Rural Energy for America Program, 22304-22338 [2021-05286]

Agencies

• DEPARTMENT OF AGRICULTURE
• Rural Business-Cooperative Service

[Federal Register Volume 86, Number 79 (Tuesday, April 27, 2021)]
[Rules and Regulations]
[Pages 22304-22338]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-05286]



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Vol. 86

Tuesday,

No. 79

April 27, 2021

Part II





Department of Agriculture





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Rural Business-Cooperative Service





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7 CFR Part 4280





Rural Energy for America Program; Final Rule

Federal Register / Vol. 86 , No. 79 / Tuesday, April 27, 2021 / Rules 
and Regulations

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DEPARTMENT OF AGRICULTURE

Rural Business-Cooperative Service

7 CFR Part 4280

[Docket No. RBS-20-BUSINESS-0027]
RIN 0570-AA98


Rural Energy for America Program

AGENCY: Rural Business-Cooperative Service, USDA.

ACTION: Final rule; request for comment.

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SUMMARY: The Rural Business-Cooperative Service (RBCS and/or Agency), a 
Rural Development agency of the United States Department of Agriculture 
(USDA), hereinafter referred to as the Agency, is publishing this final 
rule for the Rural Energy for America Program (REAP). The intent of 
this rule is to remove the provisions relating to guaranteed loans and 
to make other revisions to enhance program delivery and customer 
service for the REAP program. Program enhancements that support a 
greater distribution of funds as well as processing and servicing 
clarifications are also being incorporated into this update.

DATES: 
    Effective date: This final rule is effective July 26, 2021.
    Comment date: Comments are due June 28, 2021.

ADDRESSES: You may submit comments, identified by docket number RBS-20-
Business-0027 and Regulatory Information Number (RIN) number 0570-AA98 
through https://www.regulations.gov.
    Instructions: All submissions received must include the Agency name 
and docket number or RIN for this rulemaking. All comments received 
will be posted without change to https://www.regulations.gov, including 
any personal information provided.
    Docket: For access to the docket to read background documents or 
comments received, go to https://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Sami Zarour, Program Management 
Division, U.S. Department of Agriculture, 1400 Independence Avenue SW, 
Washington, DC 20250-3201; telephone (202) 720-9549; email: 
[email protected].

SUPPLEMENTARY INFORMATION: 

I. Background

    Rural Development administers a multitude of programs, 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 
leadership, infrastructure, capital, and technical support that can 
support rural communities, helping them to prosper.
    To achieve its mission, Rural Development provides financial 
support (including direct loans, grants, loan guarantees, and direct 
payments) and technical assistance to help enhance the quality of life 
and provide support for economic development in rural areas.
    On July 14, 2020, at 85 FR 42494, the Agency promulgated 7 CFR part 
5001, the OneRD guaranteed loan regulation, which combined four Agency 
guaranteed loan program regulations, including REAP, into one 
comprehensive guaranteed loan processing and servicing regulation. This 
final rule amends 7 CFR part 4280, subpart B accordingly to remove 
references to the guaranteed loan provisions of REAP; these references 
have become superfluous in light of the promulgation of 7 CFR part 
5001. Furthermore, program modifications required by the Agriculture 
Improvement Act of 2018 (2018 Farm Bill), as well as provisions that 
have been previously published via funding opportunities in Federal 
Register publications, have been incorporated into this final rule to 
eliminate the need for annual notification and to enhance program 
delivery.

II. Summary of Changes to the Rule

    This section presents the major changes to the existing REAP 
regulation.
    A. General changes.
    All guaranteed loan references were removed from Subpart B, of Part 
4280, and it now contains appropriate language for the updated grant 
rule.
    References were updated according to section modifications.
    B. Definitions (Sec.  4280.103).
    The definition section was revised to add new definitions to 
conform to 7 CFR part 5001 and to remove reference to 7 CFR part 4279.
    C. Conflict of interest (Sec.  4280.106). Conformed language in 
Sec.  4280.106 (a) to the definition of conflict of interest found in 7 
CFR part 5001 as applicable. Removes specific language from prior rule 
regarding award of project construction contracts and language 
regarding recipient retaining ownership in the applicant's project. 
Revisions will bring consistency to RBCS regarding conflict of interest 
determinations.
    D. U.S. Department of Agriculture Departmental Regulations and laws 
that contain other compliance requirements (Sec.  4280.108). Clarified 
in paragraph (c)(1) that compliance reviews apply only to programs 
where grantees extend federal assistance to ultimate beneficiaries and 
modified text in paragraph (c)(2) accordingly. Updated environmental 
regulation reference.
    E. Ineligible applicants, borrowers, and owners (Sec.  4280.109). 
Renamed section ``Ineligible applicants, grantees, and owners.'' 
Removed references to borrowers and inserted reference to grantees.
    F. General applicant, application, and funding provisions (Sec.  
4280.110). Removed reference to guaranteed loan only applications and 
updated environmental regulation reference. Clarified that satisfactory 
progress in paragraph (a) may include a review of compliance with 
Agency reporting, and for the energy audits (EA) program and renewable 
energy development assistance (REDA) program it means at least 50 
percent of previous EA/REDA awards expended at time Agency determines 
eligibility of new applications, as was previously clarified via annual 
program notices. Streamlined language on application and type of 
funding limits in paragraphs (c) and (d) and merged text into one new 
paragraph (c), clarifying that like RES or EEI updates to multiple 
facilities may be submitted as one application. Updated technical 
report language in paragraph (g) (including list of technologies that 
must submit a technical report) to conform to 7 CFR part 5001. Previous 
rule required a technical report for all technologies. Clarified grant 
extension language in paragraph (h). Re-lettered paragraphs 
accordingly.
    G. Notifications (Sec.  4280.111). Removed reference to lender 
notifications.
    H. Applicant eligibility (Sec.  4280.112). Clarified in paragraph 
(a) that applicant eligibility is determined by the Agency at the time 
of application, removed prospective owner language in paragraph (b) 
since this applied to the feasibility study program only which no 
longer exists, separated into two paragraphs the Unique Entity 
Identifier (UEI) ID number (e) and the System for Awards Management 
(SAM) (f) provisions since they are separate processes.
    I. Project eligibility (Sec.  4280.113). Revised introductory text 
to reference subsequent improvements and to include Agency caution to 
the applicant regarding compliance with environmental requirements, 
both provisions were previously included in this section of the rule 
and are being relocated to enhance readability. Added hydroelectric 
source size restriction previously found in definition to

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paragraph (a) and removed examples as these will be provided in 
instruction. Revised RES residential language in paragraph (e) to 
clarify documentation required for a RES project where a residence is 
closely associated with an agricultural operation or rural small 
business. Applicant certification will no longer be accepted as an 
option for RES projects with residential ties, because a certification 
alone does not provide adequate documentation that 50% or greater of 
the energy to be generated will benefit the rural small business or 
agricultural producer operation. Added provision recognizing that 
recipients may use up to 10 percent of funds to construct, improve, or 
acquire broadband infrastructure related to the project financed, 
pursuant to 7 CFR 1980, Subpart M Special Authority to Enable Funding 
of Broadband and Smart Utility Facilities Across Select Rural 
Development programs.
    J. Ineligible projects (Sec.  4280.114). Renamed section from 
former ``RES and EEI grant funding'' and created a list of ineligible 
projects as previous rule had ineligible projects scattered throughout 
various sections of the rule. Added farm labor housing and owner 
occupied bed and breakfast projects, because these are considered 
residential since long-term living accommodations are provided. Added 
projects where ineligible project costs equal or exceed 50 percent of 
the total project costs since these projects do not carry out the 
intent of the statute.
    K. RES and EEI grant funding (Sec.  4280.115). Renamed section from 
former ``Grant applications--general'' and inserted text previously 
found in Sec.  4280.114. Added fees as required by interconnection 
agreements and vendor/installer certification provision to EEI eligible 
project costs in paragraph (c). Added clarification to ineligible 
project costs that lease to own and capitalized leases are not 
eligible. Modified provisions to remove loan-only request language.
    L. Grant applications--general (Sec.  4280.116). Renamed section 
from former ``Determination of technical merit'' and inserted text 
previously found in Sec.  4280.115. Removed guaranteed loan reference 
and revised RES feasibility study requirement in paragraph (b) to be 
required based on the scope of the project or lack of other application 
documentation. Previously a feasibility study was required for all RES 
projects with total costs of $200,000 or greater.
    M. Determination of technical merit (Sec.  4280.117). Renamed 
section from former ``Grant Applications for RES and EEI Projects with 
Total Project Costs of $200,000 and Greater'' and inserted text 
previously found in Sec.  4280.116. Conformed technical merit language 
to 7 CFR part 5001 language including reverting back to include a 
``pass with conditions'' assignment and determination. Added language 
in paragraph (e) on further processing of applications after technical 
merit determination.
    N. Grant applications for RES and EEI projects with total project 
costs of $200,000 and greater (Sec.  4280.118). Renamed section from 
former ``Grant Applications for RES and EEI Projects with Total Project 
Costs of Less than $200,000, but More Than $80,000'', and inserted text 
previously found in Sec.  4280.117. Removed reference to Form RD 1940-
20 which is no longer relevant and inserted reference to 7 CFR part 
1970. Added reference to Form 4280-3C. In paragraph (b), conformed 
applicant eligibility certification language as presented in 7 CFR part 
5001. Previously, all applicants were required to submit documentation 
to justify eligibility versus being able to certify. Required financial 
statements language also conforms to 7 CFR part 5001. Referenced 
conforming technical report language from 7 CFR part 5001 which 
identifies technologies which must submit technical reports, versus 
requiring for all applications.
    O. Grant applications for RES and EEI projects with total project 
costs of Less than $200,000, but more than $80,000 (Sec.  4280.119). 
Renamed section from former ``Grant Applications for RES and EEI 
Projects with Total Project Costs of $80,000 or Less'' and inserted 
text previously found in Sec.  4280.118. Added reference to application 
Form RD 4280-3B. Removed reference to Form RD 1940-20 which is no 
longer relevant and inserted reference to 7 CFR part 1970. Conformed 
applicant eligibility certification language as presented in 7 CFR part 
5001. Previously, all applicants were required to submit documentation 
to justify eligibility versus being able to certify. Removed 
requirement for applicants to submit self-score documentation. 
Referenced conforming technical report language from 7 CFR part 5001 
which identifies technologies which must submit technical reports, 
versus requiring for all applications.
    P. Grant applications for RES and EEI projects with total project 
costs of $80,000 or less (Sec.  4280.120). Renamed section from former 
``Scoring RES and EEI Grant Applications'' and inserted text previously 
found in Sec.  4280.119. Removed reference to Form RD 1940-20 which is 
no longer relevant and inserted reference to 7 CFR part 1970. Added 
reference to application Form RD 4280-3A. Conformed applicant 
eligibility certification language and technical merit language to 
language as presented in 7 CFR part 5001.
    Q. Scoring RES and EEI grant applications (Sec.  4280.121). Renamed 
section from former ``Selecting RES and EEI Grant Applications for 
Award'' and inserted text previously found in Sec.  4280.120. Recast 
and simplified language under energy generated, replaced or saved 
scoring criteria by removing equations and renumbering section 
accordingly. Added ``or replaced'' to (b)(1)(i) and clarified that 
energy for residential use is excluded. Clarified under (b)(2)(i)(A) 
that proposed energy use, such as that contributed to an expansion, is 
not considered in an energy replacement calculation. Clarified that 
retrofitting of an existing RES which increases the amount of energy 
generated, is scored as energy generation and will receive 10 points 
under this scoring criteria. Clarified that energy savings of less than 
20 percent will receive no points under sub-criterion (b)(2).
    Commitment of funds scoring criteria was reduced from a maximum of 
20 points to 15. Recast language into two paragraphs, calculation and 
awarding of points, for clarity.
    Inserted reference to 7 CFR part 5001 under previous grantees and 
borrowers scoring criteria to reference new REAP guaranteed loan 
regulation.
    Added new ``existing business'' scoring criteria with maximum of 5 
points, points sourced from reduction under commitment of funds 
criteria.
    Updated criteria, as previously published in Notice of Solicitation 
of Applications (NOSAs), for ``size of grant request,'' which replaces 
the ``size of business as compared to the Small Business Administration 
(SBA) size standard'' criteria. Maximum points remain at 10 and 
therefore applications requesting $250,000 or less for RES and $125,000 
or less for EEI projects, have total points possible of 100. All other 
applications have a maximum possible score of 90 points.
    Amended State Director/Administrator priority point text to conform 
with 7 CFR part 5001 which includes adding the newly defined terms 
underserved community(ies)and veteran. Language clarifying unserved or 
under-served population as previously published in REAP NOSAs was 
added. Points for projects located in Federal disaster areas, as 
previously published via REAP NOSAs, were added as a separate criteria 
under State Director/Administrator priority points.
    R. Selecting RES and EEI grant applications for award (Sec.  
4280.122).

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Renamed section from former ``Awarding and Administering RES and EEI 
Grants'' and inserted text previously found in Sec.  4280.121. Added 
language in introductory paragraph to clarify state allocations of 
restricted and unrestricted funds, amended RES/EEI application deadline 
to March 31 as previously noted in annual NOSA, added language 
regarding pro-rating applications with tied scores, and amended maximum 
competitions to up to five within a Federal fiscal year, versus 
allowing for five consecutive competitions which may roll into the next 
fiscal year.
    S. Awarding and administering RES and EEI grants (Sec.  4280.123). 
Renamed section from former ``Servicing RES and EEI Grants'' and 
inserted text previously found in Sec.  4280.122. Clarified SAM 
Registration provisions and added a 6-month timeframe from obligation 
of funds for execution of the Financial Assistance Agreement to better 
manage grants.
    T. Servicing RES and EEI grants (Sec.  4280.124). Renamed section 
from former ``Construction Planning and Performing Development '', and 
inserted text previously found in Sec.  4280.123. Removed transfer of 
obligation provisions as previously published in REAP NOSAs given 
transactions are not fully supported by the Agency's data systems, e.g. 
Guarantee Loan System (GLS), PLAS, and CLSS. Each transaction requires 
multiple complex manual actions by numerous staff which is burdensome 
and inefficient given limited resources. Amended transfer of ownership 
provisions to clarify that financial assistance agreement must be 
executed prior to transfer.
    Clarified minimum requirements for all grant fund reimbursement 
requests.
    Clarified that fund disbursement in full is acceptable for grants 
with total project costs of $200,000 or greater if project is completed 
in full, is operational, and has met or exceeded steady state operating 
levels. Clarified language regarding site visits.
    Amended outcome project performance criteria to comply with REAP 
Office of Inspector General (OIG) audit closure requirements. Annual 
certification will be accepted if project was installed as presented in 
the application, and if project installation differed, actual outcomes 
must be reported to the Agency.
    U. Construction planning and performing development (Sec.  
4280.125). Renamed section from former ``Compliance with Sec. Sec.  
4279-29 through 4279.99 of this chapter '' and inserted text previously 
found in Sec.  4280.124.
    Clarified that the Agency may note exceptions to surety 
requirements to avoid placing the burden of requesting an exception on 
the applicant who is not familiar with Agency surety provisions. Added 
provision to allow surety exception when the grantee agrees to 
reimbursement in full only after the system is operational, all costs 
are paid in full, and there is evidence of no liens.
    Increased threshold for technical services required under paragraph 
(c) from $400,000 to $1,000,000.
    Added language under paragraph (d) that removes Agency review and 
approval of final plans and specifications if the applicant agrees to a 
lump sum reimbursement of grant funds at the end of construction and 30 
days of successful operation.
    V. Combined Grant and Guaranteed Loan Funding Requirements (Sec.  
4280.137). Renamed section from former ``Application and 
Documentation''. Text formerly found in Sec.  4280.165 was inserted in 
part, removing specific guaranteed loan language and instead 
referencing 7 CFR part 5001 requirements for the loan portion of a 
combination funding request.
    W. Applicant eligibility (Sec.  4280.149). Sections 4280.144-
4280.148 remain ``Reserved''.
    Begins the Energy Audit (EA) and Renewable Energy Development 
Assistance Grants (REDA) provisions. Renamed section from former 
``Reserved'' and inserted text formerly found in Sec.  4280.186. 
Clarified that the term ``council'' is to be defined as a Resource 
Conservation & Development (RC&D) council.
    X. Project eligibility (Sec.  4280.150). Renamed section from 
former ``Reserved'' and inserted text formerly found in Sec.  4280.187. 
Removed ``or both'' in introductory sentence to ensure understanding 
that each application must focus on either EA or REDA assistance. 
Referenced definition of energy audits to ensure quality of documents 
completed. Modified language for agricultural producers in non-rural 
areas to conform to language in 7 CFR part 5001.
    Y. Ineligible Projects (Sec.  4280.151). Renamed section from 
former ``Reserved'' and inserted a list of projects which are not 
eligible for EA or REDA funding to include: Research related projects; 
feasibility studies of any nature; projects where funding is not 
targeted directly to assisting agriculture producers or rural small 
businesses; projects to develop computer software or programs; and 
projects where 50 percent or more of proposed grant funding will 
support in-eligible project costs.
    Z. Grant funding for EA and REDA (Sec.  4280.152). Renamed section 
from former ``Servicing Guaranteed Loans'' and inserted text formerly 
found in Sec.  4280.188. Added to list of ineligible project costs, 
funding to train individuals to become qualified to perform EA or REDA 
assistance and payment or waiver of student tuition, given program 
desires experienced resource providers at time of application. 
Clarified in paragraph (d) that the 25 percent contribution from 
agricultural producers and rural small businesses does not count 
towards commitment of funds for scoring.
    AA. EA and REDA grant applications--content (Sec.  4280.153). 
Renamed section from former ``Reserved'' and inserted text formerly 
found in Sec.  4280.190. Clarified applicant's experience under REDA to 
include renewable energy site assessments and renewable energy 
technical assistance provided directly to agriculture producers and 
rural small businesses. Removed reference to energy assessments under 
applicant's EA experience given eligible project purpose references 
only energy audits.
    BB. Evaluation of EA and REDA grant applications (Sec.  4280.154). 
Renamed section from former ``Reserved'' and inserted text formerly 
referenced in Sec.  4280.191. Added language to clarify that only 
information submitted in the application would be used to evaluate EA 
and REDA proposals. Added reference to ineligible project provisions as 
found in Sec.  4280.151 as this is also a part of the project 
eligibility evaluation. Updated reference to sections which were 
amended.
    CC. Scoring EA and REDA grant applications (Sec.  4280.155). 
Renamed section from former ``Reserved'' and inserted text formerly 
found in Sec.  4280.192. Rearranged order of scoring criteria to align 
with 7 CFR 5001.153, application content. Placed minimum score of 40 
points to compete for EA/REDA funding, unless later altered via a 
Federal Register notification. This aligns with minimum score of the 
REAP guaranteed loan program and provides flexibility for states to 
build REAP capacity, yet not compete very low scoring applications over 
others that better align with program requirements. Clarified that in 
addition to applicant experience, contractor experience related to the 
same type of activity, would qualify under scoring criteria (d). 
Clarified in (b)(2) that the ultimate recipient list must include at 
least 50 percent of total number proposed to be served in order to 
receive an additional 10 points under this scoring criteria. Clarified 
in (e) that existing programs

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and awards do not include those of contractors, and that awards are 
referring to recognition, not funding awards. Clarified in (f) the 
calculation for commitment of funds.
    DD. Selecting EA and REDA grant applications for award (Sec.  
4280.156). Renamed section from former ``Reserved'' and inserted text 
formerly found in Sec.  4280.193. Added language regarding funds held 
at National Office for one nationwide competition and added to 
paragraph (a) a provision for a third application from each state if 
program is undersubscribed on eligible requests. Reference to the 
minimum score threshold was added to paragraph (b). Added option to 
redirect unused EA/REDA funds into the RES/EEI program in paragraph 
(c).
    EE. Awarding and administering EA and REDA grants (Sec.  4280.158). 
Renamed section from former ``Reserved'', inserted text formerly found 
in Sec.  4280.195, and updated references.
    FF. Servicing EA and REDA grants (Sec.  4280.159). Renamed section 
from former ``Reserved'', inserted text formerly found in Sec.  
4280.196, and updated references.
    GG. Reserved `` '' (Sec.  4280.165). Renamed section from former 
``Combined Grant and Guaranteed Loan Funding Requirements''.
    HH. OMB control Number (Sec.  4280.166). Renamed section from 
former ``Reserved'' and inserted text formerly found in Sec.  4280.200.
    II. Former Sections (Sec. Sec.  4280.186-4280.200). Sections are no 
longer utilized in this regulation. Text has been relocated to sections 
as noted above.
    JJ. The following sections were removed in their entirety and are 
now reserved:
    Guaranteed/Annual Renewal Fee (Sec.  4280.126).
    Borrower Eligibility (Sec.  4280.127).
    Project Eligibility (Sec.  4280.128).
    Guaranteed Loan Funding (Sec.  4280.129).
    Loan Processing (Sec.  4280.130).
    Credit Quality (Sec.  4280.131).
    Financial Statements (Sec.  4280.132).
    Personal and Corporate Guarantees (Sec.  4280.134).
    Scoring RES and EEI Guaranteed Loan-Only Applications (Sec.  
4280.135).
    Evaluation of RES and EEI Guaranteed Loan Applications (Sec.  
4280.138).
    Selecting RES and EEI Guaranteed Loan-Only Applications for Award 
(Sec.  4280.139).
    Reserved (Sec.  4280.140).
    Changes in Borrower (Sec.  4280.141).
    Conditions Precedent to Issuance of Loan Note Guarantee (Sec.  
4280.142).
    Requirements After Project Construction (Sec.  4280.143).
    Combined Grant and Guaranteed Loan Funding Requirements. (Sec.  
4280.165).
    Appendix A to Subpart B of Part 4280--Technical Reports for Energy 
Efficiency Improvement (EEI) Projects. Updated regulatory references.
    Appendix B to Subpart B of Part 4280--Technical Reports for 
Renewable Energy System (RES) Projects with Total Project Costs of Less 
Than $200,000, but More Than $80,000. Updated regulatory references.
    Appendix C to Subpart B of Part 4280--Technical Reports for 
Renewable Energy System (RES) Projects with Total Project Costs of 
$200,000 and Greater. Updated regulatory references and added language 
for biogas projects, renewable energy systems with storage components, 
and provisions for hybrid applications.
    Appendix D to Subpart B of Part 4280--Feasibility Study Components. 
Added appendix which conforms to feasibility study component appendix 
found in 7 CFR 5001.

III. Executive Orders/Acts

Executive Orders 12866 and 13563

    Executive Orders 12866 and 13563 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches to maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). Executive 
Order 13563 emphasizes the importance of quantifying both costs and 
benefits, of reducing costs, of harmonizing rules, and of promoting 
flexibility.
    This rule has been determined to be significant and was reviewed by 
the Office of Management and Budget under Executive Order 12866. In 
accordance with Executive Order 12866, the Agency conducted a 
Regulatory Impact Analysis, outlining the costs and benefits of 
implementing this program in rural America. The complete analysis is 
available in Docket No. RBS-20-Business-0027. This analysis consists a 
statement of need for the final rule, a discussion of the current 
provisions for the Rural Energy for America Program (REAP) and how the 
final rule changes those provisions, and an analysis of the benefits 
and costs of the changes.
    Much of the analysis is necessarily descriptive of the anticipated 
effects of this final rule. Benefits are described qualitatively, with 
some indication of the relative potential size. Most of the costs are 
quantified. Consequently, the analysis does not provide the exact 
magnitude of the resulting benefits and costs. Despite this, the Agency 
expects this final rule will provide cost savings and net benefits 
compared to the current situation by improved program and Agency 
management.

Congressional Review Act

    Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.), 
the Office of Information and Regulatory Affairs designated this rule 
as not a major rule, as defined by 5 U.S.C. 804(2).

Unfunded Mandates Reform Act

    This final 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

    This final rule has been reviewed in accordance with 7 CFR part 
1970 (``Environmental Policies and Procedures''). The Agency has 
determined that (i) this action meets the criteria established in 7 CFR 
1970.53(f); (ii) no extraordinary circumstances exist; and (iii) the 
action is not ``connected'' to other actions with potentially 
significant impacts, is not considered a ``cumulative action'' and is 
not precluded by 40 CFR 1506.1. Therefore, the Agency has determined 
that the action does not have a significant effect on the human 
environment, and therefore neither an Environmental Assessment nor an 
Environmental Impact Statement is required.

Executive Order 13132, Federalism

    The policies contained in this final rule do not have a substantial 
direct effect on States, on the relationship between the national 
government and the States, or on the distribution of power and 
responsibilities among the various levels of government. Nor does this 
rule impose substantial direct compliance costs on state and local 
governments. Therefore, consultation with the states is not required.

Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601-602) (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 (``APA'') or any other statute. The 
Administrative Procedures Act exempts from notice and comment 
requirements rules ``relating to agency management or personnel or to 
public property, loans, grants, benefits,

[[Page 22308]]

or contracts'' (5 U.S.C. 553(a)(2)), so therefore an analysis has not 
been prepared for this rule.

Executive Order 13211, Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use

    The Rural Energy for America Program helps offset the costs 
associated with renewable energy systems and energy efficiency 
improvements. Renewable energy systems can be installed for direct use 
to replace existing fossil fuel use where the behind-the-meter 
applications only affect on-site use and have no negative impact on the 
energy supply or distribution systems. Renewable energy systems can 
also be installed for distributed energy systems to help ensure a 
reliable source of energy in the event of natural disasters. Projects 
which produce energy for sale, or net-meter energy, are typically 
interconnected to existing energy distribution systems. These projects 
are required to meet all federal and state regulatory provisions as set 
by local utilities, state statutes and federal regulations, thus 
ensuring no adverse impacts to energy supply or distribution systems. 
For large REAP projects, applicants often incur the cost for generation 
and transmission studies to ensure no adverse impacts to energy supply 
or distribution systems. The additional infrastructure becomes a 
benefit to the utility or other parties interested in developing their 
own renewable energy projects. Energy efficiency improvement projects 
reduce the consumption of fossil fuel based energy and assist many 
utilities with management of their demand loads. It is for these 
reasons that the REAP program is not likely to have an adverse impact 
to the energy supply or distribution systems. Accordingly, this action 
is not likely to have a significant adverse effect on the supply, 
distribution, or use of energy. Moreover, the action has not otherwise 
been designated by the Administrator of the Office of Information and 
Regulatory Affairs as a significant energy action.

Executive Order 12372, Intergovernmental Review of Federal Programs

    This final rule is excluded from the scope of Executive Order 12372 
(Intergovernmental Consultation), which may require a consultation with 
State and local officials. See the final rule related notice entitled, 
``Department Programs and Activities Excluded from Executive Order 
12372'' (50 FR 47034).

Executive Order 13175, Consultation and Coordination With Indian Tribes

    This executive order imposes requirements on RBS in the development 
of regulatory policies that have tribal implications or preempt tribal 
laws. RBS has determined that the rule does not have a substantial 
direct effect on one or more Indian tribe(s) or on either the 
relationship or the distribution of powers and responsibilities between 
the Federal Government and Indian tribes. Thus, this rule is not 
subject to the requirements of Executive Order 13175. If tribal leaders 
are interested in consulting with RBS on this rule, they are encouraged 
to contact USDA's Office of Tribal Relations or the Agency's Native 
American Coordinator at: [email protected] to request such a consultation.

Catalog of Federal Domestic Assistance

    REAP is listed in the Catalog of Federal Domestic Assistance (CFDA) 
under Number 10.868.
    All active CFDA programs and the CFDA Catalog can be found at the 
following website: https://beta.sam. gov/. The website also contains a 
PDF file version of the Catalog that, when printed, has the same layout 
as the printed document that the Government Publishing Office (GPO) 
provides. GPO prints and sells the CFDA to interested buyers. For 
information about purchasing the Catalog of Federal Domestic Assistance 
from GPO, call the Superintendent of Documents at 202- 512-1800 or toll 
free at 866-512-1800, or access GPO's online bookstore.

Paperwork Reduction and Recordkeeping Requirements

    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
Chapter 35, as amended), the Agency invites comments on this 
information collection, which has been submitted for approval from the 
Office of Management and Budget (OMB) under OMB Control Number 0570-
0067.
    Written comments and recommendations for the proposed information 
collection should be sent within 60 days of publication of this notice 
to www.reginfo.gov/public/do/PRAMain. Find this particular information 
collection by selecting ``Currently under 60-day Review--Open for 
Public Comments'' or by using the search function.
    Comments are invited on (a) whether the collection of information 
is necessary for the proper performance of the functions of the Agency, 
including whether the information will have practical utility; (b) the 
accuracy of the Agency's estimate of burden including the validity of 
the methodology and assumption 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 on 
other forms of information technology.
    Title: 7 CFR 4280, Rural Energy for America Program.
    OMB Control Number: 0570-0067.
    Abstract: The Rural Energy for America Program, which supersedes 
the Renewable Energy Systems and Energy Efficiency Improvements Program 
under Title IX, Section 9006 of the Farm Security and Rural Investment 
Act of 2002, is designed to help agricultural producers and rural small 
business reduce energy cost and consumption, develop new income 
streams, and help meet the nation's critical energy needs by requiring 
the Secretary of Agriculture to provide grants and/or guaranteed loans 
for several types of projects as follows:
     Grants and grants and loan guarantees (combined funding) 
to agricultural producers and rural small businesses to purchase 
renewable energy systems and make energy efficiency improvements.
     Grants to eligible entities to provide energy audits and 
renewable energy development assistance to enable agricultural 
producers and rural small businesses to become more energy efficient 
and to use renewable energy technologies and resources. Entities 
eligible to receive grants under this program are State, tribal and 
local governments; land-grant colleges and universities or other 
institutions of higher learning; rural electric cooperatives; public 
power entities; Resource Conservation and Development Councils and 
instrumentalities of local, state, and federal governments. These grant 
funds may be used to conduct and promote energy audits; provide 
recommendations and information on how to improve the energy efficiency 
of the operations of the agricultural producers and rural small 
businesses; and provide recommendations and information on how to use 
renewable energy technologies and resources in the operations. No more 
than five (5) percent of the grant can be used for administrative 
purposes. Agricultural producers and rural small businesses for which a 
grantee is conducting an energy audit must pay at least 25 percent of 
the cost of the energy audit.

[[Page 22309]]

    The following estimates are based on the average over the first 3 
years the program is in place.
    Estimate of Burden: Public reporting burden for this collection of 
information is estimated to average 2.10 hours per response.
    Respondents: Rural developers, farmers and ranchers, rural 
businesses, public bodies, local governments, lenders.
    Estimated Number of Respondents: 1,434.
    Estimated Number of Responses per Respondent: 28.28.
    Estimated Number of Responses: 40,560.
    Estimated Total Annual Burden (hours) on Respondents: 85,178.00.
    Copies of this information collection may be obtained from Thomas 
P. Dickson, Regulatory Division Team 2, Rural Development Innovation 
Center, U.S. Department of Agriculture, 1400 Independence Ave. SW, 
Washington, DC 20250; telephone, 202-690-4492; email, 
[email protected].
    All responses to this information collection and recordkeeping 
notice 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 of 2002, which requires Government agencies in general to provide 
the public the option of submitting information or transacting business 
electronically to the maximum extent possible.

List of Subjects in 7 CFR Part 4280

    Business and industry, Energy, Grant programs--business, Loan 
programs--business, Rural areas.

    For the reasons set forth in the preamble, under the authority at 5 
U.S.C. 301, 7 U.S.C 8107, Chapter XLII of Title 7 of the Code of 
Federal Regulations is amended as follows:

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. 8107.


0
2. Revise subpart B to read 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 [Reserved]
4280.108 U.S. Department of Agriculture departmental regulations and 
laws that contain other compliance requirements.
4280.109 Ineligible applicants, grantees, 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 Ineligible projects.
4280.115 RES and EEI grant funding.
4280.116 Grant applications--general.
4280.117 Determination of technical merit.
4280.118 Grant applications for RES and EEI projects with total 
project costs $200,000 and greater.
4280.119 Grant applications for RES and EEI projects with total 
project costs of less than $200,000, but more than $80,000.
4280.120 Grant applications for RES and EEI projects with total 
project costs of $80,000 or less.
4280.121 Scoring RES and EEI grant applications.
4280.122 Selecting RES and EEI grant applications for award.
4280.123 Awarding and administering RES and EEI grants.
4280.124 Servicing RES and EEI grants.
4280.125 Construction planning and performing development.
4280.126-4280.136 [Reserved]

Combined Funding for Renewable Energy Systems and Energy Efficiency 
Improvements

4280.137 Combined grant and guaranteed loan funding requirements.
4280.138-4280.148 [Reserved]

Energy Audit and Renewable Energy Development Assistance Grants

4280.149 Applicant eligibility.
4280.150 Project eligibility.
4280.151 Ineligible projects.
4280.152 Grant funding for EA and REDA.
4280.153 EA and REDA grant applications--content.
4280.154 Evaluation of EA and REDA grant applications.
4280.155 Scoring EA and REDA grant applications.
4280.156 Selecting EA and REDA grant applications for award.
4280.157 [Reserved]
4280.158 Awarding and administering EA and REDA grants.
4280.159 Servicing EA and REDA grants.
4280.160-4280.165 [Reserved]
4280.166 OMB control number.
Appendix A to Subpart B of Part 4280--Technical Reports for Energy 
Efficiency Improvement (EEI) Projects
Appendix B to Subpart B of Part 4280--Technical Reports for 
Renewable Energy System (RES) Projects With Total Project Costs of 
Less Than $200,000, but More Than $80,000
Appendix C to Subpart B of Part 4280--Technical Reports for 
Renewable Energy System (RES) Projects With Total Project Costs of 
$200,000 and Greater
Appendix D to Subpart B of Part 4280--Contents of Feasibility Study

Subpart B--Rural Energy for America Program General


Sec.  4280.101  Purpose.

    This subpart contains the procedures and requirements for providing 
the following financial assistance under the Rural Energy for America 
Program (REAP):
    (a) Grants, 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 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
    (c) Grants or guaranteed loans, or a combination grant and 
guaranteed loan to an applicant or borrower pursuant to 7 CFR 1980, 
Subpart M Special Authority to Enable Funding of Broadband and Smart 
Utility Facilities Across Select Rural Development Programs. A Borrower 
or applicant receiving funding as referenced in paragraphs (a) or (b) 
of this section is permitted to use up to 10 percent of the amount 
provided under this subpart to construct, improve, or acquire broadband 
infrastructure related to the project financed, subject to the 
requirements of 7 CFR 1980, Subpart M.


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, grantees, 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 4280.125 discuss the requirements 
specific to RES and EEI grants. Sections 4280.112 and 4280.113 discuss, 
respectively, applicant and project eligibility. Section 4280.114 
addresses ineligible projects. Section 4280.115 addresses funding 
provisions for these grants. Sections 4280.116 through 4280.120 address 
grant application content, technical merit determination, and required 
documentation. Sections 4280.121 through 4280.124 address the scoring, 
selection, awarding and administering, and servicing of these grant 
applications. Section 4280.125

[[Page 22310]]

addresses construction planning and development.
    (c) Section 4280.137 presents the process by which the Agency will 
make combined loan guarantee and grant funding available for RES and 
EEI projects.
    (d) Sections 4280.149 through 4280.159 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.
    (e) 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 Less Than $200,000, but more than $80,000; 
and Appendix C applies to RES projects with Total Project Costs 
$200,000 and Greater. 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.  4280.120.
    (f) Appendix D covers contents of feasibility study.


Sec.  4280.103  Definitions.

    The following definitions are applicable to the capitalized terms 
used in this part.
    Administrator. The Administrator of Rural Business-Cooperative 
Service within the Rural Development Mission Area of the U.S. 
Department of Agriculture (USDA).
    Agency. The Rural Business-Cooperative Service 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. A person, including non-profits, directly 
engaged in the production of agricultural products through labor 
management and operations, including the cultivating, growing, and 
harvesting of plants and crops (including farming); breeding, raising, 
feeding, or housing of livestock (including ranching); forestry 
products; hydroponics; nursery stock; or aquaculture, whereby 50 
percent or greater of their gross income is derived from the 
operations. The percentage is calculated as the average of gross 
agricultural operations income of the concern divided by the gross 
total income of the concern for the five most recent years. If the 
concern has been in operation for less than 60 months, use average 
gross agricultural operations income and gross total income for as long 
as the concern has been in operation.
    Anaerobic digester. A Renewable Energy System that uses animal 
waste or other renewable biomass and may include other organic 
substrates to produce digestate and biogas that may be sold in a 
gaseous or compressed liquid state or used to produce thermal or 
electrical energy.
    Applicant. (1) Except for EA and REDA grants, the agricultural 
producer or rural small business that is seeking a grant, or a 
combination of a grant and guaranteed 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; 
council; or an Instrumentality of a State, Tribal, or local government 
that is seeking an EA or REDA grant under this subpart.
    Bioenergy project. A RES that produces fuel, biogas, thermal 
energy, or electric power from a renewable biomass source only.
    Biofuel. A fuel derived from renewable biomass.
    Biogas. Gaseous fuel (including landfill and sewage waste treatment 
gas) derived from the degradation and decomposition of renewable 
biomass.
    Byproduct. An incidental or secondary product, regardless of 
whether it has a readily identifiable commercial use or value, 
generated under normal operations of the proposed project that can be 
reasonably measured and monitored.
    Commercially available. A system that meets the requirements of 
either paragraph (1) or (2) of this definition.
    (1) A domestic or foreign system that:
    (i) Has both a proven and reliable operating history and proven 
performance data for at least 1 year specific to the use and operation 
to the proposed application;
    (ii) Is based on established design and installation procedures and 
practices and is replicable;
    (iii) Has professional service providers, trades, large 
construction equipment providers, and laborers who are familiar with 
installation procedures and practices;
    (iv) Has proprietary and balance of system equipment and spare 
parts that are readily available;
    (v) Has service that is readily available to properly maintain and 
operate the system; and
    (vi) Has an existing established warranty that is valid in the 
United States for major parts and labor; or
    (2) A domestic or foreign system that has been certified by a 
recognized industry organization whose certification standards are 
acceptable to the Agency.
    Complete application. An application that contains all parts 
necessary for the Agency to determine applicant and project 
eligibility, the financial feasibility and technical merit of the 
project, and contains sufficient information to determine a priority 
score for the application, if applicable.
    Costs incurred. A cost will be considered incurred when payment for 
costs associated with the project have been issued. If payment was in 
the form of a check, the date of the check will be considered the date 
the cost was incurred. If payment was in the form of an electronic 
payment, the date that the payment was issued from the grantee/
producer/borrower account will be considered the date the cost was 
incurred.
    Council. As defined, under the Resource Conservation and 
Development Program, at 16 U.S.C. 3451.
    Departmental regulations. The regulations of the Agency's Office of 
Chief Financial Officer (or successor office) as codified in 2 CFR 
chapter IV.
    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 as applicable.
    Eligible project costs. Those expenses approved by the Agency for 
the project as eligible uses of funds.
    Energy assessment. An Agency-approved report 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.
    (1) If the project's total project cost is greater than $80,000, 
the energy assessment must be conducted by either an energy auditor or 
an energy assessor or an individual supervised by either an energy 
assessor or energy auditor. The final energy assessment must be 
validated and signed by the energy assessor or energy auditor who 
conducted the energy assessment or by the supervising energy assessor 
or energy auditor of the individual who conducted the assessment, as 
applicable.

[[Page 22311]]

    (2) If the project's total project cost is $80,000 or less, the 
energy assessment may be conducted in accordance with paragraph (1) of 
this definition or by an individual or entity that has at least 3 years 
of experience and completed at least five energy assessments or energy 
audits on similar type projects.
    Energy assessor. A qualified consultant who has at least 3 years of 
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. A comprehensive report that meets an Agency-approved 
standard prepared by an energy auditor 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 4-year engineering or architectural degree 
with at least 3 years of experience and who has completed at least five 
similar type energy audits.
    Energy efficiency improvement (EEI). Improvements to or replacement 
of an existing building or systems and/or equipment, owned by the 
applicant, that reduces energy consumption on an annual basis.
    Existing business. A business that has been in operation for at 
least 1 full year. The following will be treated as existing businesses 
provided there is not a significant change in operations of the 
existing business: Mergers by an existing business with a new or 
existing business, a change in the business name, or a new business and 
an existing business applying as co-applicants.
    Feasibility study. A report including an opinion or finding 
conducted by an independent qualified consultant(s) evaluating the 
economic, market, technical, financial, and management feasibility of a 
proposed project or operation in terms of its expectation for success 
as outlined in Appendix D of this Subpart.
    Federal fiscal year. The 12-month period beginning October 1 of 
each year and ending on September 30 of the following year; it is 
designated by the calendar year in which it ends.
    Financial Assistance Agreement (Form RD 4280-2, Rural Business-
Cooperative Service Financial Assistance Agreement). An agreement 
between the Agency and the grantee setting forth the provisions under 
which the grant will be administered.
    Financial feasibility. The ability of a project to achieve 
sufficient income, credit, and cash flow to financially sustain a 
project over the long term and meet all debt obligations.
    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.
    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 RES 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.
    Hydrogen project. A system that produces hydrogen derived from a 
renewable biomass or water using wind, solar, ocean (including tidal, 
wave, current, and thermal) geothermal or hydroelectric sources as an 
energy transport medium in the production of mechanical or electric 
power or thermal energy.
    Immediate family(ies). Individuals who live in the same household 
or who are closely related by blood, marriage, or adoption, such as a 
spouse, domestic partner, parent, child, sibling, aunt, uncle, 
grandparent, grandchild, niece, nephew, or first cousin.
    Inspector. A qualified consultant who has at least 3 years of 
experience and has completed at least five inspections on similar type 
projects.
    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.
    Interconnection agreement. A contract containing the terms and 
conditions governing the interconnection and parallel operation of the 
grantee's electric generation equipment and the utility's electric 
power system or a grantee's biogas production system and gas pipeline.
    Matching funds. Those project funds required by 7 U.S.C. 8107 to be 
made available by the applicant in order to be eligible to receive the 
grant, or combined grant and guaranteed loan. Funds provided by the 
applicant in excess of matching funds are not matching funds. 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 applicant or 
any affiliate of the applicant as evidenced by a contractual agreement.
    Person. An individual or entity organized under the laws of a State 
or a Tribe.
    Power purchase agreement. The terms and conditions governing the 
sale and transportation of power produced by the applicant 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(s). An independent third-party person 
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 piece of equipment or RES that has been 
brought into a commercial facility, thoroughly inspected, and worn 
parts replaced and has a warranty that is approved by the Agency or its 
designee.
    Renewable biomass. (1) Materials, pre-commercial thinnings, or 
invasive

[[Page 22312]]

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;
    (ii) Would not otherwise be used for higher-value products; and
    (iii) Are harvested in accordance with applicable law and land 
management plans and the requirements for old-growth maintenance, 
restoration, and management direction of paragraphs (2), (3), and (4) 
of subsection (e) of section 102 of the Healthy Forests Restoration Act 
of 2003 (16 U.S.C. 6512) and large-tree retention of subsection (f) of 
Section 102; 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 
the following items:
    (i) Renewable plant material (including feed grains; other 
agricultural commodities; other plants and trees; and algae); and
    (ii) Waste material including crop residue; other vegetative waste 
material (including wood waste and wood residues); animal waste and 
byproducts (including fats, oils, greases, and manure); and food waste 
and yard waste.
    Renewable 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 an 
energy source described in paragraph (1).
    Renewable energy development assistance (REDA). Assistance provided 
by eligible grantees to agricultural producers and rural small 
businesses including education, applicability, and implementation of 
renewable energy technologies and resources. The REDA may consist of 
renewable energy site assessments 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 usable energy 
from a renewable energy source and may include:
    (1) Distribution components necessary to move energy produced by 
such system to initial point of sale; and
    (2) other components and ancillary infrastructure of such system, 
such as a storage system; however, such system may not include a 
mechanism for dispensing energy at retail.
    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. A modification to an existing building or installed 
equipment that incorporates a function or feature(s)not included in the 
original design when built or for the replacement of existing 
components with components that improve the original design and does 
not impact original warranty if the warranty is still in existence.
    Rural and rural area. Any area of a State not in a city or town 
that has a population of more than 50,000 inhabitants, and which 
excludes certain populations pursuant to 7 U.S.C. 1991(a)(13)(H), 
according to the latest decennial census of the United States and not 
in the urbanized area contiguous and adjacent to a city or town that 
has a population of more than 50,000 inhabitants. In making this 
determination, the Agency will use the latest decennial census of the 
United States. The following exclusions apply:
    (1) Any area in the urbanized area contiguous and adjacent to a 
city or town that has a population of more than 50,000 inhabitants that 
has been determined to be ``rural in character'' as follows:
    (i) 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 
(1)(ii) of this definition. 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 \1/4\ 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 the appropriate Rural Development State 
Director for recommendation to the Administrator on behalf of the Under 
Secretary. The petition shall document how the area meets the 
requirements of paragraph (1)(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 website at https://www.rd.usda.gov, 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. The Under Secretary will make a 
determination of the appeal in not less than 15 days, but no more than 
30 days.
    (iii) Rural Development State Directors may also initiate a request 
to the Under Secretary to determine if an area is ``rural in 
character.'' A written recommendation should be sent to the 
Administrator, on behalf of the Under Secretary, that documents how the 
area meets the statutory requirements of paragraph (1)(i)(B) of this 
definition and discusses why the State Director believes the area is 
``rural in character,'' including, but not limited to, the area's 
population density, demographics, topography, and how the local economy 
is tied to a rural economic base. Upon receipt of such a request, the 
Administrator will review the request for compliance with the ``rural 
in character'' provisions and make a recommendation to the Under 
Secretary. Provided a favorable determination is made, the Under 
Secretary will consult with the applicable Governor or leader

[[Page 22313]]

in a similar position and request comments within 10 business days, 
unless the comments were submitted with the request. A public notice 
will be published by the State Office in accordance with paragraph 
(1)(ii) of this definition. There is no appeal process for requests 
made on the initiative of the State Director.
    (2) 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.
    (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. Areas 
within CDPs with greater than 50,000 inhabitants, other than the San 
Juan CDP, may be determined to be rural 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 and any other CDP with greater than 50,000 
inhabitants. Areas within CDPs with greater than 50,000 inhabitants, 
other than the Honolulu CDP, may be determined to be rural if they are 
``not urban in character.''
    (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.
    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 part is located in a rural area.
    Simple payback. The estimated simple payback of a project funded 
under this part as calculated using paragraphs (1) or (2), as 
applicable, of this definition.
    (1) EEI projects simple payback = (total project costs) / (dollar 
value of energy saved).
    (i) Energy saved will be determined by subtracting the projected 
energy (determined by the method in paragraph (1)(i)(B) of this 
definition) to be consumed from the historical energy consumed 
(determined by the method in paragraph (1)(i)(A) of this definition), 
and converting the result to a monetary value using a constant value or 
price of energy (determined by the method in paragraph (1)(i)(C) of 
this definition).
    (A) Actual energy used in the original building and/or equipment, 
as applicable, prior to the EEI project, must be based on the actual 
average annual total energy used in British thermal units (BTU) over 
the most recent 12, 24, 36, 48, or 60 consecutive months of operation. 
Attach utility bills to document applicant entity's historical energy 
consumption quantity.
    (B) Projected energy use if the proposed 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 (1)(i)(A) of this definition.
    (C) Value or price of energy must be the actual average price paid 
over the same time period used to calculate the actual energy used 
under paragraph (1)(i)(A) of this definition. When calculating the 
actual average price of energy, only include energy charges directly 
reduced by the unit of energy being replaced or saved. Attach utility 
bills to document applicant entity's average price of energy.
    (ii) The EEI projects simple payback calculation does not allow 
applicants to monetize EEI benefits other than the dollar amount of the 
energy savings the agricultural producer or rural small business 
realizes as a result of the improvement.
    (2) RES projects simple payback = (total project costs) / (dollar 
value of energy units replaced, credited, sold, or used and fair market 
value of byproducts as applicable in a typical year).
    (i) Value of energy replaced will be calculated based on the 
applicant entity's historical energy consumption with actual average 
price paid for the energy replaced, following the methodology outlined 
in paragraph (1)(i) of this definition. Attach utility bills to 
document applicant entity's historical energy consumption quantity and 
actual average price of energy.
    (ii) Value of energy credited or sold will be calculated based on 
the amount of energy units to be credited or sold at the proposed rate 
per unit, as documented in utility net metering or crediting policies 
and/or a power purchase agreement. Attach utility net metering or 
crediting policies and/or a power purchase agreement to document energy 
quantity and proposed rate for energy credited or sold.
    (iii) If proposed energy will be used in a new facility, value of 
energy used will be calculated based on the amount of energy units to 
be used at the documented price per unit of conventional fuel 
alternative. Attach documentation of market price per unit of 
conventional fuel alternative.
    (iv) Value of byproducts produced by and used in the project or 
related enterprises should be documented at the fair market value to be 
received for the byproducts in a typical year. Attach documentation of 
market value price to be received for byproducts and documentation to 
support byproduct sales or direct use.
    (v) The RES projects simple payback calculation does not include 
any one-time benefits such as but not limited to construction and 
investment-related benefits, nor credits which do not provide annual 
income to the project, such as tax credits.
    Small business means,
    (1) An entity or utility, as applicable, as further defined in 
subparagraphs (i) through (iv) and paragraph (2) of this definition. 
With the exception of the entities identified in this paragraph, all 
other non-profit entities are not small businesses for the purposes of 
REAP program eligibility:
    (i) A private for-profit entity, including a sole proprietorship, 
partnership, or corporation;
    (ii) A cooperative (including a cooperative qualified under section 
501(c)(12) of the Internal Revenue Code);
    (iii) An electric utility (including a Tribal or governmental 
electric utility) that provides service to rural consumers and operates 
independent of direct government control; or
    (iv) A Tribal corporation or other Tribal business entities that 
are chartered under Section 17 of the Indian Reorganization Act (25 
U.S.C. 477) or have similar structures and relationships with their 
Tribal governments and are acceptable to the Agency. The Agency will 
determine the small business status of such Tribal entity without 
regard to the resources of the Tribal government; and
    (2) An entity that meets Small Business Administration size 
standards in accordance with 13 CFR part 121 and criteria of Sec.  
121.301 as applicable to financial assistance programs, including (i) 
or (ii) below. The size of the concern alone and the size of the 
concern combined with other entity(ies) it controls or entity(ies) it 
is controlled by, must not exceed the size standard thresholds 
designated for the industry in which the concern alone or the concern 
and its controlling entity(ies), whichever is higher, is primarily 
engaged.
    (i) The concern's tangible net worth is not in excess of $15 
million and average

[[Page 22314]]

net income (excluding carry-over losses) for the preceding two 
completed fiscal years is not in excess of $5.0 million; or
    (ii) The size of the concern does not exceed the Small Business 
Administration (SBA) size standard thresholds designated for the 
industry in which it is primarily engaged, as measured by number of 
employees or annual receipts. Industry size standard designations to be 
utilized are listed in the Small Business Administration's (SBA) table 
of size standards found in 13 CFR part 121.201. Number of employees and 
annuals receipts are calculated as follows:
    (A) Number of employees is calculated as the average number of all 
individuals employed by a concern on a full-time, part-time, or other 
basis, based upon numbers of employees for each of the pay periods for 
the preceding completed 12 calendar months. If a concern has not been 
in business for 12 months, the average number of employees is used for 
each of the pay periods during which it has been in business.
    (B) Annual receipts are calculated as average total income plus 
cost of goods sold for the for the five most recent years. If a concern 
has been in operation for less than 60 months, average annual receipts 
for as long as the concern has been in operation are used.
    Smart Utility. The use of broadband facilities and equipment that 
is only available internally by a recipient during the economic life of 
the assets financed by an Agency loan, grant, or loan guarantee.
    State. Any of the 50 States of the United States, the Commonwealth 
of Puerto Rico, the District of Columbia, the U.S. Virgin Islands, 
Guam, American Samoa, the Commonwealth of the Northern Mariana Islands, 
the Republic of Palau, the Federated States of Micronesia, and the 
Republic of the Marshall Islands.
    Steady state operating level means that there is an adequate and 
consistent supply of the applicable renewable energy resource(s) for 
the project, both on a short-term (current) and long-term basis, and 
the renewable energy system and process(es) are operating at projected 
capacity, consistently yielding an adequate quantity and quality of 
renewable energy.
    Total eligible project costs. The sum of all eligible project 
costs.
    Total project costs. The sum of all costs associated with a 
completed project.
    Underserved community(ies). Communities (including urban or rural 
communities and Indian tribal communities) that have limited access to 
affordable, healthy foods, including fresh fruits and vegetables, in 
grocery retail stores or farmer-to-consumer direct markets and that 
have either a high rate of hunger or food insecurity or a high poverty 
rate as reflected in the most recent decennial census or other Agency-
approved census.
    Used equipment. Any equipment that has been used and is provided in 
an ``as is'' condition.
    Useful life means estimated durations of utility placed on a 
variety of assets, including buildings, machinery, equipment, vehicles, 
electronics, and furniture. Useful life estimations terminate at the 
point when assets are expected to become obsolete, require major 
repairs, or cease to deliver economical results.
    Veteran. A veteran is a person who served in the active military, 
naval, or air service, and who was discharged or released therefrom 
under conditions other than dishonorable as defined in title 38 U.S.C. 
101(2).


Sec.  4280.104  Exception authority.

    The Administrator may, on a case-by-case basis, grant an exception 
to any requirement or provision of this subpart provided that such an 
exception is in the best financial interests of the Federal Government. 
Exercise of this authority cannot be in conflict with applicable law.


Sec.  4280.105  Review or appeal rights.

    Agency Applicants or grantees may have appeal or review rights for 
Agency decisions made under this part. Agency decisions that are 
adverse to the individual participant are appealable, while matters of 
general applicability are not subject to appeal; however, such 
decisions are reviewable for appealability by the National Appeals 
Division (NAD). All appeals will be conducted by NAD and will be 
handled in accordance with 7 CFR part 11. The applicant or grantee can 
appeal any Agency decision that directly and adversely affects them.


Sec.  4280.106  Conflict of interest.

    (a) General. No conflict of interest or appearance of conflict of 
interest will be allowed. Conflict of interest means a situation in 
which a person has personal, professional, or financial interests that 
prevent, or appears to prevent the person from acting impartially. 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 to a beneficiary or immediate family member of the 
applicant.
    (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  [Reserved]


Sec.  4280.108  U.S. Department of Agriculture departmental regulations 
and laws that contain other compliance requirements.

    (a) 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.
    (b) 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, disability, 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.
    (c) 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 
includes 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 for programs.
    (2) When compliance reviews are applicable to the grant, one 
subsequent compliance review following project completion is required. 
This will occur after the last disbursement of grant funds has been 
made.

[[Page 22315]]

    (d) Environmental analysis. Actions taken under this subpart must 
comply with 7 CFR part 1970. 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 or Tribal 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.
    (e) 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, grantees, and owners.

    Applicants, grantees, 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, grantee, 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, grantee, or 
owner is not eligible to receive a grant or combined grant and 
guaranteed loan until the judgment is paid in full or otherwise 
satisfied or the delinquency is resolved.
    (b) If an applicant, grantee, or owner is debarred from receiving 
Federal assistance, the applicant, grantee, or owner is not eligible to 
receive a grant or combined grant and 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. This may include a review of the 
applicant compliance with Agency reporting requirements. Satisfactory 
progress for EA and REDA grants is defined as at least 50 percent of 
previous EA or REDA awards expended at the time the Agency makes its 
eligibility determination.
    (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 and combined 
grant and guaranteed loan applications for financial assistance under 
this subpart may be submitted at any time.
    (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.
    (2) Combined grant and guaranteed loan 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) Application limits. An applicant applying for a grant or a 
combined grant and guaranteed loan is limited to competing one RES 
application and one EEI application under this subpart in any one 
Federal fiscal year. An applicant that proposes to install the same EEI 
or RES (including hybrid) across multiple facilities can be considered 
one project and be submitted in one application.
    (d) Application modification. Once submitted and prior to Agency 
award, if an applicant modifies the scope of the project described in 
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 information, and the 
application will be processed and scored by the Agency as a new 
application under this subpart.
    (e) 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 provide 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.  4280.122 or 4280.156 as applicable.
    (f) Application withdrawal. During the period between the 
submission of an application and the execution of 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.
    (g) Technical report. The following technologies: Hydrogen, ocean 
energy, geothermal electric generation, anaerobic digesters and biogas, 
biomass, hybrid applications, RES with storage components, and EEI or 
technologies as amended via Federal Register notification or posted on 
the Agency's website, must provide a technical report as specified in 
Sec. Sec.  4280.118(d) 4280.119(b)(4), and 4280.120(b)(3) and 
4280.120(b)(4), and must comply with the provisions specified in 
paragraphs (g)(1) through (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.  
4280.120(b)(3), Sec.  4280.120(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, information must be provided, in sufficient 
detail, to:
    (i) Allow the Agency to determine the technical merit of the 
applicant's project under Sec.  4280.117;
    (ii) Allow the calculation of simple payback as defined in Sec.  
4280.103;
    (iii) For RES Projects, enable the calculation of the percentage of 
historical use of energy compared to the amount of renewable energy 
that will be generated once the project is operating at its steady 
state operating level. If the project is closely associated with a 
residence, demonstration must be made that 50 percent or more of the 
projected renewable energy will benefit the agricultural operation or 
rural small business; and
    (iv) Demonstrate that the RES or EEI will operate or perform over 
the project's useful life in a reliable, safe, and a cost-effective 
manner, which may include but is not limited to addressing project 
design, installation, operation, maintenance, and warranties.
    (2) Technical report modifications. If a technical report is 
prepared prior to

[[Page 22316]]

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 may require additional environmental 
documentation in accordance with 7 CFR part 1970.
    (3) Hybrid projects. If the application is for a hybrid project, 
technical reports as applicable must be prepared for each technology 
that comprises the hybrid project.
    (h) Time limit on use of grant funds. Except as provided in 
paragraph (h)(1) of this section, grant funds not expended within 2 
years from the date the Financial Assistance Agreement was signed by 
the Agency will be returned to the Agency.
    (1) Time extensions. The Agency may extend the 2-year time limit 
for a period not to exceed 24 months 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 two-year 
anniversary of executing the Financial Assistance 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) Return of funds to the Agency. Funds remaining after grant 
closeout that exceed the amount the grantee is entitled to receive 
under the Financial Assistance Agreement will be returned to the 
Agency.


Sec.  4280.111  Notifications.

    (a) Eligibility. If an applicant and/or their application are 
determined by the Agency to be eligible for participation, the Agency 
will notify the applicant or lender in writing of the eligibility 
determination.
    (b) Ineligibility. If an applicant and/or their application are 
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, if applicable. No further processing 
of the application will occur.
    (c) Funding determinations. Each applicant and/or lender, as 
applicable, will be notified of the Agency's decision on their 
application. If unfunded in a competition, the application will compete 
in the next available competition and will continue competing until 
either awarded or the application has competed in the maximum number of 
competitions in a fiscal year. The Agency will then issue an adverse 
funding determination for the unsuccessful 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 (g) of this 
section.
    (a) Type of applicant. The applicant must be an agricultural 
producer or rural small business at the time of application.
    (b) Ownership and control. The applicant must at the time of 
application and, if an award is made, for the useful life of the 
project as described in the Financial Assistance Agreement:
    (1) Own the project; and
    (2) Own or control the site for the project. If the grantee does 
not maintain ownership of the project and ownership or control of the 
site, then grant funds may be recovered from the grantee by the Agency 
in accordance with Departmental Regulations.
    (c) End Users. If the controlling interest in the applicant entity 
is otherwise eligible and a legal transaction between two parties for 
the sale of energy in an open market is being proposed, the Agency will 
not consider the energy end-users as part of the analysis of the 
eligibility of the applicant. If the proposed end-user would be an 
ineligible applicant, such as an entity which is residential in nature 
or a non-profit entity, and the REAP applicant entity is a newly formed 
special-purpose entity with substantially the same ownership as the 
sole proposed end-user, then the REAP applicant entity is not eligible.
    (d) 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 the 
project, including its operation and maintenance. 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.
    (e) Legal authority and responsibility. Each applicant must have 
the legal authority necessary to apply for and carry out the purpose of 
the grant.
    (f) Unique Entity Identifier (UEI). All applicants must register 
for a UEI as part of the registration process. Generally, the UEI 
number is included on Standard Form-424, ``Application for Federal 
Assistance.''
    (g) 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;
    (2) Maintain an active SAM registration with current information at 
all times while an application is pending and until final fund 
disbursement has been made.


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. Subsequent EEI 
projects must meet the requirements specified in paragraph (a)(5)(ii) 
of this section. 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.
    (a) The project must be for:
    (1) The purchase of a new RES;
    (2) The purchase of a refurbished RES;
    (3) The retrofitting of an existing RES;
    (4) For the purposes of this subpart, only those hydroelectric 
sources with a rated power of 30 megawatts or less are eligible, or
    (5) Making an EEI that will allow less energy to be used on an 
annual basis than the original building and/or equipment being improved 
or replaced as provided in a vendor/installer certification or as 
demonstrated in an energy assessment or energy audit as applicable.
    (i) Types of improvements. Eligible EEI include, but are not 
limited to:
    (A) Efficiency improvements to existing RES; 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 assessment or energy audit, 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) Subsequent EEI projects. A proposed EEI project that replaces 
an

[[Page 22317]]

EEI project previously funded under this subpart may or may not be 
eligible for funding.
    (A) If the proposed EEI project would replace the same specific EEI 
equipment that had previously received funds under this subpart prior 
to the end of the useful life, as specified in the Financial Assistance 
Agreement, then the proposed improvement project, even if it is more 
energy efficient than the previously funded improvement, is ineligible.
    (B) If the proposed EEI project would replace the same specific EEI 
equipment that had previously received funds under this subpart at or 
after the end of the useful life, as specified in the Financial 
Assistance Agreement, then the proposed improvement is eligible for 
funding under this subpart provided the EEI is more energy efficient 
than the previously funded improvement. If the proposed EEI is not more 
energy efficient than the previously funded improvement, then it is not 
eligible for funding under this subpart.
    (b) The project must utilize commercially available technology;
    (c) The project must have technical merit, as determined using the 
procedures specified in Sec.  4280.117; and
    (d) The project must 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 
and the application supports the production, processing, vertical 
integration, or marketing of agricultural products. If the agricultural 
producer's operation is in a non-rural area, then the application can 
only be for RES or EEI components of the business operation that are 
directly related to and their use and purpose is limited to the 
agricultural production operation, such as vertically integrated 
operations, and are part of and co-located with the agricultural 
production operation.
    (e) For a RES project, where a residence is closely associated with 
and shares an energy metering device with an agricultural operation or 
rural small business to be served by the RES project, 50 percent or 
more of the energy to be generated by the RES project must be used by 
the agricultural operation or rural small business. This also includes 
projects which will virtually net meter or credit energy to be 
generated by the RES project to a residence off-site from the project 
and owned by the applicant. The application must contain sufficient 
documentation to evaluate this provision which may include using either 
of the methods identified in paragraphs (e)(1) through (2) of this 
section.
    (1) Provide a renewable energy site assessment or other 
documentation including calculations that demonstrate, based on 
historical energy use, that 50 percent or more of the energy to be 
produced by the RES project will be used in the agricultural operation 
or rural small business. This includes documentation on historical 
residential energy use. The Agency may request additional data to 
determine residential versus business or agricultural operation usage. 
The actual percentage of energy determined to benefit the rural small 
business or agricultural operation will be used to determine eligible 
project costs; or
    (2) The applicant may install, or elect to conditionalize funding 
upon the installation of, a device (such as a second meter) that 
restricts 100 percent of the energy generated by the RES project to be 
used only by the agricultural operation or rural small business.
    (f) An applicant is permitted to use up to 10 percent of the amount 
provided under this subpart to construct, improve, or acquire broadband 
infrastructure, subject to the requirements of 7 CFR 1980, Subpart M, 
Special Authority to Enable Funding of Broadband and Smart Utility 
Facilities Across Select Rural Development Programs.


Sec.  4280.114  Ineligible projects.

    The Agency will not award funding under this part for any projects 
identified in this section, unless otherwise noted.
    (a) Research and development projects and projects that involve 
technology that is not commercially available;
    (b) Business operations that derive more than 10 percent of annual 
gross revenue from gambling activity. Gambling activities include any 
lease income from space or machines used for gambling activities. State 
or Tribal-authorized lottery proceeds, as approved by the Agency, 
conducted for the purpose of raising funds for the approved project are 
excluded;
    (c) Business operations deriving income from activities of a sexual 
nature or illegal activities;
    (d) Residential RES or EEI projects, including farm labor housing, 
apartment complexes, and owner-occupied bed and breakfasts, except for-
profit nursing homes and assisted living facilities that provide full-
time medical care for residents, and for-profit hotels that provide 
short-term housing;
    (e) Racetracks or facilities for conducting either professional or 
amateur races of animals, or by professional or amateur drivers or 
jockeys, or any other type of racing;
    (f) RES projects that co-fire with fossil fuels, natural gas or 
petroleum-based products or materials such as coal and other non-
renewable fuels, oils, and chemicals, and tires or plastic;
    (g) Projects where 50 percent or more of the costs are ineligible 
or where project costs as defined in the application do not meet the 
definition of a renewable energy system or energy efficiency 
improvement, including projects submitted for labor costs only. Project 
costs associated with an EEI that are not clearly identified in the 
energy assessment or audit will be considered ineligible costs; and
    (h) Projects proposing two or more different types of RES 
technologies that are not incorporated into a unified system and 
projects proposing two or more different types of RES technologies at 
two or more locations.


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 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 
person or entity under this subpart will not exceed $750,000 per 
Federal fiscal year.
    (b) Matching funds and other 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.

[[Page 22318]]

    (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 (6) of this section. Each item identified in paragraphs 
(c)(1) through (6) of this section is only an eligible project cost if 
it is directly related to and its use and purpose is limited to the RES 
or EEI.
    (1) Purchase and installation of new or refurbished equipment.
    (2) Construction, retrofitting, replacement, and improvements.
    (3) EEI identified by vendor/installer certification or in the 
applicable energy assessment or energy audit.
    (4) Fees for construction permits and licenses and fees required by 
an interconnection agreement.
    (5) Professional service fees related to the project for qualified 
consultants, contractors, installers, and other third-party services.
    (6) For an eligible RES in which a residence is closely associated 
with the rural small business or agricultural operation the 
installation of a second meter to separate the residence from the 
portion of the project that benefits the rural small business or 
agricultural operation, as applicable.
    (d) Ineligible project costs. Ineligible project costs for RES and 
EEI projects include, but are not limited to:
    (1) Costs for agricultural tillage equipment, used equipment, and 
vehicles;
    (2) Construction or equipment costs that would be incurred 
regardless of the installation of a RES or EEI.
    (3) Lease payments, including lease to own or capitalized leases;
    (4) Any project cost that creates a conflict of interest or an 
appearance of a conflict of interest as provided in Sec.  4280.106;
    (5) Funds used for political or lobbying activities; and
    (6) Funds used to pay off any Federal direct or guaranteed loans or 
other Federal debts.
    (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 RES to be purchased;
    (2) The estimated quantity of energy to be generated by the RES;
    (3) The expected environmental benefits of the RES;
    (4) The quantity of energy savings expected to be derived from the 
activity, as certified by the vendor/installer as applicable, or 
demonstrated by an energy audit or energy assessment;
    (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 RES.


Sec.  4280.116  Grant applications--general.

    (a) General. Separate applications must be submitted for RES and 
EEI projects. An original, hardcopy or electronic, of each application 
is required.
    (b) Application content. Applications for RES projects or EEI 
projects must contain the information specified in Sec.  4280.118 
unless the requirements of either Sec.  4280.119(a) or Sec.  
4280.120(a) are met. If the requirements of Sec.  4280.119(a) are met, 
the application may contain the information specified in Sec.  
4280.119(b). If the requirements of Sec.  4280.120(a) are met, the 
application may contain the information specified in Sec.  4280.120(b). 
For RES Projects only, the Agency may require a feasibility study based 
on the scope of the project to the applicant's overall operations, 
including new facilities with significant impacts on an existing 
operation, or when the application information or technical report does 
not provide sufficient documentation and analysis of the project's 
engineering, technical, financial, or market feasibility, or the 
economic viability of the project including any feedstock or off-take 
agreements, that are needed to evaluate whether a project will be 
successful. The elements of an acceptable feasibility study may vary by 
project scope and should be prepared by a qualified and independent 
third party.
    (c) Evaluation of applications. The Agency will evaluate each RES 
and EEI grant application and make a determination as to whether the 
application meets the criteria specified in paragraphs (c)(1) through 
(4).
    (1) The application is complete, as defined in Sec.  4280.103;
    (2) The Applicant is eligible according to Sec.  4280.112;
    (3) The project is eligible according to Sec.  4280.113; and
    (4) The proposed project has technical merit as determined under 
Sec.  4280.117.


Sec.  4280.117  Determination of technical merit.

    The Agency will determine the technical merit of all proposed 
projects for which complete applications are submitted under Sec. Sec.  
4280.118, 4280.119, and 4280.120 under this subpart using the 
procedures specified in this section. Only projects that have been 
determined by the Agency to have technical merit are eligible for 
funding under this subpart.
    (a) General. The Agency will use the information provided in the 
applicant's application and/or technical report to determine whether or 
not the project has technical merit. In making this determination, 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 technical report. The technical 
report can also be provided in the technical feasibility section of the 
feasibility study, when required, instead of completing a separate 
technical report.
    (b) Technical report areas. The areas that the Agency will evaluate 
in the technical reports when making the technical merit determination 
are specified in paragraphs (b)(1) through (5) of this section.
    (1) EEI whose total project costs are $80,000 or less. The 
following areas will be evaluated in making the technical merit 
determination:
    (i) Project description;
    (ii) Qualifications of EEI provider(s); and
    (iii) Vender/Installer certification, energy assessment, or energy 
audit.
    (2) RES whose total project costs are $80,000 or less. The 
following areas will be evaluated in making the technical merit 
determination:
    (i) Project description;
    (ii) Resource assessment;
    (iii) Project economic assessment; and
    (iv) Qualifications of key service providers.
    (3) EEI whose total project costs are greater than $80,000. The 
following areas will be evaluated in making the technical merit 
determination:
    (i) Project information;
    (ii) Energy assessment or energy audit; and
    (iii) Qualifications of the contractor or installers.
    (4) RES whose total project costs are less than $200,000, but more 
than $80,000. The following areas will be evaluated in making the 
technical merit determination:
    (i) Project description;
    (ii) Resource assessment;
    (iii) Project economic assessment;
    (iv) Project construction and equipment; and
    (v) Qualifications of key service providers.
    (5) RES whose total project costs are $200,000 and greater. The 
following areas will be evaluated in making the technical merit 
determination:
    (i) Qualifications of the project team;
    (ii) Agreements and permits;
    (iii) Resource assessment;
    (iv) Design and engineering;
    (v) Project development;
    (vi) Equipment procurement and installation; and

[[Page 22319]]

    (vii) Operations and maintenance.
    (c) Pass/Pass with conditions/fail assignments. The Agency will 
assign each area of the technical report, as specified in paragraph (b) 
of this section, a ``pass,'' ``pass with conditions,'' or ``fail.'' An 
area will receive a ``pass'' if the information provided for the area 
has no weaknesses and meets or exceeds any requirements specified for 
the area. An area will receive a ``pass with conditions'' if the 
information provided for the area has minor weaknesses which could be 
conditionalized and reasonably resolved by the applicant. Otherwise, if 
the information provided for the area is conclusively deemed to be a 
major weakness or if the area has not been addressed by the applicant, 
the area will receive a ``fail.''
    (d) Determination. The Agency will compile the results for each 
area of the technical report to determine if the project has technical 
merit.
    (1) A project whose technical report receives a ``pass'' in each of 
the applicable technical report areas will be considered to have 
``technical merit.''
    (2) A project whose technical report receives a ``pass with 
conditions'' in one or more the applicable areas will be considered to 
have ``conditional technical merit.''
    (3) A project whose technical report receives a ``fail'' in any one 
technical report area will be considered to be without technical merit.
    (e) Further processing of applications. A project that is 
determined to have ``technical merit'' or ``conditional technical 
merit'' is eligible for further consideration for funding. Projects 
with ``conditional technical merit'' would be subject to funding 
conditions that would need to be met to ensure full technical merit 
prior to completion of the project. A project that is determined to be 
``without technical merit'' is considered to be an incomplete 
application and therefore is not eligible to compete for funding.


Sec.  4280.118  Grant applications for RES and EEI projects with total 
project costs of $200,000 and greater.

    Grant applications for RES and EEI projects with total project 
costs of $200,000 and greater must provide the information specified in 
paragraphs (a) through (c) of this section, as applicable. Each 
applicant is encouraged, but is not required, to self-score the project 
using the evaluation criteria in Sec.  4280.121.
    (a) Forms and certifications. Each application must contain the 
forms and certifications specified in paragraphs (a)(1) through (10), 
as applicable, of this section, except paragraph (a)(5) is optional.
    (1) Form RD 4280-3C, ``Application for Renewable Energy Systems and 
Energy Efficiency Improvement Projects Total Project Costs of $200,000 
or Greater''.
    (2) Form SF-424, ``Application for Federal Assistance.''
    (3) Form SF-424C, ``Budget Information--Construction Programs.''
    (4) Form SF-424D, ``Assurances--Construction Programs.''
    (5) Identify the ethnicity, race, and gender of the applicant. 
Identify if the borrower is a veteran. This information is optional and 
is not required for a complete application but may be used by the 
Agency to award priority points.
    (6) Environmental documentation in accordance with 7 CFR part 1970. 
The applicant should contact the Agency to determine what documentation 
is required to be provided.
    (7) 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.
    (8) 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(s) where the applicant has a place of business.
    (9) 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 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.
    (10) 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 specified in 
paragraphs (b)(1) through (4) of this section to allow the Agency to 
determine the eligibility of the applicant.
    (1) Type of applicant. Eligible applicants must meet the definition 
of agricultural producer or rural small business as defined in Sec.  
4280.103. Agricultural producers seeking funding for a RES or EEI 
project may apply as either a rural small business or as an 
agricultural producer, provided they meet the applicable eligibility 
requirements. The applicant must provide the primary North American 
Industry Classification System (NAICS) code applicable to the 
applicant's business concern and certify on the Agency approved 
application form that they meet the definition of agricultural producer 
or rural small business. The Agency reserves the right to request 
supporting documentation to verify applicant eligibility.
    (2) Applicant description. Describe the ownership of the applicant, 
including the information specified in paragraphs (b)(2)(i) and (ii) of 
this section as applicable. Include a description of the applicant's 
farm/ranch/business operation, including how long the applicant has 
been in operation.
    (i) Describe how the applicant meets the ownership and control 
requirements as identified in Sec.  4280.112(b).
    (ii) For each entity(ies) it controls or entity(ies) it is 
controlled by, provide a list of the individual owners with their 
contact information. Describe the relationship between the applicant 
and the other entity(ies), including percent ownership and control, 
management, passive investor ownership, and as applicable products 
exchanged. Organizational charts to demonstrate structure should be 
submitted when applicable.
    (3) Financial information. Financial information is required on the 
total operation of the applicant and all entity(ies) it controls or 
entity(ies) that control the applicant.
    (i) All financial information (e.g., financial statements, balance 
sheets, financial projections, income statements) must be submitted in 
accordance with accounting practices acceptable to the Agency. Such 
practices can include, but are not limited to, Generally Accepted 
Accounting Principles (GAAP) and the industry's standard accounting 
practice.
    (ii) For sole proprietorships and other situations where business 
assets are held personally, financial statements must be prepared using 
only the assets and liabilities directly attributable to the business. 
Assets, plus any improvements must be valued at the lower of cost or 
market value.
    (iii) The Agency may request additional financial statements, 
financial models, cash flow information, updated financial statements, 
and other related financial information to determine the financial 
feasibility of a Project. Required financial statements:
    (A) Historical financial statements. Provide Agency-acceptable 
historical balance sheets and income statements the lesser of the last 
3 fiscal years or all years of operation.
    (B) Current balance sheet and income statement. Provide a current 
Agency-

[[Page 22320]]

acceptable balance sheet and year-to-date income statement dated within 
90 days of submission of the complete application.
    (C) Pro forma financial statements. Provide balance sheets, income 
statements, and cash flow statements or financial model starting from 
the current financial statements through a minimum of 2 years of the 
project performing at full operational capacity or stable operations. 
Financial projections must be supported by a list of assumptions 
showing the basis for the projections.
    (4) Previous grants and loans. State whether the applicant has 
received and accepted any grants or guaranteed loan commitments under 
this subpart or any guaranteed loans under 7 CFR 5001. If the applicant 
has, identify each such grant award or guaranteed loan commitment and 
describe the progress the applicant has made on each project for which 
the grant 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.  
4280.125(a)(1).
    (3) Indicate if 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 (EPA) renewable fuel 
standard(s), greenhouse gases, emissions, particulate matter).
    (4) Identify the amount of funds and the source(s) the applicant is 
proposing to use for the project. Provide written commitments for funds 
at the time the application is submitted to receive points under this 
scoring criterion.
    (i) If financial resources come from the applicant, documentation 
may include bank statements that demonstrates availability of funds.
    (ii) If a third party is providing financial assistance, the 
applicant must submit a commitment letter signed by an authorized 
official of the third party. The letter must be specific to the project 
and must identify the dollar amount and any applicable rates and terms. 
If the third-party commitment is a loan, the commitment must be firm; a 
letter-of-intent or pre-qualification letter subject to underwriting 
requirements or contingencies are not acceptable. An acceptable 
condition may be based on the receipt of the REAP grant or an 
appraisal.
    (d) Technical report. Each application must contain a technical 
report prepared in accordance with Sec.  4280.110(g) and Appendix A or 
C, as applicable, of this subpart.
    (e) Construction planning and performing development. Each 
application submitted must be in accordance with Sec.  4280.125 for 
planning, designing, bidding, contracting, and constructing RES and EEI 
projects as applicable.


Sec.  4280.119  Grant applications for RES and EEI projects with total 
project costs of less than $200,000, but more than $80,000.

    Grant applications for RES and EEI projects with total project 
costs of less than $200,000, but more than $80,000, may provide the 
information specified in this section or, if the applicant elects to do 
so, the information specified in Sec.  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 projects with total 
project costs of less than $200,000, but more than $80,000. In order to 
submit an application under this section, each of the conditions 
specified in paragraphs (a)(1) through (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 less than $200,000, but more than 
$80,000.
    (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 and is 
operating in accordance with the information provided in the 
application for the project.
    (7) The applicant must maintain insurance as required under Sec.  
4280.123(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 (4) 
of this section. Each applicant is encouraged, but is not required, to 
self-score the project using the evaluation criteria in Sec.  4280.121.
    (1) Forms and certifications. The application must contain the 
items identified in Sec.  4280.118(a), except that Form RD 4280-3B, 
``Application for Renewable Energy Systems and Energy Efficiency 
Improvement Projects Total Project Costs of Less than $200,000, But 
More Than $80,000'' may be used instead of the form noted in Sec.  
4280.118 (a)(1). 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.  4280.118(b), except that the information specified 
in Sec.  4280.118(b)(3) is not required. The Agency reserves the right 
to request supporting documentation to verify applicant eligibility.
    (3) Project information. The application must contain the items 
identified in Sec.  4280.118(c).
    (4) Technical report. Each application must contain a technical 
report in accordance with Sec.  4280.110(g) 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 (3) of this section 
for construction planning and performing development.
    (1) General. Paragraphs (a)(1), (2), and (4) of Sec.  4280.125 
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 22321]]

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 less than $200,000, but more than $80,000.
    (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 RES, 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.  4280.120  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.  4280.118 or 4280.119. 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 (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 the project has been completed 
and is operating in accordance with the information provided in the 
application for the project.
    (7) The applicant must maintain insurance as required under Sec.  
4280.123(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 
(4), as applicable. Each applicant is encouraged, but is not required, 
to self-score the project using the evaluation criteria in Sec.  
4280.121.
    (1) Forms and certifications. Each application must contain the 
forms and certifications specified in paragraphs (b)(1)(i) through (x), 
as applicable, of this section except that paragraph (b)(1)(v) is 
optional.
    (i) Form RD 4280-3A, ``Application for Renewable Energy Systems and 
Energy Efficiency Improvement Projects Total Project Costs of $80,000 
or Less''.
    (ii) Form SF-424, ``Application for Federal Assistance''.
    (iii) Form SF-424C, ``Budget Information for Construction 
Programs''.
    (iv) Form SF-424D, ``Assurances for Construction Programs''.
    (v) Identify the ethnicity, race, and gender of the applicant. 
Identify if the borrower is a veteran. This information is optional and 
is not required for a complete application but may be used by the 
Agency to award priority points.
    (vi) Environmental documentation in accordance with 7 CFR part 
1970. The applicant should contact the Agency to determine what 
documentation is required to be provided.
    (vii) Certification by the applicant that:
    (A) The applicant meets each of the applicant eligibility criteria 
found in Sec.  4280.112. The Agency reserves the right to request 
supporting documentation to verify applicant eligibility;
    (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.  4280.125(a)(1); and
    (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.
    (viii) State whether the applicant has received any grants and/or 
guaranteed loans under this subpart, or any guaranteed loans under 7 
CFR part 5001. 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.
    (ix) 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.
    (x) 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 22322]]

    (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) Indicate if 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 EPA's renewable fuel standard(s), greenhouse gases, 
emissions, particulate matter); and
    (iv) Identify the amount of matching funds and other funds and the 
source(s) the applicant is proposing to use for the project. In order 
to receive points under this scoring criterion, written commitments for 
funds (e.g., a Letter of commitment, bank statement) must be submitted 
when the application is submitted.
    (A) If financial resources come from the applicant, documentation 
may include a bank statement that demonstrates availability of funds.
    (B) If a third party is providing financial assistance, the 
applicant must submit a commitment letter signed by an authorized 
official of the third party. The letter must be specific to the 
project, identify the dollar amount and any applicable rates and terms. 
If the third-party commitment is a loan, the commitment must be firm, a 
letter-of-intent or pre-qualification letter, subject to underwriting 
requirements or contingencies are not acceptable. An acceptable 
condition may be based on the receipt of the REAP grant or an 
appraisal.
    (3) Technical report for EEI. Each EEI application submitted under 
this section must include a technical report in accordance with Sec.  
4280.110(g) and paragraphs (b)(3)(i) through (iv) of this section.
    (i) Project description. Provide a description of the proposed EEI, 
including its intended purpose and a vendor/installer certification 
that the EEI project meets the requirements for being commercially 
available.
    (ii) Qualifications of EEI provider(s). Provide a certification by 
the vendor/installer that:
    (A) They are qualified to complete the project as intended, 
including the number of years of 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.
    (B) The EEI system will operate and perform over the project's 
useful life in a reliable and cost-effective manner; and
    (iii) Energy assessment. Provide a copy of the energy assessment 
(or energy audit) performed for the project as required under Section C 
of Appendix A to this subpart and the qualifications of the person 
which completed the energy assessment.
    (iv) Simple payback. Provide an estimate of simple payback, 
including all calculations, documentation, and any assumptions.
    (4) Technical report for RES. Each RES application submitted under 
this section must include a technical report in accordance with Sec.  
4280.110(g) and paragraphs (b)(4)(i) through (iv) of this section.
    (i) Project description. Provide a description of the project, 
including its intended purpose and a vendor/installer certification 
that the RES project meets the requirements for being commercially 
available. Appendix B contains instructions for how a project is to be 
constructed and installed. Identify the project's location and describe 
the project site.
    (ii) Resource assessment. Provide vendor/installer certified 
projections on energy to be replaced and/or generated once the proposed 
system is operating at its steady state operating level, including the 
quality and availability of the renewable resource to the project. If 
there is a residence closely associated with the RES project, include 
the historical amount of energy used by the residence and the 
historical amount of energy used by the agricultural operation or rural 
small business, as applicable, to satisfactorily demonstrate 50% or 
more of proposed generation will benefit the agricultural operation or 
rural small business;
    (iii) Project economic assessment. Describe the projected financial 
performance of the proposed project. The description must address total 
project costs, revenues accrued from the sale or crediting of energy, 
quantity and value of energy offset, and revenue from byproducts. 
Include applicable investment and other production incentives and 
indicate if they are a one time or reoccurring incentive. Provide an 
estimate of simple payback, including all calculations, documentation, 
and any assumptions; and
    (iv) Qualifications of key service providers. Provide a 
certification by the vendor/installer that:
    (A) They are qualified to complete the project as intended, 
including the number of similar systems installed previously and any 
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; and
    (B) The RES system will operate and perform over the project's 
useful life in a reliable and cost-effective manner.
    (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 (3) of this section for 
construction planning and performing development.
    (1) General. Paragraphs (a)(1), (2), and (4) of Sec.  4280.125 
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, ``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 $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 
currently be operating as described in the technical report prior to 
disbursement of funds. For RES, 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

[[Page 22323]]

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.  4280.121  Scoring RES and EEI grant applications.

    Agency personnel will score each complete and 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. A maximum of 5 points will be awarded 
for this criterion based on whether the applicant has indicated in the 
application that 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 
EPA's renewable fuel standard(s), greenhouse gases, emissions, 
particulate matter). If the project will have a positive impact on:
    (1) Any one of the three impact areas, 1 point will be awarded.
    (2) Any two of the three impact areas, 3 points will be awarded.
    (3) All three impact areas, 5 points will be awarded.
    (b) Energy generated, replaced, or saved. A maximum of 25 points 
will be awarded for this criterion. Applications for RES and EEI 
projects are eligible for points under both paragraphs (b)(1) and (2) 
of this section.
    (1) Quantity of energy generated or saved per REAP grant dollar 
requested. A maximum of 10 points will be awarded for this sub-
criterion. For RES and EEI projects, points will be awarded for either 
the amount of renewable energy generation per grant dollar requested, 
which includes those projects that are replacing energy usage with a 
renewable source; or the actual annual average energy savings over the 
most recent 12, 24, 36, 48, or 60 consecutive months of operation per 
grant dollar requested. Points will not be awarded for more than one 
category.
    (i) RES. The quantity of energy generated or replaced per grant 
dollar requested will be determined by dividing the projected total 
annual energy generated or replaced by the RES or RES retrofit (minus 
energy for residential use), which will be converted to BTUs, by the 
grant dollars requested. Points will be awarded based on the annual 
amount of energy generated or replaced (minus energy for residential 
use) per grant dollar requested for the proposed RES project. In cases 
where there are ineligible pre-application costs, the entire quantity 
of energy produced by the system is utilized for this scoring criteria 
as long as the use of energy produced is eligible. The Agency will 
award up to 10 points as determined using paragraphs (b)(1)(i)(A) and 
(B) of this section. If the annual amount of energy generated or 
replaced per grant dollar requested is:
    (A) 50,000 BTUs average annual energy generated or replaced per 
grant dollar requested or higher, 10 points will be awarded; or
    (B) Less than 50,000 BTUs annual energy generated or replaced per 
grant dollar requested, points will be awarded according to the results 
of taking the energy generated or replaced per grant dollar requested/
50,000 x 10 points. The points awarded are rounded to the nearest 
hundredth of a point.
    (ii) EEI. The Agency will award up to 10 points under this sub-
criterion based on the average annual energy saved per grant dollar 
requested for the EEI project. The Agency will award up to 10 points as 
determined under paragraph (b)(1)(ii)(A) and (B) of this section. If 
the average annual energy saved per grant dollar requested is:
    (A) 50,000 BTUs average annual energy saved per grant dollar 
requested or higher, 10 points will be awarded; or
    (B) Less than 50,000 BTUs average annual energy saved per grant 
dollar requested, points will be awarded according to the result of 
taking the energy saved per grant dollar requested/50,000 x 10 points. 
The points awarded are rounded to the nearest hundredth of a point.
    (2) Quantity of energy replaced, generated, or saved. A maximum of 
15 points will be awarded for this sub-criterion. Points will be 
awarded on the basis of whether the project is for energy replacement, 
energy savings, or energy generation; points will not be awarded for 
more than one category.
    (i) Energy replacement. The Agency will award points under this 
sub-criterion for a RES project based on the amount of energy replaced 
by the project compared to the amount of energy used by the applicable 
process(es) over a 12-month period. If the estimated energy produced is 
more than 150 percent of the energy used by the applicable process(es), 
the project will be scored as an energy generation project under 
paragraph (b)(2)(ii) of this section.
    (A) Documentation for energy replacement. For a RES project to 
qualify as energy replacement, the applicant must provide documentation 
in its application on prior energy use incurred by the applicant. 
Proposed energy use, such as that attributed to an expansion, is not 
considered in the replacement calculation. For a RES project involving 
new construction and being installed to serve the new facility, the 
project can be classified as energy replacement only if the applicant 
can document prior energy use from a facility that is within plus or 
minus 10 percent of the size of the facility it is replacing. The 
estimated quantities of energy must be converted to either BTUs, watts, 
or similar energy equivalents to facilitate scoring.
    (B) Calculation. Energy replacement is determined by dividing the 
quantity of renewable energy that the RES project is estimated would 
have been generated if it were in place over the most recent 12-month 
period by the quantity of energy actually consumed over the same period 
by the applicable energy process(es) that is(are) consuming energy.
    (C) Awarding of points. Using the results from paragraph 
(b)(2)(i)(B) of this section, if the percentage of energy replacement 
is:
    (1) Greater than 50 percent, 15 points will be awarded;
    (2) Greater than 25 percent, but equal to or less than 50 percent, 
10 points will be awarded; or
    (3) Equal to or less than 25 percent, 5 points will be awarded.
    (ii) Energy generation. If the proposed RES is intended for 
production of energy or is a proposed retrofitting of an existing RES 
which increases the amount of energy generated, the Agency will award 
10 points.
    (iii) Energy saved. The Agency will award up to 15 points under 
this sub-criterion for an EEI project based on the percentage of 
estimated energy saved by the installation of the project as determined 
by the projections in the applicable energy assessment or energy audit. 
If the estimated energy expected to be saved over the same period used 
in the energy assessment or energy audit, as applicable, will be:
    (A) 50 percent or greater, 15 points will be awarded;
    (B) 35 percent up to, but not including 50 percent, 10 points will 
be awarded;
    (C) 20 percent up to, but not including 35 percent, 5 points will 
be awarded; or
    (D) Less than 20 percent, no points will be awarded.
    (c) Commitment of funds. A maximum of 15 points will be awarded for 
this criterion based on the percentage of written commitment an 
applicant has from its fund sources that are documented with a complete 
application.

[[Page 22324]]

    (1) Calculation. The percentage of written commitment is calculated 
as follows: Percentage of written commitment = total amount of funds 
for which written commitments have been submitted with the application/
total amount of matching funds and other funds required.
    (2) Awarding of points. Using the result from paragraph (c)(1) of 
this section, the Agency will award points as shown in paragraphs 
(c)(2)(i) through (iii) of this section.
    (i) If the percentage of written commitments is 100 percent of the 
matching funds, 15 points will be awarded.
    (ii) If the percentage of written commitments is less than 100 
percent, but more than 50 percent, points will be awarded as follows: 
((Percentage of written commitments -50 percent)/(50 percent)) x 15 
points, where points awarded are rounded to the nearest hundredth of a 
point.
    (iii) If the percentage of written commitments is 50 percent or 
less, no points will be awarded.
    (d) Previous grantees and borrowers. A maximum of 15 points will be 
awarded for this criterion based on whether the applicant has received 
and accepted a REAP grant award or guaranteed loan commitment under 7 
CFR part 4280 of this title or a guaranteed loan commitment under 
either this part or 7 CFR part 5001 of this title.
    (1) If the applicant has never received and accepted a grant award 
or a guaranteed loan commitment under either this part or 7 CFR part 
5001 of this title, 15 points will be awarded.
    (2) If the applicant has not received and accepted a grant award or 
guaranteed loan commitment under this subpart, or a guaranteed loan 
commitment under 7 CFR part 5001 of this title within the 2 previous 
Federal fiscal years, 5 points will be awarded.
    (3) If the applicant has received a grant award or guaranteed loan 
commitment under this subpart, or a guaranteed loan commitment under 7 
CFR part 5001 of this title within the 2 previous Federal fiscal years, 
no points will be awarded.
    (e) Existing business. A maximum of 5 points will be awarded for an 
existing agricultural producer business or rural small business that 
meets the definition of existing business in Sec.  4280.103 of this 
part.
    (f) Simple payback. A maximum of 15 points will be awarded for this 
criterion based on the simple payback of the project as defined in 
Sec.  4280.103. Points will be awarded for either RES or EEI; points 
will not be awarded for more than one category.
    (1) RES. 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 25 years, 5 points will be 
awarded; or
    (iv) Longer than 25 years, no points will be awarded.
    (2) EEI. 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) Size of request. For grant applications requesting $250,000 or 
less for RES, or $125,000 or less for EEI, an additional 10 points may 
be awarded such that a maximum score of 100 points is possible. All 
other applications will have a maximum possible score of 90 points.
    (h) State Director and Administrator priority points. A maximum of 
10 points are available for this criterion. 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 based on the conditions specified in paragraphs (h)(1) 
through (5) of this section. In no case shall an application receive 
more than 10 points under this criterion.
    (1) The application is for an under-represented technology.
    (2) Selecting the application helps achieve geographic diversity, 
which may include points based upon the size of the funding request.
    (3) The applicant is a member of an unserved or under-served 
population described as follows:
    (i) Owned by a veteran, including but not limited to individuals as 
sole proprietors, members, partners, stockholders, etc., of not less 
than 20 percent. In order to receive points, applicants must provide a 
statement in their applications to indicate that owners of the project 
have Veteran status; or
    (ii) Owned by a member of a socially-disadvantaged group, which are 
groups whose members have been subjected to racial, ethnic, or gender 
prejudice because of their identity as members of a group without 
regard to their individual qualities. In order to receive points, the 
application must include a statement to indicate that the owners of the 
project are members of a socially disadvantaged group.
    (4) Selecting the application helps further a Presidential 
initiative or a Secretary of Agriculture priority.
    (5) The proposed project is located in a Federally declared 
disaster area. Declarations must be within the last 2 calendar years.
    (6) The proposed project is located in an area where 20 percent or 
more of its population is living in poverty, as defined by the United 
States Census Bureau, underserved community(ies) or has experienced 
long-term population decline, or loss of employment.


Sec.  4280.122  Selecting RES and EEI grant applications for award.

    Unless otherwise provided for in a Federal Register notice, RES and 
EEI grant applications will be processed in accordance with this 
section. Complete applications will be evaluated, processed, and 
subsequently ranked, and will compete for funding, subject to the 
availability of grant funding. Each State will receive two grant 
allocations, an allocation of grant funds restricted to funding 
requests of $20,000 or less, and an allocation of grant funds which are 
unrestricted and can fund any size funding request.
    (a) RES and EEI grant applications. Complete RES and EEI grant 
applications, including combination grant and guaranteed loan requests, 
regardless of the amount of funding requested, are eligible to compete 
in two competitions within a Federal fiscal year--a State competition 
and a National competition.
    (1) To be competed in the State and National competitions, complete 
applications must be received by the applicable State Office by 4:30 
p.m. local time no later than March 31. If March 31 falls on a non-
business day or a federally-observed holiday, the next Federal business 
day will be considered the last day for receipt of a complete 
application. Complete applications received after this date and time 
will be processed in the subsequent fiscal year.
    (2) All eligible RES and EEI grant applications that remain 
unfunded after completion of the State competition will be competed in 
a National competition.
    (b) RES and EEI grant applications requesting $20,000 or less. 
Complete RES and EEI grant applications, including combination grant 
and guaranteed loan requests, requesting $20,000 or less are eligible 
to compete in up to five competitions--two State competitions and a 
National set-aside competition for grants of $20,000 or less, as well 
as the two competitions

[[Page 22325]]

referenced in paragraph (a) of this section.
    (1) For complete RES and EEI grant applications for grants 
requesting $20,000 or less, there will be two State competitions each 
Federal fiscal year. Complete applications for $20,000 or less that are 
received by the Agency by 4:30 p.m. local time on October 31 of the 
Federal fiscal year will be competed against each other. Complete 
applications for $20,000 or less that are received by the Agency by 
4:30 p.m. local time on March 31 of the Federal fiscal year and any 
applications for $20,000 or less that were not ready to compete or were 
not funded from the prior competition, will be competed against each 
other. If either October 31 or March 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. Complete 
applications received after 4:30 p.m. local time on March 31, 
regardless of the postmark on the application, will be processed in the 
subsequent fiscal year.
    (2) All eligible RES and EEI grant applications requesting $20,000 
or less that remain unfunded after completion of the State competition 
for applications received by March 31 will be competed in the National 
competition.
    (c) Ranking of applications. The Agency will rank complete eligible 
applications using the scoring criteria specific in Sec.  4280.121. 
Higher scoring applications will receive first consideration.
    (d) 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. If two or more applications score 
the same and if remaining funds are insufficient to fund each such 
application, the Agency will notify the applicants that they may either 
accept a proportional amount of funds or submit their total request for 
the next available competition. 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.
    (e) Handling of ranked applications not funded. Based on the 
availability of funding, a ranked application might not be funded. 
Handling of unfunded applications depends on whether the request is 
more or less than $20,000.
    (1) All complete and eligible applications requesting $20,000 or 
less may be competed in up to five competitions within a Federal fiscal 
year and if not selected for funding, the Agency will discontinue 
consideration of the applications.
    (2) The Agency will discontinue consideration for funding all 
complete and eligible applications requesting more than $20,000 that 
are not selected for funding after the State and National competitions 
for the Federal fiscal year.
    (f) Commencement of the project. Not all grant applications that 
compete for funding will receive an award. Thus, the applicant assumes 
all risks if the applicant chooses to purchase the proposed equipment 
or start construction of the proposed project after the complete 
application has been received by the Agency, but before the applicant 
is notified as to whether or not they have been selected for an award.


Sec.  4280.123  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 1942-46, ``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, 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 (5) 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 (4) of this section and all of 
the certifications must be submitted prior to grant approval. The form 
specified in paragraph (c)(5) 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 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.
    (4) Form RD 400-4, ``Assurance Agreement,'' or successor form.
    (5) Form AD-1048, as signed by the contractor or other lower tier 
party.
    (d) Evidence of matching funds and other funds. If an applicant 
submitted written evidence of matching funds and other 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 and other funds with the application, the applicant must 
submit such written evidence that is in effect before the Agency will 
execute the Financial Assistance Agreement. In either case, written 
evidence of matching funds and other funds needed to complete the 
project must be provided to the Agency before execution of the 
Financial Assistance Agreement and must be in effect (i.e., must not 
have expired) at the time Financial Assistance Agreement is executed.
    (e) System for Award Management (SAM) registration. Before the 
Financial Assistance Agreement can be executed, the applicant's UEI 
number must be registered in the SAM and a valid (e.g. non-expired) 
Commercial and Government Entity (CAGE) code must be submitted to the 
Agency.

[[Page 22326]]

    (f) Financial Assistance Agreement. Once the requirements specified 
in paragraphs (a) through (e) of this section have been met, the 
Financial Assistance Agreement can be executed by the grantee and the 
Agency. The Agreement should be signed as soon as possible, but no 
later than within 6 months of obligation of funds or grant funds may be 
de-obligated by the Agency. The grantee must abide by all requirements 
contained in the Financial Assistance 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 and the Financial Assistance 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 Financial Assistance Agreement 
is executed, unless otherwise approved by the Agency.


Sec.  4280.124  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 3; 7 CFR 
1951 Subparts E and O; the Financial Assistance 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. Grantees may make changes to an approved 
project's costs, scope, contractor, or vendor subject to the provisions 
specified in paragraphs (b)(1) through (3) of this section. If the 
changes result in lowering the project's score to below what would have 
qualified the application for award, the Agency will not approve the 
changes.
    (1) Prior approval. The grantee must obtain prior Agency approval 
for any change to the scope, contractor, or vendor of the approved 
project. Changes in project cost will require Agency approval as 
outlined in paragraph (b)(1)(iii) of this section.
    (i) Grantees must submit requests for programmatic changes in 
writing to the Agency for Agency approval.
    (ii) Failure to obtain prior Agency approval of any such change 
could result in such remedies as suspension, termination, and recovery 
of grant funds.
    (iii) Prior Agency approval is required for all increases in 
project costs. Prior Agency approval is required for a decrease in 
project cost only if the decrease would have a negative effect on the 
long-term viability of the project. A decrease in project cost that 
does not have a negative impact on long-term viability requires Agency 
review and approval prior to disbursement of funds.
    (2) Changes in project cost or scope. If there is a significant 
change in project cost or any change in project scope, then the 
grantee'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.
    (3) 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.  4280.118(e), 4280.119(b)(4), 4280.120(b)(3), or 
4280.120(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 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 ownership. After the Financial Assistance Agreement 
for the project has been executed, the grantee may request, in writing, 
a transfer of the Financial Assistance Agreement to another entity. 
Subject to Agency approval provided in writing, the Financial 
Assistance 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.
    (d) Disposition of acquired property. Grantees must abide by the 
disposition requirements outlined in Departmental Regulations.
    (e) Financial management system and records. The grantee must 
provide for financial management systems and maintain records as 
specified in paragraphs (f)(1) and (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.
    (f) 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.
    (g) Grant disbursement. As applicable, grantees must disburse grant 
funds as scheduled in accordance with the appropriate construction and 
inspection requirements in Sec. Sec.  4280.119, 4280.120 or 4280.125 as 
applicable. Unless required by third parties providing cost sharing 
payments to be provided on a pro-rata basis with other funds, grant 
funds will be disbursed after all other 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

[[Page 22327]]

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. Fund requests must at a 
minimum include documentation of costs and evidence of payment(s), 
including payment date(s). Failure to provide sufficient documentation 
of costs and evidence of payment, including payment date, may result in 
denied reimbursement.
    (5) For a grant awarded to a project with total project costs of 
$200,000 and greater, grant funds will be disbursed in full after the 
project is completed, is operational, and has met or exceeded the 
steady state operating level as set out in the grant award 
requirements. Grant funds may also be disbursed 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 or review of 
documentation, the 30-day steady state operating level is not found 
acceptable to the Agency.
    (h) 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 is being accomplished by projected time 
periods;
    (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.
    (i) Reporting requirements. Financial and project performance 
reports must be provided by grantees and contain the information 
specified in paragraphs (i)(1) through (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 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 (i)(2)(i) and 
(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) Project completion requirements. Once the project has been 
constructed, the grantee must provide the Agency as applicable via form 
RD 4280-3D ``Annual Outcome Project Performance Certification'', a 
certification that their system has for the past year performed at the 
steady operating level as described in the technical report of their 
application, and whether projected jobs created or saved have occurred, 
or certify that it has not performed as described. If it has not 
performed, a description of the circumstances which have occurred and 
affected system performance must be reported, along with the actual 
performance of the subject REAP project, and the actual number of jobs 
created or saved as a direct result of the REAP project.
    (i) RES. Three total annual outcome project performance 
certifications or reports are required for RES projects. The first is 
due at the completion of the first full calendar year following the 
year in which the project was completed. The remaining are required for 
subsequent calendar years.
    (ii) EEI. Two total annual outcome performance certifications or 
reports are required for EEI projects. The first is due at completion 
of the first full calendar year following the year in which the project 
was completed. The second is required for the subsequent calendar year.
    (j) Grant close-out. Grant close-out must be performed in 
accordance with the requirements specified in 2 CFR part 200.


Sec.  4280.125  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 or excessive bonding requirements. In specifying

[[Page 22328]]

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 
Executive Order 13672, 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. The Agency will require surety on any contract for 
procurement exceeding $100,000, except as provided for in paragraph 
(a)(3)(iv) of this section. For contracts of lesser amounts, the 
grantee may require surety.
    (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 (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) When surety is not provided, contractors must furnish 
evidence of payment in full for all materials, labor, and any other 
items procured under the contract in an Agency-approved form.
    (iv) The Agency may make exceptions to surety for any of the 
situations identified in paragraphs (a)(3)(iv)(A) through (E) of this 
section.
    (A) Small acquisition and construction procedures as specified in 
Sec.  4280.119(c) and (d) or Sec.  4280.120(c) and (d) 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.
    (E) The grantee agrees to request reimbursement of grant funds only 
after the contractors have furnished evidence of payment in full and 
evidence there are no outstanding liens regarding any materials, labor, 
and any other items procured under the contract, and the systems are 
deemed operational.
    (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 and there is not a negative impact to their business 
operation. 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; and
    (iv) Inspection and acceptance of the grantee's work must be 
completed by either:
    (A) An inspector that will:
    (1) Inspect, as applicable, and accept construction; and
    (2) Furnish inspection reports; or
    (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 $1,000,000 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 (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. Unless the applicant plans to request a lump 
sum reimbursement of grant funds at the end of construction and 30 days 
of successful operation, regardless of total project costs, final plans 
and specifications must be reviewed by the Agency and approved prior to 
the start of construction. Facilities funded by the

[[Page 22329]]

Agency must meet the following design requirements, as applicable:
    (1) Environmental requirements. Actions taken under this subpart 
must comply with the environmental review requirements in accordance 
with 7 CFR part 1970. 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 
101-196, 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 E.O. 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 must be procured 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 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 a person 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), (B), or (C) of this section; or
    (E) An entity which employs, or is about to employ, any person in 
paragraph (e)(1)(iii)(A), (B), (C), or (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 (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.

[[Page 22330]]

    (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 (iv) of this section.
    (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 an Agency-approved form.
    (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:

[[Page 22331]]

    (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. Owners awarding 
construction or other procurement contracts prior to filing an 
application, must provide evidence that is satisfactory to the Agency 
that the contract was entered into without intent to circumvent the 
requirements of Agency regulations.
    (1) Modifications. The contract shall be modified to conform to the 
provisions of this subpart. Where this is not possible, modifications 
will be made to the extent practicable and, as a minimum, the contract 
must comply with all State and local laws and regulations as well as 
statutory requirements and executive orders related to the Agency 
financing.
    (2) Consultant's certification. Provide a certification by an 
engineer, licensed in the State where the facility is constructed, that 
any construction performed complies fully with the plans and 
specifications.
    (3) Owner's certification. Provide a certification by the owner 
that the contractor has complied with applicable statutory and 
executive requirements related to Agency financing.
    (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.


Sec. Sec.  4280.126-4280.136  [Reserved]

Combined Funding for Renewable Energy Systems and Energy Efficiency 
Improvements


Sec.  4280.137  Combined grant and guaranteed loan funding 
requirements.

    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 specified in Sec.  4280.112. If the applicant is seeking a 
loan, the applicant must also meet the borrower eligibility 
requirements specified in 7 CFR 5001.126. Lenders must meet eligibility 
requirements specified in 7 CFR 5001.130-132. Projects must meet the 
project eligibility requirements specified in Sec. Sec.  4280.113, 7 
CFR parts 5001.102 (b) and (c) and 5001.106-107, as applicable. For 
projects that include New Markets Tax Credits, the guaranteed loan 
portion of the combined funding request must meet provisions found in 
5001.141.
    (b) Funding. Funding provided under this section is subject to the 
limits described in paragraphs (b)(1) through (2) of this section.
    (1) The amount of any combined grant and guaranteed loan shall not 
exceed 75 percent of eligible project costs and the grant portion shall 
not exceed 25 percent of eligible project costs. Loan amount provisions 
of 7 CFR part 5001.406(d) apply, except for (d)(2). For purposes of 
combined funding requests, eligible project costs are based on the 
total costs associated with those items specified in Sec.  4280.115(c) 
and 7 CFR part 5001.121(d), except for (d)(2). The applicant must 
provide the remaining total funds needed to complete the project.
    (2) The minimum guaranteed loan 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) Loan origination provisions. Provisions found in 7 CFR parts 
5001.201 through 5001.208 apply to the guaranteed loan portion of a 
combined grant and guaranteed loan funding request.
    (d) Application provisions and documentation. When applying for 
combined funding, the applicant/borrower must provide all documentation 
outlined in this section and the lender must submit grant and 
guaranteed loan application information simultaneously.
    (1) Applications must include the following documentation, 
including the requisite forms and certifications, specified in 
Sec. Sec.  4280.118, 4280.119, or 4280.120 as applicable, for the grant 
request, except that applicants submitting a properly completed 5001-1 
form only need to submit the applicable RD 4280-3 form containing the 
applicant's CAGE code and properly signed certifications. The 
guaranteed loan applications are filed in accordance with 7 CFR part 
5001.301 where they will be processed in accordance with 7 CFR parts 
5001.303 and 5001.307, and as follows:
    (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; the combined application does not need to contain 
duplicate documentation, forms, and certifications.
    (e) Loan provisions. Provisions found in 7 CFR parts 5001.401 
through 5001.408 apply to the guaranteed loan portion of a combined 
funding request.
    (f) Guarantee provisions. Provisions found in 7 CFR parts 5001.450 
through 5001.459 apply to the guarantee on the guaranteed loan portion 
of a combined funding request.
    (g) Servicing provisions. Provisions found in 7 CFR parts 5001.501 
through 5001.524 apply to the guaranteed loan portion of a combined 
funding request.
    (h) Evaluation, scoring, and award. The Agency will evaluate each 
combined application according to Sec.  4280.116(c) and 7 CFR part 
5001.315 (a) and (b). The Agency will select applications according to 
applicable procedures specified in Sec.  4280.122(a) and (b) unless 
modified by this section. A combination loan and grant request will be 
selected based upon the grant score of the project. The Agency will 
score combined funding applications based upon the grant score as noted 
in Sec.  4280.121. Projects will be ranked and selected for award 
according to applicable competition procedures specified in Sec.  
4280.122 (c), unless modified by this section or via a Federal Register 
notification.
    (i) 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 7 CFR 
parts 5001.401 and 5001.402.
    (j) Other provisions. In addition to the requirements specified in 
paragraphs (a) through (i) 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 (j)(1) through (4) of this 
section.

[[Page 22332]]

    (1) All other provisions of Sec. Sec.  4280.101 through 4280.111 
apply to the grant portion of the combined funding request and all 
other provisions as applicable of 7 CFR parts 5001.1 through 5001.10 
apply to the guaranteed loan portion of the combined funding request.
    (2) All other provisions of Sec. Sec.  4280.112 through 4280.124 
apply to the grant portion of the combined funding request and Sec.  
4280.125 applies if the project for which the grant is sought has a 
total project cost of $200,000 and greater.
    (3) All guarantee loan and grant combination applications that are 
ranked, but not funded, will be processed in accordance with provisions 
found in Sec.  4280.122(d), (e), and (f).
    (4) 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, if construction costs are less than projected or if 
funding sources differ from those provided in the application.
    (5) Ineligible project provisions of Sec. Sec.  5001.115 and 
5001.119, and ineligible use of funds provision of Sec.  5001.122 apply 
to the guaranteed loan portion of the combined funding request. 
Borrower ineligibility provisions of Sec.  5001.127 are also 
applicable.


Sec. Sec.  4280.138-4280.148  [Reserved]

Energy Audit and Renewable Energy Development Assistance Grants


Sec.  4280.149  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;
    (5) An instrumentality of a State, Tribal, or local government; or
    (6) A council, as defined under the Resource Conservation and 
Development Program, at 16 U.S. C. 3451.
    (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) The applicant must:
    (1) Be registered in the SAM prior to submitting an application;
    (2) Maintain an active SAM registration with current information at 
all times until final fund disbursement has been made.
    (3) Provide its UEI number in each application it submits to the 
Agency. Generally, the UEI number is included on SF-424.


Sec.  4280.150  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 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 as defined in 4280.103.
    (b) Conducting and promoting REDA by providing to agricultural 
producers and rural small businesses recommendations and information on 
how to improve the energy efficiency of the operations and to use 
renewable energy technologies and resources in their operations.
    (c) EA and REDA 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 and the EA or REDA can only be for an 
EEI or RES on components that support the production, processing, 
vertical integration, or marketing of agricultural products. If the 
agricultural producer's operation is in a non-rural area, then the 
Energy Audit or REDA can only be for RES or EEI components of the 
business operation that are directly related to and their use and 
purpose is limited to the agricultural production operation, such as 
vertically integrated operations, and are part of and co-located with 
the agricultural production operation.
    (d) The EA or REDA 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.  4280.151  Ineligible projects.

    Ineligible projects for EA and REDA grants include, but are not 
limited to:
    (a) Research related projects.
    (b) Feasibility studies of any nature.
    (c) Projects where funding is not targeted directly to assisting 
agricultural producers or rural small businesses.
    (d) Projects to develop computer software or programs.
    (e) Projects where 50 percent or more of the costs are in-eligible 
or where project costs as defined in the application do not meet the 
definition of providing energy audits or renewable energy development 
assistance.
    (f) Projects which propose to provide energy audits or renewable 
energy development assistant for residential purposes.


Sec.  4280.152  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 in a Federal fiscal year. 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. Provisions for EA 
applications are listed in paragraph (d)of this section.
    (b) Eligible project costs. Eligible project costs for EA and REDA 
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 EA and REDA, 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;

[[Page 22333]]

    (5) Any costs of preparing the application package for funding 
under this subpart; and
    (6) Funding of political or lobbying activities.
    (7) Funding to train individuals to become qualified to perform EA 
or REDA assistance.
    (8) Payment or waiver of student tuition.
    (d) EA. A grantee that conducts energy audits must require that, as 
a condition of providing the EA assistance, 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. The 25% to be paid by an agricultural 
producer or rural small business does not count towards the commitment 
of funds scoring criteria noted in 4280.155(f).


Sec.  4280.153  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 (EA and REDA) 
applications will be accepted.
    (b) Applicants must submit complete applications consisting of the 
elements specified in paragraphs (b)(1) through (7) of this section, 
except that paragraph (b)(3), is optional. Applications will be 
evaluated based only on information submitted by the applicant in the 
application.
    (1) Form SF-424.
    (2) Form SF-424A, ``Budget Information--Non Construction 
Programs.''
    (3) Identify the ethnicity, race, and gender of the applicant. This 
information is optional and is not required for a complete application.
    (4) 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.
    (5) 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.
    (6) 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 must 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, such as renewable energy site 
assessments and renewable energy technical assistance provided directly 
to agricultural producers and rural small businesses, 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 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;
    (viii) Itemized budget; and
    (ix) Identify the amount of matching funds and other funds and the 
source(s) the applicant is proposing to use for the project. Provide 
written commitments for matching funds and other funds at the time the 
application is submitted.
    (A) If financial resources come from the applicant, documentation 
may include a bank statement that demonstrates availability of funds.
    (B) If a third party is providing financial assistance to the 
project, the applicant must submit a commitment letter signed by an 
authorized official of the third party. The letter must be specific to 
the project, identify the dollar amount being provided and any 
applicable rates and terms.


Sec.  4280.154  Evaluation of EA and REDA grant applications.

    The Agency will evaluate EA and REDA grant applications, based only 
upon information submitted in the application, to determine if:
    (a) The application is complete, as defined in Sec.  4280.103 and 
as per Sec.  4280.153;
    (b) The applicant is eligible according to Sec.  4280.149;
    (c) The project is eligible according to Sec.  4280.150 and 
4280.151, including 50% or more of proposed project costs are eligible; 
and
    (d) Grant funding provisions according to Sec.  4280.152 are met.


Sec.  4280.155  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. Unless otherwise altered via a 
Federal Register notification, the project must score a minimum of 40 
points to be eligible to compete for funding.
    (a) 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

[[Page 22334]]

identified needs throughout that service area, 10 points will be 
awarded.
    (b) Number of agricultural producers/rural small businesses to be 
served. A maximum of 20 points will be awarded for this criterion based 
on the proposed number of ultimate recipients to be assisted and if the 
applicant has provided the names and contact information for the 
ultimate recipients to be assisted.
    (1) If the applicant plans to provide EA or REDA 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 with at least 50 percent of 
the total number of proposed ultimate recipients ready to be assisted, 
including their name and contact information, an additional 10 points 
may be awarded.
    (c) Marketing and outreach plan. A maximum of 5 points will be 
awarded for this criterion. If the scope of work included in the 
application provides a satisfactory discussion of each of the following 
criteria, one point for each 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.
    (d) Applicant's organizational experience in completing the EA or 
REDA proposed activity. A maximum of 25 points will be awarded for this 
criterion based on the experience of the organization in providing EA 
or REDA 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. Experience of 
contractors proposed in the application to perform the services may be 
applied to this scoring criteria as long as the experience relates to 
the same type of activity, e.g., energy audit experience for an EA 
application.
    (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.
    (e) Potential of project to produce energy savings or generation 
and its attending environmental benefits. A maximum of 10 points will 
be awarded for this criterion under both paragraphs (e)(1) and (2) of 
this section
    (1) If the applicant (does not include entities the applicant will 
contract with) 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.
    (2) If the applicant (does not include entities the applicant will 
contract with) provides evidence that it has received one or more 
awards (e.g., recognition, not funding 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.
    (f) Commitment of funds. A maximum of 20 points will be awarded for 
this criterion if written documentation from each source providing 
matching funds and other funds are submitted with the application. 
Compare eligible commitment of funds to the amount of grant requested 
to derive percentage to be used for scoring.
    (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.  4280.156  Selecting EA and REDA grant applications for award.

    Unless otherwise provided for in a Federal Register notice, EA and 
REDA grant applications will be processed in accordance with this 
section. EA and REDA grant funding is maintained at the National Office 
and applications compete for funds only once in a nationwide 
competition.
    (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. Complete 
applications received after 4:30 p.m. local time on January 31, 
regardless of the postmark on the application, will be processed in the 
subsequent fiscal year. Unless otherwise specified in a Federal 
Register notice, the two highest scoring applications from each State, 
based on the scoring criteria established under Sec.  4280.155, will 
compete for initial funding. If undersubscribed on eligible 
applications, the third highest scoring application from each state 
shall be requested for National Office review and potential 
competition, ranking and funding, until funds are expended.
    (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 and meet the 
minimum scoring threshold 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 
redirect unused funds into the RES/EEI program or allow any remaining 
multi-year funds to be carried over to the next fiscal year rather than 
funding on a pro-rata basis.
    (d) Handling of ranked applications not funded. Based on the 
availability of funding, a ranked application submitted for EA or REDA 
funds may not be funded. Such ranked applications will not be carried 
forward into the next Federal fiscal year's competition.


Sec.  4280.157  [Reserved]


Sec.  4280.158  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.  4280.123, except as specified in 
paragraphs (a) through (b) of this section.
    (a) Instead of complying with Sec.  4280.123(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

[[Page 22335]]

bonding and/or insurance requirements as are normally required by the 
grantee.
    (b) The power purchase agreement specified in Sec.  4280.123 (h) is 
not required.


Sec.  4280.159  Servicing EA and REDA grants.

    The Agency will service EA and REDA grants in accordance with the 
requirements specified in Departmental Regulations, the Financial 
Assistance Agreement, 7 CFR part 3, 7 CFR 1951 Subparts E and O, and 
the requirements in Sec.  4280.124, 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, Request for Advance 
or Reimbursement, 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 EA performed, number 
of recipients assisted, and the type of assistance provided for REDA);
    (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)(1)(i) or (ii) of this section, 
as applicable.
    (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 EA 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 amount of energy saved and 
the amount of renewable energy generated, as applicable.


Sec. Sec.  4280.160-4280.165  [Reserved]


Sec.  4280.166  OMB control number.

    The report and recordkeeping requirements contained in this part 
have been approved by the Office of Management and Budget and have been 
assigned OMB control number 0570-0067

Appendix A to Subpart B of Part 4280--Technical Reports for Energy 
Efficiency Improvement (EEI) Projects

    For all 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.  4280.120 (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 $200,000 and greater, you must conduct an energy audit. 
However, if the application is for an EEI project with a total 
project costs of less than $200,000, 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 EEI(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 12 months, or an 
average of 2, 3, 4, or 5 years, 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 12 months, or an average of 2, 3, 4, or 
5 years, 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 
were in operation for this same time period.
    (ii) Calculate all direct and attendant indirect costs of each 
improvement;
    (iii) Rank potential improvements measures by cost-
effectiveness; and
    (iv) Provide an estimate of Simple Payback, including all 
calculations, documentation, and any assumptions.
    (4) Qualifications of the auditor. Provide the qualifications of 
the person which completed the energy 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 12 months, or an 
average of 2, 3, 4, or 5 years, for the building and equipment being 
evaluated. Any energy conversion shall be based on use rather than 
source.

[[Page 22336]]

    (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 section C(3)(i) through (iii) 
of this appendix.
    (i) For the most recent 12 months, or an average of 2, 3, 4, or 
5 years, 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 
were 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) Provide an estimate of Simple Payback, including all 
calculations, documentation, and any assumptions.
    (4) Qualifications of the assessor. Provide the qualifications 
of the person that completed the assessment. If the energy 
assessment for a project with total project costs of $80,000 or less 
is not conducted by Energy Auditor or Energy Assessor, then the 
person must have at least 3 years of experience and completed at 
least five energy assessments or energy audits on similar type 
projects.
    Section D--Qualifications. 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 
qualified installer/contractor.

Appendix B to Subpart B of Part 4280--Technical Reports for Renewable 
Energy System (RES) Projects With Total Project Costs of Less Than 
$200,000, but More Than $80,000

    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.  4280.120 (b)(4).

    Section A--Project Description. Provide a description of the 
project, including its intended purpose and a summary of how the 
project will be constructed and installed. Describe how the system 
meets the definition of commercially available. Identify the 
project's location and describe the project site.
    Section B--Resource Assessment. Describe the quality and 
availability of the renewable resource to the project. Identify the 
amount of renewable energy generated that will be generated once the 
proposed project is operating at its steady state operating level. 
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.
    Section C--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, and byproducts. 
Provide an estimate of Simple Payback, including all calculations, 
documentation, and any assumptions.
    Section D--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 RES 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 E--Qualifications of Key Service Providers. Describe the 
key service providers, including the number of similar systems 
installed and/or manufactured previously, professional credentials, 
licenses, and relevant experience. When specific numbers are not 
available for similar systems, estimations will be acceptable.

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

    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. For hybrid projects, technical reports must be prepared for 
each technology that comprises the hybrid 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 projects, 
complete Section C.3 of this appendix. For anaerobic digester 
projects, complete Section C.6 of this appendix.
    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/Biomass 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. 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.
    5. 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.

[[Page 22337]]

    6. Anaerobic Digester Project/Biogas. 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. If an 
anerobic digester project, identify the type of operation (e.g., 
dairy, swine, layer, etc.), along with breed, herd population size 
and demographics, and the type of waste collection method and 
frequency information available. For the biogas produced, identify 
the type of digester (e.g., mixed, plug-flow, attached film, covered 
lagoon, etc.), if applicable, or the method of capture (landfill, 
sewage waste treatment, etc.) and treatment. Identify the system 
designer and determine the digester design assumptions such as the 
number and type of animals, the bedding type and estimated annual 
quantity used, the manure and wastewater volumes, and the treatment 
of digester effluent (e.g., none, solids separation by screening, 
etc. with details including use or method of disposal).
    7. 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.
    8. 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.
    (9) RES with storage components. Provide adequate and 
appropriate data to demonstrate the amount of renewable resource 
available. Indicate the type, quantity, quality, and seasonality of 
the renewable energy resource, where applicable. Indicate the 
storage system specifications and the integrity of the system in 
conjunction with the RES it is integrated with, including 
application, size, lifetime, response time, capital and maintenance 
costs associated with the operation as well as the distribution of 
the stored resource(s).
    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 must cover and provide 
protection against both breakdown and a degradation of performance. 
The performance of the RES or EEI shall be monitored and recorded as 
appropriate to the specific technology.

Appendix D to Subpart B of Part 4280--Feasibility Study Components

                            Executive Summary
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
Provide an overview to describe the nature and scope of the proposed
 project, including the purpose, project location, design features,
 capacity, and estimated capital costs. Include a summary of the
 feasibility determinations made for each applicable component.
------------------------------------------------------------------------


                                Economic
------------------------------------------------------------------------
 
------------------------------------------------------------------------
What is it?..................  Cost benefit analysis.
What are the factors to        Minimum amount of inputs (labor,
 consider?.                     infrastructure, utilities, renewable
                                resources, feedstocks) to operate
                                successfully.
                               Contracts in place and contracts to be
                                negotiated, including terms and
                                renewals.
                               Environmental risks.
                               Cost of project relative to the increase
                                in revenues or benefits provided.
                               Overall economic impact of project
                                including new markets created and
                                economic development.
------------------------------------------------------------------------


                                 Market
------------------------------------------------------------------------
 
------------------------------------------------------------------------
What is it?..................  Analysis of the current and future market
                                potential, competition, sales or service
                                estimations including current and
                                prospective buyers or users.
What are the factors to        Competition.
 consider?.
                               Type of project: Service, product or
                                commodity based.
                               Target market, new versus established.
                               End user analysis, captive versus
                                competitive.
                               By-product revenue streams.
                               Industry risk.
------------------------------------------------------------------------


[[Page 22338]]


                                Technical
------------------------------------------------------------------------
 
------------------------------------------------------------------------
What is it?..................  Analyzing the reliability of the
                                technology to be used and/or the
                                analysis of the delivery of goods or
                                services, including transportation,
                                business location, and the need for
                                technology, materials, and labor.
What are the factors to        Commercial availability.
 consider?.
                               Product and process success record and
                                duplication of results.
                               Experience of the service providers.
                               Roads, rail, airport infrastructure.
                               Need for local transportation.
                               Labor market.
                               Availability of materials.
                               Use, age, and reliability of technology.
                               Construction risk.
------------------------------------------------------------------------


                                Financial
------------------------------------------------------------------------
 
------------------------------------------------------------------------
What is it?..................  Analysis of the operation to achieve
                                sufficient income, credit, and cashflow
                                to financially sustain the project over
                                the long term and meet all debt
                                obligations.
What are the factors to        Commercial or project underwriting.
 consider?.
                               Management's assumptions.
                               Accounting policies.
                               Source of repayment.
                               Dependency on other entities.
                               Equity contribution.
                               Market demand forecast.
                               Peer industry comparison.
                               Cost-accounting system.
                               Availability of short-term credit.
                               Adequacy of raw materials and supplies.
                               Sensitivity analysis.
------------------------------------------------------------------------


                               Management
------------------------------------------------------------------------
 
------------------------------------------------------------------------
What is it?..................  Analysis of the legal structure of the
                                business or operation; ownership, board
                                and management analysis.
What are the factors to        History of the business or organization.
 consider?.
                               Professional and educational background.
                               Experience.
                               Skills.
                               Qualifications necessary to implement the
                                project.
------------------------------------------------------------------------


                             Recommendation
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
Conclude with an opinion and recommendation presented by the consultant.
------------------------------------------------------------------------


                             Qualifications
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
Provide a resume or statement of qualifications of the author of the
 feasibility study, including prior experience.
------------------------------------------------------------------------


Mark Brodziski,
Acting Administrator, Rural Business-Cooperative Service.
[FR Doc. 2021-05286 Filed 4-26-21; 8:45 am]
BILLING CODE 3410-XY-P