'' application
 Submit a ``unique'' set of certifications covering:
    [cir] Applicant and project eligibility criteria
    [cir] Ability of project to meet is intended purpose
    [cir] Will abide to open and free competition requirements
    [cir] For bioenergy projects, any and all woody biomass feedstock 
from National forest system land or public lands cannot be used as a 
higher value wood-based product
    [cir] For flexible fuel pumps, blended liquid transportation fuel 
is available and there is demand for that fuel in its service area
 Application description, including the financial information, 
in Sec.  4280.117(b) is not required
 A separate project description and identification of project 
location is not required
 RES feasibility study (Sec.  4280.117(d)) does not apply and 
thus is not required (difference from the ``>$200,000'' applications 
only)
 Less onerous technical reports from the other two application 
tiers, including for EEI applicants the submittal of an energy analysis 
rather than either an energy assessment or energy audit.

    Paragraphs (c) and (d) presents the procurement and payment 
processes, which are the same as for projects with total project costs 
of $200,000 or less (but more than $80,000).
Scoring Grant Applications (Sec.  4280.120)
    This section identifies the criteria the Agency will use to score 
each RES and EEI application. The Agency is including a provision that 
would allow it to modify the scoring through the publication of a 
Federal Register notice.
    Numerous changes have been made to the scoring criteria as 
summarized in Table 1. Reasons for the changes are discussed following 
Table 1.

     Table 1--Summary of Scoring Criteria Changes for RES/EEI Grant
                              Applications
------------------------------------------------------------------------
 7 CFR part 4280, subpart B     Proposed criteria
 criteria and maximum points   and maximum points    Summary of changes
------------------------------------------------------------------------
1. Quantity of energy         b. Quantity of        Replaces this
 replaced, produced or         energy generated or   criterion with
 saved, and flexible fuel      saved per REAP        ``Quantity of
 pumps.                        grant dollar          energy generated or
                               requested, and        saved per REAP
                               renewable fuel        grant dollar
                               dispensed through     requested, and
                               flexible fuel pumps   renewable fuel
                               (max 25 points).      dispensed through
                                                     flexible fuel
                                                     pumps''.
2. Environmental benefits     a. Environmental      1. Revises criterion
 (max 10 points).              benefits (max 5       to award points
                               points).              based on positive
                                                     effects in three
                                                     areas: resource
                                                     conservation,
                                                     public health, and
                                                     the environment.
                                                    2. Decreases points
                                                     from 10 to 5.
3. Commercial availability    ....................  Removed.
 (max 10 points).
4. Technical merit (max 35    ....................  Removes criterion as
 points).                                            scoring criterion.
                                                     Instead, all
                                                     projects will be
                                                     assessed on a pass/
                                                     fail basis for
                                                     technical merit.
5. Readiness (max 15 points)  c. Readiness (max 25  Increases points
                               points).              from 15 to 25.
6. Small agricultural         d. Size of            Changes metric for
 producer/very small           agricultural          awarding points to
 business (max 10 points).     producer or rural     size of applicant
                               small business (max   relative to the
                               10 points).           Small Business
                                                     Administration's
                                                     small business size
                                                     standards.
7. Simplified application/    ....................  Removes criterion.
 low cost projects (max 5
 points).
8. Previous grantees or       e. Previous grantees  Increases maximum
 borrowers (max 5 points).     or borrowers (max     points from 5 to
                               10 points).           10.
------------------------------------------------------------------------

     Quantity of energy replaced, produced or saved, and 
flexible fuel pumps. The Agency is replacing this criterion with 
``Quantity of energy generated or saved per REAP grant dollar 
requested, and renewable fuel dispensed through flexible fuel pumps'' 
based on Office of Inspector General audit recommendation and given 
that maintaining both criteria would be duplicative.
     Environmental benefits. The Agency is revising the method 
for awarding points under this criterion. Under the Interim Rule, an 
applicant is required to obtain a letter from an authority within the 
State supporting the project. While support from the State is viewed as 
positive, it puts extra burden on the applicant to obtain the letter 
and puts those applicants that do not get a letter at a disadvantage. 
In addition, receiving such a letter does not make it a better project. 
Lastly, under the current guidance it has also been very hard to 
quantify environmental benefits. Therefore, for these reasons, the 
Agency is proposing to award points under this criterion based on the 
applicant providing documentation that the proposed project will have a 
positive effect on any of the three impact areas: resource 
conservation, public health, and environment.
     Commercial availability. The Agency is removing this 
criterion because only commercially available technologies are eligible 
for the program.
     Technical merit. The Agency is removing this criterion for 
scoring purposes because of its subjective nature. Instead, the Agency 
is proposing to make technical merit an eligibility criterion. Based on 
the information in the technical report, the Agency will make a 
determination as to whether a project has technical merit or not. If 
the Agency determines that a project does not have technical merit, the 
project will be ineligible for funding.
     Readiness. In order to encourage applicants to provide 
written commitment of matching funds with the application submittal, 
the Agency is proposing to increase the maximum number of points 
awarded under this criterion from 15 to 25.
     Small agricultural producer/very small business. The 
Agency is proposing to change the basis for awarding points to size of 
applicant relative to the Small Business Administration's small 
business size standards. Under the Interim Rule for

[[Page 22055]]

REAP, there are different measurement standards for determining the 
size of a small agricultural producer and the size of a very small 
business for awarding of points under this scoring criterion. The new 
provision will measure each applicant based on the size requirement 
published by the Small Business Administration. Grantees one-third or 
less than the SBA size requirement will get full points, while those 
two-thirds or less of the SBA size requirement will get one-half of the 
points. The Agency has determined this is a more equitable method for 
awarding points for this criterion between agricultural producers and 
rural small businesses.
     Simplified applications/low cost projects. The Agency is 
proposing to remove this criterion because it will set aside funding 
for grants requesting less than $20,000 and therefore priority points 
are not needed.
     Previous grantees or borrowers. In order to encourage new 
applicants, the Agency is proposing to increase points awarded under 
this criterion from 5 to 10. Under the proposed rule, an applicant who 
has not received a grant in the previous two years will be awarded 5 
points, while an applicant that has never received REAP funding will 
receive 10 points.
Selecting RES and EEI Grants for Award (Sec.  4280.121)
    This is a new section and addresses the process the Agency will use 
to select applications for awards as summarized below. This section 
covers the following:
     Application competitions (paragraphs (a) through (c)). 
Paragraphs (a) through (c) describe application competitions and 
deadline dates to compete for funding. Paragraph (a) describes the 
process for State competitions, paragraph (b) is dedicated to the 
grants of $20,000 or less set-aside, and paragraph (c) describes the 
details for national competitions. In the past, application 
competitions and deadlines have been published in a Federal Register 
notice on an annual basis. The proposed rule is establishing these 
dates in the rule to ensure that program delivery is not solely tied to 
the Federal budgetary process and applications can be accepted year 
round except for energy audit and renewable energy development 
assistance applications.
     Funding selected applications (paragraph (d)). This 
paragraph identifies how the Agency will handle an application selected 
for funding, but for which insufficient funds remain to fund the 
application.
     Disposition of ranked applications not funded (paragraph 
(f)). This paragraph identifies how long an application will be held by 
the Agency and for which competitions the application may compete for 
funds as described in paragraphs (a) through (c) of this section. 
Disposition of ranked applications not funded was never discussed in 7 
CFR part 4280, subpart B, and the Agency wants to ensure that 
applicants are aware of their chances for funding. Thus, this paragraph 
was added for clarity.
     Commencement of the project (paragraph (g)). Applicants 
are put on notice that they assume all risks if they purchase the 
technology proposed or start construction of the proposed project after 
the application has been received by the Agency, but prior to award 
announcement.
Awarding and Administering RES and EEI Grants (Sec.  4280.122)
    This section addresses the process the Agency will use to award and 
administer grants. This section places in one spot in the rule, several 
provisions that are currently found in various places of 7 CFR part 
4280, subpart B. By doing so, the proposed rule provides a clearer 
presentation of this process.
Servicing RES and EEI Grants (Sec.  4280.123)
    This section addresses the procedures the Agency will use to 
service RES and EEI grants. The proposed section expands upon the 
provisions found in Sec.  4280.121 and includes several provisions 
found in other portions of 7 CFR part 4280, subpart B.
    Many of the provisions are being incorporated from the grant 
agreement into the text of the regulation. Some of the provisions 
(e.g., programmatic changes, project monitoring, transfer of 
obligations, and grant close-out) are similar to provisions developed 
by the Agency or as cited in the Department regulations when it was 
considering consolidating various grant programs into a single rule.
    The renewable energy system and energy efficiency improvement grant 
outcome project performance reporting requirements in this section are 
very similar to those found in 7 CFR part 4280, subpart B, with the 
differences found in the report contents.
    For the renewable energy system report, the Agency is proposing to 
drop from the report the documentation of any identified health and/or 
sanitation problem that has been solved because the Agency has 
determined that it provides little benefit. In its place, the Agency is 
proposing to add the type of technology to the report. Two other 
changes are to clarify that the actual amount of energy generated will 
be reported as an ``annual'' amount and to identify how that amount is 
to be calculated.
    For energy efficiency improvement projects, the Agency is proposing 
one substantive change. The Agency is adding to the report the actual 
jobs created or saved. While creating or saving jobs is being added to 
the reporting requirements, the Agency does not expect every energy 
efficiency project to have an impact on employment. Most energy 
efficiency projects may report zero jobs created or saved, because the 
impact of the grant was to save the applicant money on energy bills and 
improve their profitability.
Construction Planning and Performing Development (Sec.  4280.124)
    This section replaces the current construction planning and 
performing development provisions found in 7 CFR 4280.119. While this 
section is organized differently from the current corresponding 
section, it covers many of the same subjects.
    The primary change is the provision of exceptions to the surety 
requirements for: (1) Small acquisition and construction procedures, 
(2) equipment purchases and installation-only projects of more than 
$200,000 if two conditions are met, and (3) other construction projects 
that have only one contractor performing work.
    There are also numerous substantive changes associated with the 
provisions for technical services for projects with total project costs 
greater than $400,000. The proposed rule clarifies that technical 
services may be provided by the applicant's `in-house' professional 
engineers or contracted professional engineers. In addition, all 
contracts for design services require Agency concurrence. Services 
performed by engineers may only be done by engineers licensed in the 
state in which the facility is located.
    Further, the Agency is proposing an exemption from these 
requirements for projects with total project costs greater than 
$400,000 if State or Tribal law does not require the use of a licensed 
professional engineer and if the project is not complex and can be 
completed to meet the requirements of the program without the services 
of a licensed professional engineer. An example to demonstrate this 
exemption would be a large equipment purchase that does not require 
changes to a structure or require State-approved plans to be installed.

[[Page 22056]]

RES and EEI Guaranteed Loans
Compliance With Sec. Sec.  4279.29 Through 4279.99 (Sec.  4280.125)
    7 CFR part 4280, subpart B required compliance with the Business 
and Industry (B&I) provisions found in Sec. Sec.  4279.29 through 
4279.99, but contained a number of exceptions. Because there is no need 
to maintain a distinction for loans guaranteed under REAP, the proposed 
rule follows the provisions of the B&I regulations, with one exception. 
The one exception is associated with Sec.  4279.71, because REAP does 
not apply to public bodies and non-profit corporations.
    One of the distinctions being removed is the current REAP provision 
that excludes mortgage companies that are part of a bank holding 
company from being an eligible lender. To the extent the B&I provisions 
allow such entities to be an eligible lender, so would REAP.
Guarantee Fee/Annual Renewal Fee (Sec.  4280.126)
    The Agency is proposing to conform the REAP guarantee fee and 
annual renewable fee provisions (found in 7 CFR 4280.127) to those 
found in the B&I rule. The one exception is that the B&I provisions for 
receiving a reduced guarantee fee would not apply to REAP guaranteed 
loans. Instead, the Agency is proposing to announce the conditions, if 
any, in a Federal Register notice that would enable a reduced guarantee 
fee for REAP guaranteed loans.
Borrower Eligibility (Sec.  4280.127)
    The Agency is proposing that eligible borrowers meet the same 
eligibility as RES/EEI grant applicants. However, some of the applicant 
requirements have been moved from other places in 7 CFR part 4280, 
subpart B into proposed Sec.  4280.112 and those that are applicable to 
borrowers are repeated in this section (rather than cross-referencing 
back to Sec.  4280.112).
Project Eligibility (Sec.  4280.128)
    The basic eligibility requirements for projects are the same as for 
RES/EEI grants, but, as noted earlier in the preamble, some of those 
requirements have changed. In addition, the Agency is proposing to 
allow loans for the purchase of a qualifying existing renewable energy 
system to be guaranteed. This provision would replace 7 CFR 4280, 
subpart B's provision for ``necessary capital improvements to an 
existing renewable energy system.''
Guaranteed Loan Funding (Sec.  4280.129)
    The Agency is proposing several changes to these provisions for 
guaranteed loan funding.
    The Agency is identifying project costs that would be ineligible 
for payment using the guaranteed loan. These are consistent with the 
items identified as ineligible for payment under the RES/EEI grant 
provisions, except that construction or equipment costs that would be 
incurred regardless of the installation of a renewable energy system or 
energy efficiency improvement may be included as an eligible project 
cost for guaranteed loans. In addition, the Agency is including as 
ineligible project costs, paragraph (p) from the B&I provisions at 7 
CFR 4279.114, which addresses loans made with the proceeds of any 
obligation the interest on which is excludable from income under 26 
U.S.C. 103 or a successor statute.
    The Agency is also proposing to refer to eligible project costs 
that are included under grants (7 CFR 4280.115(c)) for guaranteed loans 
as well as the following items:
     Working capital;
     Land acquisition;
     Routine lender fees; and
     Energy analyses, energy assessments, energy audits, 
technical reports, business plans, and feasibility studies completed 
and acceptable to the Agency, if no portion was financed by any other 
Federal or State grant or payment assistance, including, but not 
limited to, a REAP energy analysis, assessment, or audit, feasibility 
study, or renewable energy development assistance grant.
    The Agency is proposing that these four sets of eligible costs be 
``capped'' at no more than 5 percent of the guaranteed loan amount. 
This cap is intended to ensure that these expenses do not inadvertently 
or otherwise consume a substantial share of funds for the actual 
project.
Loan Processing (Sec.  4280.130)
    In the proposed rule, the Agency is proposing to reduce the number 
of exceptions between REAP and B&I loan guarantees. The following 
paragraphs summarize the proposed changes.
    a. Interest rates. In the proposed rule, the interest rate 
provisions for B&I guaranteed loans would apply in their entirety to 
REAP guaranteed loans. This would remove some changes in the 
determination of interest rates, but the Agency has determined that the 
B&I provisions are sufficient and any difference between the two 
programs in unnecessary.
    b. Loan terms. In the proposed rule, the loan term provisions for 
B&I guaranteed loans would apply in their entirety to REAP guaranteed 
loans. This would change the loan term for machinery and equipment and 
eliminate a few specific requirements, but the Agency has determined 
that the B&I provisions are sufficient and any difference between the 
two programs in unnecessary.
    c. Insurance requirements. The Agency is proposing to make the 
insurance requirement identical to those in the B&I program. 7 CFR part 
4280, subpart B requires that the coverage be maintained for the life 
of the loan unless this requirement is waived or modified by the 
Agency. The Agency has determined that the provisions of the B&I 
program are sufficient and that this requirement is unnecessary.
    d. Appraisals. The Agency has determined that the additional 
appraisal requirements found in 7 CFR part 4280, subpart B do not need 
to be maintained for the program. Therefore, the Agency is proposing 
that REAP appraisals be conducted in accordance with the B&I appraisal 
provisions.
    e. Construction planning and performing development. The Interim 
Rule provides specific provisions for construction planning and 
performing development (see 7 CFR 4280.119). Under the proposed rule, 
the Agency is proposing that 7 CFR 4279.156 applies to guaranteed loan 
projects under this subpart.
Credit Quality (Sec.  4280.131)
    The Agency is proposing to make the credit quality requirements 
identical to those in the B&I program with the exception of equity. In 
general, with the exception of equity, conforming the REAP credit 
quality provisions to those in the B&I program does not create 
substantive changes from 7 CFR part 4280, subpart B.
    With regard to the proposed equity provisions, there are 
substantive differences from the 7 CFR part 4280, subpart B equity 
provisions and the B&I guaranteed loan program equity provisions. There 
is no longer a distinction between the size of the loan guarantee for 
REAP equity requirements. For example, the cash equity injection is 
specified at 25 percent for all loan guarantees. The Agency is also 
proposing to eliminate the provision in 7 CFR 4280, subpart B that 
allows the fair market value of equity in real property that is to be 
pledged as collateral for the loan to be substituted for any portion of 
the cash equity requirement.

[[Page 22057]]

Financial Statements (Sec.  4280.132)
    The proposed rule would adopt, in their entirety, the financial 
statement provisions found in the B&I program, except that, due to a 
difference in eligible applicants, the proposed rule would allow 
agricultural producers the option of providing financial information in 
the manner that is generally required by commercial lenders. The Agency 
notes that the financial information requested in 7 CFR 4280.140(a) is 
still being requested under the proposed rule, but in a different 
provision.
Personal and Corporate Guarantees (Sec.  4280.134)
    Except for passive investors, the Agency is proposing to allow all 
of Sec.  4279.149 to apply to this subpart. Currently, the 7 CFR part 
4280, subpart B adopts only Sec.  4279.149(a).
Scoring RES and EEI Guaranteed Loan Only Applications (Sec.  4280.135)
    The Agency is proposing this new section to clarify how guaranteed 
loan-only applications will be scored. Specifically, these applications 
will be scored using the same criteria as for RES and EEI grants, but 
with the calculations, as applicable, to be made using guaranteed loan 
amounts and not grant amounts. This section also identifies that the 
Agency will establish a minimum score each year to assist in funding 
higher priority projects. The minimum score will also be used to 
determine whether or not an application is competed in each quarter. 
Lastly, the Agency will notify applicants whose applications are below 
the minimum score.
Application and Documentation (Sec.  4280.137)
    A number of changes are being proposed for guaranteed loan 
applications, as discussed below.
    a. Applications for guaranteed loan requests greater than $600,000.
    To provide flexibility for the applicant, the Agency is proposing 
to remove the requirement that the application be ``organized pursuant 
to a Table of Contents format in a chapter format presented in the 
order shown'' and provision of a project summary.
    The application content still mirrors that required for RES/EEI 
grants and, thus, the changes described earlier in this proposed rule 
for those applications would apply to these guaranteed loan 
applications as well.
    Several substantive changes were made to the lender forms, 
certifications, and agreements that are to be submitted with the 
application, as follows:
     With regard to appraisals, the Agency is proposing to add 
that its approval in the form of a Conditional Commitment may be issued 
subject to receipt of adequate appraisals.
     With regard to historical financial statements, the Agency 
is proposing to remove reference to Generally Accepted Accounting 
Principles and adding a provision to allow agricultural producers to 
submit these statements in the format that is generally required by 
commercial agricultural lenders.
     The Agency is proposing to remove reference to the 
business-level feasibility study because the feasibility study is 
required through a cross-reference to the provisions for grant 
applications.
     The Agency is proposing to remove the requirement for 
certification by the lender that it has completed a comprehensive 
written analysis of the proposal. This certification duplicates the 
requirement to submit the lender's complete comprehensive written 
analysis.
     With regard to the certification by the lender that the 
loan is for authorized purposes, the Agency is proposing to remove the 
phrase ``with technical merit.''
    b. Applications for guaranteed loan requests of $600,000 or less.
    The Agency is proposing to remove the requirement that the 
application be ``organized pursuant to a Table of Contents format in a 
chapter format presented.''
    The application content will vary for these projects depending on 
the total project cost for the proposed project. If the total project 
cost is more than $200,000, the application would contain the 
information specified for RES/EEI grant applications of similar size. 
If the total project cost is $200,000 or less, the application would 
contain the information specified for RES/EEI grant applications of 
similar size.
    Changes in the application content for these applications parallel 
those identified earlier in this proposed rule for RES/EEI grant 
applications.
    With regard to forms, certifications, and agreements, the Agency is 
proposing to require the lender to submit the appraisal rather than 
keep it on file and to submit the certification by the lender that the 
borrower is eligible, the loan is for authorized purposes, and there is 
a reasonable assurance of repayment.
Evaluation of RES and EEI Guaranteed Loan Applications (Sec.  4280.138)
    The Agency is proposing to modify 7 CFR part 4280, subpart B 
provisions for application evaluation (see 7 CFR 4280.129) in several 
ways.
    The Agency is proposing to evaluate applicant and project 
eligibility using the procedures specified in 7 CFR 4279.165, except 
that the applicant and project eligibility criteria for REAP will be 
used.
    The Agency has moved the provisions for technical merit 
determination (7 CFR 4280.129(b)) to a general section of the rule. One 
change being proposed is that the interest rate on the loan would not 
be used as a scoring criterion.
    Lastly, the Agency is removing the evaluation criteria from 7 CFR 
4280.129(c) and including the revised criteria in Sec.  4280.135, as 
discussed earlier.
Loan Approval and Obligation of Funds (7 CFR 4280.139)
    The Agency has determined that a separate provision for loan 
approval and obligation of funds in 7 CFR part 4280, subpart B is not 
required.
Selection of RES and EEI Guaranteed Loan Only Applications (Sec.  
4280.139)
    This is a new section that contains the procedures to be used for 
competing guaranteed loan only applications as has been described 
earlier. The procedures in this section apply only to guaranteed loan 
only applications. The process and procedures for guaranteed loan 
applications that are part of a combination funding request are covered 
under Sec.  4280.165.
Conditions Precedent to the Issuance of the Loan Note Guarantee (Sec.  
4280.142)
    The Agency is proposing to conform the REAP provisions to the B&I 
provisions with two exceptions, which are: that all development must 
have been performed at a steady state operating level in accordance 
with the technical requirements and, when applicable, a copy of the 
executed power purchase agreement must be provided to the Agency before 
the Loan Note Guarantee can be issued.
Servicing Guaranteed Loans (Sec.  4280.152)
    With two exceptions, the Agency is proposing that REAP guaranteed 
loans be serviced in accordance with the servicing provisions for B&I 
guaranteed loans. In general, this results in few changes, because 7 
CFR part 4280, subpart B already cross-references most of the B&I 
servicing regulations with few changes.
    The two remaining exceptions pertain to borrowers being determined 
to be eligible borrowers under the REAP regulation when they are 
involved in a

[[Page 22058]]

transfer and assumption and to loans providing additional funds in 
connection with a transfer and assumption must be considered as new 
loan application under the REAP regulation and would compete against 
other applications received for funding consideration in that 
competition cycle for the fiscal year, provided there is sufficient 
budget authority available to fund the project.
Combined Funding for Renewable Energy Systems and Energy Efficiency 
Improvements
    Changes being proposed for applications for renewable energy 
systems and energy efficiency improvement projects seeking combined 
funding are summarized below.
     Clarifying that the grant portion of the combined funding 
request shall not exceed 25 percent of total eligible project costs.
     Clarifying what the contents of the guaranteed loan 
application are if the guaranteed loan request is greater than $600,000 
or is less than or equal to $600,000.
     Clarifying what needs to be submitted when both 
applications would contain the same documentation, form, or 
certification.
     Requiring that the grant portion of the funding request 
must be at least $1,500 for energy efficiency improvement projects and 
at least $2,500 for renewable energy system projects.
     Identifying when the System for Awards Management (SAM) 
number and expiration date must be submitted.
     Adding a provision to identify how combined funding 
applications will be handled if they are ranked, but not funded.
     Adding a provision indicating that compliance reviews will 
be conducted.
     Revising the process for evaluating combined funding 
requests to refer only to the grant procedures.
Renewable Energy System Feasibility Study Grants
    Changes being proposed for renewable energy system feasibility 
study grants are summarized below.
General Provisions (Sec.  4280.169)
    The Agency is proposing to add a provision that would make a 
feasibility study application ineligible if the applicant proposes to 
conduct any portion of the feasibility study. In other words, the 
feasibility study must be conducted entirely by entities other than the 
applicant.
Applicant Eligibility (Sec.  4280.170)
    In addition to make a few clarifying changes, the Agency is 
proposing to add new conditions, which would make this set of applicant 
eligibility requirements consistent with the other grant programs in 
REAP. These four provisions are:
     In lieu of being the prospective owner of the RES project, 
the applicant has the option of being the prospective controller of the 
site for the useful life of the property on which the RES would be 
placed; and
     The applicant must have the legal authority necessary to 
apply for and carry out the purpose of the grant.
     The applicant is required to follow the Universal 
identifier and the SAM requirements of 2 CFR unless exempt under 2 CFR 
25.110.
    Eligibility of RES Projects for Feasibility Study Grants (Sec.  
4280.171)
    In addition to several clarifications, the Agency is also proposing 
two substantive changes to this section.
    The Agency is removing the provision that would allow the 
technology to be a ``pre-commercial'' technology to qualify. This 
change is consistent with the overall proposed change to RES project 
eligibility requirements as stated earlier in this Notice.
    The Agency is adding a provision cautioning the applicant from 
taking any actions or incurring any obligations prior to the Agency 
completing the environmental review that would either limit the range 
of alternatives to be considered or that would have an adverse effect 
on the environment, such as the initiation of construction, because 
taking any such actions or incurring any such obligations could result 
in project ineligibility.
Application Eligibility Provisions
    While the proposed rule would no longer have this section, its 
provisions have been incorporated elsewhere in the rule. There is one 
change, however, associated with the 7 CFR part 4280, subpart B 
requirement prohibiting a feasibility study application being submitted 
in the same Federal fiscal year that a renewable energy system 
application is submitted and vice-versa. This requirement is being 
replaced with one that states: ``An applicant can apply for only one 
Renewable Energy System project, one Energy Efficiency Improvement 
project, and one Feasibility Study project under this subpart per 
Federal fiscal year.'' This could, theoretically, allow an applicant to 
submit a feasibility study application and a renewable energy system 
application for the same renewable energy system in the same Federal 
fiscal year.
    Grant Funding for RES Feasibility Studies (Sec.  4280.173)
    Several substantive changes are being proposed for this section.
    The Agency is proposing to increase the maximum amount of grant 
funds from $50,000 to $100,000, but still require the lesser of the 
$100,000 or 25 percent of the total eligible costs.
    The Agency is proposing to revise the list of items that illustrate 
what can be considered as eligible projects costs as follows:
     Payment of services to qualified consultants to perform 
the evaluations needed for the feasibility study and to complete the 
feasibility study; and
     Other studies or assessments to evaluate the economic, 
technical, market, financial, and management feasibility of the 
renewable energy system that are needed to complete the feasibility 
study (e.g., resource assessment, transmission study, or environmental 
study).
    The reference to resource assessment, transmission study, and 
environmental study in 7 CFR part 4280, subpart B has been incorporated 
into the second item describing eligible project costs.
    The Agency is proposing to add two new ineligible project costs: 
preparing the application package and funding of political or lobbying 
activities. These two new ineligible project costs are consistent with 
the other grant provisions.
    The provision concerning the requirement to expend the grant funds 
within 2 years still applies to feasibility study grants, but has been 
relocated to the General section of the rule (see proposed Sec.  
4280.110(j)).
Feasibility Study Grant Applications--Content (Sec.  4280.176)
    In addition to several clarifying and conforming edits, the 
following substantive changes are being proposed.
    The provision requiring a Table of Contents with clear pagination 
and chapter identification is being removed.
    The requirement to submit a copy of legal organizational documents 
is being removed.
    Applicants would now identify the primary NAICS code applicable to 
their operation, if known, or a description of their operation in 
sufficient detail for the Agency to determine the applicable primary 
NAICS code.
    Applicants are now certifying that they are legal entities in good 
standing, if applicable, and operating in accordance with the laws of 
the state(s) in which the applicants have a place of business.
    Removed from the proposed scope of work (referred to in 7 CFR part 
4280,

[[Page 22059]]

subpart B as the proposed work plan) is the requirement to submit a 
description of the feasibility study to be conducted. In addition, 
reference to the applicant requiring those conducting the feasibility 
study to consider and document within the feasibility study the 
important environmental factors and alternatives is being removed 
because such consideration is adequately covered elsewhere in the rule. 
The changes to the paragraphs concerning the experience of the 
qualified consultants and the source and amount of matching funds are 
clarification in nature, with emphasis on submitting written 
commitments in part so that the Agency can score the application.
    The submittal of the applicant's DUNS number is removed because it 
is already required on Standard Form SF-424, ``Application for Federal 
Assistance.''
    With regard to the financial information, the Agency is only 
requesting a certification on financial items specific to rural small 
businesses and agricultural producers. This information is needed for 
scoring purposes and rather than having an applicant submit financial 
statements, the Agency will accept a certification on the applicable 
financial items.
Evaluation of Feasibility Study Grant Applications (Sec.  4280.177)
    The Agency has determined that the process for evaluating 
feasibility study grant applications is no different than the process 
it will use to evaluate RES/EEI grant applications. Therefore, rather 
than repeating that process, as was done in 7 CFR part 4280, subpart B, 
the Agency is proposing to cross-reference the RES/EEI grant 
application process. The one difference is that a technical merit 
determination is not applicable to feasibility study grant 
applications.
Scoring Feasibility Study Grant Applications (Sec.  4280.178)
    The Agency is proposing several substantive changes to how it will 
score feasibility study grant applications. These changes are 
summarized in Table 2.

 Table 2--Summary of Scoring Criteria Changes for RES Feasibility Study
                           Grant Applications
------------------------------------------------------------------------
       7 CFR part 4280, subpart B               Proposed change(s)
------------------------------------------------------------------------
Energy replacement or generation.......  Remove as a scoring criterion.
Commitment of funds....................  Increase maximum points from 10
                                          to 25.
                                         Written commitments are
                                          required in order to obtain
                                          points.
                                         Distribution of points is
                                          changed.
Designation as a small agricultural      Criterion changed to size of
 producer or rural small business.        agricultural producer or rural
                                          small business.
                                         Points reduced from 20 to 10.
                                         Points awarded on basis of
                                          relative size of the applicant
                                          to SBA size standards for the
                                          applicant's applicable NAICS
                                          code.
Experience and qualifications..........  Points increased from 15 to 25.
                                         Distribution of points changed.
Size of grant request..................  Dollar thresholds doubled for
                                          determining points awarded.
Previous grantees and borrowers........  New criterion for ``Previous
                                          grantees and borrowers''.
                                         Maximum 10 points.
                                         Consistent with change made in
                                          RES/EEI grant scoring.
Resources to implement project.........  Removed.
------------------------------------------------------------------------

Selecting Feasibility Study Grant Applications for Award (Sec.  
4280.179)
    The Agency is proposing to revamp the process it will use to select 
feasibility study applications for award. While higher scoring 
applications will still receive preference, the Agency is proposing to 
accept applications throughout the year, with two competitions held. 
The first competition would be for those complete and eligible 
applications received by November 30; and the second, for those 
received by May 31. All applications would be eligible for two rounds 
of competitions, which could result in an application being competed 
across two Federal fiscal years (i.e., first competed in the May 31 
competition and then again in the November 30 competition).
    The Agency is revising one of the provisions associated with 
funding selected applications by requiring that the applicant provide 
the remaining total funds needs to complete the project in situations 
in which the applicant agrees to lower its grant request in order to be 
awarded the grant. This replaces the current provision that the Agency 
must determine the project is financially feasible at the lower amount.
    The Agency is also proposing to add a new provision that puts the 
applicant on notice that the applicant assumes all risk if the choice 
is made to purchase the technology proposed or start construction of 
the project to be financed in the grant application after the complete 
application has been received by the Agency.
Actions Prior to Grant Closing (7 CFR 4280.180)
    The Agency is proposing to move the two provisions in this section 
to new locations within the proposed rule. The first paragraph 
concerning environmental assessment is covered in the proposed rule at 
Sec.  4280.108(c). The second paragraph concerning evidence of funds is 
covered in the proposed rule at Sec.  4280.181, which cross references 
Sec.  4280.122.
Awarding and Administering Feasibility Study Grants (Sec.  4280.181)
    The Agency has determined that, with two exceptions, the same 
process for awarding and administering RES/EEI grants is applicable to 
feasibility study grants and that there is no reason to repeat those 
provisions. Thus, this section has been modified to refer back to the 
corresponding RES/EEI grant section.
    The two exceptions noted in the previous paragraph are:
     the insurance requirements in Sec.  4280.122(b) does not 
apply unless equipment is purchased, and
     the power purchase agreement specified in Sec.  
4280.122(e) does not apply.
Servicing Feasibility Study Grants (Sec.  4280.182)
    The Agency has determined that, with a few exceptions and 
additions, the same process for servicing RES/EEI grants is applicable 
to feasibility study grants and that there is no reason to

[[Page 22060]]

repeat those provisions. Thus, this section has been modified to refer 
back to the corresponding RES/EEI grant section.
    The exceptions noted in the previous paragraph are:
     Feasibility study grant funds are to be expended on a pro 
rata basis with matching funds;
     Form SF-270, ``Request for Advancement or Reimbursement,'' 
is to be used;
     The final 10 percent of grant funds will be held back 
until an acceptable feasibility study has been submitted;
     Upon completion of the project, the feasibility study 
acceptable to the Agency and Form SF-270 are to be submitted; and
     Outcome project performance reports are to be submitted 
beginning the first full year after completion of the feasibility 
study.
    The Agency notes that it is proposing one change to the project 
performance report. This change is to add a discussion, when 
applicable, of why the renewable energy system is not underway.
Energy Audit and Renewable Energy Development Assistance Grants
    Changes being proposed for energy audit and renewable energy 
development assistance grants are summarized below.
Applicant Eligibility (Sec.  4280.186)
    Two substantive changes are being proposed to this section.
    The Agency is proposing to remove the option of allowing an 
applicant to ``obtain'' the legal authority necessary such that all 
applicants must have the necessary legally authority at the time of 
application.
    Currently, 7 CFR part 4280, subpart B requires that this legal 
authority is necessary ``to carry out the purpose of the grant.'' The 
Agency is proposing an additional requirement--that the applicant has 
the legal authority necessary to ``apply for the grant'' as well.
Project Eligibility (Sec.  4280.187)
    The Agency is proposing several clarifications to this section, 
including removing the text identifying what constitutes an energy 
audit, because that material is covered in Section B of Appendix A of 
this subpart. In addition to these clarifications, the Agency is 
proposing one substantive change. As it is proposing to do for the RES 
feasibility study grants, the Agency is adding a provision cautioning 
the applicant from taking any actions or incurring any obligations 
prior to the Agency completing the environmental review that would 
either limit the range of alternatives to be considered or that would 
have an adverse effect on the environment, such as the initiation of 
construction, because taking any such actions or incurring any such 
obligations could result in project ineligibility.
Grant Funding for Energy Audit and Renewable Energy Development 
Assistance (Sec.  4280.188)
    The proposed changes to the paragraph on eligible project costs are 
clarification-type changes, including removing unnecessary examples. 
One example is replacing the term ``administrative expenses'' with 
``expenses charged as a direct cost or as an indirect cost * * * for 
administering the grant.''
    With regard to ineligible project costs, the Agency is proposing to 
add as an identified ineligible project cost, any goods or services 
provided by a person or entity that has a conflict of interest. The 
Agency is also proposing to add the leasing of equipment as an 
ineligible project cost. The current provision associated with the 
payment of costs incurred prior to the application date was removed 
from the list of ineligible project costs. The Agency has determined 
that it is unnecessarily duplicative of the provision that limits 
eligible project costs to only those costs that are incurred after a 
complete application has been received by the Agency.
    In addition, the Agency is proposing to allow a grantee to use 
program income to further the objectives of their project or energy 
audit services offered during the grant period in accordance with 
Department regulations.
Energy Audit/Renewable Energy Development Assistance Grant 
Applications--Content (Sec.  4280.190)
    In addition to several clarifying and conforming edits, the 
following substantive changes are being proposed.
    The Agency is proposing that an applicant may only submit one 
energy audit (EA) grant application and one renewable energy 
development assistance (REDA) grant application each Federal fiscal 
year and that combination applications (one in which an applicant 
proposed both EA and REDA) will not be accepted. The Agency is 
proposing to drop several items from the application as follows.
     A copy of the applicant's organizational documents showing 
the applicant's legal existence and authority to perform the activities 
under the grant (7 CFR 4280.190(d)).
     The Executive Summary (7 CFR 4280.190(e)(1)).
     The itemized budget (7 CFR 4280.190(e)(4)).
     The narrative addressing the applicant's resources, 
including personnel, finances, and technology, to complete what is 
proposed (7 CFR 4280.190(e)(7), although the applicant is still 
required to demonstrate that it has sufficient resources to complete 
all projects if the project is located in multiple states.
     The most recent financial audit of the applicant, or 
subdivision thereof, that will be performing the project (7 CFR 
4280.190(f)).
     The applicant's DUNS number (7 CFR 4280.190(g)), because 
it is contained in Standard Form SF-424.
     Dropping the ``using State and Federal support'' provision 
in 7 CFR 4280.190(e)(6)(iii) when describing the applicant's 
experience, resulting in a broader discussion.
    The Agency is proposing to add several items to the application as 
follows.
     Certification that the applicant is a legal entity in good 
standing (as applicable) and operating in accordance with the laws of 
the state(s) where the applicant has a place of business.
     A description of the goals of the project.
     Identification of the specific needs for the service area 
and the target audience to be served.
     The name and contact information, if available, for those 
that will be served by the project.
     Identification of the specific needs for the service area 
and the target audience to be served.
     Discussing whether the applicant has any existing programs 
that can demonstrate the achievement of energy savings or energy 
generation with the agricultural producers and/or rural small 
businesses the applicant has served.
     If the applicant has received one or more awards within 
the last 5 years in recognition of its renewable energy, energy 
savings, or energy-based technical assistance, describing that 
achievement.
    The Agency is proposing to revise several of the requirements, 
including:
     Consolidating provisions associated with the timeline and 
schedule for the project.
     Consolidating the requirements associated with outreach (7 
CFR 4280.190(e)(9)) into a more general description of what is being 
requested.

[[Page 22061]]

Evaluation of EA and REDA Grant Applications (Sec.  4280.191)
    The Agency has determined that the process for evaluating energy 
audit and REDA grant applications is no different than the process it 
will use to evaluate RES/EEI grant applications. Therefore, the Agency 
is proposing to cross-reference the RES/EEI grant application process. 
The one difference is that a technical merit determination is not 
applicable to either EA or REDA grant applications.
Scoring EA and REDA Grant Applications (Sec.  4280.192)
    The Agency is proposing several substantive changes to how it will 
score energy audit and REDA grant applications. These changes are 
summarized in Table 3.

    Table 3--Summary of Scoring Criteria Changes for Energy Audit and
       Renewable Energy Development Assistance Grant Applications
------------------------------------------------------------------------
              Interim rule                      Proposed change(s)
------------------------------------------------------------------------
Project proposal.......................  Remove as a scoring criterion.
Use of grant funds for administrative    Remove as a scoring criterion.
 expenses.
Applicant's organizational experience    Changed title of scoring
 in completing proposed activity.         criterion.
                                         Increased maximum points from
                                          15 to 25.
                                         Adjusted distribution of
                                          points.
Geographic scope of project............  Points increased from 10 to 20.
                                         Adjusted distribution of
                                          points.
Number of agricultural producers/rural   Points increased from 15 to 20.
 small businesses to be served.          Distribution of points changed.
                                         Added a new metric to receive
                                          an additional 10 points if the
                                          applicant provides a list of
                                          ultimate recipients, including
                                          their name and contact
                                          information, that are ready to
                                          be assisted.
Potential to produce energy savings and  Points decreases from 25 to 10.
 its attending environmental benefits.   Revised distribution and how
                                          points will be awarded.
Marketing and outreach plan............  Points decreased from 10 to 5.
Level of commitment of other funds for   Increased points from 5 to 20.
 the project.                            Revised distribution and how
                                          points will be awarded.
------------------------------------------------------------------------

Selecting EA and REDA Grant Applications for Award (Sec.  4280.193)
    The Agency is proposing several substantive changes to this 
section.
    The Agency is proposing a single competition for all complete 
applications received by January 31 of each year.
    In selecting applications for funding, if two or more applications 
score the same and if remaining funds are insufficient to fund each 
application, the Agency is proposing to distribute the remaining funds 
to each such application on a pro-rata basis. While the Agency is 
proposing to continue the provision that unfunded applications will not 
be carried forward into the next Federal fiscal year, the Agency is 
adjusting the language to make this clear (currently the rule only 
refers to not carrying unfunded applications forward into Fiscal Year 
2012).
Actions Prior to Grant Closing
    The Agency is proposing to remove 7 CFR 4280.194.
Awarding and Administering EA and REDA Grants (Sec.  4280.195)
    The Agency has determined that, with three exceptions, the same 
process for awarding and administering RES/EEI grants is applicable to 
energy audit and REDA grants and that there is no reason to repeat 
those provisions. Thus, this section has been modified to refer back to 
the corresponding RES/EEI grant section.
    The three exceptions noted in the previous paragraph are:
     The insurance requirements in Sec.  4280.122(b) do not 
apply. Instead, the Agency is proposing that the grantee must provide 
satisfactory evidence to the Agency that all officers of grantee 
organization authorized to receive and/or disburse Federal funds are 
covered by such bonding and/or insurance requirements as are normally 
required by the grantee.
     Form RD 400-1, ``Equal Opportunity Agreement,'' specified 
in Sec.  4280.122(c)(6) is not required.
     The power purchase agreement specified in Sec.  
4280.122(h) does not apply.
Servicing EA and REDA Grants (Sec.  4280.196)
    The Agency has determined that, with a few exceptions and 
additions, the same process for servicing RES/EEI grants is applicable 
to energy audit and REDA grants and that there is no reason to repeat 
those provisions. Thus, this section has been modified to refer back to 
the corresponding RES/EEI grant section.
    The exceptions noted in the previous paragraph are:
     Grant disbursement;
     Semi-annual reports;
     Final performance report; and
     Outcome project performance reports (referred to in 7 CFR 
part 4280, subpart B as Final Status Reports.)
    The Agency is proposing to remove the requirement to identify the 
percentage of financial resources expended on contractors for the semi-
annual and final performance reports.

III. Request for Comments

    The Agency is interested in receiving comments on all aspects of 
the proposed rule. Areas in which the Agency is seeking specific 
comments are identified below. All comments should be submitted as 
indicated in the ADDRESSES section of this preamble. In addition, all 
written comments received under the REAP interim rule that was 
published in the Federal Register on April 14, 2011 (76 FR 21110) will 
be considered along with any comments received under this proposed 
rule. The Agency will address all written comments in a final rule in 
the Federal Register.
    a. The Agency is proposing to allow projects with total project 
costs of no more than $200,000 to submit applications that contain less 
documentation. The Agency is requesting comment on this threshold as to 
whether it is at an appropriate level. If you believe that the level 
should be different, please identify your suggested level and provide 
your rationale.
    b. The Agency is proposing to allow projects with total project 
costs of no

[[Page 22062]]

more than $80,000 to submit applications that contain less 
documentation. The Agency is requesting comment on this threshold as to 
whether it is at an appropriate level. If you believe that the level 
should be different, please identify your suggested level and provide 
your rationale.
    c. The Agency is seeking comment on the definition of small 
business. This definition has changed since the original rule was 
developed as the Section 9006 program. The Agency is interested in 
alternative definitions that would simplify the identification of small 
businesses. Please be sure to provide your rationale.
    d. As proposed, the maximum grant that would be made for a 
renewable energy system feasibility study is $100,000. The Agency is 
interested in receiving comments on the appropriateness of this limit. 
If you believe that the level should be different, please identify your 
suggested level and provide your rationale.
    e. The Agency is proposing to award points for flexible fuel pumps 
based on the average annual gallons of renewable fuel estimated to be 
sold over the first two years by the pumps per grant dollar requested. 
The Agency is seeking comment on this metric. For example, to what 
extent would this metric be a good selection criterion? The Agency is 
also seeking suggestions for alternative metrics. Please be sure to be 
specific in your comments and suggestions and provide your rationale.
    f. The Agency is considering replacing the current cash equity 
requirement with a minimum of 25 percent tangible balance sheet equity 
(or a maximum debt-to-tangible net worth ratio of 3:1). Please comment 
on this consideration, including pros and cons on each metric (i.e. 
cash equity, tangible balance sheet equity) and your suggestions on the 
level of debt-to-tangible net worth ratio. In addition, the Agency 
acknowledges that Federal and State grants can be recorded differently 
on the balance sheet and how this can impact tangible balance sheet 
equity in various ways. This should also be a consideration when making 
comments on the proposed cash equity requirement change. Please be sure 
to provide your rationale for your position.
    g. The Agency is seeking to encourage greater use of REAP 
guaranteed loans. The Agency is interested in other possible provisions 
to expand the use of the guaranteed loan only applications under REAP. 
To make informed decisions in this regard, the Agency needs a better 
understanding of specific rule provisions that affect the decision to 
use or not use REAP guaranteed loans.
    For any suggested changes to the rule that you believe will 
encourage more guaranteed loan only applications, please be sure to 
provide your rationale/basis for each suggested change. An important 
consideration for the Agency in making any change is the potential 
effect on increasing the risk of default and thus increasing the 
subsidy rate (which would reduce the level of funding that the Agency 
could use in making loan guarantees). Therefore, please be sure to 
address this issue and, to the extent possible, suggest ways that could 
mitigate increases in risk.
    h. As noted in the preamble to this rule, the Agency is proposing 
to compete guaranteed-loan only applications on a quarterly basis. The 
Agency is specifically seeking comment on the frequency with which 
guaranteed-loan only applications are competed. Please comment on how 
the frequency of competition cycles such as monthly, semi-annually, and 
annually would meet the needs of lenders and borrowers better than 
quarterly competitions. Please be specific in your comments and provide 
your rationale.
    i. The Agency is considering issuing the REAP Loan Note Guarantee 
prior to construction for technologies that demonstrate lower risk to 
the government. The Agency is interested in receiving comments on the 
appropriateness of this action and would like to receive suggestions on 
what type of technologies should be considered. Please be sure to be 
specific in your comments and provide your rationale.
    j. The Agency is seeking comment on how a multi-farm, community 
digester project could be developed based upon the requirements 
contained in this proposed rule. Please be sure to be specific in your 
comments and provide your rationale.
    k. The current REAP regulation allows the State Director or the 
Administrator to award points to an application that is ``for an under-
represented technology'' (see Sec.  4280.120(g)). Under Renewable 
Energy Systems, there are different categories or technologies: wind, 
solar, renewable biomass, ocean (including tidal, wave, current, and 
thermal), geothermal, hydroelectric source, or hydrogen derived from 
one of these sources. Energy efficiency only has one category.
    The Agency is considering revising how it awards points for the 
``under-represented technology'' provision for EEI technology. For 
example, looking at the number of prior lighting project awards 
compared to the number of prior grain dryer or poultry house project 
awards and awarding State Director or Administrator points to those 
projects that are under-represented. To this end, the Agency is seeking 
comments on the following questions. In all cases, please provide your 
rationale to support your comments.
     For energy efficiency improvement projects, how would you 
suggest subdividing EEI projects to create ``similar classes of EEI 
technologies'' for purposes of determining ``under-representation''?
     Should we determine under-represented based on the pool of 
applications each year or based on the historical data for the program?

List of Subjects in 7 CFR Part 4280

    Loan programs--Business and industry, Economic development, Energy, 
Energy Efficiency Improvements, Feasibility studies, Grant programs, 
Guaranteed loan programs, Renewable Energy Systems, and Rural areas.

    For the reasons set forth in the preamble, under the authority at 5 
U.S.C. 301, 7 U.S.C. 1989, and 7 U.S.C. 8107, chapter XLII of title 7 
of the Code of Federal Regulations is proposed to be amended as 
follows: Chapter XLII--Rural Business-Cooperative Service and Rural 
Utilities Service, Department of Agriculture

PART 4280--LOAN AND GRANTS

0
1. The authority citation for part 4280 continues to read as follows:

    Authority:  5 U.S.C. 301; 7 U.S.C. 940c; 7 U.S.C. 8107

0
2. Subpart B is revised as follows:

Subpart B--Rural Energy for America Program

General

Sec.
4280.101 Purpose.
4280.102 Organization of subpart.
4280.103 Definitions.
4280.104 Exception authority.
4280.105 Review or appeal rights.
4280.106 Conflict of interest.
4280.107 USDA Departmental regulations.
4280.108 Laws that contain other compliance requirements.
4280.109 Ineligible applicants, borrowers, and owners.
4280.110 General applicant, application, and funding provisions.
4280.111 Notifications.

Renewable Energy System and Energy Efficiency Improvement Grants

4280.112 Applicant eligibility.
4280.113 Project eligibility.
4280.114 [Reserved]

[[Page 22063]]

4280.115 RES and EEI grant funding.
4280.116 Grant applications--general.
4280.117 Grant applications for RES and EEI projects with total 
project costs greater than $200,000.
4280.118 Grant applications for RES and EEI projects with total 
project costs of $200,000 or less.
4280.119 Grant applications for RES and EEI projects with total 
project costs of $80,000 or less.
4280.120 Scoring RES and EEI grant applications.
4280.121 Selecting RES and EEI grant applications for award.
4280.122 Awarding and administering RES and EEI grants.
4280.123 Servicing RES and EEI grants.
4280.124 Construction planning and performing development.

Renewable Energy System and Energy Efficiency Improvement Guaranteed 
Loans

4280.125 Compliance with Sec. Sec.  4279.29 through 4279.99.
4280.126 Guarantee/annual renewal fee.
4280.127 Borrower eligibility.
4280.128 Project eligibility.
4280.129 Guaranteed loan funding.
4280.130 Loan processing.
4280.131 Credit quality.
4280.132 Financial statements.
4280.133 [Reserved]
4280.134 Personal and corporate guarantees.
4280.135 Scoring RES and EEI guaranteed loan only applications.
4280.136 [Reserved]
4280.137 Application and documentation.
4280.138 Evaluation of RES and EEI guaranteed loan applications.
4280.139 Selection of RES and EEI guaranteed loan only applications.
4280.140 [Reserved]
4280.141 Changes in borrower.
4280.142 Conditions precedent to issuance of loan note guarantee.
4280.143 Requirements after project construction.
4280.144-4280.151 [Reserved]
4280.152 Servicing guaranteed loans.
4280.153-4280.164 [Reserved]

Combined Funding for Renewable Energy Systems and Energy Efficiency 
Improvements

4280.165 Combined funding for renewable energy systems and energy 
efficiency improvements.
4280.166-4280.168 [Reserved]

Renewable Energy System Feasibility Study Grants

4280.169 General provisions.
4280.170 Applicant eligibility.
4280.171 Eligibility of RES projects for feasibility study grants.
4280.172 [Reserved]
4280.173 Grant funding for RES feasibility studies.
4280.174-4280.175 [Reserved]
4280.176 Feasibility study grant applications--content.
4280.177 Evaluation of feasibility study grant applications.
4280.178 Scoring feasibility study grant applications.
4280.179 Selecting feasibility study grant applications for award.
4280.180 [Reserved]
4280.181 Awarding and administering feasibility study grants.
4280.182 Servicing feasibility study grants.
4280.183--4280.185 [Reserved]

Energy Audit and Renewable Energy Development Assistance Grants

4280.186 Applicant eligibility.
4280.187 Project eligibility.
4280.188 Grant funding for energy audit and renewable energy 
development assistance.
4280.189 [Reserved]
4280.190 EA and REDA grant applications--content.
4280.191 Evaluation of EA and REDA grant applications.
4280.192 Scoring EA and REDA grant applications.
4280.193 Selecting EA and REDA grant applications for award.
4280.194 [Reserved]
4280.195 Awarding and administering EA and REDA grants.
4280.196 Servicing EA and REDA grants.
4280.197-4280.199 [Reserved]
4280.200 OMB control number.
Appendix A to Part 4280--Technical Report for Energy Efficiency 
Improvement Projects
Appendix B to Part 4280--Technical Reports for Renewable Energy 
System (RES) Projects with Total Project Costs of $200,000 or Less
Appendix C to Part 4280--Technical Reports for Renewable Energy 
System Projects with Total Project Costs of Greater than $200,000
Appendix D to Part 4280 -Feasibility Study Content

General


Sec.  4280.101  Purpose.

    The subpart contains the procedures and requirements for providing 
the following financial assistance under the Rural Energy for America 
Program (REAP):
    (a) Grants or guaranteed loans, or a combination grant and 
guaranteed loan, for the purpose of purchasing and installing Renewable 
Energy Systems (RES) and Energy Efficiency Improvements (EEI);
    (b) Grants for conducting RES Feasibility Studies; and
    (c) Grants to assist Agricultural Producers and Rural Small 
Businesses by conducting Energy Audits (EA) and providing 
recommendations and information on Renewable Energy Development 
Assistance (REDA) and improving energy efficiency.


Sec.  4280.102  Organization of subpart.

    (a) Sections 4280.103 through 4280.111 discuss definitions; 
exception authority; review or appeal rights; conflict of interest; 
USDA Departmental Regulations; other applicable laws; ineligible 
applicants, borrowers, and owners; general applicant, application, and 
funding provisions; and notifications, which are applicable to all of 
the funding programs under this subpart.
    (b) Sections 4280.112 through 4280.124 discuss the requirements 
specific to RES and EEI grants. Sections 4280.112 and 4280.113 discuss, 
respectively, applicant and project eligibility. Section 4280.115 
addresses funding provisions for these grants. Sections 4280.116 
through 4280.119 address grant application content and required 
documentation. Sections 4280.120 through 4280.123 address the scoring, 
selection, awarding and administering, and servicing of these grant 
applications. Section 4280.124 addresses construction planning and 
development.
    (c) Sections 4280.125 through 4280.152 discuss the requirements 
specific to RES and EEI guaranteed loans. Sections 4280.125 through 
4280.128 discuss eligibility and requirements for making and processing 
loans guaranteed by the Agency. Section 4280.129 addresses funding for 
guaranteed loans. In general, Sections 4280.130 through 4280.152 
provide guaranteed loan origination and servicing requirements. These 
requirements apply to lenders, holders, and other parties involved in 
making, guaranteeing, holding, servicing, or liquidating such loans. 
Section 4280.137 addresses the application requirements for guaranteed 
loans.
    (d) Section 4280.165 presents the process by which the Agency will 
make combined loan guarantee and grant funding available for RES and 
EEI projects.
    (e) Sections 4280.170 through 4280.182 presents the process by 
which the Agency will make RES Feasibility Study grant funding 
available. These sections cover applicant and project eligibility, 
grant funding, application content, evaluation, scoring, selection, 
awarding and administering, and servicing.
    (f) Sections 4280.186 through 4280.196 present the process by which 
the Agency will make EA and REDA grant funding available. These 
sections cover applicant and project eligibility, grant funding, 
application content, evaluation, scoring, selection, awarding and 
administering, and servicing.
    (g) Appendices A through C cover technical report requirements. 
Appendix A applies to EEI projects; Appendix B applies to RES projects 
with Total Project Costs of $200,000 or less; and Appendix C applies 
RES projects with Total Project Costs greater

[[Page 22064]]

than $200,000. Appendix D identifies the contents of the Feasibility 
Study that will be required to be submitted to the Agency if funding is 
provided under Sec. Sec.  4280.169 through 4280.182. Appendices A and B 
do not apply to RES and EEI projects with Total Project Costs of 
$80,000 or less, respectively. Instead, technical report requirements 
for these projects are found in Sec.  4280.119.


Sec.  4280.103  Definitions.

    Terms used in this subpart are defined in either Sec.  4279.2 of 
this chapter or in this section. If a term is defined in both Sec.  
4279.2 and this section, it will have, for purposes of this subpart 
only, the meaning given in this section. Terms used in this subpart 
that have the same meaning as the terms defined in this section have 
been capitalized in this subpart.
    Administrator. The Administrator of Rural Business-Cooperative 
Service within the Rural Development Mission Area of the U.S. 
Department of Agriculture.
    Agency. The Rural Business-Cooperative Service (RBS) or successor 
agency assigned by the Secretary of Agriculture to administer the Rural 
Energy for America Program. References to the National Office, Finance 
Office, State Office, or other Agency offices or officials should be 
read as prefaced by ``Agency'' or ``Rural Development'' as applicable.
    Agricultural producer. An individual or entity directly engaged in 
the production of agricultural products, including crops (including 
farming); livestock (including ranching); forestry products; 
hydroponics; nursery stock; or aquaculture, whereby 50 percent or 
greater of their gross income is derived from the operations.
    Anaerobic digester project. A Renewable Energy System that uses 
animal or other Renewable Biomass and may include other organic 
substrates, via anaerobic digestion, to produce biomethane that is used 
to produce thermal or electrical energy or that is converted to a 
compressed gaseous or liquid state.
    Annual receipts. The total income or gross income (sole 
proprietorship) plus cost of goods sold.
    Applicant. (1) Except for EA and REDA grants, the Agricultural 
Producer or Rural Small Business that is seeking a grant, guaranteed 
loan, or a combination of a grant and loan, under this subpart.
    (2) For EA and REDA grants, a unit of state, tribal, or local 
government; a land-grant college or university or other Institution of 
Higher Education; a rural electric cooperative; a Public Power Entity; 
or an Instrumentality of a State, Tribal, or local government that is 
seeking an EA or REDA grant under this subpart.
    Assignment Guarantee Agreement (Form RD 4279-6, or successor form). 
The signed agreement among the Agency, the lender, and the holder 
containing the terms and conditions of an assignment of a guaranteed 
portion of a loan, using the single note system.
    Bioenergy project. A Renewable Energy System that produces fuel, 
thermal energy, or electric power from a Renewable Biomass source only.
    Blended liquid transportation fuel. A fuel used for transportation 
that:
    (1) Is composed of one or more fuel types, at least one of which 
must meet the Renewable Fuel Standard, and
    (2) Results in a blended fuel that exceeds the highest Federal or 
State percentage volume, if any, for a renewable fuel required for each 
retail service station for the respective jurisdiction. For example, if 
the Federal government required E15 be dispensed at all retail service 
stations and a State required E30 be dispensed at all retail service 
stations in this State, then Applicants in that State would be eligible 
for funds under this program only if the Flexible Fuel Pump to be 
installed would dispense a Blended Liquid Transportation Fuel higher 
than E30 (e.g., E50, E85).
    Capacity. The maximum output rate that an apparatus or heating unit 
is able to attain on a sustained basis as rated by the manufacturer.
    Commercially available. A system that has a proven operating 
history for at least one year specific to the proposed application. 
Such a system is based on established design and installation 
procedures and practices. Professional service providers, trades, large 
construction equipment providers, and labor are familiar with 
installation procedures and practices. Proprietary and balance of 
system equipment and spare parts are readily available. Service is 
readily available to properly maintain and operate the system. An 
established warranty exists for major parts and labor. If the system is 
currently Commercially Available only outside of the U.S., 
authoritative evidence of the foreign operating history, performance 
and reliability is required in order to address the proven operating 
history.
    Complete application. An application that contains all parts 
necessary for the Agency to determine Applicant and project 
eligibility, to score the application, and, where applicable, to enable 
the Agency to perform a technical evaluation of the project.
    Conditional Commitment (Form RD 4279-3, or successor form). The 
Agency's notice to the lender that the loan guarantee it has requested 
is approved subject to the completion of all conditions and 
requirements set forth by the Agency and outlined in the Conditional 
Commitment.
    Departmental regulations. The regulations of the Department of 
Agriculture's Office of Chief Financial Officer (or successor office) 
as codified in 2 CFR part 417 and 7 CFR parts 3000 through 3099, 
including, but not necessarily limited to, 7 CFR parts 3015 through 
3019, 7 CFR part 3021, and 7 CFR part 3052, and successor regulations 
to these parts.
    Design/build method. A method of project development whereby all 
design, engineering, procurement, construction, and other related 
project activities are performed under a single contract. The 
contractor is solely responsible and accountable for successful 
delivery of the project to the grantee and/or borrower as applicable.
    Eligible project costs. The Total Project Costs that are eligible 
to be paid or guaranteed with program funds.
    Energy analysis. An Agency-approved report prepared by an 
individual or entity who has at least 3 years experience and completed 
at least five energy analyses, energy assessments, or energy audits on 
similar type projects, assessing energy use, cost and efficiency by 
analyzing energy bills and surveying the target building and/or 
equipment sufficiently to provide an Agency-approved energy analysis.
    Energy assessment. An Agency-approved report prepared by an Energy 
Auditor, Energy Assessor, or an individual supervised by either an 
Energy Assessor or Energy Auditor, assessing energy use, cost, and 
efficiency by analyzing energy bills and surveying the target building 
and/or equipment sufficiently to provide an Agency-approved energy 
assessment. The final energy assessment must be validated and signed by 
the Energy Assessor or Energy Auditor who conducted the assessment or 
by the supervising Energy Assessor or Energy Auditor of the individual 
who conducted the assessment, as applicable.
    Energy assessor. A Qualified Consultant who has at least 3 year 
experience and completed at least five Energy Assessments or Energy 
Audits on similar type projects and who adheres to generally recognized 
engineering principles and practices.
    Energy audit (EA). A comprehensive report that meets an Agency 
approved standard prepared by an Energy Auditor

[[Page 22065]]

or an individual supervised by an Energy Auditor that documents current 
energy usage; recommended potential improvements, typically called 
energy conservation measures, and their costs; energy savings from 
these improvements; dollars saved per year; and Simple Payback. The 
methodology of the energy audit must meet professional and industry 
standards. The final energy audit must be validated and signed off by 
the Energy Auditor who conducted the audit or by the supervising Energy 
Auditor of the individual who conducted the audit, as applicable.
    Energy auditor. A Qualified Consultant that meets one of the 
following criteria:
    (1) A Certified Energy Auditor certified by the Association of 
Energy Engineers;
    (2) A Certified Energy Manager certified by the Association of 
Energy Engineers;
    (3) A Licensed Professional Engineer in the State in which the 
audit is conducted with at least 1 year experience and who has 
completed at least two similar type Energy Audits; or
    (4) An individual with a four-year engineering or architectural 
degree with at least 3 years experience and who has completed at least 
five similar type Energy Audits.
    Energy efficiency improvement (EEI). Improvements to or replacement 
of an existing building and/or equipment that reduces energy 
consumption on an annual basis.
    Feasibility study. An analysis conducted by a qualified consultant 
of the economic, market, technical, financial, and management 
feasibility of a proposed project or business.
    Federal fiscal year. The 12-month period beginning October 1 of any 
given year and ending on September 30 of the following year.
    Financial feasibility. The ability of a project or business to 
achieve sufficient income, credit, and cash flow to financially sustain 
a project over the long term. The concept of financial feasibility 
includes assessments of the cost-accounting system, the availability of 
short-term credit for seasonal businesses, and the adequacy of raw 
materials and supplies.
    Flexible fuel pump. A retail pump that combines and dispenses a 
Blended Liquid Transportation Fuel or dispenses a Blended Liquid 
Transportation Fuel. If a flexible fuel pump dispenses more than one 
blend of liquid transportation fuel, at least one of the blends must 
meet the definition of Blended Liquid Transportation Fuel found in this 
section.
    Geothermal direct generation. A system that uses thermal energy 
directly from a geothermal source.
    Geothermal electric generation. A system that uses thermal energy 
from a geothermal source to produce electricity.
    Grant agreement (Form RD 4280-2, Rural Business Cooperative Service 
Grant Agreement, or successor form). An agreement between the Agency 
and the grantee setting forth the provisions under which the grant will 
be administered.
    Hybrid. A combination of two or more Renewable Energy technologies 
that are incorporated into a unified system to support a single 
project.
    Hydroelectric source. A Renewable Energy System producing 
electricity using various types of moving water including, but not 
limited to, diverted run-of-river water, in-stream run-of-river water, 
and in-conduit water. For the purposes of this subpart, only those 
hydroelectric sources with a Rated Power of 30 megawatts or less are 
eligible.
    Hydrogen project. A system that produces hydrogen from a Renewable 
Energy source or that uses hydrogen produced from a Renewable Energy 
source as an energy transport medium in the production of mechanical or 
electric power or thermal energy.
    Immediate family. Individuals who are closely related by blood, 
marriage, or adoption, or who live within the same household, such as a 
spouse, domestic partner, parent, child, brother, sister, aunt, uncle, 
grandparent, grandchild, niece, or nephew.
    Inspector. A Qualified Consultant with at least 3 year experience 
and who has completed at least five inspections on similar type 
projects. A project might require one or more inspectors to perform the 
required inspections.
    Institution of higher education. As defined in 20 U.S.C. 1002(a).
    Instrumentality. An organization recognized, established, and 
controlled by a State, Tribal, or local government, for a public 
purpose or to carry out special purposes (e.g., a Water District, 
Resource Conservation and Development Council, etc.).
    Interconnection agreement. A contract containing the terms and 
conditions governing the interconnection and parallel operation of the 
grantee's or borrower's electric generation equipment and the utility's 
electric power system.
    Lender's Agreement (Form RD 4279-4, or successor form). Agreement 
between the Agency and the lender setting forth the lender's loan 
responsibilities.
    Loan Note Guarantee (Form RD 4279-5, or successor form). A 
guarantee issued and executed by the Agency containing the terms and 
conditions of the guarantee.
    Matching funds. The funds needed to pay for the portion of the 
Total Project Costs not funded or guaranteed by the Agency. Unless 
authorized by statute, other Federal grant funds cannot be used to meet 
a Matching Funds requirement.
    Ocean energy. Energy created by use of various types of moving 
water in the ocean and other large bodies of water (e.g., Great Lakes) 
including, but not limited to, tidal, wave, current, and thermal 
changes.
    Passive investor. An equity investor that does not actively 
participate in management and operation decisions of the business 
entity as evidenced by a contractual agreement.
    Power purchase agreement. The terms and conditions governing the 
sale and transportation of electricity produced by the grantee or 
borrower to another party.
    Public power entity. Is defined using the definition of ``state 
utility'' as defined in section 217(A)(4) of the Federal Power Act (16 
U.S.C. 824q(a)(4)). As of this writing, the definition ``means a State 
or any political subdivision of a State, or any agency, authority, or 
instrumentality of any one or more of the foregoing, or a corporation 
that is wholly owned, directly or indirectly, by any one or more of the 
foregoing, competent to carry on the business of developing, 
transmitting, utilizing, or distributing power.''
    Qualified consultant. An independent third-party individual or 
entity possessing the knowledge, expertise, and experience to perform 
the specific task required.
    Rated power. The maximum amount of energy that can be created at 
any given time.
    Refurbished. Refers to a Renewable Energy System or equipment that 
has been brought into a facility, thoroughly inspected, and worn parts 
replaced. A refurbished system or equipment will typically have some 
type of warranty.
    Renewable biomass. (1) Materials, pre-commercial thinnings, or 
invasive species from National Forest System land or public lands (as 
defined in section 103 of the Federal Land Policy and Management Act of 
1976 (43 U.S.C. 1702)) that:
    (i) Are byproducts of preventive treatments that are removed to 
reduce hazardous fuels; to reduce or contain disease or insect 
infestation; or to restore ecosystem health;

[[Page 22066]]

    (ii) Would not otherwise be used for higher-value products; and
    (iii) Are harvested in accordance with applicable law and land 
management plans and the requirements for old-growth maintenance, 
restoration, and management direction of paragraphs (e)(2), (e)(3), and 
(e)(4) and large-tree retention of subsection (f) of section 102 of the 
Healthy Forests Restoration Act of 2003 (16 U.S.C. 6512); or
    (2) Any organic matter that is available on a renewable or 
recurring basis from non-Federal land or land belonging to an Indian or 
Indian Tribe that is held in trust by the United States or subject to a 
restriction against alienation imposed by the United States, including:
    (i) Renewable plant material, including feed grains; other 
agricultural commodities; other plants and trees; and algae; and
    (ii) Waste material, including crop residue; other vegetative waste 
material (including wood waste and wood residues); animal waste and 
byproducts (including fats, oils, greases, and manure); and food waste, 
yard waste, and other biodegradable waste. (Waste material does not 
include unsegregated solid waste.)
    Renewable energy. Energy derived from:
    (1) A wind, solar, Renewable Biomass, ocean (including tidal, wave, 
current, and thermal), geothermal or Hydroelectric Source; or
    (2) Hydrogen derived from Renewable Biomass or water using wind, 
solar, ocean (including tidal, wave, current, and thermal), geothermal 
or Hydroelectric Sources.
    Renewable energy development assistance (REDA). Assistance provided 
by eligible grantees to Agricultural Producers and Rural Small 
Businesses to become more energy efficient and to use Renewable Energy 
technologies and resources. The renewable energy development assistance 
may consist of Renewable Energy site assessment and/or Renewable Energy 
Technical Assistance.
    Renewable energy site assessment. A report provided to an 
Agricultural Producer or Rural Small Business providing information 
regarding and recommendations for the use of Commercially Available 
Renewable Energy technologies in its operation. The report must be 
prepared by a Qualified Consultant and must contain the information 
specified in Sections A through C of Appendix B.
    Renewable energy system (RES). A system that produces or produces 
and delivers a usable energy from a Renewable Energy source, or is a 
Flexible Fuel Pump.
    Renewable energy technical assistance. Assistance provided to 
Agricultural Producers and Rural Small Businesses on how to use 
Renewable Energy technologies and resources in their operations.
    Retrofitting. The modification of a Renewable Energy System to 
incorporate features not included in the original design or for the 
replacement of existing components with ones that improve the original 
design.
    Rural or rural area. Any area of a State not in a city or town that 
has a population of more than 50,000 inhabitants, according to the 
latest decennial census of the United States, or in the urbanized area 
contiguous and adjacent to a city or town that has a population of more 
than 50,000 inhabitants, and any area that has been determined to be 
``rural in character'' by the Under Secretary for Rural Development, or 
as otherwise identified in this definition.
    (1) An area that is attached to the urbanized area of a city or 
town with more than 50,000 inhabitants by a contiguous area of 
urbanized census blocks that is not more than two census blocks wide. 
Applicants from such an area should work with their Rural Development 
State Office to request a determination of whether their project is 
located in a rural area under this provision.
    (2) For the purposes of this definition, cities and towns are 
incorporated population centers with definite boundaries, local self 
government, and legal powers set forth in a charter granted by the 
State.
    (3) For the Commonwealth of Puerto Rico, the island is considered 
rural and eligible except for the San Juan Census Designated Place 
(CDP) and any other CDP with greater than 50,000 inhabitants. CDPs with 
greater than 50,000 inhabitants, other than the San Juan CDP, may be 
determined to be eligible if they are ``not urban in character.''
    (4) For the State of Hawaii, all areas within the State are 
considered rural and eligible except for the Honolulu CDP within the 
County of Honolulu.
    (5) For the purpose of defining a rural area in the Republic of 
Palau, the Federated States of Micronesia, and the Republic of the 
Marshall Islands, the Agency shall determine what constitutes rural and 
rural area based on available population data.
    (6) The determination that an area is ``rural in character'' will 
be made by the Under Secretary of Rural Development. The process to 
request a determination under this provision is outlined in paragraph 
(6)(ii) of this definition.
    (i) The determination that an area is ``rural in character'' under 
this definition will apply to areas that are within:
    (A) An urbanized area that has two points on its boundary that are 
at least 40 miles apart, which is not contiguous or adjacent to a city 
or town that has a population of greater than 150,000 inhabitants or 
the urbanized area of such a city or town; or
    (B) An urbanized area contiguous and adjacent to a city or town of 
greater than 50,000 inhabitants that is within one quarter mile of a 
rural area.
    (ii) Units of local government may petition the Under Secretary of 
Rural Development for a ``rural in character'' designation by 
submitting a petition to both the appropriate Rural Development State 
Director and the Administrator on behalf of the Under Secretary. The 
petition shall document how the area meets the requirements of 
paragraph (6)(i)(A) or (B) of this definition and discuss why the 
petitioner believes the area is ``rural in character,'' including, but 
not limited to, the area's population density, demographics, and 
topography and how the local economy is tied to a rural economic base. 
Upon receiving a petition, the Under Secretary will consult with the 
applicable Governor or leader in a similar position and request 
comments to be submitted within 5 business days, unless such comments 
were submitted with the petition. The Under Secretary will release to 
the public a notice of a petition filed by a unit of local government 
not later than 30 days after receipt of the petition by way of 
publication in a local newspaper and posting on the Agency's Web site, 
and the Under Secretary will make a determination not less than 15 
days, but no more than 60 days, after the release of the notice. Upon a 
negative determination, the Under Secretary will provide to the 
petitioner an opportunity to appeal a determination to the Under 
Secretary, and the petitioner will have 10 business days to appeal the 
determination and provide further information for consideration.
    Rural Small Business. A Small Business that is located in a Rural 
Area or that can demonstrate the proposed project for which assistance 
is being applied for under this subpart is located in a Rural Area.
    Simple payback. The estimated simple payback of a project funded 
under this subpart as calculated using paragraph (1), (2), or (3), as 
applicable, of this definition.
    (1) For energy generation projects, Simple Payback is calculated as 
follows:

[[Page 22067]]

    (i) Simple Payback = (Total Project Costs)/(Average Net Income + 
Interest Expense + Depreciation Expense (for the project))
    (ii) Average Net Income:
    (A) Is based on all energy related revenue streams which include 
monetary benefits from production tax credit, renewable energy credit, 
carbon credits, revenue from byproducts produced by the energy system, 
fair market value of byproducts produced by and used in the project or 
related enterprises, and other incentives that can be annualized.
    (B) Is based on income remaining after all project obligations are 
paid (operating and maintenance), except interest and depreciation as 
noted above.
    (C) Is based on the Agency's review and acceptance of the project's 
typical year income (which is after the project is operating and 
stabilized) projections at the time of application submittal.
    (D) Does not allow Investment Tax Credits, State tax incentives, or 
other one-time construction and investment related benefits that cannot 
be annualized to be included as income or reduce total Eligible Project 
Costs.
    (2) For EEI projects, Simple Payback is calculated as follows:
    (i) Simple Payback = (Total Project Costs)/Dollar Value of Energy 
Generated or Saved (as applicable)
    (ii) Dollar Value of Energy Generated or Saved incorporates the 
following:
    (A) All energy related revenue streams, which include monetary 
benefits from production tax credit, renewable energy credit, carbon 
credits, revenue from byproducts produced by the energy system, and 
other monetary incentives that can be annualized.
    (B) Energy saved or replaced will be calculated on the quantity of 
energy saved or replaced (as determined by subtracting the result 
obtained under paragraph (2)(ii)(B)(2) from the result obtained under 
paragraph (2)(ii)(B)(1) of this definition, and converted to a monetary 
value using a constant value or price of energy (as determined under 
paragraph (2)(ii)(B)(3) of this definition).
    (1) Actual energy used in the original building and/or equipment, 
as applicable, prior to the RES or EEI project, shall be based on the 
actual average annual total energy used (BTU) over the most recent 36 
months of operation or, if in operation for less than 36 months, the 
length of ownership.
    (2) Projected energy use if the proposed RES or EEI project had 
been in place for the original building and/or equipment, as 
applicable, for the same time period used to determine that actual 
energy use under paragraph (2)(ii)(B)(1) of this definition.
    (3) Value or price of energy shall be the actual average price paid 
over the same time period used to calculate the actual energy used 
under paragraph (2)(ii)(B)(1) of this definition.
    (C) Does not allow Energy Efficiency Improvements to monetize 
benefits other than the dollar amount of the energy savings the 
Agricultural Producer or Rural Small Business realizes as a result of 
the improvement.
    (D) Does not allow investment tax credits, State tax incentives, or 
other one-time construction and investment related benefits that cannot 
be annualized to be included as income or reduce total Eligible Project 
Costs.
    (3) For Flexible Fuel Pumps, only the costs for the Flexible Fuel 
Pump and any equipment and tanks directly associated with the Flexible 
Fuel Pump, revenue, and expenses will be included in the calculation 
for Simple Payback as follows:
    (i) Simple Payback = (Total Project Costs)/(Average Net Income + 
Interest Expense + Depreciation Expense (for the project))
    (ii) Average Net Income is based on:
    (A) All energy-related revenue streams, which include monetary 
benefits from tax credits and other credits or incentives that can be 
annualized.
    (B) Income remaining after all project obligations are paid 
(operating and maintenance), except interest and depreciation as noted 
above.
    (C) The Agency's review and acceptance of the project's typical 
year income (which is after the project is operating and stabilized) 
projections at the time of application submittal.
    (D) Does not allow State tax incentives or other one-time 
construction and investment related benefits that cannot be annualized 
to be included as income or reduce total Eligible Project Costs.
    Small business. An entity is considered a small business in 
accordance with the Small Business Administration's (SBA) small 
business size standards categorized by the North American Industry 
Classification System (NAICS) found in 13 CFR part 121. A private 
entity, including a sole proprietorship, partnership, corporation, 
cooperative (including a cooperative qualified under section 501(c)(12) 
of the Internal Revenue Code), and an electric utility (including a 
Tribal or governmental electric utility) that provides service to rural 
consumers provided such utilities meet SBA's definition of small 
business. These entities must operate independent of direct Government 
control except for Tribal corporations charted under Section 17 of the 
Indian Reorganization Act (25 U.S.C. 477) or other Tribal business 
entities that have similar structures and relationships with their 
Tribal governments as determined by the Agency. The Agency shall 
determine the small business status of such a Tribal entity without 
regard to the resources of the Tribal government. With the exception of 
the entities described above, all other non-profit entities are 
excluded.
    State. Any of the 50 States of the United States, the Commonwealth 
of Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, the 
Commonwealth of the Northern Mariana Islands, the Republic of Palau, 
the Federated States of Micronesia, and the Republic of the Marshall 
Islands.
    Total project costs. The sum of all costs associated with a 
completed project.
    Used equipment. Any equipment that has been used in any previous 
application and is provided in an ``as is'' condition.


Sec.  4280.104  Exception authority.

    The Administrator may, with the concurrence of the Secretary of 
Agriculture, make an exception, on a case-by-case basis, to any 
requirement or provision of this subpart that is not inconsistent with 
any authorizing statute or applicable law, if the Administrator 
determines that application of the requirement or provision would 
adversely affect the Federal government's financial interest.


Sec.  4280.105  Review or appeal rights.

    An Applicant, lender, holder, borrower, or grantee may seek a 
review of an Agency decision or appeal to the National Appeals Division 
in accordance with 7 CFR part 11.
    (a) Guaranteed loan. In cases where the Agency has denied or 
reduced the amount of final loss payment to the lender, the adverse 
decision may be appealed by the lender only. An adverse decision that 
only impacts the holder may be appealed by the holder only. A decision 
by a lender adverse to the interest of the borrower is not a decision 
by the Agency, whether or not concurred in by the Agency.
    (b) Combined guaranteed loan and grant. For an adverse decision 
involving a combination guaranteed loan and grant funding request, only 
the party that is adversely affected may request the review or appeal.


Sec.  4280.106  Conflict of interest.

    (a) General. No conflict of interest or appearance of conflict of 
interest will be

[[Page 22068]]

allowed. For purposes of this subpart, conflict of interest includes, 
but is not limited to, distribution or payment of grant, guaranteed 
loan funds, and Matching Funds or award of project contracts to an 
individual owner, partner, or stockholder, or to a beneficiary or 
Immediate Family of the Applicant or borrower when the recipient will 
retain any portion of ownership in the Applicant's or borrower's 
project. Grant and Matching Funds may not be used to support costs for 
services or goods going to, or coming from, a person or entity with a 
real or apparent conflict of interest.
    (b) Assistance to employees, relatives, and associates. The Agency 
will process any requests for assistance under this subpart in 
accordance with 7 CFR part 1900, subpart D.
    (c) Member/delegate clause. No member of or delegate to Congress 
shall receive any share or part of this grant or any benefit that may 
arise there from; but this provision shall not be construed to bar, as 
a contractor under the grant, a publicly held corporation whose 
ownership might include a member of Congress.


Sec.  4280.107  USDA Departmental regulations.

    All projects funded under this subpart are subject to the 
provisions of the Departmental Regulations, as applicable, which are 
incorporated by reference herein.


Sec.  4280.108  Laws that contain other compliance requirements.

    (a) Equal opportunity and nondiscrimination. The Agency will ensure 
that equal opportunity and nondiscrimination requirements are met in 
accordance with the Equal Credit Opportunity Act (15 U.S.C. 1691 et 
seq.) and 7 CFR part 15d, Nondiscrimination in Programs and Activities 
Conducted by the United States Department of Agriculture. The Agency 
will not discriminate against Applicants on the basis of race, color, 
religion, national origin, sex, marital status, or age (provided that 
the Applicant has the capacity to contract); because all or part of the 
Applicant's income derives from any public assistance program; or 
because the Applicant has in good faith exercised any right under the 
Consumer Credit Protection Act (15 U.S.C. 1601 et seq).
    (b) Civil rights compliance. Recipients of grants must comply with 
the Americans with Disabilities Act of 1990 (42 U.S.C. 12101 et seq.), 
Title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d et seq.), and 
Section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794). This may 
include collection and maintenance of data on the race, sex, and 
national origin of the recipient's membership/ownership and employees. 
These data must be available to conduct compliance reviews in 
accordance with 7 CFR 1901.204.
    (1) Initial compliance reviews will be conducted by the Agency 
prior to funds being obligated.
    (2) Grants will require one subsequent compliance review following 
project completion. This will occur after the last disbursement of 
grant funds has been made.
    (c) Environmental analysis. 7 CFR part 1940, subpart G or successor 
regulation outlines environmental procedures and requirements for this 
subpart. Prospective Applicants are advised to contact the Agency to 
determine environmental requirements as soon as practicable after they 
decide to pursue any form of financial assistance directly or 
indirectly available through the Agency.
    (1) Any required environmental review must be completed by the 
Agency prior to the Agency obligating any funds.
    (2) The Applicant will be notified of all specific compliance 
requirements, including, but not limited to, the publication of public 
notices, and consultation with State Historic Preservation Offices and 
the U.S. Fish and Wildlife Service.
    (3) A site visit by the Agency may be scheduled, if necessary, to 
determine the scope of the review.
    (d) Discrimination complaints.
    (1) Who may file. Persons or a specific class of persons believing 
they have been subjected to discrimination prohibited by this section 
may file a complaint personally, or by an authorized representative 
with USDA, Director, Office of Adjudication, 1400 Independence Avenue 
SW., Washington, DC 20250.
    (2) Time for filing. A complaint must be filed no later than 180 
days from the date of the alleged discrimination, unless the time for 
filing is extended by the designated officials of USDA or Rural 
Development.


Sec.  4280.109  Ineligible Applicants, borrowers, and owners.

    Applicants, borrowers, and owners will be ineligible to receive 
funds under this subpart as discussed in paragraphs (a) and (b) of this 
section.
    (a) If an Applicant, borrower, or owner has an outstanding judgment 
obtained by the U.S. in a Federal Court (other than in the United 
States Tax Court), is delinquent in the payment of Federal income 
taxes, or is delinquent on a Federal debt, the Applicant, borrower, or 
owner is not eligible to receive a grant or guaranteed loan until the 
judgment is paid in full or otherwise satisfied or the delinquency is 
resolved.
    (b) If an Applicant, borrower, or owner is debarred from receiving 
Federal assistance, the Applicant, borrower, or owner is not eligible 
to receive a grant or guaranteed loan under this subpart.


Sec.  4280.110  General Applicant, application, and funding provisions.

    (a) Satisfactory progress. An Applicant that has received one or 
more grants and/or guaranteed loans under this program must make 
satisfactory progress, as determined by the Agency, toward completion 
of any previously funded projects before the Applicant will be 
considered for subsequent funding.
    (b) Application submittal. Applications must be submitted in 
accordance with the provisions of this subpart unless otherwise 
specified in a Federal Register notice. Grant applications, guaranteed 
loan only applications, and combined guaranteed loan and grant 
applications for financial assistance under this subpart may be 
submitted at any time except for EA and REDA applications. The 
application competition deadline for EA and REDA applications is 
identified in Sec.  4280.193.
    (1) Grant applications. Complete grant applications will be 
accepted on a continuous basis, with awards made based on the 
application's score and subject to available funding. EA and REDA 
applications will be accepted as identified in Sec.  4280.193.
    (2) Guaranteed loan only applications. Each complete guaranteed 
loan-only applications received by the Agency will be scored. Each 
application that is ready for funding and that scores at or above the 
minimum score will be competed on the first business day of the second 
month of each Federal fiscal quarter, with higher scoring applications 
receiving priority. Each application ready for funding that scores 
below the minimum score will be competed during the last fiscal 
quarter.
    (3) Combined guaranteed loan and grant applications. Applications 
requesting a RES or EEI grant and a guaranteed loan under this subpart 
will be accepted on a continuous basis, with awards made based on the 
grant application's score and subject to available funding.
    (c) Limit on number of applications. An Applicant can apply for 
only one Renewable Energy System project, one Energy Efficiency 
Improvement project,

[[Page 22069]]

and one Feasibility Study project under this subpart per Federal Fiscal 
Year.
    (d) Limit on type of funding requests. An Applicant can submit only 
one type of funding request (grant-only, guaranteed loan-only or 
combined funding) for each project under this subpart per Federal 
Fiscal Year.
    (e) Application modification. Once submitted and prior to Agency 
award, if an Applicant modifies its application, the application will 
be treated as a new application. The submission date of record for such 
modified applications will be the date the Agency receives the modified 
application, and the application will be processed by the Agency as a 
new application under this subpart.
    (f) Incomplete applications. Applicants must submit Complete 
Applications in order to be considered for funding. If an application 
is incomplete, the Agency will identify those parts of the application 
that are incomplete and return it, with a written explanation, to the 
Applicant for possible future resubmission. Upon receipt of a Complete 
Application by the appropriate Agency office, the Agency will complete 
its evaluation and will compete the application in accordance with the 
procedures specified in Sec. Sec.  4280.121, 4280.179 or 4280.193 as 
applicable of this subpart.
    (g) Application withdrawal. During the period between the 
submission of an application and the execution of loan and/or grant 
award documents for an application selected for funding, the Applicant 
must notify the Agency, in writing, if the project is no longer viable 
or the Applicant no longer is requesting financial assistance for the 
project. When the Applicant notifies the Agency, the selection will be 
rescinded and/or the application withdrawn.
    (h) Technical report. Each technical report submitted under this 
subpart, as specified in Sec. Sec.  4280.117(e), 4280.118(b)(4), and 
4280.119(b)(3) and 4280.119(b)(4) must comply with the provisions 
specified in paragraphs (h)(1) through (h)(3), as applicable, of this 
section.
    (1) Technical report format and detail. The information in the 
technical report must follow the format specified in Sec.  
4280.119(b)(3), Sec.  4280.119(b)(4), and Appendices A through C of 
this subpart, as applicable. Supporting information may be submitted in 
other formats. Design drawings and process flowcharts are encouraged as 
exhibits. In addition, the information must be of sufficient detail to:
    (i) Allow the Agency to determine the technical merit of the 
Applicant's project under paragraph (i) of this section; and
    (ii) Demonstrate that the Renewable Energy System or Energy 
Efficiency Improvement will operate or perform over the project's 
useful life in a reliable, safe, and a cost-effective manner. Such 
demonstration shall address project design, installation, operation, 
and maintenance.
    (2) Technical report modifications. If a technical report is 
prepared prior to the Applicant's selection of a final design, 
equipment vendor, or contractor, or other significant decision, it may 
be modified and resubmitted to the Agency, provided that the overall 
scope of the project is not materially changed as determined by the 
Agency. Changes in the technical report might require an updated Form 
RD 1940-20, ``Request for Environmental Information.''
    (3) Hybrid projects. If the application is for a Hybrid project, 
technical reports must be prepared for each technology that comprises 
the Hybrid project.
    (i) Technical merit. The Agency will determine the technical merit 
of all applications submitted under this subpart. The Agency's 
determination of a project's technical merit will be based on the 
information provided in the application. The Agency may engage the 
services of other government agencies or other recognized industry 
experts in the applicable technology field, at its discretion, to 
evaluate and rate the application.
    (1) Projects that are determined to have technical merit are 
eligible for funding under this subpart. Projects that are determined 
to be without technical merit will be deemed ineligible for funding 
under this subpart.
    (2) If the information in the application is insufficient to allow 
the Agency to make a technical merit determination, the application 
will be considered by the Agency to be incomplete and such applications 
will be processed according to the procedures specified in paragraph 
(f) of this section.
    (j) Time limit on use of grant funds. (1) Grant funds not expended 
within 2 years from the date the Grant Agreement was signed by the 
Agency will be returned to the Agency. However, the Agency may extend 
this period if the Agency determines, at its sole discretion, that the 
grantee is unable to complete the project for reasons beyond the 
grantee's control. Grantees must submit a request for the no-cost 
extension no later than 30 days before the expiration date of the Grant 
Agreement. This request must describe the extenuating circumstances 
that were beyond their control to complete the project for which the 
grant was awarded, and why an approval is in the Government's best 
interest.
    (2) Funds remaining after grant closeout that exceed the amount the 
grantee is entitled to receive under the Grant Agreement will be 
returned to the Agency.


Sec.  4280.111  Notifications.

    (a) Eligibility. If an Applicant and/or their application is 
determined by the Agency to be eligible for participation, the Agency 
will notify the Applicant or lender, as applicable, in writing.
    (b) Ineligibility. If an Applicant and/or their application is 
determined to be ineligible at any time, the Agency will inform the 
Applicant or lender, as applicable, in writing of the decision, reasons 
therefore, and any appeal rights. No further evaluation of the 
application will occur.
    (c) Disposition of applications. Each Applicant and/or lender, as 
applicable, will be notified of the Agency's decision on their 
application. If the Agency's decision is not to fund an application, 
the Agency will include in the notification any applicable appeal or 
review rights.

Renewable Energy System and Energy Efficiency Improvement Grants


Sec.  4280.112  Applicant eligibility.

    To receive a RES or EEI grant under this subpart, an Applicant must 
meet the requirements specified in paragraphs (a) through (e) of this 
section. If an award is made to an Applicant, that Applicant (grantee) 
must continue to meet the requirements specified in this section. If 
the grantee does not, then grant funds may be recovered from the 
grantee by the Agency in accordance with Departmental Regulations.
    (a) Type of Applicant. The Applicant must be an Agricultural 
Producer or Rural Small Business.
    (b) Ownership and control. The Applicant must:
    (1) Own or be the prospective owner of the project; and
    (2) Own or control the site for the project described in the 
application at the time of application and, if an award is made, for 
the useful life of the project as described in the Grant Agreement.
    (c) Revenues and expenses. The Applicant must have available at the 
time of application satisfactory sources of revenue in an amount 
sufficient to provide for the operation, management, maintenance, and 
any debt service of the project for the useful life of the project. In 
addition, the Applicant must control the revenues and expenses of

[[Page 22070]]

the project, including its operation and maintenance, for which the 
assistance is sought. Notwithstanding the provisions of this paragraph, 
the Applicant may employ a Qualified Consultant under contract to 
manage revenues and expenses of the project and its operation and/or 
maintenance.
    (d) Legal authority and responsibility. Each Applicant must have 
the legal authority necessary to apply for and carry out the purpose of 
the grant.
    (e) Universal identifier and System for Awards Management (SAM). 
Unless exempt under 2 CFR 25.110, the Applicant must:
    (1) Be registered in the SAM prior to submitting an application or 
plan;
    (2) Maintain an active SAM registration with current information at 
all times during which it has an active Federal award or an application 
or plan under consideration by the Agency; and
    (3) Provide its DUNS number in each application or plan it submits 
to the Agency. Generally, the DUNS number is included on Standard Form-
424, ``Application for Federal Assistance.''


Sec.  4280.113  Project eligibility.

    For a project to be eligible to receive a RES or EEI grant under 
this subpart, the proposed project must meet each of the requirements 
specified in paragraphs (a) through (e) of this section.
    (a) Be for:
    (1) The purchase of a new Renewable Energy System;
    (2) The purchase of a Refurbished Renewable Energy System;
    (3) The Retrofitting of an existing Renewable Energy System; or
    (4) Making Energy Efficiency Improvements that will use less energy 
on an annual basis than the original building and/or equipment that it 
will improve or replace as demonstrated in an Energy Analysis, Energy 
Assessment, or Energy Audit as applicable.
    (i) Eligible Energy Efficiency Improvements include, but are not 
limited to:
    (A) Efficiency improvements to existing Renewable Energy Systems 
and
    (B) Construction of a new energy efficient building only when the 
building is used for the same purpose as the existing building, and, 
based on an Energy Analysis, Energy Audit, or Energy Assessment, as 
applicable, it will be more cost effective to construct a new building 
and will use less energy on annual basis than improving the existing 
building.
    (ii) If the proposed Energy Efficiency Improvement would duplicate 
the same Energy Efficiency Improvement that had previously received 
funds under this subpart, then the proposed improvement is ineligible. 
For example, an Applicant received a grant to replace the windows in a 
warehouse with more energy efficient windows. Shortly thereafter, the 
Applicant decides to replace the new windows. An application for 
replacing the new windows would be ineligible for funding under this 
subpart.
    (b) Be for a Commercially Available and replicable technology;
    (c) Have technical merit, as determined using the procedures 
specified in Sec.  4280.110(i); and
    (d) Be located in a Rural Area in a State if the type of Applicant 
is a Rural Small Business, or in a Rural or non-Rural area in a State 
if the type of Applicant is an Agricultural Producer. If the 
Agricultural Producer's operation is in a non-Rural area, then the 
application can only be for Renewable Energy Systems or Energy 
Efficiency Improvements on integral components of or that are directly 
related to the agricultural production operation, such as vertically 
integrated operations, and are part of and co-located with the 
agricultural production operation.
    (e) The Applicant is cautioned against taking any actions or 
incurring any obligations prior to the Agency completing the 
environmental review that would either limit the range of alternatives 
to be considered or that would have an adverse effect on the 
environment, such as the initiation of construction. If the Applicant 
takes any such actions or incurs any such obligations, it could result 
in project ineligibility.


Sec.  4280.114  [Reserved]


Sec.  4280.115  RES and EEI grant funding.

    (a) Grant amounts. The amount of grant funds that will be made 
available to an eligible RES or EEI project under this subpart will not 
exceed 25 percent of total Eligible Project Costs. Eligible Project 
Costs are specified in paragraph (c) of this section.
    (1) Minimum request. Unless otherwise specified in a Federal 
Register notice, the minimum request for a RES grant application is 
$2,500 and the minimum request for an EEI grant application is $1,500.
    (2) Maximum request. Unless otherwise specified in a Federal 
Register notice, the maximum request for a RES grant application is 
$500,000 and the maximum request for an EEI grant application is 
$250,000.
    (3) Maximum grant assistance. Unless otherwise specified in a 
Federal Register notice, the maximum amount of grant assistance to one 
individual or entity under this subpart will not exceed $750,000 per 
Federal Fiscal Year.
    (b) Matching Funds. The Applicant is responsible for securing the 
remainder of the Total Project Costs not covered by grant funds.
    (1) Without specific statutory authority, other Federal grant funds 
cannot be used to meet the Matching Funds requirement. A copy of the 
statutory authority must be provided to the Agency to verify if the 
other Federal grant funds can be used to meet the Matching Funds 
requirement under this subpart.
    (2) Passive third-party equity contributions are acceptable for RES 
projects, including equity raised from the sale of Federal tax credits.
    (c) Eligible Project Costs. Eligible Project Costs are only those 
costs incurred after a Complete Application has been received by the 
Agency and are associated with the items identified in paragraphs 
(c)(1) through (c)(5) of this section. Each item identified in 
paragraphs (c)(1) through (c)(5) is only an Eligible Project Cost if it 
is either an integral component of or directly related to and its use 
and purpose is limited to the Renewable Energy System or Energy 
Efficiency Improvement.
    (1) Purchase and installation of new or Refurbished equipment.
    (2) Construction, Retrofitting, and improvements.
    (3) Energy Efficiency Improvements identified in the applicable 
Energy Analysis, Energy Assessment, or Energy Audit.
    (4) Fees for construction permits and licenses.
    (5) Professional service fees for Qualified Consultants, 
contractors, installers, and other third-party services.
    (d) Ineligible project costs. Ineligible project costs for RES and 
EEI projects include, but are not limited to:
    (1) Agricultural tillage equipment, Used Equipment, and vehicles;
    (2) Residential RES or EEI projects;
    (3) Construction or equipment costs that would be incurred 
regardless of the installation of a Renewable Energy System or Energy 
Efficiency Improvement shall not be included as an Eligible Project 
Costs. For example, the foundation for a building where a Renewable 
Energy System is being installed, storage only grains bins connected to 
drying systems, and the roofing of a building where solar panels are 
being attached;
    (4) Businesses that derive more than 10 percent of annual gross 
revenue (including any lease income from space or machines) from 
gambling activity, excluding State or Tribal-authorized

[[Page 22071]]

lottery proceeds, as approved by the Agency, conducted for the purpose 
of raising funds for the approved project;
    (5) Businesses deriving income from activities of a sexual nature 
or illegal activities;
    (6) The guarantee of lease payments;
    (7) Guaranteeing loans made by other Federal agencies;
    (8) Any project that creates a conflict of interest or an 
appearance of a conflict of interest as provided in Sec.  4280.106;
    (9) Funding of political or lobbying activities; and
    (10) To pay off any Federal direct or guaranteed loans.
    (e) Award amount considerations. In determining the amount of a RES 
or EEI grant awarded, the Agency will take into consideration the 
following six criteria:
    (1) The type of Renewable Energy System to be purchased;
    (2) The estimated quantity of energy to be generated by the 
Renewable Energy System;
    (3) The expected environmental benefits of the Renewable Energy 
System;
    (4) The quantity of energy savings expected to be derived from the 
activity, as demonstrated by an Energy Audit;
    (5) The estimated period of time for the energy savings generated 
by the activity to equal the cost of the activity; and
    (6) The expected energy efficiency of the Renewable Energy System.


Sec.  4280.116  Grant applications--general.

    (a) General. Separate applications must be submitted for RES and 
EEI projects. An original of each application is required.
    (b) Application content. Applications for RES projects or EEI 
projects must contain the information specified in Sec.  4280.117 
unless the requirements of either Sec.  4280.118(a) or Sec.  
4280.119(a) are met. If the requirements of Sec.  4280.118(a) are met, 
the application may contain the information specified in Sec.  
4280.118(b). If the requirements of Sec.  4280.119(a) are met, the 
application may contain the information specified in Sec.  4280.119(b).
    (c) Evaluation of applications. The Agency will evaluate each RES 
and EEI grant application and make a determination as to whether:
    (1) The grant application documentation is complete;
    (2) The Applicant is eligible;
    (3) The proposed grant is for an eligible project; and
    (4) The proposed project has technical merit.


Sec.  4280.117  Grant applications for RES and EEI projects with Total 
Project Costs greater than $200,000.

    Grant applications for RES and EEI projects with Total Project 
Costs greater than $200,000 must provide the information specified in 
this section. This information must be presented in the order shown in 
paragraphs (a) through (f), as applicable, of this section. Each 
Applicant is encouraged, but is not required, to self-score the project 
using the evaluation criteria in Sec.  4280.120 and to submit with 
their application the total score, including appropriate calculations 
and attached documentation or specific cross-references to information 
elsewhere in the application.
    (a) Forms and certifications. Each application must contain the 
forms and certifications specified in paragraphs (a)(1) through (a)(9), 
as applicable, of this section, except that Form AD 2106, ``Form to 
Assist in Assessment of USDA Compliance with Civil Rights Laws,'' is 
optional.
    (1) Form SF-424.
    (2) Form SF-424C, ``Budget Information-Construction Programs.''
    (3) Form SF-424D, ``Assurances-Construction Programs.''
    (4) Form AD 2106. Although this form is optional, if the applicant 
has previously submitted the form to the Agency or another Federal 
agency, the applicant does not need to resubmit the form.
    (5) Form RD 1940-20 with documentation attached for the appropriate 
level of environmental assessment. The Applicant should contact the 
Agency to determine what documentation is required to be provided.
    (6) The Applicant must identify whether or not the Applicant has a 
known relationship or association with an Agency employee. If there is 
a known relationship, the Applicant must identify each Agency employee 
with whom the Applicant has a known relationship.
    (7) Certification that the Applicant is a legal entity in good 
standing (as applicable), and operating in accordance with the laws of 
the State(s) or Tribe where the Applicant has a place of business.
    (8) Certification by the Applicant that the equipment required for 
the project is available, can be procured and delivered within the 
proposed project development schedule, and must be installed in 
conformance with manufacturer's specifications and design requirements. 
This would not be applicable when equipment is not part of the project.
    (9) Certification by the Applicant that the project will be 
constructed in accordance with applicable laws, regulations, 
agreements, permits, codes, and standards.
    (b) Applicant information. Provide information to allow the Agency 
to determine the eligibility of the Applicant.
    (1) Type of Applicant. Demonstrate that the Applicant meets the 
definition of Agricultural Producer or Rural Small Business, including 
appropriate information necessary to demonstrate that the Applicant 
meets the Agricultural Producer's percent of gross income derived from 
agricultural operations or the Rural Small Business' size, as 
applicable, requirements identified in these definitions. Include a 
description of the Applicant's farm/ranch/business operation.
    (i) Rural Small Businesses. Identify the primary NAICS code 
applicable to the Applicant's operation. Provide sufficient information 
to determine total Annual Receipts for the past 3 years and number of 
employees of the business and any parent, subsidiary, or affiliates at 
other locations to demonstrate that the Applicant meets the definition 
of Small Business. If the Rural Small Business Applicant has not 
engaged in business operations for the past 3 years, than information 
for as long as the Rural Small Business Applicant has been in business 
must be submitted. New businesses that do not have any Annual Receipts 
must provide projections based upon a typical operating year for a 2-
year time period.
    (ii) Agricultural producers. Provide the gross market value of the 
Applicant's agricultural products, gross agricultural income of the 
Applicant, and gross nonfarm income of the Applicant for the calendar 
year preceding the year in which the application is being submitted.
    (2) Applicant description. Describe the ownership of the Applicant, 
including the following information if applicable.
    (i) Ownership and control. Describe how the Applicant meets the 
ownership and control requirements.
    (ii) Affiliated companies. For entities (e.g., corporate parents, 
affiliates, subsidiaries), provide a list of the individual owners with 
their contact information of those entities. Describe the relationship 
between the Applicant and these other entities, including management 
and products exchanged.
    (3) Financial information. Financial information is required on the 
total operation of the Agricultural Producer/Rural Small Business and 
its parent, subsidiary, or affiliates at other

[[Page 22072]]

locations. All information submitted under this paragraph must be 
substantiated by authoritative records.
    (i) Historical financial statements. Provide historical financial 
statements prepared in accordance with Generally Accepted Accounting 
Practices (GAAP) for the past 3 years, including income statements and 
balance sheets. If Agricultural Producers are unable to present this 
information in accordance with GAAP, they may instead present financial 
information in the format that is generally required by commercial 
agriculture lenders.
    (ii) Current balance sheet and income statement. Provide a current 
balance sheet and income statement prepared in accordance with GAAP and 
dated within 90 days of the application. Agricultural producers can 
present financial information in the format that is generally required 
by commercial agriculture lenders.
    (iii) Pro forma financial statements. Provide pro forma balance 
sheet at start-up of the Agricultural Producer's/Rural Small Business' 
business that reflects the use of the loan proceeds or grant award; and 
3 additional years, indicating the necessary start-up capital, 
operating capital, and short-term credit; and projected cash flow and 
income statements for 3 years supported by a list of assumptions 
showing the basis for the projections.
    (4) Previous grants and loans. State whether the Applicant has 
received any grants and/or loans under this subpart. If the Applicant 
has, identify each such grant and/or loan and describe the progress the 
Applicant has made on each project for which the grant and/or loan was 
received, including projected schedules and actual completion dates.
    (c) Project information. Provide information concerning the 
proposed project as a whole and its relationship to the Applicant's 
operations, including the following:
    (1) Identification as to whether the project is for a RES or an EEI 
project. Include a description and the location of the project.
    (2) A description of the process that will be used to conduct all 
procurement transactions to demonstrate compliance with Sec.  
4280.124(a)(1).
    (3) Describe how the proposed project will have a positive effect 
on resource conservation (e.g., water, soil, forest), public health 
(e.g., potable water, air quality), and the environment (e.g., 
compliance with the U.S. Environmental Protection Agency's renewable 
fuel standard(s), greenhouse gases, emissions, particulate matter).
    (4) Identify the amount of Matching Funds and the source(s) the 
Applicant is proposing to use for the project. Provide written 
commitments for Matching Funds at the time the application is submitted 
to receive points under the readiness scoring criterion.
    (d) Feasibility Study for Renewable Energy Systems. If the 
application is for a RES project with Total Project Costs greater than 
$200,000, a Feasibility Study must be submitted as specified in 
Appendix D of this subpart. The Feasibility Study must be conducted by 
a Qualified Consultant.
    (e) Technical report. Each application must contain a technical 
report prepared in accordance with Sec.  4280.110(h) and Appendix A or 
C, as applicable, of this subpart.
    (f) Construction planning and performing development. Each 
application submitted must be in accordance with Sec.  4280.124 for 
planning, designing, bidding, contracting, and constructing RES and EEI 
projects as applicable.


Sec.  4280.118  Grant applications for RES and EEI projects with Total 
Project Costs of $200,000 or less.

    Grant applications for RES and EEI projects with Total Project 
Costs of $200,000 or less may provide the information specified in this 
section or, if the Applicant elects to do so, the information specified 
in Sec.  4280.117. In order to submit an application under this 
section, the criteria specified in paragraph (a) of this section must 
be met. The content for applications submitted under this section is 
specified in paragraph (b) of this section. Unless otherwise specified 
in this subpart, the construction planning and performing development 
procedures and the payment process that will be used for awards for 
applications submitted under this section are specified in paragraphs 
(c) and (d), respectively, of this section.
    (a) Criteria for submitting applications for projects with Total 
Project Costs of $200,000 or less. In order to submit an application 
under this section, each of the conditions specified in paragraphs 
(a)(1) through (a)(7) of this section must be met.
    (1) The Applicant must be eligible in accordance with Sec.  
4280.112.
    (2) The project must be eligible in accordance with Sec.  4280.113.
    (3) Total Project Costs must be $200,000 or less.
    (4) Construction planning and performing development must be 
performed in compliance with paragraph (c) of this section. The 
Applicant or the Applicant's prime contractor assumes all risks and 
responsibilities of project development.
    (5) The Applicant or the Applicant's prime contractor is 
responsible for all interim financing, including during construction.
    (6) The Applicant agrees not to request reimbursement from funds 
obligated under this program until after project completion.
    (7) The Applicant must maintain insurance as required under Sec.  
4280.122(b), except business interruption insurance is not required.
    (b) Application content. Applications submitted under this section 
must contain the information specified in paragraphs (b)(1) through 
(b)(4) of this section and must be presented in the same order. Each 
Applicant is encouraged, but is not required, to self-score the project 
using the evaluation criteria in Sec.  4280.120 and to submit with 
their application the total score, including appropriate calculations 
and attached documentation or specific cross-references to information 
elsewhere in the application.
    (1) Forms and certifications. The application must contain the 
items identified in Sec.  4280.117(a). In addition, the Applicant must 
submit a certification that the Applicant meets each of the criteria 
for submitting an application under this section as specified in 
paragraph (a) of this section.
    (2) Applicant information. The application must contain the items 
identified in Sec.  4280.117(b), except that the information specified 
in Sec.  4280.117(b)(3) is not required.
    (3) Project information. The application must contain the items 
identified in Sec.  4280.117(c).
    (4) Technical report. Each application must contain a technical 
report in accordance with Sec.  4280.110(h) and Appendix A or B, as 
applicable, of this subpart.
    (c) Construction planning and performing development. Applicants 
submitting applications under this section must comply with the 
requirements specified in paragraphs (c)(1) through (c)(3) of this 
section for construction planning and performing development.
    (1) General. Paragraphs (a)(1), (a)(2), and (a)(4) of Sec.  
4280.124 apply.
    (2) Small acquisition and construction procedures. Small 
acquisition and construction procedures are those relatively simple and 
informal procurement methods that are sound and appropriate for a 
procurement of services, equipment and construction of a RES or EEI 
project with a Total Project Cost of not more than $200,000. The 
Applicant is solely responsible for the execution of all contracts 
under this

[[Page 22073]]

procedure, and Agency review and approval is not required.
    (3) Contractor forms. Applicants must have each contractor sign, as 
applicable:
    (i) Form RD 400-6, ``Compliance Statement,'' for contracts 
exceeding $10,000; and
    (ii) Form AD-1048, ``Certification Regarding Debarment, Suspension, 
Ineligibility and Voluntary Exclusion--Lower Tier Covered 
Transactions,'' for contracts exceeding $25,000.
    (d) Payment process for applications for RES and EEI projects with 
Total Project Costs of $200,000 or less. (1) Upon completion of the 
project, the grantee must submit to the Agency a copy of the 
contractor's certification of final completion for the project and a 
statement that the grantee accepts the work completed. At its 
discretion, the Agency may require the Applicant to have an Inspector 
certify that the project is constructed and installed correctly.
    (2) The RES or EEI project must be constructed, installed, and 
operating as described in the technical report prior to disbursement of 
funds. For Renewable Energy Systems, the system must be operating at 
the steady state operating level described in the technical report for 
a period of not less than 30 days, unless this requirement is modified 
by the Agency, prior to disbursement of funds. Any modification to the 
30-day steady state operating level requirement will be based on the 
Agency's review of the technical report and will be incorporated into 
the Letter of Conditions.
    (3) Prior to making payment, the Agency will be provided with Form 
RD 1924-9, ``Certificate of Contractor's Release,'' and Form RD 1924-
10, ``Release by Claimants,'' or similar forms, executed by all persons 
who furnished materials or labor in connection with the contract.


Sec.  4280.119  Grant applications for RES and EEI projects with Total 
Project Costs of $80,000 or less.

    Grant applications for RES and EEI projects with Total Project 
Costs of $80,000 or less must provide the information specified in this 
section or, if the Applicant elects to do so, the information specified 
in either Sec. Sec.  4280.117 or 4280.118. In order to submit an 
application under this section, the criteria specified in paragraph (a) 
of this section must be met. The content for applications submitted 
under this section is specified in paragraph (b) of this section. 
Unless otherwise specified in this subpart, the construction planning 
and performing development procedures and the payment process that will 
be used for awards for applications submitted under this section are 
specified in paragraphs (c) and (d), respectively, of this section.
    (a) Criteria for submitting applications for RES and EEI projects 
with Total Project Costs of $80,000 or less. In order to submit an 
application under this section, each of the conditions specified in 
paragraphs (a)(1) through (a)(7) of this section must be met.
    (1) The Applicant must be eligible in accordance with Sec.  
4280.112.
    (2) The project must be eligible in accordance with Sec.  4280.113.
    (3) Total Project Costs must be $80,000 or less.
    (4) Construction planning and performing development must be 
performed in compliance with paragraph (c) of this section. The 
Applicant or the Applicant's prime contractor assumes all risks and 
responsibilities of project development.
    (5) The Applicant or the Applicant's prime contractor is 
responsible for all interim financing, including during construction.
    (6) The Applicant agrees not to request reimbursement from funds 
obligated under this program until after project completion.
    (7) The Applicant must maintain insurance as required under Sec.  
4280.122(b), except business interruption insurance is not required.
    (b) Application content. Applications submitted under this section 
must contain the information specified in paragraphs (b)(1) through 
(b)(4), as applicable, of this section and must be presented in the 
same order. Each Applicant is encouraged, but is not required, to self-
score the project using the evaluation criteria in Sec.  4280.120 and 
to submit with their application the total score, including appropriate 
calculations and attached documentation or specific cross-references to 
information elsewhere in the application.
    (1) Forms and certifications. Each application must contain the 
forms and certifications specified in paragraphs (b)(1)(i) through 
(b)(1)(ix), as applicable, of this section except that Form AD 2106 is 
optional.
    (i) Form SF-424.
    (ii) Form SF-424C.
    (iii) Form SF-424D.
    (iv) Form AD 2106. Although this form is optional, if the applicant 
has previously submitted the form to the Agency or another Federal 
agency, the applicant does not need to resubmit the form.
    (v) Form RD 1940-20 with documentation attached for the appropriate 
level of environmental assessment. The Applicant should contact the 
Agency to determine what documentation is required to be provided.
    (vi) Certification by the Applicant that:
    (A) The Applicant meets each of the Applicant eligibility criteria 
found in Sec.  4280.112;
    (B) The proposed project meets each of the project eligibility 
requirements found in Sec.  4280.113;
    (C) The design, engineering, testing, and monitoring will be 
sufficient to demonstrate that the proposed project will meet its 
intended purpose;
    (D) The equipment required for the project is available, can be 
procured and delivered within the proposed project development 
schedule, and will be installed in conformance with manufacturer's 
specifications and design requirements. This would not be applicable 
when equipment is not part of the project;
    (E) The project will be constructed in accordance with applicable 
laws, regulations, agreements, permits, codes, and standards;
    (F) The Applicant meets the criteria for submitting an application 
for projects with Total Project Costs of $80,000 or less;
    (G) The Applicant will abide by the open and free competition 
requirements in compliance with Sec.  4280.124(a)(1);
    (H) For Bioenergy Projects, any and all woody biomass feedstock 
from National forest system land or public lands cannot be otherwise 
used as a higher value wood-based product; and
    (I) For applications for the installation of equipment and tanks 
directly associated with Flexible Fuel Pumps, Blended Liquid 
Transportation Fuel is available and there is demand for that fuel in 
its service area.
    (vii) State whether the Applicant has received any grants and/or 
loans under this subpart. If the Applicant has, identify each such 
grant and/or loan and describe the progress the Applicant has made on 
each project for which the grant and/or loan was received, including 
projected schedules and actual completion dates.
    (viii) The Applicant must identify whether or not the Applicant has 
a known relationship or association with an Agency employee. If there 
is a known relationship, the Applicant must identify each Agency 
employee with whom the Applicant has a known relationship.
    (ix) The Applicant is a legal entity in good standing (as 
applicable), and operating in accordance with the laws of the State(s) 
or Tribe where the Applicant has a place of business.

[[Page 22074]]

    (2) General. For both RES and EEI project applications:
    (i) Identify whether the project is for a RES or an EEI project;
    (ii) Identify the primary NAICS code applicable to the Applicant's 
operation if known or a description of the operation in enough detail 
for the Agency to determine the primary NAICS code;
    (iii) Describe in detail or document how the proposed project will 
have a positive effect on resource conservation (e.g., water, soil, 
forest), public health (e.g., potable water, air quality), and the 
environment (e.g., compliance with the U.S. Environmental Protection 
Agency's renewable fuel standard(s), greenhouse gases, emissions, 
particulate matter); and
    (iv) Identify the amount of Matching Funds and the source(s) the 
Applicant is proposing to use for the project. In order to receive 
points under the readiness scoring criterion, written commitments for 
Matching Funds (e.g., a Letter of Commitment, bank statement) must be 
submitted when the application is submitted.
    (3) Technical report for energy efficiency improvements. Each EEI 
application submitted under this section must include a technical 
report in accordance with Sec.  4280.110(h) and paragraphs (b)(3)(i) 
through (b)(3)(v) of this section.
    (i) Project description. Provide a description of the proposed 
Energy Efficiency Improvement, including its intended purpose.
    (ii) Qualifications of EEI provider(s). Provide a resume or other 
evidence of the contractor or installer's qualifications and experience 
with the proposed EEI technology. Any contractor or installer with less 
than 2 years of experience may be required to provide additional 
information in order for the Agency to determine if they are a 
qualified installer/contractor.
    (iii) Energy Analysis. For the most recent 36 months, or the length 
of ownership if in operation for less than 36 months, prior to the date 
the application is submitted, provide both the total amount and the 
total cost of energy used for the original building and/or equipment, 
as applicable, for each improvement identified in the potential 
project. In addition, provide for each improvement identified in the 
potential project an estimate of the total amount energy that would 
have been used and the total cost that would have been incurred if the 
proposed project was in operation for this same time period.
    (iv) Simple Payback. Estimate Simple Payback.
    (v) Qualifications of Energy Analysis provider. Provide the 
qualifications of the individual or entity which completed the Energy 
Analysis specified in paragraph (b)(3)(iii) of this section.
    (4) Technical report for Renewable Energy Systems. Each RES 
application submitted under this section must include a technical 
report in accordance with Sec.  4280.110(h) and paragraphs (b)(4)(i) 
through (b)(4)(iv) of this section.
    (i) Project and resource descriptions. Provide a description of the 
project, including its intended purpose and a summary of how the 
project will be constructed and installed. Identify the project's 
location and describe the project site. Describe the quality and 
availability of the renewable resource at the project site.
    (ii) Energy generation. Identify the amount of Renewable Energy 
that will be generated once the proposed system is operating at its 
steady state operating level.
    (iii) Project economic assessment. Describe the projected financial 
performance of the proposed project. The description must address Total 
Project Costs, energy savings, and revenues, including applicable 
investment and other production incentives accruing from government 
entities. Revenues to be considered shall accrue from the sale of 
energy, offset or savings in energy costs, byproducts, and green tags. 
Information must be provided to allow the calculation of Simple 
Payback.
    (iv) Qualifications of key service providers. Describe the key 
service providers, including the number of similar systems installed 
and/or manufactured, professional credentials, licenses, and relevant 
experience. If specific numbers are not available for similar systems, 
you may submit an estimation of the number of similar systems.
    (c) Construction planning and performing development for 
applications submitted under this section. All Applicants submitting 
applications under this section must comply with the requirements 
specified in paragraphs (c)(1) through (c)(3) of this section for 
construction planning and performing development.
    (1) General. Paragraphs (a)(1), (a)(2), and (a)(4) of Sec.  
4280.124 apply.
    (2) Small acquisition and construction procedures. Small 
acquisition and construction procedures are those relatively simple and 
informal procurement methods that are sound and appropriate for a 
procurement of services, equipment and construction of a RES or EEI 
project with a Total Project Cost of not more than $80,000. The 
Applicant is solely responsible for the execution of all contracts 
under this procedure, and Agency review and approval is not required.
    (3) Contractor forms. Applicants must have each contractor sign, as 
applicable:
    (i) Form RD 400-6 for contracts exceeding $10,000; and
    (ii) Form AD-1048 for contracts exceeding $25,000.
    (d) Payment process for applications for RES and EEI projects with 
Total Project Costs of $80,000 or less. (1) Upon completion of the 
project, the grantee must submit to the Agency a copy of the 
contractor's certification of final completion for the project and a 
statement that the grantee accepts the work completed. At its 
discretion, the Agency may require the Applicant to have an Inspector 
certify that the project is constructed and installed correctly.
    (2) The RES or EEI project must be constructed, installed, and 
operating as described in the technical report prior to disbursement of 
funds. For Renewable Energy Systems, the system must be operating at 
the steady state operating level described in the technical report for 
a period of not less than 30 days, unless this requirement is modified 
by the Agency, prior to disbursement of funds. Any modification to the 
30-day steady state operating level requirement will be based on the 
Agency's review of the technical report and will be incorporated into 
the Letter of Conditions.
    (3) Prior to making payment, the grantee must provide the Agency 
with Form RD 1924-9 and Form RD 1924-10, or similar forms, executed by 
all persons who furnished materials or labor in connection with the 
contract.


Sec.  4280.120  Scoring RES and EEI grant applications.

    Agency personnel will score each eligible RES and EEI application 
based on the scoring criteria specified in this section, unless 
otherwise specified in a Federal Register notice, with a maximum score 
of 100 points possible.
    (a) Environmental benefits. Five points will be awarded for this 
criterion if the Applicant has documented in the application that the 
proposed project will have a positive effect on any of the three impact 
areas: resource conservation (e.g., water, soil, forest), public health 
(e.g., potable water, air quality), and the environment (e.g., 
compliance with the U.S. Environmental Protection Agency's renewable 
fuel standard(s), greenhouse gases, emissions, particulate matter).
    (b) Quantity of energy generated or saved per REAP grant dollar 
requested,

[[Page 22075]]

and renewable fuel dispensed through Flexible Fuel Pumps. For RES and 
EEI projects, points will be awarded for either the amount of energy 
generation per grant dollar requested, which includes those projects 
that are replacing energy usage with a renewable source, or the average 
annual energy savings over the most recent 36 months per grant dollar 
requested; points will not be awarded for more than one category. For 
Flexible Fuel Pumps, points will be awarded based on the average annual 
gallons of renewable fuel estimated to be sold over the first 2 years 
per grant dollar requested. Ratios of energy generated and energy 
savings per grant dollar requested and of average annual gallons of 
renewable fuel estimated to be sold over the first 2 years per grant 
dollar requested that fall between the levels identified below will be 
assigned points based on Equations 1, 2, or 3, as applicable, rounded 
to the nearest hundredth of a point.
    (1) Renewable Energy Systems. The quantity of energy generated per 
grant dollar requested will be determined by dividing the projected 
total annual energy generated by the Renewable Energy System, which 
will be converted to BTUs, by the grant dollars requested. Points will 
be awarded based on the annual amount of energy generated per grant 
dollar requested for the proposed Renewable Energy System as determined 
using paragraphs (b)(1)(i) and (b)(1)(ii) of this section. A maximum of 
25 points will be awarded under this criterion.
    (i) The annual energy generated per grant dollar requested will be 
calculated using Equation 1.

Equation 1: EG/$ = (EG12/GR)

Where:

EG/$ = Energy generated per grant dollar requested.
EG12 = Energy generated (BTUs) by the proposed Renewable 
Energy System over the most recent 12-month period.
GR = Grant amount requested under this subpart.

    (ii) If the annual energy generated per grant dollar requested 
calculated under paragraph (b)(1)(i) of this section is:
    (A) Less than 25,000 BTUs annual energy generated per grant dollar 
requested, points will be awarded as follows: Points awarded = (EG/$)/
25,000 x 25 points, where the points awarded are rounded to the nearest 
hundredth of a point.
    (B) 25,000 BTUs annual energy generated per grant dollar or higher, 
25 points will be awarded. For example, An Applicant has requested a 
$2,500 grant to install a small wind Renewable Energy System which will 
generate 5,000 kilowatt hours (kWh) per year, or 17,060,000 BTUs per 
year (one kWh equals 3,412 BTUs). Thus, there are 6,824 BTUs per grant 
dollar requested (17,060,000 BTUs/$2,500). Because this is less than 
25,000 BTUs annual energy generated per grant dollar requested, points 
will be awarded as follows:

Points awarded = 6,824 BTUs/25,000 BTUs x 25 = 6.824

    This would be rounded to the nearest hundredth, or to 6.82.
    (2) Energy efficiency improvements. Energy savings per grant dollar 
requested will be determined by dividing the average annual energy 
projected to be saved as determined by the Energy Analysis, Energy 
Assessment, or Energy Audit for the Energy Efficiency Improvement, 
which will be converted to BTUs, by the grant dollars requested. Points 
will be awarded based on the average annual amount of energy saved per 
grant dollar requested for the proposed Energy Efficiency Improvement 
as determined using paragraphs (b)(2)(i) and (b)(2)(ii) of this 
section. A maximum of 25 points will be awarded under this criterion.
    (i) The average annual energy saved per grant dollar requested 
shall be calculated using Equation 2.

Equation 2: ES/$ = (ES36/GR)

Where:

ES/$ = Average annual energy saved per grant dollar requested.
ES36 = Average annual energy saved by the proposed Energy 
Efficiency Improvement over the most recent 36-month period as 
identified in the Energy Analysis, Energy Assessment, or Energy 
Audit, as applicable.
GR = Grant amount requested under this subpart.

    (ii) If the average annual energy saved per grant dollar requested 
calculated under paragraph (b)(2)(i) of this section is:
    (A) Less than 25,000 BTUs average annual energy saved per grant 
dollar requested, points will be awarded as follows: Points awarded = 
(ES/$)/25,000 x 25 points, where the points awarded are rounded to the 
nearest hundredth of a point.
    (B) 25,000 BTUs average annual energy saved per grant dollar 
requested or higher, 25 points will be awarded. For example, an 
Applicant has requested a $1,500 grant to install a new boiler. The 
average BTU usage of the existing boiler for the most recent 36 months 
prior to submittal of the application was 125,555,000 BTUs per year. If 
the new boiler had been in place for those same 36 months, the annual 
average BTU usage is estimated to be 100,000,000 BTUs. Thus, the new 
boiler is projected to save the Applicant 25,555,000 BTUs per year. 
Based on this example, there are 17,036.6667 BTUs saved per grant 
dollar requested (25,555,000 BTUs/$1,500). Because this is less than 
25,000 BTUs average annual energy saved per grant dollar requested, 
points will be awarded as follows:

Points awarded = 17,036.6667 BTUs/25,000 BTUs x 25 = 17.03667

    This would be rounded to the nearest hundredth, or to 17.04 points.
    (3) RES--flexible fuel pump(s) for renewable fuels. If the proposed 
project is for Flexible Fuel Pump(s), points will be awarded based on 
the average annual gallons of renewable fuel estimated to be sold over 
the first 2 years by the pumps per grant dollar requested for the 
proposed Flexible Fuel Pumps to be installed, as determined using 
paragraphs (b)(3)(i) and (b)(3)(ii) of this section. A maximum of 25 
points will be awarded under this criterion.
    (i) The average annual gallons of renewable fuel estimated to be 
sold over the first 2 years per grant dollar shall be calculated using 
Equation 3.

Equation 3: RG24/$ = (RG24/GR)

Where:

RG24/$ = Renewable fuel gallons estimated to be sold over 
the first 2 years per grant dollar requested.
RG24 = Average annual renewable gallons estimated to be 
sold by the Applicant over the first 24-month period.
GR = Grant amount requested under this subpart.

    (ii) If the average annual renewable fuel gallons estimated to be 
sold over the first 2 years per grant dollar requested calculated under 
paragraph (b)(3)(i) of this section is:
    (A) Less than 25 gallons of average annual renewable fuel estimated 
to be sold over the first 2 years per grant dollar requested, points 
will be awarded as follows: Points awarded = (RG24/$)/25 x 
25 points, where the points awarded are rounded to the nearest 
hundredth of a point.
    (B) 25 gallons of annual average renewable fuel estimated to be 
sold over the first 2 years per grant dollar or higher, 25 points will 
be awarded. For example, an Applicant has requested a $7,500 grant to 
install a Flexible Fuel Pump at a gas station that, based on the 
technical report, is estimated to sell 100,000 gallons of renewable 
fuel in the first year and 225,000 gallons of renewable fuel in the 
second year, for an average annual sales over the first 2 years of 
162,500 gallons. This equates to approximately 21.67 renewable fuel 
gallons per grant dollar requested (162,500 gallons/$7,500). Because 
this is less than 25 gallons estimated to be sold

[[Page 22076]]

annually per grant dollar, points will be awarded as follows:

Points awarded = ((162,500 gallons/$7,500)/25) x 25 = 21.6667

    This would be rounded to the nearest hundredth, or to 21.67 points.
    (c) Readiness. A maximum of 25 points will be awarded based on the 
level of written commitment an Applicant has from its Matching Fund 
sources that are documented with a Complete Application. If the 
Applicant has written commitments from the source(s) confirming 
commitment of:
    (1) 100 percent of the Matching Funds, 25 points will be awarded.
    (2) 75 percent up to but not including 100 percent of the Matching 
Funds, 10 points will be awarded.
    (3) 50 percent up to but not including 75 percent of the Matching 
Funds, 5 points will be awarded.
    (4) Less than 50 percent, no points will be awarded.
    (d) Size of Agricultural Producer or Rural Small Business. 
Applicants will be awarded points under this criterion based on 
Applicant size compared to the SBA Small Business size standards 
categorized by the NAICS found in 13 CFR 121.201. A maximum of 10 
points will be awarded under this criterion. For Applicants that are:
    (1) One-third or less of the maximum size standard identified by 
SBA, 10 points will be awarded.
    (2) Greater than one-third up to and including two-thirds of the 
maximum size standard identified by SBA, 5 points will be awarded.
    (3) Larger than two-thirds of the maximum size standard identified 
by SBA, no points will be awarded. For example, most agricultural 
production NAICS codes are limited to $750,000 in Annual Receipts. An 
Agricultural Producer within one of the agricultural production NAICS 
codes with Annual Receipts of $250,000 or less would be awarded 10 
points, while an Agricultural Producer with Annual Receipts of more 
than $250,000 Annual Receipts up to and including $500,000, would be 
awarded 5 points.
    (e) Previous grantees and borrowers. Points under this scoring 
criterion will be awarded based on whether the Applicant has received a 
grant or guaranteed loan under this subpart. A maximum of 10 points 
will be awarded.
    (1) If the Applicant has never received a grant and/or guaranteed 
loan under this subpart, 10 points will be awarded.
    (2) If the Applicant has not received a grant and/or guaranteed 
loan under this subpart within the 2 previous Federal Fiscal Years, 5 
points will be awarded.
    (f) Simple Payback. A maximum of 15 points will be awarded for 
either Renewable Energy Systems or Energy Efficiency Improvements; 
points will not be awarded for more than one category. In either case, 
points will be awarded based on the Simple Payback of the project.
    (1) Renewable Energy Systems, including Flexible Fuel Pumps. If the 
Simple Payback of the proposed project is:
    (i) Less than 10 years, 15 points will be awarded;
    (ii) 10 years up to but not including 15 years, 10 points will be 
awarded;
    (iii) 15 years up to and including 20 years, 5 points will be 
awarded; or
    (iv) Longer than 20 years, no points will be awarded.
    (2) Energy Efficiency Improvements. If the Simple Payback of the 
proposed project is:
    (i) Less than 4 years, 15 points will be awarded;
    (ii) 4 years up to but not including 8 years, 10 points will be 
awarded;
    (iii) 8 years up to and including 12 years, 5 points will be 
awarded; or
    (iv) Longer than 12 years, no points will be awarded.
    (g) State Director and Administrator priority points.


A State Director, for its State allocation under this subpart, or the 
Administrator, for making awards from the National Office reserve, may 
award up to 10 points to an application if the application is for an 
under-represented technology or for Flexible Fuel Pumps or if selecting 
the application would help achieve geographic diversity. In no case 
shall an application receive more than 10 points under this criterion.


Sec.  4280.121  Selecting RES and EEI grant applications for award.

    (a) State competitions. Complete RES and EEI grant applications 
will be competed against each other twice each calendar year. Complete 
RES and EEI grant applications received by the Agency by 4:30 p.m. 
local time on November 30 will be competed against each other. Complete 
RES and EEI applications received by the Agency by 4:30 p.m. local time 
on May 31, including any Complete Applications competed in the November 
30 competition, but that were not funded, will be competed against each 
other. If November 30 or May 31 falls on a weekend or a Federally-
observed holiday, the next Federal business day will be considered the 
last day for receipt of a Complete Application.
    (b) Set-aside funding for grants of $20,000 or less. There will be 
one State competition for grants of $20,000 or less competing for set-
aside funds. Complete RES and EEI grant applications for grants of 
$20,000 or less received by the Agency by 4:30 p.m. local time on April 
30 will be competed against each other. If April 30 falls on a weekend 
or a Federally-observed holiday, the next Federal business day will be 
considered the last day for receipt of a Complete Application.
    (c) National competition. All unfunded eligible State applications 
that competed in the May 31 State competition and the April 30 set-
aside competition for grant of $20,000 or less will be competed against 
other applications from other States or Tribes at a final National 
competition.
    (d) Ranking of applications. Complete applications will be 
evaluated, processed, and subsequently ranked, and will compete for 
funding, subject to the availability of grant funding, as described in 
paragraph (a) of this section. Higher scoring applications will receive 
first consideration.
    (e) Funding selected applications. As applications are funded, if 
insufficient funds remain to fund the next highest scoring application, 
the Agency may elect to fund a lower scoring application. Before this 
occurs, the Agency will provide the Applicant of the higher scoring 
application the opportunity to reduce the amount of the Applicant's 
grant request to the amount of funds available. If the Applicant agrees 
to lower its grant request, the Applicant must certify that the 
purposes of the project will be met and provide the remaining total 
funds needed to complete the project. At its discretion, the Agency may 
also elect to allow any remaining multi-year funds to be carried over 
to the next fiscal year rather than selecting a lower scoring 
application.
    (f) Disposition of ranked applications not funded. (1) Based on the 
availability of funding, a ranked application might not be funded in 
the first semiannual competition for which it is eligible. All 
applications not selected for funding will be retained by the Agency 
for consideration in the next subsequent semiannual competition. 
Applications not selected for funding after a total of two semiannual 
competitions will not be considered for funding in future semiannual 
competitions. However, the application may compete in one National 
competition as described in paragraph (c) of this section within the 
Federal Fiscal Year received. If an application is not selected for 
funding after competing in a total of two semiannual competitions and 
one National competition, the Agency will discontinue considering the 
application for potential funding.

[[Page 22077]]

    (2) Applications not selected for funding in the set-aside 
competition for grants of $20,000 or less will not be considered for 
funding in future set-aside competitions. However, applications can 
compete in the May 31 semiannual State competition and the National 
competition as described in paragraph (c) of this section within the 
fiscal year received. If an application is not selected for funding 
after the May 31 semiannual State competition and the National 
competition, the Agency will discontinue considering the application 
for potential funding.
    (g) Commencement of the project. The Applicant assumes all risks if 
the choice is made to purchase the technology proposed or start 
construction of the project to be financed in the grant application 
after the Complete Application has been received by the Agency, but 
prior to award announcement.


Sec.  4280.122  Awarding and administering RES and EEI grants.

    The Agency will award and administer RES and EEI grants in 
accordance with Departmental Regulations and with paragraphs (a) 
through (h) of this section.
    (a) Letter of conditions. A Letter of Conditions will be prepared 
by the Agency, establishing conditions that must be agreed to by the 
Applicant before any obligation of funds can occur. Upon reviewing the 
conditions and requirements in the Letter of Conditions, the Applicant 
must complete, sign, and return the Form RD 1942-26, ``Letter of Intent 
to Meet Conditions,'' and Form RD 1940-1, ``Request for Obligation of 
Funds,'' to the Agency if they accept the conditions of the grant; or 
if certain conditions cannot be met, the Applicant may propose 
alternate conditions to the Agency. The Agency must concur with any 
changes proposed to the Letter of Conditions by the Applicant before 
the application will be further processed.
    (b) Insurance requirements. Agency approved insurance coverage must 
be maintained for 3 years after the Agency has approved the final 
performance report unless this requirement is waived or modified by the 
Agency in writing. Insurance coverage shall include, but is not limited 
to:
    (1) Property insurance, such as fire and extended coverage, will 
normally be maintained on all structures and equipment.
    (2) Liability.
    (3) National flood insurance is required in accordance with 7 CFR 
part 1806, subpart B, of this title, if applicable.
    (4) Business interruption insurance for projects with Total Project 
Costs of more than $200,000.
    (c) Forms and certifications. The forms specified in paragraphs 
(c)(1) through (c)(8) of this section will be attached to the Letter of 
Conditions referenced in paragraph (a) of this section. The forms 
specified in paragraphs (c)(1) through (c)(7) of this section and all 
of the certifications must be submitted prior to grant approval. The 
form specified in paragraph (c)(8) of this section, which is to be 
completed by contractors, does not need to be returned to the Agency, 
but must be kept on file by the Grantee.
    (1) Form RD 1942-46, ``Letter of Intent to Meet Conditions.''
    (2) Form RD 1940-1.
    (3) Form AD-1049, ``Certification Regarding Drug-Free Workplace 
Requirements (Grants) Alternative 1-For Grantees Other than 
Individuals.''
    (4) Form SF-LLL, ``Disclosure of Lobbying Activities,'' if the 
grant exceeds $100,000 and/or if the grantee has made or agreed to make 
payment using funds other than Federal appropriated funds to influence 
or attempt to influence a decision in connection with the application.
    (5) Form AD-1047, ``Certification Regarding Debarment, Suspension, 
and Other Responsibility Matters-Primary Covered Transactions.''
    (6) Form RD 400-1, ``Equal Opportunity Agreement,'' or successor 
form.
    (7) Form RD 400-4, ``Assurance Agreement,'' or successor form.
    (8) Form AD-1048, as signed by the contractor or other lower tier 
party.
    (d) Evidence of Matching Funds. If an Applicant submitted written 
evidence of Matching Funds with the application, the Applicant is 
responsible for ensuring that such written evidence is still in effect 
(i.e., not expired) when the grant is executed. If the Applicant did 
not submit written evidence of Matching Funds with the application, the 
Applicant must submit such written evidence that is in effect before 
the Agency will execute the Grant Agreement. In either case, written 
evidence of Matching Funds must be provided to the Agency before 
execution of the Grant Agreement and must be in effect (i.e., must not 
have expired) at the time Grant Agreement is executed.
    (e) SAM number. Before the Grant Agreement can be executed, the 
number and expiration date of the Applicant's SAM number are required.
    (f) Grant Agreement. Once the requirements specified in paragraphs 
(a) through (e) of this section have been met, the Grant Agreement can 
be executed by the grantee and the Agency. The grantee must abide by 
all requirements contained in the Grant Agreement, this subpart, and 
any other applicable Federal statutes or regulations. Failure to follow 
these requirements might result in termination of the grant and 
adoption of other available remedies.
    (g) Grant approval. The grantee will be sent a copy of the executed 
Form RD 1940-1, the approved scope of work, and the Grant Agreement.
    (h) Power Purchase Agreement. Where applicable, the grantee shall 
provide to the Agency a copy of the executed Power Purchase Agreement 
within 12 months from the date that the Grant Agreement is executed, 
unless otherwise approved by the Agency.


Sec.  4280.123  Servicing RES and EEI grants.

    The Agency will service RES and EEI grants in accordance with the 
requirements specified in Departmental Regulations; 7 CFR part 1951, 
subparts E and O; the Grant Agreement; and paragraphs (a) through (k) 
of this section.
    (a) Inspections. Grantees must permit periodic inspection of the 
project records and operations by a representative of the Agency.
    (b) Programmatic changes. The grantee must obtain prior Agency 
approval for any change to the costs, scope, or contractor or vendor of 
the approved project. Failure to obtain prior approval of any such 
change could result in such remedies as suspension, termination, and 
recovery of grant funds. Requests for changes must be submitted in 
writing to the Agency.
    (1) Changes in project cost or scope. If there is a significant 
reduction in project cost or changes in project scope, then the 
Applicant's funding needs, eligibility, and scoring, as applicable, 
will be reassessed. Decreases in Agency funds will be based on revised 
project costs and other factors, including Agency regulations used at 
the time of grant approval.
    (2) Change of contractor or vendor. When seeking a change, the 
grantee must submit to the Agency a written request for approval. The 
proposed contractor or vendor must have qualifications and experience 
acceptable to the Agency. The written request must contain sufficient 
information, which may include a revised technical report as required 
under Sec.  4280.117(e), Sec.  4280.118(b)(4), Sec.  4280.119(b)(3), or 
Sec.  4280.119(b)(4), as applicable, to demonstrate to the Agency's 
satisfaction that such change maintains project integrity. If the 
Agency determines that project integrity continues to be

[[Page 22078]]

demonstrated, the grantee may make the change. If the Agency determines 
that project integrity is no longer demonstrated, the change will not 
be approved and the grantee has the following options: continue with 
the original contractor or vendor; find another contractor or vendor 
that has qualifications and experience acceptable to the Agency to 
complete the project; or terminate the grant by providing a written 
request to the Agency. No additional funding will be available from the 
Agency if costs for the project have increased. The Agency decision 
will be provided in writing.
    (c) Transfer of obligations. Prior to the construction of the 
project, the grantee may request, in writing, a transfer of obligation 
to a different (substitute) grantee. Subject to Agency approval 
provided in writing, an obligation of funds established for a grantee 
may be transferred to a substitute grantee provided:
    (1) The substituted grantee
    (i) Is eligible;
    (ii) Has a close and genuine relationship with the original 
grantee; and
    (iii) Has the authority to receive the assistance approved for the 
original grantee; and
    (2) The type of RES or EEI technology, the project cost and scope 
of the project for which the Agency funds will be used remain 
unchanged.
    (d) Transfer of ownership. After the construction of the project, 
the grantee may request, in writing, a transfer of the Grant Agreement 
to another entity. Subject to Agency approval provided in writing, the 
Grant Agreement may be transferred to another entity provided:
    (1) The entity is determined by the Agency to be an eligible entity 
under this subpart; and
    (2) The type of RES or EEI technology and the scope of the project 
for which the Agency funds will be used remain unchanged.
    (e) Disposition of acquired property. Grantees must abide by the 
disposition requirements outlined in Departmental Regulations.
    (f) Financial management system and records. The grantee must 
provide for financial management systems and maintain records as 
specified in paragraphs (f)(1) and (f)(2) of this section.
    (1) Financial management system. The grantee will provide for a 
financial system that will include:
    (i) Accurate, current, and complete disclosure of the financial 
results of each grant;
    (ii) Records that identify adequately the source and application of 
funds for grant-supporting activities, together with documentation to 
support the records. Those records must contain information pertaining 
to grant awards and authorizations, obligations, unobligated balances, 
assets, liabilities, outlays, and income; and
    (iii) Effective control over and accountability for all funds. The 
grantee must adequately safeguard all such assets and must ensure that 
funds are used solely for authorized purposes.
    (2) Records. The grantee will retain financial records, supporting 
documents, statistical records, and all other records pertinent to the 
grant for a period of at least 3 years after completion of grant 
activities except that the records must be retained beyond the 3-year 
period if audit findings have not been resolved or if directed by the 
United States. The Agency and the Comptroller General of the United 
States, or any of their duly authorized representatives, must have 
access to any books, documents, papers, and records of the grantee that 
are pertinent to the specific grant for the purpose of making audit, 
examination, excerpts, and transcripts.
    (g) Audit requirements. If applicable, grantees must provide an 
annual audit in accordance with 7 CFR part 3052. The Agency may 
exercise its right to do a program audit after the end of the project 
to ensure that all funding supported Eligible Project Costs.
    (h) Grant Disbursement. As applicable, grantees must disburse grant 
funds as scheduled in accordance with the appropriate construction and 
inspection requirements in Sec. Sec.  4280.118, 4280.119 or 4280.124 as 
applicable of this subpart. Unless required by third parties providing 
cost sharing payments to be provided on a pro-rata basis with other 
Matching Funds, grant funds will be disbursed after all other Matching 
Funds have been expended.
    (1) Unless authorized by the Agency to do so, grantees may submit 
requests for reimbursement no more frequently than monthly. Ordinarily, 
payment will be made within 30 days after receipt of a proper request 
for reimbursement.
    (2) Grantees must not request reimbursement for the Federal share 
of amounts withheld from contractors to ensure satisfactory completion 
of work until after it makes those payments.
    (3) Payments will be made by electronic funds transfer.
    (4) Grantees must use SF-271, ``Outlay Report and Request for 
Reimbursement for Construction Programs,'' or other format prescribed 
by the Agency to request grant reimbursements.
    (5) For a grant awarded to a project with Total Project Costs over 
$200,000, grant funds will be disbursed in accordance with the above 
through 90 percent of grant disbursement. The final 10 percent of grant 
funds will be held by the Agency until construction of the project is 
completed, the project is operational, and the project has met or 
exceeded the steady state operating level as set out in the grant award 
requirements. In addition, the Agency reserves the right to request 
additional information or testing if upon a final site visit the 30 day 
steady state operating level is not found acceptable to the Agency.
    (i) Monitoring of project. Grantees are responsible for ensuring 
that all activities are performed within the approved scope of work and 
that funds are only used for approved purposes.
    (1) Grantees shall constantly monitor performance to ensure that:
    (i) Time schedules are being met;
    (ii) Projected work by time periods is being accomplished;
    (iii) Financial resources are being appropriately expended by 
contractors (if applicable); and
    (iv) Any other performance objectives identified in the scope of 
work are being achieved.
    (2) To the extent that resources are available, the Agency will 
monitor grantees to ensure that activities are performed in accordance 
with the Agency-approved scope of work and to ensure that funds are 
expended for approved purposes. The Agency's monitoring of grantees 
neither:
    (i) Relieves the grantee of its responsibilities to ensure that 
activities are performed within the scope of work approved by the 
Agency and that funds are expended for approved purposes only; nor
    (ii) Provides recourse or a defense to the grantee should the 
grantee conduct unapproved activities, engage in unethical conduct, 
engage in activities that are or that give the appearance of a conflict 
of interest, or expend funds for unapproved purposes.
    (j) Reporting requirements. Financial and project performance 
reports must be provided by grantees and contain the information 
specified in paragraphs (j)(1) through (j)(3)of this section.
    (1) Federal financial reports. Between grant approval and 
completion of project (i.e., construction), SF-425, ``Federal Financial 
Report'' will be required of all grantees as applicable on a semiannual 
basis. The grantee will complete the project within the total sums 
available to it, including the grant, in accordance with the scope of 
work and any necessary modifications thereof

[[Page 22079]]

prepared by grantee and approved by the Agency.
    (2) Project performance reports. Between grant approval and 
completion of project (i.e., construction), grantees must provide 
semiannual project performance reports and a final project development 
report containing the information specified in paragraphs (j)(2)(i) and 
(j)(2)(ii) of this section. These reports are due 30 working days after 
June 30 and December 31 of each year.
    (i) Semiannual project performance reports. Each semiannual project 
performance report must include the following:
    (A) A comparison of actual accomplishments to the objectives for 
that period;
    (B) Reasons why established objectives were not met, if applicable;
    (C) Reasons for any problems, delays, or adverse conditions which 
will affect attainment of overall program objectives, prevent meeting 
time schedules or objectives, or preclude the attainment of particular 
objectives during established time periods. This disclosure must be 
accompanied by a statement of the action taken or planned to resolve 
the situation; and
    (D) Objectives and timetables established for the next reporting 
period.
    (ii) Final project development report. The final project 
development report must be submitted 90 days after project completion 
and include:
    (A) A detailed project funding and expense summary; and
    (B) A summary of the project's installation/construction process, 
including recommendations for development of similar projects by future 
Applicants to the program.
    (3) Outcome project performance reports. Once the project has been 
constructed, the grantee must provide the Agency periodic reports. 
These reports will include the information specified in paragraphs 
(j)(3)(i) or (j)(3)(ii) of this section, as applicable.
    (i) Renewable Energy Systems. For RES projects, commencing the 
first full calendar year following the year in which project 
construction was completed and continuing for 3 full years, provide a 
report detailing the information specified in paragraphs (j)(3)(i)(A) 
through (j)(3)(i)(G) of this section.
    (A) Type of technology;
    (B) The actual annual amount of energy generated in BTUs, kilowatt-
hours, or similar energy equivalents;
    (C) Annual income for systems that are selling energy, if 
applicable, and/or energy savings of the Renewable Energy System;
    (D) A summary of the cost of operations and maintenance;
    (E) A description of any associated major maintenance or 
operational problems;
    (F) Recommendations for development of future similar projects; and
    (G) Actual number of jobs created or saved as a result of the REAP 
funding.
    (ii) Energy Efficiency Improvements. For EEI projects, commencing 
the first full calendar year following the year in which project 
construction was completed and continuing for 2 full years, provide a 
report detailing, including calculations and any assumptions:
    (A) The actual amount of energy saved annually as determined by the 
difference between:
    (1) The annual amount of energy used by the project with the 
project in place and
    (2) The annual average amount of energy used for the 36 month 
period prior to application submittal as reported in the application; 
and
    (B) Actual number of jobs created or saved as a result of the REAP 
funding.
    (k) Grant close-out. Grant close-out must be performed in 
accordance with the requirements specified in Departmental Regulations.


Sec.  4280.124  Construction planning and performing development.

    (a) General. The following requirements are applicable to all 
procurement methods specified in paragraph (f) of this section.
    (1) Maximum open and free competition. All procurement 
transactions, regardless of procurement method and dollar value, must 
be conducted in a manner that provides maximum open and free 
competition. Procurement procedures must not restrict or eliminate 
competition. Competitive restriction examples include, but are not 
limited to, the following: placing unreasonable requirements on firms 
in order for them to qualify to do business; noncompetitive practices 
between firms; organizational conflicts of interest; and unnecessary 
experience and bonding requirements. In specifying material(s), the 
grantee and its consultant will consider all materials normally 
suitable for the project commensurate with sound engineering practices 
and project requirements. The Agency will consider any recommendation 
made by the grantee's consultant concerning the technical design and 
choice of materials to be used for such a project. If the Agency 
determines that a design or material, other than those that were 
recommended, should be considered by including them in the procurement 
process as an acceptable design or material in the project, the Agency 
will provide such Applicant or grantee with a comprehensive 
justification for such a determination. The justification will be 
documented in writing.
    (2) Equal employment opportunity. For all construction contracts 
and grants in excess of $10,000, the contractor must comply with 
Executive Order 11246, as amended by Executive Order 11375, and as 
supplemented by applicable Department of Labor regulations (41 CFR part 
60). The Applicant, or the lender and borrower, as applicable, is 
responsible for ensuring that the contractor complies with these 
requirements.
    (3) Surety. Any contract exceeding $100,000 for procurement will 
require surety, except as provided for in paragraph (a)(3)(v) of this 
section.
    (i) Surety covering both performance and payment will be required. 
The United States, acting through the Agency, will be named as co-
obligee on all surety unless prohibited by State or Tribal law. Surety 
may be provided as specified in paragraphs (a)(3)(i)(A) or (a)(3)(i)(B) 
of this section.
    (A) Surety in the amount of 100 percent of the contract cost may be 
provided using either:
    (1) A bank letter of credit; or
    (2) Performance bonds and payment bonds. Companies providing 
performance bonds and payment bonds must hold a certificate of 
authority as an acceptable surety on Federal bonds as listed in 
Treasury Circular 570 as amended and be legally doing business in the 
State where the project is located.
    (B) Cash deposit in escrow of at least 50 percent of the contract 
amount. The cash deposit cannot be from funds awarded under this 
subpart.
    (ii) The surety will normally be in the form of performance bonds 
and payment bonds; however, when other methods of surety are necessary, 
bid documents must contain provisions for such alternative types of 
surety. The use of surety other than performance bonds and payment 
bonds requires concurrence by the Agency after submission of a 
justification to the Agency together with the proposed form of escrow 
agreement or letter of credit.
    (iii) For contracts of lesser amounts, the grantee may require 
surety.
    (iv) When surety is not provided, contractors will furnish evidence 
of payment in full for all materials, labor, and any other items 
procured under the contract. Forms RD 1924-9 and RD

[[Page 22080]]

1924-10 can be obtained at the local Rural Development office and used 
for this purpose. Other similar forms may be used with Rural 
Development State Office concurrence.
    (v) Exceptions may be granted to surety for any of the following 
situations:
    (A) Small acquisition and construction procedures as specified in 
Sec.  4280.118(c)(2) or Sec.  4280.119(c)(2) as applicable are used.
    (B) The proposed project is for equipment purchase and installation 
only and the contract costs for the equipment purchase and installation 
are $200,000 or less.
    (C) The proposed project is for equipment purchase and installation 
only and the contract costs for the equipment purchase and installation 
are more than $200,000 and the following requirements can be met:
    (1) The project involves two or fewer subcontractors; and
    (2) The equipment manufacturer or provider must act as the general 
contractor.
    (D) Other construction projects that have only one contractor 
performing work.
    (4) Grantees accomplishing work. In some instances, grantees may 
wish to perform a part of the work themselves. Grantees may accomplish 
construction by using their own personnel and equipment, provided the 
grantees possess the necessary skills, abilities, and resources to 
perform the work. For a grantee to provide a portion of the work, with 
the remainder to be completed by a contractor:
    (i) A clear understanding of the division of work must be 
established and delineated in the contract;
    (ii) Grantees are not eligible for payment for their own work as it 
is not an Eligible Project Cost;
    (iii) Warranty requirements applicable to the technology must cover 
the grantee's work;
    (iv) Inspection and acceptance of the grantee's work will be 
completed by either:
    (A) An Inspector that will:
    (1) Inspect, as applicable, and accept construction; and
    (2) Furnish inspection reports.
    (B) A licensed engineer that will:
    (1) Prepare design drawings and specifications;
    (2) Inspect, as applicable, and accept construction; and
    (3) Furnish inspection reports.
    (b) Forms used. Technical service and procurement documents must be 
approved by the Agency and may be used only if they are customarily 
used in the area and protect the interest of the Applicant and the 
Government with respect to compliance with items such as the drawings, 
specifications, payments for work, inspections, completion, 
nondiscrimination in construction work and acceptance of the work. The 
Agency will not become a party to a construction contract or incur any 
liability under it. No contract will become effective until concurred 
in writing by the Agency. Such concurrence statement must be attached 
to and made a part of the contract.
    (c) Technical services. Unless the requirements of paragraph (c)(4) 
of this section can be met, all RES and EEI projects with Total Project 
Costs greater than $400,000 require:
    (1) The design, installation monitoring, testing prior to 
commercial operation, and project completion certification be completed 
by a licensed professional engineer (PE) or team of licensed PEs. 
Licensed PEs may be ``in-house'' PEs or contracted PEs.
    (2) Any contract for design services must be subject to Agency 
concurrence.
    (3) Engineers must be licensed in the State where the project is to 
be constructed.
    (4) The Agency may grant an exception to the requirements of 
paragraphs (c)(1) through (c)(3) of this section if the following 
requirements are met:
    (i) State or Tribal law does not require the use of a licensed PE; 
and
    (ii) The project is not complex, as determined by the Agency, and 
can be completed to meet the requirements of this program without the 
services of a licensed PE.
    (d) Design policies. Final plans and specifications must be 
reviewed by the Agency and approved prior to the start of construction. 
Facilities funded by the Agency must meet the following design 
requirements, as applicable:
    (1) Environmental review. Facilities financed by the Agency must 
undergo an environmental analysis in accordance with the National 
Environmental Policy Act and 7 CFR part 1940, subpart G of this title. 
Project planning and design must not only be responsive to the 
grantee's needs but must consider the environmental consequences of the 
proposed project. Project design must incorporate and integrate, where 
practicable, mitigation measures that avoid or minimize adverse 
environmental impacts. Environmental reviews serve as a means of 
assessing environmental impacts of project proposals, rather than 
justifying decisions already made. Applicants may not take any action 
on a project proposal that will have an adverse environmental impact or 
limit the choice of reasonable project alternatives being reviewed 
prior to the completion of the Agency's environmental review. If such 
actions are taken, the Agency has the right to withdraw and discontinue 
processing the application.
    (2) Architectural barriers. All facilities intended for or 
accessible to the public or in which physically handicapped persons may 
be employed must be developed in compliance with the Architectural 
Barriers Act of 1968 (42 U.S.C. 4151 et seq.) as implemented by 41 CFR 
101-19.6, section 504 of the Rehabilitation Act of 1973 (42 U.S.C 1474 
et seq.) as implemented by 7 CFR parts 15 and 15b, and Titles II and 
III of the Americans with Disabilities Act of 1990 (42 U.S.C. 12101 et 
seq.).
    (3) Energy/environment. Project design shall consider cost 
effective energy-efficient and environmentally-sound products and 
services.
    (4) Seismic safety. All new structures, fully or partially 
enclosed, used or intended for sheltering persons or property will be 
designed with appropriate seismic safety provisions in compliance with 
the Earthquake Hazards Reduction Act of 1977 (42 U.S.C. 7701 et seq.), 
and Executive Order 12699, Seismic Safety of Federal and Federally 
Assisted or Regulated New Building Construction. Designs of components 
essential for system operation and substantial rehabilitation of 
structures that are used for sheltering persons or property shall 
incorporate seismic safety provisions to the extent practicable as 
specified in 7 CFR part 1792, subpart C.
    (e) Contract Methods. This paragraph identifies the three types of 
contract methods that can be used for projects funded under this 
subpart. The procurement methods, which are applicable to each of these 
contract methods, are specified in paragraph (f) of this section.
    (1) Traditional method or design-bid-build. The services of the 
consulting engineer or architect and the general construction 
contractor shall normally be procured from unrelated sources in 
accordance with the following paragraphs.
    (i) Solicitation of offers. Solicitation of offers must:
    (A) Incorporate a clear and accurate description of the technical 
requirements for the material, product, or service to be procured. The 
description must not, in competitive procurements, contain features 
that unduly restrict competition. The description may include a 
statement of the qualitative nature of the material, product or service 
to be procured, and when necessary will set forth those

[[Page 22081]]

minimum essential characteristics and standards to which it must 
conform if it is to satisfy its intended use. When it is impractical or 
uneconomical to make a clear and accurate description of the technical 
requirements, a ``brand name or equal'' description may be used to 
define the performance or other salient requirements of a procurement. 
The specific features of the named brands which must be met by offerors 
must be clearly stated.
    (B) Clearly specify all requirements which offerors must fulfill 
and all other factors to be used in evaluating bids or proposals.
    (ii) Contract pricing. Cost plus a percentage of cost method of 
contracting must not be used.
    (iii) Unacceptable bidders. The following will not be allowed to 
bid on, or negotiate for, a contract or subcontract related to the 
construction of the project:
    (A) An engineer or architect as an individual or entity who has 
prepared plans and specifications or who will be responsible for 
monitoring the construction;
    (B) Any entity in which the grantee's architect or engineer is an 
officer, employee, or holds or controls a substantial interest in the 
grantee;
    (C) The grantee's governing body officers, employees, or agents;
    (D) Any member of the grantee's Immediate Family or partners in 
paragraphs (e)(1)(iii)(A), (e)(1)(iii)(B), or (e)(1)(iii)(C) of this 
section; or
    (E) An entity which employs, or is about to employ, any person in 
paragraph (e)(1)(iii)(A), (e)(1)(iii)(B), (e)(1)(iii)(C), or 
(e)(1)(iii)(D) of this section.
    (iv) Contract award. Contracts must be made only with responsible 
parties possessing the potential ability to perform successfully under 
the terms and conditions of a proposed procurement. Consideration must 
include, but not be limited to, matters such as integrity, record of 
past performance, financial and technical resources, and accessibility 
to other necessary resources. Contracts must not be made with parties 
who are suspended or debarred.
    (2) Design/Build Method. The Design/Build Method, where the same 
person or entity provides design and engineering work, as well as 
construction or installation, may be used with Agency written approval.
    (i) Concurrence information. The Applicant will request Agency 
concurrence by providing the Agency at least the information specified 
in paragraphs (e)(2)(i)(A) through (e)(2)(i)(H) of this section.
    (A) The grantee's written request to use the Design/Build Method 
with a description of the proposed method.
    (B) A proposed scope of work describing in clear, concise terms the 
technical requirements for the contract. It shall include a 
nontechnical statement summarizing the work to be performed by the 
contractor, the results expected, and a proposed construction schedule 
showing the sequence in which the work is to be performed.
    (C) A proposed firm-fixed-price contract for the entire project 
which provides that the contractor will be responsible for any extra 
cost which result from errors or omissions in the services provided 
under the contract, as well as compliance with all Federal, State, 
local, and Tribal requirements effective on the contract execution 
date.
    (D) Where noncompetitive negotiation is proposed and found, by the 
Agency, to be an acceptable procurement method, then the Agency will 
evaluate documents indicating the contractor's performance on previous 
similar projects in which the contractor acted in a similar capacity.
    (E) A detailed listing and cost estimate of equipment and supplies 
not included in the construction contract but which are necessary to 
properly operate the project.
    (F) Evidence that a qualified construction Inspector who is 
independent of the contractor has or will be hired.
    (G) Preliminary plans and outline specifications. However, final 
plans and specifications must be completed and reviewed by the Agency 
prior to the start of construction.
    (H) The grantee's attorney's opinion and comments regarding the 
legal adequacy of the proposed contract documents and evidence that the 
grantee has the legal authority to enter into and fulfill the contract.
    (ii) Agency concurrence of Design/Build Method. The Agency will 
review the material submitted by the Applicant. When all items are 
acceptable, the Agency approval official will concur in the use of the 
Design/Build Method for the proposal.
    (iii) Forms used. Agency approved contract documents must be used 
provided they are customarily used in the area and protect the interest 
of the Applicant and the Agency with respect to compliance with items 
such as the drawings, specifications, payments for work, inspections, 
completion, nondiscrimination in construction work, and acceptance of 
the work. The Agency will not become a party to a construction contract 
or incur any liability under it. No contract shall become effective 
until concurred, in writing, by the Agency. Such concurrence statement 
must be attached to and made a part of the contract.
    (iv) Contract provisions. Contracts will have a listing of 
attachments and must contain the following:
    (A) The contract sum;
    (B) The dates for starting and completing the work;
    (C) The amount of liquidated damages, if any, to be charged;
    (D) The amount, method, and frequency of payment;
    (E) Surety provisions that meet the requirements of paragraph 
(a)(3) of this section;
    (F) The requirement that changes or additions must have prior 
written approval of the Agency as identified in the letter of 
conditions;
    (G) Contract review and concurrence. The grantee's attorney will 
review the executed contract documents, including performance and 
payment bonds, and will certify that they are in compliance with 
Federal, State, or Tribal law, and that the persons executing these 
documents have been properly authorized to do so. The contract 
documents, engineer's recommendation for award, and bid tabulation 
sheets will be forwarded to the Agency for concurrence prior to 
awarding the contract. All contracts will contain a provision that they 
are not effective until they have been concurred, in writing, by the 
Agency;
    (H) This part does not relieve the grantee of any responsibilities 
under its contract. The grantee is responsible for the settlement of 
all contractual and administrative issues arising out of procurement 
entered into in support of Agency funding. These include, but are not 
limited to, source evaluation, protests, disputes, and claims. Matters 
concerning violation of laws are to be referred to the applicable 
local, State, Tribal, or Federal authority; and
    (3) Construction Management. Construction Managers as a Constructor 
(CMc) acts in the capacity of a General Contractor and is financially 
and professionally responsible for the construction. This type of 
Construction Management is also referred to as Construction Manager 
``At Risk.'' The construction contract is between the grantee and the 
CMc. The CMc in turn subcontracts for some or all of the work. The CMc 
will need to carry the Agency required 100 percent surety and 
insurance, as required under paragraph (a)(3) of this section. Projects 
using construction management must follow the requirements of (e)(2)(i) 
through (e)(2)(iv) of this section.

[[Page 22082]]

    (f) Procurement methods. Procurement must be made by one of the 
following methods: competitive sealed bids (formal advertising); 
competitive negotiation; or noncompetitive negotiation. Competitive 
sealed bids (formal advertising) are the preferred procurement method 
for construction contracts.
    (1) Competitive sealed bids. In competitive sealed bids (formal 
advertising), sealed bids are publicly solicited and a firm-fixed-price 
contract (lump sum or unit price) is awarded to the responsible bidder 
whose bid, conforming with all the material terms and conditions of the 
invitation for bids, is lowest, price and other factors considered. 
When using this method, the following will apply:
    (i) At a sufficient time prior to the date set for opening of bids, 
bids must be solicited from an adequate number of qualified sources. In 
addition, the invitation must be publicly advertised.
    (ii) The invitation for bids, including specifications and 
pertinent attachments, must clearly define the items or services needed 
in order for the bidders to properly respond to the invitation under 
paragraph (f)(1) of this section.
    (iii) All bids must be opened publicly at the time and place stated 
in the invitation for bids.
    (iv) A firm-fixed-price contract award must be made by written 
notice to that responsible bidder whose bid, conforming to the 
invitation for bids, is lowest. When specified in the bidding 
documents, factors such as discounts and transportation costs will be 
considered in determining which bid is lowest.
    (v) The Applicant, with the concurrence of the Agency, will 
consider the amount of the bids or proposals, and all conditions listed 
in the invitation. On the basis of these considerations, the Applicant 
will select and notify the lowest responsible bidder. The contract will 
be awarded using Form RD 1924-6, ``Construction Contract,'' or a 
similar Agency-approved document.
    (vi) Any or all bids may be rejected by the grantee when it is in 
their best interest.
    (2) Competitive negotiation. In competitive negotiations, proposals 
are requested from a number of sources. Negotiations are normally 
conducted with more than one of the sources submitting offers 
(offerors). Competitive negotiation may be used if conditions are not 
appropriate for the use of formal advertising and where discussions and 
bargaining with a view to reaching agreement on the technical quality, 
price, other terms of the proposed contract and specifications are 
necessary. If competitive negotiation is used for procurement, the 
following requirements will apply:
    (i) Proposals must be solicited from two qualified sources, unless 
otherwise approved by the Agency, to permit reasonable competition 
consistent with the nature and requirements of the procurement.
    (ii) The Request for Proposal must identify all significant 
evaluation factors, including price or cost where required, and their 
relative importance.
    (iii) The grantee must provide mechanisms for technical evaluation 
of the proposals received, determination of responsible offerors for 
the purpose of written or oral discussions, and selection for contract 
award.
    (iv) Award may be made to the responsible offeror whose proposal 
will be most advantageous to the grantee, price and other factors 
considered. Unsuccessful offerors must be promptly notified.
    (v) Owners may utilize competitive negotiation procedures for 
procurement of architectural/engineering and other professional 
services, whereby the offerors' qualifications are evaluated and the 
most qualified offeror is selected, subject to negotiations of fair and 
reasonable compensation.
    (3) Noncompetitive negotiation. Noncompetitive negotiation is 
procurement through solicitation of a proposal from only one source. 
Noncompetitive negotiation may be used when the award of a contract is 
not feasible under small acquisition and construction procedures, 
competitive sealed bids (formal advertising) or competitive negotiation 
procedures. Circumstances under which a contract may be awarded by 
noncompetitive negotiations are limited to the following:
    (i) After solicitation of a number of sources, competition is 
determined inadequate; or
    (ii) No acceptable bids have been received after formal 
advertising.
    (4) Additional procurement methods. The grantee may use additional 
innovative procurement methods provided the grantee receives prior 
written approval from the Agency. Contracts will have a listing of 
attachments and the minimum provisions of the contract will include:
    (i) The contract sum;
    (ii) The dates for starting and completing the work;
    (iii) The amount of liquidated damages to be charged;
    (iv) The amount, method, and frequency of payment;
    (v) Whether or not surety bonds will be provided; and
    (vi) The requirement that changes or additions must have prior 
written approval of the Agency.
    (g) Contracts awarded prior to applications. Applicants awarding 
contracts prior to filing an application must comply with 7 CFR 
1780.74.
    (h) Contract administration. Contract administration must comply 
with 7 CFR 1780.76. If another authority, such as a Federal, State, or 
Tribal agency, is providing funding and requires oversight of 
inspections, change orders, and pay requests, the Agency will accept 
copies of their reports or forms as meeting oversight requirements of 
the Agency.

Renewable Energy System and Energy Efficiency Improvement Guaranteed 
Loans


Sec.  4280.125  Compliance with Sec. Sec.  4279.29 through 4279.99.

    All loans guaranteed under this subpart must comply with the 
provisions found in Sec. Sec.  4279.29 through 4279.99 of this chapter, 
except that the provisions of Sec.  4279.71 of this chapter are not 
applicable.


Sec.  4280.126  Guarantee/annual renewal fee.

    Except for the conditions for receiving reduced guarantee fee and 
unless otherwise specified in a Federal Register notice, the provisions 
specified in Sec.  4279.107 of this chapter apply to loans guaranteed 
under this subpart.


Sec.  4280.127  Borrower eligibility.

    To receive a RES or EEI guaranteed loan under this subpart, a 
borrower must be eligible under Sec.  4280.109. In addition, borrower 
must meet the requirements of paragraphs (a) through (e) of this 
section. Borrowers who receive a loan guaranteed under this subpart 
must continue to meet the requirements specified in this section.
    (a) Type of borrower. The borrower must be an Agricultural Producer 
or Rural Small Business.
    (b) Ownership. The borrower must:
    (1) Own or be the prospective owner of the project; and
    (2) Own or control the site for the project at the time of 
application and, if the loan is guaranteed under this subpart, for the 
term of the loan.
    (c) Revenues and expenses. The borrower must have available, at the 
time of application, satisfactory sources of revenue in an amount 
sufficient to provide for the operation, management, maintenance, and 
any debt service of the project for the term of the loan. In

[[Page 22083]]

addition, the borrower must control the revenues and expenses of the 
project, including its operation and maintenance, for which the loan is 
sought. Notwithstanding the provisions of this paragraph, the borrower 
may employ a Qualified Consultant under contract to manage revenues and 
expenses of the project and its operation and/or maintenance.
    (d) Legal authority and responsibility. Each borrower and lender 
must have the legal authority necessary to apply for and carry out the 
purpose of the guaranteed loan.
    (e) Universal identifier and SAM. Unless exempt under 2 CFR 25.110, 
the borrower must:
    (1) Be registered in the SAM prior to submitting an application or 
plan;
    (2) Maintain an active SAM registration with current information at 
all times during which it has an active Federal award or an application 
or plan under consideration by the Agency; and
    (3) Provide its DUNS number in each application or plan it submits 
to the Agency.


Sec.  4280.128  Project eligibility.

    For a RES or EEI project to be eligible to receive a guaranteed 
loan under this subpart, the project must meet each criteria specified 
in Sec.  4280.113(a) through (e). In addition, the purchase of an 
existing RES that meets the criteria specified in Sec.  4280.113(b) 
through (f) is an eligible project under this section.


Sec.  4280.129  Guaranteed loan funding.

    (a) The amount of the loan that will be made available to an 
eligible project under this subpart will not exceed 75 percent of total 
Eligible Project Costs. Eligible Project Costs are specified in 
paragraph (e) of this section. Ineligible project costs are identified 
in paragraph (f) of this section.
    (b) The minimum amount of a guaranteed loan made to a borrower will 
be $5,000, less any program grant amounts. The maximum amount of a 
guaranteed loan made to a borrower is $25 million.
    (c) The percentage of guarantee, up to the maximum allowed by this 
section, will be negotiated between the lender and the Agency. The 
maximum percentage of guarantee is:
    (1) 85 percent for loans of $600,000 or less;
    (2) 80 percent for loans greater than $600,000 up to and including 
$5 million;
    (3) 70 percent for loans greater than $5 million up to and 
including $10 million; and
    (4) 60 percent for loans greater than $10 million.
    (d) The total amount of the loans guaranteed under this subpart to 
one borrower, including the guaranteed and unguaranteed portion, the 
outstanding principal, and interest balance of any existing loans 
guaranteed under this program and the new loan request, must not exceed 
$25 million.
    (e) Eligible Project Costs are only those costs associated with the 
items identified in Sec.  4280.115(c) and paragraphs (e)(1) through 
(e)(4) of this section, as long as the items are an integral and 
necessary part of the Renewable Energy System or Energy Efficiency 
Improvement. The Eligible Project Costs identified in paragraphs (e)(1) 
through (e)(4) of this section cannot exceed more than 5 percent of the 
loan amount.
    (1) Working capital.
    (2) Land acquisition.
    (3) Routine lender fees, as described in Sec.  4279.120(a) of this 
chapter.
    (4) Energy Analyses, Energy Assessments, Energy Audits, technical 
reports, business plans, and Feasibility Studies completed and 
acceptable to the Agency, except if any portion was financed by any 
other Federal or State grant or payment assistance, including, but not 
limited to, a REAP Energy Analysis, Energy Assessment, or Energy Audit, 
Feasibility Study, or REDA grant.
    (f) Ineligible project costs include, but are not limited to costs 
identified in Sec. Sec.  4280.115(d)(1), (d)(2), and (d)(4) through 
(d)(9) and loans made with the proceeds of any obligation the interest 
on which is excludable from income under 26 U.S.C. 103 or a successor 
statute. Funds generated through the issuance of tax-exempt obligations 
may neither be used to purchase the guaranteed portion of any Agency 
guaranteed loan nor may an Agency guaranteed loan serve as collateral 
for a tax-exempt issue. The Agency may guarantee a loan for a project 
which involves tax-exempt financing only when the guaranteed loan funds 
are used to finance a part of the project that is separate and distinct 
from the part which is financed by the tax-exempt obligation, and the 
guaranteed loan has at least a parity security position with the tax-
exempt obligation.
    (g) In determining the amount of a loan awarded, the Agency will 
take into consideration the criteria specified in Sec.  4280.115(e).


Sec.  4280.130  Loan processing.

    (a) Processing RES and EEI guaranteed loans under this subpart must 
comply with the provisions found in Sec. Sec.  4279.120 through 
4279.187 of this chapter, except for those sections specified in 
paragraph (b) of this section, and as provided in Sec. Sec.  4280.131 
through 4280.142.
    (b) The provisions found in Sec. Sec.  4279.150, 4279.155, 
4279.161, and 4279.175 of this chapter do not apply to loans guaranteed 
under this subpart.


Sec.  4280.131  Credit quality.

    Except for Sec.  4279.131(d) of this chapter, the credit quality 
provisions of Sec.  4279.131 of this chapter apply to this subpart. 
Instead of complying with Sec.  4279.131(d), borrowers must demonstrate 
evidence of cash equity injection in the project of not less than 25 
percent of total Eligible Project Costs. Cash equity injection must be 
in the form of cash. For guaranteed loan only requests, Federal grant 
funds may be counted as cash equity.


Sec.  4280.132  Financial statements.

    All financial statements must be in accordance with Sec.  4279.137 
of this chapter except that, for Agricultural Producers, the borrower 
may provide financial information in the manner that is generally 
required by agricultural commercial lenders.


Sec.  4280.133  [Reserved]


Sec.  4280.134  Personal and corporate guarantees.

    All personal and corporate guarantees must be in accordance with 
Sec.  4279.149 of this chapter. In addition, except for Passive 
Investors, unconditional personal and corporate guarantees for those 
owners with a beneficial interest greater than or equal to 20 percent 
of the borrower will be required where legally permissible.


Sec.  4280.135  Scoring RES and EEI guaranteed loan only applications.

    (a) Evaluation criteria. The Agency will score each guaranteed loan 
only application received using the evaluation criteria specified in 
Sec.  4280.120, except that, in Sec.  4280.120(b), the calculation will 
be made on the loan amount requested and not on the grant amount 
requested.
    (b) Minimum score. The Agency will announce each year in a Federal 
Register notice the minimum score guaranteed loan-only applications 
must meet in order to be considered for funding in quarterly 
competitions, as specified in Sec.  4280.138(b). Any application that 
does not meet the applicable minimum score is only eligible to compete 
during the last quarter of the Federal Fiscal Year, as specified in 
Sec.  4280.138(b).
    (c) Notification. The Agency will notify in writing each lender and 
borrower whose application does not meet the applicable minimum score.

[[Page 22084]]

Sec.  4280.136  [Reserved]


Sec.  4280.137  Application and documentation.

    The requirements in this section apply to guaranteed loan 
applications for RES and EEI projects under this subpart.
    (a) General. Guaranteed loan applications must be submitted in 
accordance with the guaranteed loan requirements specified in Sec.  
4280.110 and in this section.
    (b) Application content for guaranteed loans greater than $600,000. 
Each guaranteed loan only application for greater than $600,000 must 
contain the information specified in paragraphs (b)(1) and (b)(2) of 
this section.
    (1) Application content. Each application submitted under this 
paragraph must contain the information specified in Sec. Sec.  
4280.117(a)(6) through (a)(9) and (b) through (e) and as specified in 
paragraph (b)(2) of this section, and must present the information in 
the same order as shown in Sec.  4280.117.
    (2) Lender forms, certifications, and agreements. Each application 
submitted under paragraph (b) of this section must contain applicable 
forms, certifications, and agreements specified in paragraphs (b)(2)(i) 
through (b)(2)(xi) of this section instead of the forms and 
certifications specified in Sec.  4280.117(a).
    (i) A completed Form RD 4279-1, ``Application for Loan Guarantee.''
    (ii) Form RD 1940-20.
    (iii) Form AD 2106. Although this form is optional, if the 
applicant has previously submitted the form to the Agency or another 
Federal agency, the applicant does not need to resubmit the form.
    (iv) A personal credit report from an Agency approved credit 
reporting company for each owner, partner, officer, director, key 
employee, and stockholder owning 20 percent or more interest in the 
borrower's business, except Passive Investors and those corporations 
listed on a major stock exchange.
    (v) Appraisals completed in accordance with Sec.  4279.144 of this 
chapter. Completed appraisals should be submitted when the application 
is filed. If the appraisal has not been completed when the application 
is filed, the Applicant must submit an estimated appraisal. Agency 
approval in the form of a Conditional Commitment may be issued subject 
to receipt of adequate appraisals. In all cases, a completed appraisal 
must be submitted prior to the loan being closed.
    (vi) Commercial credit reports obtained by the lender on the 
borrower and any parent, affiliate, and subsidiary firms.
    (vii) Current personal and corporate financial statements of any 
guarantors.
    (viii) Financial information is required on the total operation of 
the Agricultural Producer/Rural Small Business and its parent, 
subsidiary, or affiliates at other locations. All information submitted 
under this paragraph must be substantiated by authoritative records.
    (A) Historical financial statements. Provide 3 years of historical 
financial statements including income statements and balance sheets. 
Agricultural producers may present historical financial information in 
the format that is generally required by commercial agriculture 
lenders.
    (B) Current balance sheet and income statement. Provide a current 
balance sheet and income statement presented in accordance with GAAP 
and dated within 90 days of the application submittal. Agricultural 
producers may present financial information in the format that is 
generally required by commercial agriculture lenders or in a similar 
format used when submitting the same information in support of the 
borrower's Federal income tax returns.
    (C) Pro forma financial statements. Provide pro forma balance sheet 
at start-up of the borrower's business that reflects the use of the 
loan proceeds or grant award; 3 additional years of financial 
statements, indicating the necessary start-up capital, operating 
capital, and short-term credit; and projected cash flow and income 
statements for 3 years supported by a list of assumptions showing the 
basis for the projections.
    (ix) Lender's complete comprehensive written analysis in accordance 
with Sec.  4280.131.
    (x) A certification by the lender that the borrower is eligible, 
the loan is for authorized purposes, and there is reasonable assurance 
of repayment ability based on the borrower's history, projections, 
equity, and the collateral to be obtained.
    (xi) A proposed loan agreement or a sample loan agreement with an 
attached list of the proposed loan agreement provisions. The following 
requirements must be addressed in the proposed or sample loan 
agreement:
    (A) Prohibition against assuming liabilities or obligations of 
others;
    (B) Restriction on dividend payments;
    (C) Limitation on the purchase or sale of equipment and fixed 
assets;
    (D) Limitation on compensation of officers and owners;
    (E) Minimum working capital or current ratio requirement;
    (F) Maximum debt-to-net worth ratio;
    (G) Restrictions concerning consolidations, mergers, or other 
circumstances;
    (H) Limitations on selling the business without the concurrence of 
the lender;
    (I) Repayment and amortization provisions of the loan;
    (J) List of collateral and lien priority for the loan, including a 
list of persons and corporations guaranteeing the loan with a schedule 
for providing the lender with personal and corporate financial 
statements. Financial statements for corporate and personal guarantors 
must be updated at least annually once the guarantee is provided;
    (K) Type and frequency of financial statements to be required from 
the borrower for the duration of the loan;
    (L) The addition of any requirements imposed by the Agency in its 
Conditional Commitment;
    (M) A reserved section for any Agency environmental requirements; 
and
    (N) A provision for the lender or the Agency to have reasonable 
access to the project and its performance information during its useful 
life or the term of the loan, whichever is longer, including the 
periodic inspection of the project by a representative of the lender or 
the Agency.
    (c) Application content for guaranteed loans of $600,000 or less. 
Each guaranteed loan only application for $600,000 or less must contain 
the information specified in paragraphs (c)(1) and (c)(2) of this 
section.
    (1) Application Contents. If the application is for $200,000 or 
less, the application must contain the information specified in Sec.  
4280.118(b), except as specified in paragraph (c)(2) of this section 
(e.g., the grant forms under Sec.  4280.117(a) are not required to be 
submitted), and must present the information in the same order as shown 
in Sec.  4280.118(b). If the application is for more than $200,000, the 
application must contain the information specified in Sec.  4280.117, 
except as specified in paragraph (c)(2) of this section, and must 
present the information in the same order as shown in Sec.  4280.117.
    (2) Lender forms, certifications, and agreements. Each application 
submitted under paragraph (c) of this section must use Form RD 4279-1A, 
``Application for Loan Guarantee, Short Form,'' and the forms and 
certifications specified in paragraphs (b)(2)(ii), (b)(2)(iii) (if not 
previously submitted), (b)(2)(v), (b)(2)(viii), (b)(2)(ix), (b)(2)(x), 
and (b)(2)(xi) of this section. The lender must have the documentation 
contained in paragraphs (b)(2)(iv), (b)(2)(vi), and

[[Page 22085]]

(b)(2)(vii) available in its files for the Agency's review.


Sec.  4280.138  Evaluation of RES and EEI guaranteed loan applications.

    The provisions of Sec.  4279.165 of this chapter apply to this 
subpart, although the Agency will determine borrower and project 
eligibility in accordance with the provisions of this subpart.


Sec.  4280.139  Selection of RES and EEI guaranteed loan only 
applications.

    Complete and eligible guaranteed loan-only applications that are 
ready to be approved will be processed according to this section, 
unless otherwise modified by the Agency in a notice published in the 
Federal Register. Guaranteed loan applications that are part of a 
grant-guaranteed loan combination request will be processed according 
to Sec.  4280.165(d).
    (a) Competing applications. On the first business day of the second 
month of each Federal fiscal quarter, the Agency will compete each 
eligible application that is ready to be funded and that has a priority 
score, as determined under Sec.  4280.135, that meets or exceeds the 
applicable minimum score. An application that does not meet the minimum 
score will be competed against all other applications during the last 
quarter of the Federal Fiscal Year. Higher scoring applications will 
receive first consideration.
    (b) Funding selected applications. As applications are funded, the 
remaining guaranteed funding authority may be insufficient to fund the 
next highest scoring application or applications in those cases where 
two or more applications receive the same priority score. The 
procedures described in paragraphs (b)(1) and (b)(2) of this section 
may be repeated as necessary in order to consider all applications as 
appropriate.
    (1) If the remaining funds are insufficient to fund the next 
highest scoring project completely, the Agency will notify the lender 
and offer the lender the opportunity to accept the level of funds 
available. If the lender does not accept the offer, the Agency will 
process the next highest scoring application.
    (2) If the remaining funds are insufficient to fund each project 
that receives the same priority score, the Agency will notify each 
lender and offer the lender the opportunity to accept the level of 
funds available and the level of funds the Agency offers to each such 
lender will be proportional to the amount of the lenders' requests. If 
funds are still remaining, the Agency may consider funding the next 
highest scoring project.
    (3) Any lender offered less than the full amount requested under 
either paragraph (b)(1) or (b)(2) of this section may either accept the 
funds available or can request to compete in the following quarter's 
competition. Under no circumstances would there be an assurance that 
the project(s) would be funded in subsequent competitions.
    (4) If a lender agrees to the lower loan funding offered by the 
Agency under either paragraph (b)(1) or (b)(2) of this section, the 
lender must certify that the purpose(s) of the project can still be met 
at the lower funding level and must provide documentation that the 
borrower has obtain the remaining total funds needed to complete the 
project.
    (c) Disposition of ranked applications not funded. How the Agency 
disposes of ranked applications that have not received funding depends 
on whether the application's priority score is equal to or greater than 
the minimum score or is less than the minimum score.
    (1) An application with a priority score equal to or greater than 
the minimum score that is not funded in a quarterly competition will be 
retained by the Agency for consideration in subsequent quarterly 
competitions. If an application is not selected for funding after four 
quarterly competitions, including the first quarter in which the 
application was competed, the application will be withdrawn by the 
Agency from further funding consideration.
    (2) An application with a priority score less than the applicable 
minimum priority score will be competed during the last quarter of the 
Federal Fiscal Year in which the application is ready for funding. If 
the application is not funded, the application will be withdrawn by the 
Agency from further funding consideration.
    (d) Unused funding. At the end of each Federal fiscal quarter, the 
Agency will roll any remaining guaranteed funding authority into the 
next Federal fiscal quarter. At the end of each Federal Fiscal Year, 
the Agency may elect at its discretion to allow any remaining multi-
year funds to be carried over to the next Federal Fiscal Year rather 
than selecting a lower scoring application.
    (e) Commencement of the project. The applicant assumes all risks if 
the choice is made to purchase the technology proposed or start 
construction of the project to be financed in the guaranteed loan only 
application after the complete application has been received by the 
Agency, but prior to award announcement.


Sec. Sec.  4280.139-4280.140  [Reserved]


Sec.  4280.141  Changes in borrower.

    All changes in borrowers must be in accordance with Sec.  4279.180 
of this chapter, but the eligibility requirements of this subpart 
apply.


Sec.  4280.142  Conditions precedent to issuance of Loan Note 
Guarantee.

    In addition to complying with Sec.  4279.181 of this chapter, 
paragraphs (a) and (b) of this section must be met as applicable.
    (a) The project has been performing at a steady state operating 
level in accordance with the technical requirements, plans, and 
specifications, conforms with applicable Federal, State, and local 
codes, and costs have not exceeded the amount approved by the lender 
and the Agency.
    (b) Where applicable, the lender must provide to the Agency a copy 
of the executed Power Purchase Agreement.


Sec.  4280.143  Requirements after project construction.

    Once the project has been constructed, the lender must provide the 
Agency reports from the borrower in accordance with Sec.  
4280.123(j)(3), as applicable.


Sec. Sec.  4280.144-4280.151  [Reserved]


Sec.  4280.152  Servicing guaranteed loans.

    Except as specified in paragraphs (a) and (b) of this section, all 
loans guaranteed under this subpart must be in compliance with the 
provisions found in Sec.  4287.101(b) and in Sec. Sec.  4287.107 
through 4287.199 of this chapter.
    (a) Documentation of request. In complying with Sec.  4287.134(a) 
of this chapter, all transfers and assumptions must be to eligible 
borrowers in accordance with Sec.  4280.127.
    (b) Additional loan funds. In complying with Sec.  4287.134(e) of 
this chapter, loans to provide additional funds in connection with a 
transfer and assumption must be considered as a new loan application 
under Sec.  4280.137.


Sec. Sec.  4280.153-4280.164  [Reserved]

Combined Funding for Renewable Energy Systems and Energy Efficiency 
Improvements


Sec.  4280.165  Combined funding for Renewable Energy Systems and 
Energy Efficiency Improvements.

    The requirements for a RES or EEI project for which an Applicant is 
seeking a combined grant and guaranteed loan are specified in this 
section.
    (a) Eligibility. All Applicants must be eligible under the 
requirements

[[Page 22086]]

specified in Sec.  4280.109. If the Applicant is seeking a grant, the 
Applicant must also meet the Applicant eligibility requirements 
specified in Sec.  4280.112. If the Applicant is seeking a loan, the 
Applicant must also meet the borrower eligibility requirements 
specified in Sec.  4280.127. Projects must meet the project eligibility 
requirements specified in Sec. Sec.  4280.113 and 4280.128, as 
applicable.
    (b) Funding. Funding provided under this section is subject to the 
limits described in paragraphs (b)(1) and (b)(2) of this section.
    (1) The amount of any combined grant and guaranteed loan shall not 
exceed 75 percent of total Eligible Project Costs and the grant portion 
shall not exceed 25 percent of total Eligible Project Costs. For 
purposes of combined funding requests, total Eligible Project Costs are 
based on the total costs associated with those items specified in 
Sec. Sec.  4280.115(c) and 4280.129(e). The Applicant must provide the 
remaining total funds needed to complete the project.
    (2) The minimum combined funding request allowed is $5,000, with 
the grant portion of the funding request being at least $1,500 for EEI 
projects and at least $2,500 for RES projects.
    (c) Application and documentation. When applying for combined 
funding, the Applicant must submit separate applications for both types 
of assistance (grant and guaranteed loan). The separate applications 
must be submitted simultaneously by the lender.
    (1) Each application must meet the requirements, including the 
requisite forms and certifications, specified in Sec. Sec.  4280.117, 
4280.118, 4280.119, and 4280.137, as applicable, and as follows:
    (i) Notwithstanding Form RD 4279-1, the SAM number and its 
expiration date must be provided prior to obligation of funds;
    (ii) A combined funding request for a guaranteed loan greater than 
$600,000 must contain the information specified in Sec.  4280.137(b)(1) 
and (2); and
    (iii) A combined funding request for a guaranteed loan of $600,000 
or less must contain the information specified in Sec.  4280.137(c)(1) 
and (c)(2).
    (2) Where both the grant application and the guaranteed loan 
application provisions request the same documentation, form, or 
certification, such documentation, form, or certification may be 
submitted once; that is, the combined application does not need to 
contain duplicate documentation, forms, and certifications.
    (d) Evaluation. The Agency will evaluate each application according 
to Sec.  4280.116(c). The Agency will select applications according to 
applicable procedures specified in Sec.  4280.121 unless modified by 
this section. A combination loan and grant request will be selected 
based upon the grant score of the project.
    (e) Interest rate and terms of loan. The interest rate and terms of 
the guaranteed loan for the loan portion of the combined funding 
request will be determined based on the procedures specified in 
Sec. Sec.  4279.125 and 4279.126 of this chapter for guaranteed loans.
    (f) Other provisions. In addition to the requirements specified in 
paragraphs (a) through (e) of this section, the combined funding 
request is subject to the other requirements specified in this subpart, 
including, but not limited to, processing and servicing requirements, 
as applicable, as described in paragraphs (f)(1) through (f)(6) of this 
section.
    (1) All other provisions of Sec. Sec.  4280.101 through 4280.111 
apply to the combined funding request.
    (2) All other provisions of Sec. Sec.  4280.112 through 4280.123 
apply to the grant portion of the combined funding request and Sec.  
4280.124 applies if the project for which the grant is sought has a 
Total Project Cost over $200,000.
    (3) All other provisions of Sec. Sec.  4280.125 through 4280.152 
apply to the guaranteed loan portion of the combined funding request.
    (4) All guarantee loan and grant combination applications that are 
ranked, but not funded, will be processed in accordance with provisions 
found in Sec.  4280.121(d), (e), and (f).
    (5) Applicants whose combination applications are approved for 
funding must utilize both the loan and the grant. The guaranteed loan 
will be closed prior to grant funds being disbursed. The Agency 
reserves the right to reduce the total loan guarantee and grant award 
as appropriate.
    (6) Compliance reviews will be conducted on a combined grant and 
guaranteed loan request. The compliance review will encompass the 
entire operation, program, or activity to be funded with Agency 
assistance.


Sec. Sec.  4280.166-4280.168  [Reserved]

Renewable Energy System Feasibility Study Grants


Sec.  4280.169  General provisions.

    Grants for Feasibility Studies must be for specific Renewable 
Energy Systems that meet the project eligibility criteria specified for 
RES projects under this subpart. Applications for industry-level 
feasibility studies, also known as feasibility study templates or 
guides, are not eligible because the assistance is not provided to a 
specific project. In addition, any application in which the Applicant 
proposes to conduct any portion of the Feasibility Study is not 
eligible. The Feasibility Study completed for the proposed RES project 
must conform to Appendix D of this subpart.


Sec.  4280.170  Applicant eligibility.

    To be eligible for a RES Feasibility Study grant under this 
subpart, the Applicant must meet the criteria specified in paragraphs 
(a) through (d) of this section.
    (a) The Applicant must be an Agricultural Producer or a Rural Small 
Business;
    (b) The Applicant must be the prospective owner of the Renewable 
Energy System for which the Feasibility Study grant is sought and must 
be the prospective owner or controller of the site for the useful life 
of the property on which said Renewable Energy System would be placed; 
and
    (c) The Applicant must have the legal authority necessary to apply 
for and carry out the purpose of the grant.
    (d) Unless exempt under 2 CFR 25.110, the Applicant must
    (1) Be registered in the SAM prior to submitting an application or 
plan;
    (2) Maintain an active SAM registration with current information at 
all times during which it has an active Federal award or an application 
or plan under consideration by the Agency; and
    (3) Provide its DUNS number in each application or plan it submits 
to the Agency.


Sec.  4280.171  Eligibility of RES projects for Feasibility Study 
grants.

    Only RES projects that meet the requirements specified in this 
section are eligible for Feasibility Study grants under this subpart. 
The RES project for which the Feasibility Study grant is sought shall 
meet the requirements specified in paragraphs (a) through (e) of this 
section.
    (a) Be for a project as described in Sec.  4280.113 (a)(1) through 
(a)(3) and (a)(4)(i) or Sec.  4280.128.
    (b) Be for a project located in a Rural Area if the Applicant is a 
Rural Small Business, or in a Rural or non-Rural Area if the Applicant 
is an Agricultural Producer. If the Agricultural Producer's operation 
is in a non-Rural Area, then the Feasibility Study can only be for a 
Renewable Energy System on integral components of or directly related 
to the Agricultural Producer's operation, such as vertically integrated 
operations, and are part of and co-located with the agricultural 
production operation.

[[Page 22087]]

    (c) Be for technology that is Commercially Available, and that is 
replicable.
    (d) Not have had a Feasibility Study already completed for it with 
Federal and/or State assistance.
    (e) The project must be located in the same State where the 
Applicant has a place of business.
    (f) The Applicant is cautioned against taking any actions or 
incurring any obligations prior to the Agency completing the 
environmental review that would either limit the range of alternatives 
to be considered or that would have an adverse effect on the 
environment, such as the initiation of construction. If the Applicant 
takes any such actions or incurs any such obligations, it could result 
in project ineligibility.


Sec.  4280.172  [Reserved]


Sec.  4280.173  Grant funding for RES Feasibility Studies.

    (a) Maximum grant amount. The maximum amount of grant funds that 
will be made available for an eligible RES Feasibility Study project 
under this subpart to any one recipient will not exceed $100,000 or 25 
percent of the total Eligible Project Cost of the study, whichever is 
less. Eligible Project Costs are specified in paragraph (b) of this 
section.
    (b) Eligible Project Costs. Only those costs incurred after the 
date a Complete Application has been received by the Agency will be 
considered eligible. Eligible Project Costs for RES Feasibility Studies 
must be specific to the completion of the Feasibility Study and can 
include, but are not limited to, the items listed in paragraphs (b)(1) 
and (b)(2) of this section.
    (1) Payment of services to Qualified Consultant(s) to perform the 
necessary evaluations needed for the Feasibility Study and to complete 
the Feasibility Study.
    (2) Other studies or assessments to evaluate the economic, 
technical, market, financial, and management feasibility of the 
Renewable Energy System that are needed to complete the Feasibility 
Study (e.g., resource assessment, transmission study, or environmental 
study).
    (c) Ineligible project costs. Ineligible project costs for RES 
Feasibility Studies include, but are not limited to:
    (1) Costs associated with selection of engineering, architectural, 
or environmental services;
    (2) Designing, bidding, or contract development for the proposed 
project;
    (3) Permitting and other licensing costs required to construct the 
project;
    (4) Payment of any judgment or debt owed to the United States.
    (5) Any goods or services provided by a person or entity who has a 
conflict of interest as provided in Sec.  4280.106;
    (6) Any costs of preparing the application package for funding 
under this subpart; and
    (7) Funding of political or lobbying activities.


Sec. Sec.  4280.174-4280.175  [Reserved]


Sec.  4280.176  Feasibility Study grant applications--content.

    Applications for Feasibility Study grants must contain the 
information specified in paragraphs (a) through (n) of this section, 
except that Form AD 2106 is optional, and must be presented in the same 
order.
    (a) Form SF-424.
    (b) Form SF-424A, ``Budget Information--Non-Construction Programs'' 
(as applicable).
    (c) Form SF-424B, ``Assurances--Non-Construction Programs'' (as 
applicable).
    (d) Form SF-424C (as applicable).
    (e) Form SF-424D (as applicable).
    (f) Form AD 2106. Although this form is optional, if the applicant 
has previously submitted the form to the Agency or another Federal 
agency, the applicant does not need to resubmit the form.
    (g) Form RD 1940-20 (as applicable).
    (h) Identify the primary NAICS code applicable to the Applicant's 
operation if known or a description of the operation in enough detail 
for the Agency to determine the primary NAICS code;
    (i) Certification that the Applicant is a legal entity in good 
standing (as applicable), and operating in accordance with the laws of 
the state(s) where the Applicant has a place of business.
    (j) The Applicant must identify whether or not the Applicant has a 
known relationship or association with an Agency employee. If there is 
a known relationship, the Applicant must identify each Agency employee 
with whom the Applicant has a known relationship.
    (k) A proposed scope of work, which includes:
    (1) A brief description of the proposed Renewable Energy System 
that the Feasibility Study will evaluate;
    (2) The timeframe for completion of the Feasibility Study;
    (3) The experience of the Qualified Consultant completing the 
Feasibility Study, including the number of similar Feasibility Studies 
the Qualified Consultant has performed, the number of years the 
Qualified Consultant has been performing a similar service, and 
corresponding resumes; and
    (4) The identification of the amount and source of Matching Funds 
the Applicant is proposing to use for the proposed Feasibility Study 
and the amount of funds for which the Applicant has received written 
commitments at the time the application is submitted. Include 
documentation verifying the written commitment(s) that the Applicant 
has received from its Matching Funding sources;
    (l) A certification that the Applicant has not received any other 
Federal or State assistance for a Feasibility Study for the subject 
Renewable Energy System.
    (m) If the Applicant is a Rural Small Business, certification that 
the Feasibility Study grant will be for a RES project that is located 
in a Rural Area.
    (n) A certification providing:
    (1) For Rural Small Businesses, the total Annual Receipts for the 
past 3 years and number of employees of the business and any parent, 
subsidiary or affiliates at other locations for Rural Small Businesses. 
If the Rural Small Business Applicant has not engaged in business 
operations for the past 3 years, than information for as long as the 
Rural Small Business Applicant has been in business must be submitted. 
New businesses that do not have any Annual Receipts must provide 
projections based upon a typical operating year for a 2-year time 
period; or
    (2) For Agricultural Producers, the gross market value of the 
Applicant's agricultural products, gross agricultural income of the 
Applicant, and gross nonfarm income of the Applicant for the calendar 
year preceding the year in which the application is being submitted.


Sec.  4280.177  Evaluation of Feasibility Study grant applications.

    Section 4280.116(c) applies to this subpart, except for Sec.  
4280.116(c)(4).


Sec.  4280.178  Scoring Feasibility Study grant applications.

    The Agency will score each Feasibility Study application based on 
the evaluation criteria specified in paragraphs (a) through (f) of this 
section, with a maximum score of 100 points possible.
    (a) Commitment of funds for the RES Feasibility Study. A maximum of 
25 points will be awarded based on the level of written commitment an 
Applicant has from its Matching Funds source(s) that are documented 
with a Complete Application. If the Applicant has written commitments 
from the source(s) confirming commitment of:

[[Page 22088]]

    (1) 100 percent of the Matching Funds, 25 points will be awarded.
    (2) 75 percent up to but not including 100 percent of the Matching 
Funds, 10 points will be awarded.
    (3) 50 percent up to but not including 75 percent of the Matching 
Funds, 5 points will be awarded.
    (4) Less than 50 percent, no points will be awarded.
    (b) Size of Agricultural Producer or Rural Small Business. 
Applicants will be awarded points under this criterion based on 
Applicant size compared to the SBA Small Business size standards 
categorized by the NAICS codes found in 13 CFR 121.201. A maximum of 10 
points will be awarded under this criterion. For Applicants that are:
    (1) One-third or less of the maximum size standard identified by 
SBA, 10 points will be awarded.
    (2) Greater than one-third up to and including two-thirds of the 
maximum size standard identified by SBA, 5 points will be awarded.
    (3) Larger than two-thirds of the maximum size standard identified 
by SBA, no points will be awarded. For example, most agricultural 
production NAICS codes are limited to $750,000 in Annual Receipts. An 
Agricultural Producer within one of the agricultural production NAICS 
codes with Annual Receipts of $250,000 or less would be awarded 10 
points, while an Agricultural Producer with Annual Receipts of more 
than $250,000 Annual Receipts up to and including $500,000, would be 
awarded 5 points.
    (c) Experience with the proposed technology of the Qualified 
Consultant identified to perform the RES Feasibility Study. A maximum 
of 25 points can be awarded under this section. If the entity's 
experience in the field of study for the technology being proposed is:
    (1) 10 or more years, 25 points will be awarded.
    (2) 5 or more years, but less than 10 years, 20 points will be 
awarded.
    (3) 2 or more years, but less than 5 years, 10 points will be 
awarded.
    (4) Less than 2 years, no points will be awarded.
    (d) Size of RES Feasibility Study grant request. A maximum of 20 
points can be awarded under this criterion. If the grant request is:
    (1) $20,000 or less, 20 points will be awarded.
    (2) Greater than $20,000 up to and including $50,000, 10 points 
will be awarded.
    (3) Greater than $50,000, no points will be awarded.
    (e) Resources to implement project. Points will be awarded under 
this criterion depending on whether the RES project for which the 
Applicant is seeking to conduct a Feasibility Study qualifies for local 
or State program assistance for the construction of the proposed RES 
project or, once it has been constructed, for its operation. Points can 
be awarded for both types of assistance, for a maximum of 10 points.
    (1) If the Applicant has identified local programs, 5 points will 
be awarded.
    (2) If the Applicant has identified State programs, 5 points will 
be awarded.
    (f) Previous grantees and borrowers. Points under this scoring 
criterion will be awarded based on whether the Applicant has received a 
grant or guaranteed loan under this subpart. A maximum of 10 points 
will be awarded.
    (1) If the Applicant has never received a grant and/or guaranteed 
loan under this subpart, 10 points will be awarded.
    (2) If the Applicant has not received a grant and/or guaranteed 
loan under this subpart within the 2 previous Federal Fiscal Years, 5 
points will be awarded.


Sec.  4280.179  Selecting Feasibility Study grant applications for 
award.

    (a) Application competitions. Complete RES Feasibility Study grant 
applications will be competed against each other twice each calendar 
year. Complete RES Feasibility Study grant applications received by the 
Agency by 4:30 p.m. local time on November 30 will be competed against 
each other. Complete RES Feasibility Study grant applications received 
by the Agency by 4:30 p.m. local time on May 31, including any Complete 
Applications competed in the November 30 competition, but that were not 
funded, will be competed against each other. If November 30 or May 31 
falls on a weekend or a Federally-observed holiday, the next Federal 
business day will be considered the last day for receipt of a Complete 
Application.
    (b) Ranking of applications. Complete applications will be 
evaluated, processed, and subsequently ranked, and will compete for 
funding, subject to the availability of grant funding, as described in 
paragraph (a) of this section. Higher scoring applications will receive 
first consideration.
    (c) Funding selected applications. As applications are funded, if 
insufficient funds remain to fund the next highest scoring application, 
the Agency may elect to fund a lower scoring application. Before this 
occurs, the Administrator will provide the Applicant of the higher 
scoring application the opportunity to reduce the amount of the 
Applicant's grant request to the amount of funds available. If the 
Applicant agrees to lower its grant request, the Applicant must certify 
that the purposes of the project will be met and provide the remaining 
total funds needed to complete the project. At its discretion, the 
Agency may also elect to allow any remaining multi-year funds to be 
carried over to the next fiscal year rather than selecting a lower 
scoring application.
    (d) Disposition of ranked applications not funded. Based on the 
availability of funding, a ranked application might not be funded in 
the first semiannual competition for which it is eligible. All 
applications not selected for funding will be retained by the Agency 
for consideration in the next subsequent semiannual competition. The 
Agency will discontinue considering the application for potential 
funding after the application has competed in a total of two semiannual 
competitions.
    (e) Commencement of the project. The Applicant assumes all risks if 
the choice is made to purchase the technology proposed or start 
construction of the project to be financed in the grant application 
after the Complete Application has been received by the Agency.


Sec.  4280.180  [Reserved]


Sec.  4280.181  Awarding and administering Feasibility Study grants.

    The Agency will award and administer RES Feasibility Study grants 
in accordance with Departmental Regulations and with the procedures and 
requirements specified in Sec.  4280.122, except as specified in 
paragraphs (a) and (b) of this section.
    (a) The insurance specified in Sec.  4280.122(b) does not apply, 
unless equipment is purchased.
    (b) The Power Purchase Agreement specified in Sec.  4280.122(h) 
does not apply.


Sec.  4280.182  Servicing Feasibility Study grants.

    The Agency will service RES Feasibility Study grants in accordance 
with the requirements specified in Departmental Regulations; 7 CFR part 
1951, subparts E and O; the Grant Agreement; and the requirements in 
Sec.  4280.123 except as specified in paragraph (a) through (c) of this 
section.
    (a) Grant disbursement. RES Feasibility Study grant funds will be 
expended on a pro rata basis with Matching Funds.
    (1) Form SF-270, ``Request for Advance or Reimbursement,'' or other 
format prescribed by the Agency shall be used to request grant 
reimbursements.

[[Page 22089]]

    (2) RES Feasibility Study grant funds will be disbursed in 
accordance with the above through 90 percent of grant disbursement. The 
final 10 percent of grant funds will be held by the Agency until a 
Feasibility study acceptable to the Agency has been submitted.
    (b) Final deliverables. Upon completion of the Feasibility Study, 
the grantee shall submit the following to the Agency:
    (1) A Feasibility Study acceptable to the Agency; and
    (2) Form SF-270.
    (c) Outcome project performance reports. Beginning the first full 
year after the Feasibility Study has been completed, grantees must 
report annually for 2 years on the following:
    (1) Is the RES project for which the Feasibility Study was 
conducted underway? If ``yes,'' describe how far along the RES project 
is (e.g., financing has been secured, site has been secured, 
construction contracts are in place, project is completed). If ``no,'' 
discuss why the RES project is not underway.
    (2) Is the RES project complete? If so, what is the actual amount 
of energy being produced?


Sec. Sec.  4280.183-4280.185  [Reserved]

Energy Audit (EA) and Renewable Energy Development Assistance (REDA) 
Grants


Sec.  4280.186  Applicant eligibility.

    To be eligible for an EA grant or a REDA grant under this subpart, 
the Applicant must meet each of the criteria, as applicable, specified 
in paragraphs (a) through (d) of this section. The Agency will 
determine an Applicant's eligibility.
    (a) The Applicant must be one of the following:
    (1) A unit of State, Tribal, or local government;
    (2) A land-grant college or university, or other Institution of 
Higher Education;
    (3) A rural electric cooperative;
    (4) A Public Power Entity; or
    (5) An Instrumentality of a State, Tribal, or local government.
    (b) The Applicant must have sufficient capacity to perform the EA 
or REDA activities proposed in the application to ensure success. The 
Agency will make this assessment based on the information provided in 
the application.
    (c) The Applicant must have the legal authority necessary to apply 
for and carry out the purpose of the grant.
    (d) Unless exempt under 2 CFR 25.110, the Applicant must:
    (1) Be registered in the SAM prior to submitting an application or 
plan;
    (2) Maintain an active SAM registration with current information at 
all times during which it has an active Federal award or an application 
or plan under consideration by the Agency; and
    (3) Provide its DUNS number in each application or plan it submits 
to the Agency. Generally, the DUNS number is included on Standard Form-
424.


Sec.  4280.187  Project eligibility.

    To be eligible for an EA or a REDA grant, the grant funds for a 
project must be used by the grantee to assist Agricultural Producers or 
Rural Small Businesses in one or both of the purposes specified in 
paragraphs (a) and (b) of this section, and must also comply with 
paragraphs (c) through (f) of this section.
    (a) Conducting and promoting Energy Audits.
    (b) Conducting and promoting Renewable Energy Development 
Assistance by providing to Agricultural Producers and Rural Small 
Businesses recommendations and information on how to improve the energy 
efficiency of their operations and to use Renewable Energy technologies 
and resources in their operations.
    (c) Energy Audit and Renewable Energy Development Assistance can be 
provided only to a project located in a Rural Area unless the grantee 
of such project is an Agricultural Producer. If the project is owned by 
an Agricultural Producer, the project for which such services are being 
provided may be located in either a Rural or non-Rural Area. If the 
Agricultural Producer's project is in a non-Rural Area, then the Energy 
Audit or Renewable Energy Development Assistance can only be for a 
Renewable Energy System or Energy Efficiency Improvement on integral 
components of or directly related to the Agricultural Producer's 
project, such as vertically integrated operations, and are part of and 
co-located with the agricultural production operation.
    (d) The Energy Audit or Renewable Energy Development Assistance 
must be provided to a recipient in a State.
    (e) The Applicant must have a place of business in a State.
    (f) The Applicant is cautioned against taking any actions or 
incurring any obligations prior to the Agency completing the 
environmental review that would either limit the range of alternatives 
to be considered or that would have an adverse effect on the 
environment, such as the initiation of construction. If the Applicant 
takes any such actions or incurs any such obligations, it could result 
in project ineligibility.


Sec.  4280.188  Grant funding for Energy Audit and Renewable Energy 
Development Assistance.

    (a) Maximum grant amount. The maximum aggregate amount of EA and 
REDA grants awarded to any one recipient under this subpart cannot 
exceed $100,000. Grant funds awarded for EA and REDA projects may be 
used only to pay Eligible Project Costs, as described in paragraph (b) 
of this section. Ineligible project costs are listed in paragraph (c) 
of this section.
    (b) Eligible Project Costs. Eligible Project Costs for Energy 
Audits and Renewable Energy Development Assistance are those costs 
incurred after the date a Complete Application has been received by the 
Agency and that are directly related to conducting and promoting Energy 
Audits and Renewable Energy Development Assistance, which include but 
are not limited to:
    (1) Salaries;
    (2) Travel expenses;
    (3) Office supplies (e.g., paper, pens, file folders); and
    (4) Expenses charged as a direct cost or as an indirect cost of up 
to a maximum of 5 percent for administering the grant.
    (c) Ineligible project costs. Ineligible project costs for EA and 
REDA grants include, but are not limited to:
    (1) Payment for any construction-related activities;
    (2) Purchase or lease of equipment;
    (3) Payment of any judgment or debt owed to the United States;
    (4) Any goods or services provided by a person or entity who has a 
conflict of interest as provided in Sec.  4280.106;
    (5) Any costs of preparing the application package for funding 
under this subpart; and
    (6) Funding of political or lobbying activities.
    (d) Energy Audits. A grantee that conducts an Energy Audit must 
require that, as a condition of providing the Energy Audit, the 
Agricultural Producer or Rural Small Business pay at least 25 percent 
of the cost of the Energy Audit. Further, the amount paid by the 
Agricultural Producer or Rural Small Business will be retained by the 
grantee as a contribution towards the cost of the Energy Audit and 
considered program income. The grantee may use the program income to 
further the objectives of their project or EA services offered during 
the grant period in accordance with Departmental Regulations.

[[Page 22090]]

Sec.  4280.189  [Reserved]


Sec.  4280.190  EA and REDA grant applications--content.

    (a) Unless otherwise specified in a Federal Register notice, 
Applicants may only submit one EA grant application and one REDA grant 
application each Federal Fiscal Year. No combination (Energy Audit and 
Renewable Energy Development Assistance) applications will be accepted.
    (b) Applicants must submit Complete Applications consisting of the 
elements specified in paragraphs (b)(1) through (b)(7) of this section, 
except that Form AD 2106 is optional.
    (1) Form SF-424.
    (2) Form SF-424A.
    (3) Form SF-424B.
    (4) Form AD 2106. Although this form is optional, if the applicant 
has previously submitted the form to the Agency or another Federal 
agency, the applicant does not need to resubmit the form.
    (5) Certification that the Applicant is a legal entity in good 
standing (as applicable), and operating in accordance with the laws of 
the State(s) or Tribe where the Applicant has a place of business.
    (6) The Applicant must identify whether or not the Applicant has a 
known relationship or association with an Agency employee. If there is 
a known relationship, the Applicant must identify each Agency employee 
with whom the Applicant has a known relationship.
    (7) A proposed scope of work to include the following items:
    (i) A brief summary including a project title describing the 
proposed project;
    (ii) Goals of the proposed project;
    (iii) Geographic scope or service area of the proposed project and 
the method and rationale used to select the service area;
    (iv) Identification of the specific needs for the service area and 
the target audience to be served. The number of Agricultural Producers 
and/or Rural Small Businesses to be served shall be identified 
including name and contact information, if available, as well as the 
method and rationale used to select the Agricultural Producers and/or 
Rural Small Businesses;
    (v) Timeline describing the proposed tasks to be accomplished and 
the schedule for implementation of each task. Include whether 
organizational staff, consultants, or contractors will be used to 
perform each task. If a project is located in multiple states, 
resources must be sufficient to complete all projects;
    (vi) Marketing strategies to include a discussion on how the 
Applicant will be marketing and providing outreach activities to the 
proposed service area ensuring that Agricultural Producers and/or Rural 
Small Businesses are served;
    (vii) Applicant's experience as follows:
    (A) If applying for a REDA grant, the Applicant's experience in 
completing similar REDA activities, including the number of similar 
projects the Applicant has performed and the number of years the 
Applicant has been performing a similar service.
    (B) If applying for an EA grant, the number of Energy Audits and 
Energy Assessments the Applicant has completed and the number of years 
the Applicant has been performing those services;
    (C) For all Applicants, the amount of experience in administering 
EA, REDA, or similar activities as applicable to the purpose of the 
proposed project. Provide discussion if the Applicant has any existing 
programs that can demonstrate the achievement of energy savings or 
energy generation with the Agricultural Producers and/or Rural Small 
Businesses the Applicant has served. If the Applicant has received one 
or more awards within the last 5 years in recognition of its renewable 
energy, energy savings, or energy-based technical assistance, please 
describe the achievement; and
    (viii) Identify the amount of Matching Funds and the source(s) the 
Applicant is proposing to use for the project. Provide written 
commitments for Matching Funds at the time the application is 
submitted.


Sec.  4280.191  Evaluation of EA and REDA grant applications.

    Section 4280.116(c) applies to EA and REDA grants, except for Sec.  
4280.116(c)(4).


Sec.  4280.192  Scoring EA and REDA grant applications.

    The Agency will score each EA and REDA application using the 
criteria specified in paragraphs (a) through (f) of this section, with 
a maximum score of 100 points possible.
    (a) Applicant's organizational experience in completing the EA or 
REDA proposed activity. The Applicant will be scored based on the 
experience of the organization in providing Energy Audits or Renewable 
Energy Development Assistance as applicable to the purpose of the 
proposed project. The organization must have been in business and 
provided services for the number of years as identified in the 
paragraphs below. A maximum of 25 points can be awarded.
    (1) More than 10 years of experience, 25 points will be awarded.
    (2) At least 5 years and up to and including 10 years of 
experience, 20 points will be awarded.
    (3) At least 2 years and up to and including 5 years of experience, 
10 points will be awarded.
    (4) Less than 2 years of experience, no points will be awarded.
    (b) Geographic scope of project in relation to identified need. A 
maximum of 20 points can be awarded.
    (1) If the Applicant's proposed or existing service area is State-
wide or includes all or parts of multiple states, and the scope of work 
has identified needs throughout that service area, 20 points will be 
awarded.
    (2) If the Applicant's proposed or existing service area consists 
of multiple counties in a single State and the scope of work has 
identified needs throughout that service area, 15 points will be 
awarded.
    (3) If the Applicant's service area consists of a single county or 
municipality and the scope of work has identified needs throughout that 
service area, 10 points will be awarded.
    (c) Number of Agricultural Producers/Rural Small Businesses to be 
served. Applicants will be awarded points based on the proposed number 
of ultimate recipients to be assisted and if the Applicant can identify 
an actual list of ultimate recipients to be assisted. A maximum of 20 
points can be awarded.
    (1) If the Applicant plans to provide Energy Audits or Renewable 
Energy Development Assistance to:
    (i) Up to 10 ultimate recipients, 2 points will be awarded.
    (ii) Between 11 and up to and including 25 ultimate recipients, 5 
points will be awarded.
    (iii) More than 25 ultimate recipients, 10 points will be awarded.
    (2) If the Applicant provides a list of ultimate recipients, 
including their name and contact information, that are ready to be 
assisted, an additional 10 points may be awarded.
    (d) Potential of project to produce energy savings or generation 
and its attending environmental benefits. Applicants can be awarded 
points under both paragraphs (d)(1) and (d)(2) of this section. A 
maximum of 10 points can be awarded.
    (1) If the Applicant has an existing program that can demonstrate 
the achievement of energy savings or energy generation with the 
Agricultural Producers and/or Rural Small Businesses it has served, 5 
points will be awarded.

[[Page 22091]]

    (2) If the Applicant provides evidence that it has received one or 
more awards within the last 5 years in recognition of its renewable 
energy, energy savings, or energy-based technical assistance, up to a 
maximum of 5 points will be awarded as follows:
    (i) International/national--3 points for each.
    (ii) Regional/state--2 points for each.
    (iii) Local--1 point for each.
    (e) Marketing and outreach plan. If the scope of work included in 
the application provides a satisfactory discussion of each of the 
following criteria, one point for each (a maximum of 5 points) can be 
awarded.
    (1) The goals of the project;
    (2) Identified need;
    (3) Targeted ultimate recipients;
    (4) Timeline and action plan; and
    (5) Marketing and outreach strategies and supporting data for 
strategies.
    (f) Commitment of Matching Funds for the Total Project Cost. In 
order to receive points under this criterion, written documentation 
from each source providing Matching Funds is required when the 
application is submitted. A maximum of 20 points can be awarded.
    (1) If the Applicant proposes to match 50 percent or more of the 
grant funds requested, 20 points will be awarded.
    (2) If the Applicant proposes to match 20 percent or more but less 
than 50 percent of the grant funds requested, 15 points will be 
awarded.
    (3) If the Applicant proposes to match 5 percent or more but less 
than 20 percent of the grant funds requested, 10 points will be 
awarded.
    (4) If the Applicant proposes to match less than 5 percent of the 
grant funds requested, no points will be awarded.


Sec.  4280.193  Selecting EA and REDA grant applications for award.

    (a) Application competition. Complete EA and REDA applications 
received by the Agency by 4:30 p.m. local time on January 31 will be 
competed against each other. If January 31 falls on a weekend or a 
Federally-observed holiday, the next Federal business day will be 
considered the last day for receipt of a Complete Application. Unless 
otherwise specified in a Federal Register notice, the two highest 
scoring applications from each State, based on the scoring criteria 
established under Sec.  4280.192, will compete for funding.
    (b) Ranking of applications. All applications submitted to the 
National Office under paragraph (a) of this section will be ranked in 
priority score order. All applications that are ranked will be 
considered for selection for funding.
    (c) Selection of applications for funding. Using the ranking 
created under paragraph (a) of this section, the Agency will consider 
the score an application has received compared to the scores of other 
ranked applications, with higher scoring applications receiving first 
consideration for funding. If two or more applications score the same 
and if remaining funds are insufficient to fund each such application, 
the Agency will distribute the remaining funds to each such application 
on a pro-rata basis. At its discretion, the Agency may also elect to 
allow any remaining multi-year funds to be carried over to the next 
fiscal year rather than funding on a pro-rata basis.
    (d) Disposition of ranked applications not funded. Based on the 
availability of funding, a ranked application submitted for EA and/or 
REDA funds may not be funded. Such ranked applications will not be 
carried forward into the next Federal Fiscal Year's competition.


Sec.  4280.194  [Reserved]


Sec.  4280.195  Awarding and administering EA and REDA grants.

    The Agency will award and administer EA and REDA grants in 
accordance with Departmental Regulations and with the procedures and 
requirements specified in Sec.  4280.122, except as specified in 
paragraphs (a) through (c) of this section.
    (a) Instead of complying with Sec.  4280.122(b), the grantee must 
provide satisfactory evidence to the Agency that all officers of 
grantee organization authorized to receive and/or disburse Federal 
funds are covered by such bonding and/or insurance requirements as are 
normally required by the grantee.
    (b) Form RD 400-1 specified in Sec.  4280.122(c)(6) is not 
required.
    (c) The Power Purchase Agreement specified in Sec.  4280.122(h) is 
not required.


Sec.  4280.196  Servicing EA and REDA grants.

    The Agency will service EA and REDA grants in accordance with the 
requirements specified in Departmental Regulations, the Grant 
Agreement, 7 CFR part 1951, subparts E and O, and the requirements in 
Sec.  4280.123, except as specified in paragraphs (a) through (d) of 
this section.
    (a) Grant disbursement. The Agency will determine, based on the 
applicable Departmental Regulations, whether disbursement of a grant 
will be by advance or reimbursement. Form SF-270 must be completed by 
the grantee and submitted to the Agency no more often than monthly to 
request either advance or reimbursement of funds.
    (b) Semiannual performance reports. Project performance reports 
shall include, but not be limited to, the following:
    (1) A comparison of actual accomplishments to the objectives 
established for that period (e.g., the number of Energy Audits 
performed, number of recipients assisted and the type of assistance 
provided for Renewable Energy Development Assistance);
    (2) A list of recipients, each recipient's location, and each 
recipient's NAICS code;
    (3) Problems, delays, or adverse conditions, if any, that have in 
the past or will in the future affect attainment of overall project 
objectives, prevent meeting time schedules or objectives, or preclude 
the attainment of particular project work elements during established 
time periods. This disclosure shall be accompanied by a statement of 
the action taken or planned to resolve the situation;
    (4) Objectives and timetable established for the next reporting 
period.
    (c) Final performance report. A final performance report will be 
required with the final Federal financial report within 90 days after 
project completion. The final performance report must contain the 
information specified in paragraphs (c)(2)(i) or (c)(2)(ii), as 
applicable, of this section.
    (1) For EA projects, the final performance report must provide 
complete information regarding:
    (i) The number of audits conducted,
    (ii) A list of recipients (Agricultural Producers and Rural Small 
Businesses) with each recipient's NAICS code,
    (iii) The location of each recipient,
    (iv) The cost of each audit and documentation showing that the 
recipient of the Energy Audit provided 25 percent of the cost of the 
audit, and
    (v) The expected energy saved for each audit conducted if the audit 
is implemented.
    (2) For REDA projects, the final performance report must provide 
complete information regarding:
    (i) The number of recipients assisted and the type of assistance 
provided,
    (ii) A list of recipients with each recipient's NAICS code,
    (iii) The location of each recipient, and
    (iv) The expected Renewable Energy that would be generated if the 
projects were implemented.
    (d) Outcome project performance report. One year after submittal of 
the final performance report, the grantee will provide the Agency a 
final status report on the number of projects that are proceeding with 
the grantee's recommendations, including the

[[Page 22092]]

amount of energy saved and the amount of Renewable Energy generated, as 
applicable.


Sec. Sec.  4280.197-4280.200.  [Reserved]

Appendix A to Part 4280--Technical Report for Energy Efficiency 
Improvement Projects

    For all Energy Efficiency Improvement (EEI) projects with Total 
Project Costs of more than $80,000, provide the information 
specified in Sections A and D and in Section B or Section C, as 
applicable. If the application is for an EEI project with Total 
Project Costs of $80,000 or less, please see Sec.  4280.119(b)(3) 
for the technical report information to be submitted with your 
application.
    If the application is for an EEI project with Total Project 
Costs of more than $200,000, you must conduct an Energy Audit. 
However, if the application is for an EEI project with a Total 
Project Costs of $200,000 or less, you may conduct either an Energy 
Assessment or an Energy Audit.
    Section A--Project information. Describe how all the 
improvements to or replacement of an existing building and/or 
equipment meet the requirements of being Commercially Available. 
Describe how the design, engineering, testing, and monitoring are 
sufficient to demonstrate that the proposed project will meet its 
intended purpose, ensure public safety, and comply with applicable 
laws, regulations, agreements, permits, codes, and standards. 
Describe how all equipment required for the Energy Efficiency 
Improvement(s) is available and able to be procured and delivered 
within the proposed project development schedule. In addition, 
present information regarding component warranties and the 
availability of spare parts.
    Section B--Energy Audit. If conducting an Energy Audit, provide 
the following information.
    (1) Situation report. Provide a narrative description of the 
existing building and/or equipment, its energy system(s) and usage, 
and activity profile. Also include average price per unit of energy 
(electricity, natural gas, propane, fuel oil, renewable energy, 
etc.) paid by the customer for the most recent 36 months or, if in 
operation less than 36 months, the length of ownership for the 
building and equipment being audited. Any energy conversion should 
be based on use rather than source.
    (2) Potential improvement description. Provide a narrative 
summary of the potential improvement and its ability to reduce 
energy consumption or improve energy efficiency, including a 
discussion of reliability and durability of the improvements.
    (i) Provide preliminary specifications for critical components.
    (ii) Provide preliminary drawings of project layout, including 
any related structural changes.
    (iii) Identify significant changes in future related operations 
and maintenance costs.
    (iv) Describe explicitly how outcomes will be measured.
    (3) Technical analysis. Give consideration to the interactions 
among the potential improvements and the current energy system(s).
    (i) For the most recent 36 months, or the length of ownership if 
in operation for less than 36 months, prior to the date the 
application is submitted, provide both the total amount and the 
total cost of energy used for the original building and/or 
equipment, as applicable, for each improvement identified in the 
potential project. In addition, provide for each improvement 
identified in the potential project an estimate of the total amount 
of energy that would have been used and the total cost that would 
have been incurred if the proposed project was in operation for this 
same time period.
    (ii) Calculate all direct and attendant indirect costs of each 
improvement; and
    (iii) Rank potential improvements measures by cost-
effectiveness.
    (4) Qualifications of the auditor. Provide the qualifications of 
the individual or entity which completed the audit.
    Section C--Energy Assessment. If conducting an Energy 
Assessment, provide the following information.
    (1) Situation report. Provide a narrative description of the 
existing building and/or equipment, its energy system(s) and usage, 
and activity profile. Also include average price per unit of energy 
(electricity, natural gas, propane, fuel oil, renewable energy, 
etc.) paid by the customer for the most recent 36 months or, if in 
operation less than 36 months, the length of ownership for the 
building and equipment being evaluated. Any energy conversion shall 
be based on use rather than source.
    (2) Potential improvement description. Provide a narrative 
summary of the potential improvement and its ability to reduce 
energy consumption or improve energy efficiency.
    (3) Technical analysis. Giving consideration to the interactions 
among the potential improvements and the current energy system(s), 
provide the information specified in paragraphs (3)(i) through 
(3)(iii) of this section.
    (i) For the most recent 36 months, or the length of ownership if 
in operation for less than 36 months, prior to the date the 
application is submitted, provide both the total amount and the 
total cost of energy used for the original building and/or 
equipment, as applicable, for each improvement identified in the 
potential project. In addition, provide for each improvement 
identified in the potential project an estimate of the total amount 
of energy that would have been used and the total cost that would 
have been incurred if the proposed project was in operation for this 
same time period.
    (ii) Document baseline data compared to projected consumption, 
together with any explanatory notes on source of the projected 
consumption data. When appropriate, show before-and-after data in 
terms of consumption per unit of production, time, or area.
    (iii) Estimate Simple Payback.
    (4) Qualifications of the assessor. Provide the qualifications 
of the individual or entity which completed the assessment.
    Section D--Qualifications. Provide a resume or other evidence of 
the contractor or installer's qualifications and experience with the 
proposed energy efficiency improvement technology. Any contractor or 
installer with less than 2 years of experience may be required to 
provide additional information in order for the Agency to determine 
if they are qualified installer/contractor.

Appendix B to Part 4280--Technical Reports for Renewable Energy System 
(RES) Projects With Total Project Costs of $200,000 or Less

    Provide the information specified in Sections A through D for 
each technical report prepared under this appendix. A Renewable 
Energy Site Assessment may be used in lieu of Sections A through C 
if the Renewable Energy Site Assessment contains the information 
requested in Sections A through C. In such instances, the technical 
report would consist of Section D and the Renewable Energy Site 
Assessment.

    Note: If the Total Project Cost for the RES project is $80,000 
or less, this appendix does not apply. Instead, for such projects, 
please provide the information specified in Sec.  4280.119(b)(4).

    Section A--Project description. Provide a description of the 
project, including descriptions of the project site and its location 
and the quality and availability of the Renewable Energy resource. 
Describe how all the major equipment and construction meet the 
requirements of being Commercially Available. Identify the amount of 
Renewable Energy generated through the deployment of the proposed 
system. If applicable, also identify the percentage of energy being 
replaced by the system.
    If the application is for a Bioenergy Project, provide 
documentation that demonstrates that any and all woody biomass 
feedstock from National forest system land or public lands cannot be 
used as a higher value wood-based product.
    If the application is for the installation of equipment and 
tanks directly associated with Flexible Fuel Pumps, provide 
documentation that demonstrates the availability of Blended Liquid 
Transportation Fuel and the demand for that fuel in its service 
area.
    Section B--Project economic assessment. Describe the projected 
financial performance of the proposed project. The description must 
address Total Project Costs, energy savings, and revenues, including 
applicable investment and other production incentives accruing from 
government entities. Revenues to be considered shall accrue from the 
sale of energy, offset or savings in energy costs, byproducts, and 
green tags. Information must be provided to allow the calculation of 
Simple Payback.
    Section C--Project construction and equipment information. 
Describe how the design, engineering, testing, and monitoring are 
sufficient to demonstrate that the proposed project will meet its 
intended purpose, ensure public safety, and comply with applicable 
laws, regulations, agreements, permits, codes, and standards. 
Describe how all equipment required for the Renewable Energy System 
is available and able to be procured and delivered within the 
proposed project development schedule. In addition, present 
information regarding

[[Page 22093]]

component warranties and the availability of spare parts.
    Section D--Qualifications of key service providers. Describe the 
key service providers, including the number of similar systems 
installed and/or manufactured, professional credentials, licenses, 
and relevant experience. When specific numbers are not available for 
similar systems, estimations will be acceptable.

Appendix C to Part 4280--Technical Reports for Renewable Energy System 
Projects With Total Project Costs of Greater than $200,000

    Provide the information specified in Sections A through G for 
each technical report prepared under this appendix. Provide the 
resource assessment under Section C that is applicable to the 
project.
    Section A--Qualifications of the project team. Describe the 
project team, their professional credentials, and relevant 
experience. The description shall support that the project team key 
service providers have the necessary professional credentials, 
licenses, certifications, and relevant experience to develop the 
proposed project.
    Section B--Agreements and permits. Describe the necessary 
agreements and permits (including any for local zoning requirements) 
required for the project and the anticipated schedule for securing 
those agreements and permits. For example, Interconnection 
Agreements and Power Purchase Agreements are necessary for all 
renewable energy projects electrically interconnected to the utility 
grid.
    Section C--Resource assessment. Describe the quality and 
availability of the renewable resource and the amount of Renewable 
Energy generated through the deployment of the proposed system. For 
all Bioenergy Projects, except Anaerobic Digesters, complete Section 
C.3. For Anaerobic Digester projects, complete Section C.7.
    1. Wind. Provide adequate and appropriate data to demonstrate 
the amount of renewable resource available. Indicate the source of 
the wind data and the conditions of the wind monitoring when 
collected at the site or assumptions made when applying nearby wind 
data to the site.
    2. Solar. Provide adequate and appropriate data to demonstrate 
the amount of renewable resource available. Indicate the source of 
the solar data and assumptions.
    3. Bioenergy Project. Provide adequate and appropriate data to 
demonstrate the amount of renewable resource available. Indicate the 
type, quantity, quality, and seasonality of the Renewable Biomass 
resource, including harvest and storage, where applicable. Where 
applicable, also indicate shipping or receiving method and required 
infrastructure for shipping. For proposed projects with an 
established resource, provide a summary of the resource. Document 
that any and all woody biomass feedstock from National forest system 
land or public lands cannot be used as a higher value wood-based 
product.
    4. Flexible Fuel Pumps. Applications for the installation of 
equipment and tanks directly associated with Flexible Fuel Pumps 
must document availability of Blended Liquid Transportation Fuel and 
the demand for that fuel in its service area.
    5. Geothermal Electric Generation. Provide adequate and 
appropriate data to demonstrate the amount of renewable resource 
available. Indicate the quality of the geothermal resource, 
including temperature, flow, and sustainability and what conversion 
system is to be installed. Describe any special handling of cooled 
geothermal waters that may be necessary. Describe the process for 
determining the geothermal resource, including measurement setup for 
the collection of the geothermal resource data. For proposed 
projects with an established resource, provide a summary of the 
resource and the specifications of the measurement setup.
    6. Geothermal Direct Generation. Provide adequate and 
appropriate data to demonstrate the amount of renewable resource 
available. Indicate the quality of the geothermal resource, 
including temperature, flow, and sustainability and what direct use 
system is to be installed. Describe any special handling of cooled 
geothermal waters that may be necessary. Describe the process for 
determining the geothermal resource, including measurement setup for 
the collection of the geothermal resource data. For proposed 
projects with an established resource, provide a summary of the 
resource and the specifications of the measurement setup.
    7. Anaerobic digester. Provide adequate and appropriate data to 
demonstrate the amount of renewable resource available. Indicate the 
substrates used as digester inputs, including animal wastes or other 
Renewable Biomass in terms of type, quantity, seasonality, and 
frequency of collection. Describe any special handling of feedstock 
that may be necessary. Describe the process for determining the 
feedstock resource. Provide either tabular values or laboratory 
analysis of representative samples that include biodegradability 
studies to produce gas production estimates for the project on 
daily, monthly, and seasonal basis.
    8. Hydrogen Project. Provide adequate and appropriate data to 
demonstrate the amount of renewable resource available. Indicate the 
type, quantity, quality, and seasonality of the Renewable Biomass 
resource. For solar, wind, or geothermal sources of energy used to 
generate hydrogen, indicate the renewable resource where the 
hydrogen system is to be installed. Local resource maps may be used 
as an acceptable preliminary source of renewable resource data. For 
proposed projects with an established renewable resource, provide a 
summary of the resource.
    9. Hydroelectric/Ocean Energy projects. Provide adequate and 
appropriate data to demonstrate the amount of renewable resource 
available. Indicate the quality of the resource, including 
temperature (if applicable), flow, and sustainability of the 
resource, including a summary of the resource evaluation process and 
the specifications of the measurement setup and the date and 
duration of the evaluation process and proximity to the proposed 
site. If less than 1 year of data is used, a Qualified Consultant 
must provide a detailed analysis of the correlation between the site 
data and a nearby, long-term measurement site.
    Section D--Design and engineering. Describe the intended purpose 
of the project and the design, engineering, testing, and monitoring 
needed for the proposed project. The description shall support that 
the system will be designed, engineered, tested, and monitored so as 
to meet its intended purpose, ensure public safety, and comply with 
applicable laws, regulations, agreements, permits, codes, and 
standards. In addition, identify that all major equipment is 
Commercially Available, including proprietary equipment, and justify 
how this unique equipment is needed to meet the requirements of the 
proposed design. In addition, information regarding component 
warranties and the availability of spare parts must be presented.
    Section E--Project development. Describe the overall project 
development method, including the key project development activities 
and the proposed schedule, including proposed dates for each 
activity. The description shall identify each significant historical 
and projected activity, its beginning and end, and its relationship 
to the time needed to initiate and carry the activity through to 
successful project completion. The description shall address 
Applicant project development cash flow requirements. Details for 
equipment procurement and installation shall be addressed in Section 
F of this Appendix.
    Section F--Equipment procurement and installation. Describe the 
availability of the equipment required by the system. The 
description shall support that the required equipment is available 
and can be procured and delivered within the proposed project 
development schedule. Describe the plan for site development and 
system installation, including any special equipment requirements. 
In all cases, the system or improvement shall be installed in 
conformance with manufacturer's specifications and design 
requirements, and comply with applicable laws, regulations, 
agreements, permits, codes, and standards.
    Section G--Operations and maintenance. Describe the operations 
and maintenance requirements of the system, including major rebuilds 
and component replacements necessary for the system to operate as 
designed over its useful life. The warranty shall cover and provide 
protection against both breakdown and a degradation of performance. 
The performance of the renewable energy system or energy efficiency 
improvement shall be monitored and recorded as appropriate to the 
specific technology.

Appendix D to Part 4280--Feasibility Study Content

    Elements in an acceptable Feasibility Study include, but are not 
necessarily limited to, the elements specified in Sections A through 
G, as applicable, of this appendix.
    Section A. Executive Summary. Provide an introduction and 
overview of the project. In the overview, describe the nature and 
scope of the proposed project, including purpose, project location, 
design features, Capacity, and estimated total capital cost. Include 
a summary of each of the elements of the Feasibility Study, 
including:

[[Page 22094]]

    (1) Economic feasibility determinations;
    (2) Market feasibility determinations;
    (3) Technical feasibility determinations;
    (4) Financial Feasibility determinations;
    (5) Management feasibility determinations; and
    (6) Recommendations for implementation of the proposed project.
    Section B. Economic Feasibility. Provide information regarding 
the project site; the availability of trained or trainable labor; 
and the availability of infrastructure, including utilities, and 
rail, air and road service to the site. Discuss feedstock source 
management, including feedstock collection, pre-treatment, 
transportation, and storage, and provide estimates of feedstock 
volumes and costs. Discuss the proposed project's potential impacts 
on existing manufacturing plants or other facilities that use 
similar feedstock if the proposed technology is adopted. Provide 
projected impacts of the proposed project on resource conservation, 
public health, and the environment. Provide an overall economic 
impact of the proposed project including any additional markets 
created (e.g., for agricultural and forestry products and 
agricultural waste material) and potential for rural economic 
development. Provide the proposed project's plans for working with 
producer associations or cooperatives including estimated amount of 
annual feedstock and biofuel and byproduct dollars from producer 
associations and cooperatives.
    Section C. Market Feasibility. Provide information on the sales 
organization and management. Discuss the nature and extent of market 
and market area and provide marketing plans for sale of projected 
output, including both the principal products and the by-products. 
Discuss the extent of competition including other similar facilities 
in the market area. Provide projected total supply of and projected 
competitive demand for raw materials. Describe the procurement plan, 
including projected procurement costs and the form of commitment of 
raw materials (e.g., marketing agreements, etc.). Identify 
commitments from customers or brokers for both the principal 
products and the by-products. Discuss all risks related to the 
industry, including industry status.
    Section D. Technical Feasibility. The technical feasibility 
report shall be based upon verifiable data and contain sufficient 
information and analysis so that a determination may be made on the 
technical feasibility of achieving the levels of income or 
production that are projected in the financial statements. If no 
other individual or firm with the expertise necessary to make such a 
determination is reasonably available to perform the function, an 
individual or firm that is not independent may be used.
    (1) Identify any constraints or limitations in the financial 
projections and any other project or design-related factors that 
might affect the success of the enterprise. Identify and estimate 
project operation and development costs and specify the level of 
accuracy of these estimates and the assumptions on which these 
estimates have been based.
    (2) Discuss all risks related to construction of the project and 
regulatory and governmental action as they affect the technical 
feasibility of the project.
    Section E. Financial Feasibility. Discuss the reliability of the 
financial projections and assumptions on which the financial 
statements are based including all sources of project capital both 
private and public, such as Federal funds. Provide 3 years (minimum) 
projected Balance Sheets, Income Statements, and cash flow 
projections for the life of the project. Discuss the ability of the 
business to achieve the projected income and cash flow. Provide an 
assessment of the cost accounting system. Discuss the availability 
of short-term credit or other means to meet seasonable business 
costs and the adequacy of raw materials and supplies. Provide a 
sensitivity analysis, including feedstock and energy costs. Discuss 
all risks related to the project, financing plan, the operational 
units, and tax issues.
    Section F. Management Feasibility. Discuss the continuity and 
adequacy of management. Identify Applicant and/or management's 
previous experience concerning the receipt of Federal financial 
assistance, including amount of funding, date received, purpose, and 
outcome. Discuss all risks related to the Applicant as a company 
(e.g., Applicant is at the development stage) and conflicts of 
interest, including appearances of conflicts of interest.
    Section G. Qualifications. Provide a resume or statement of 
qualifications of the author of the Feasibility Study, including 
prior experience.

    Dated: March 21, 2013.
Doug O'Brien,
Deputy Under Secretary, Rural Development.

[FR Doc. 2013-07273 Filed 4-11-13; 8:45 am]
BILLING CODE 3410-XY-P