Notice of Funding Opportunity for the Powering Affordable Clean Energy (PACE) Program, 31232-31243 [2023-10388]

Agencies

• DEPARTMENT OF AGRICULTURE
• Rural Utilities Service

[Federal Register Volume 88, Number 94 (Tuesday, May 16, 2023)]
[Notices]
[Pages 31232-31243]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-10388]


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DEPARTMENT OF AGRICULTURE

Rural Utilities Service

[Docket#: RUS-23-ELECTRIC-0003]


Notice of Funding Opportunity for the Powering Affordable Clean 
Energy (PACE) Program

AGENCY: Rural Utilities Service, USDA.

ACTION: Notice.

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SUMMARY: The Rural Utilities Service (RUS or the Agency), a Rural 
Development (RD) Agency of the United States Department of Agriculture 
(USDA), is soliciting Letters of Interest (LOI) for loan Applications, 
announcing the Application process for those loans, and providing 
deadlines for Applications from eligible entities under the Powering 
Affordable Clean Energy (PACE) Program. These loan funds will be made 
to qualified PACE Applicants to finance power generation Projects for 
Renewable Energy Resource (RER) systems or Energy Storage Systems (ESS) 
that support RER Projects. The PACE Program has $1,000,000,000 
available in appropriated funds under the Inflation Reduction Act of 
2022 (IRA).

DATES: Letters of Interest (LOIs) can be submitted beginning at 11:59 
a.m. Eastern Time (ET) on June 30, 2023, until 11:59 a.m. ET September 
29, 2023.
    An applicant that is invited by RUS to proceed with the loan 
Application will have 60 days, or a time agreeable to the Agency, to 
complete and submit a loan Application beginning from the date the 
Invitation to Proceed is emailed to the PACE Applicant. If the deadline 
to submit the completed Application falls on Saturday, Sunday, or a 
Federal holiday, the Application is due the next business day. RUS 
reserves the right, in its sole discretion, to extend the deadline upon 
the written request of the applicant if the applicant demonstrates to 
the satisfaction of the Administrator that exceptional circumstances 
exist to warrant the extension.

ADDRESSES: 
    Letters of Interest (LOI) Submissions. All LOIs must be submitted 
to RUS electronically through an on-line application window. The Agency 
will finalize the specific requirements of submitting the LOI through 
the on-line application window by notice in the Federal Register and 
the RUS website at https://www.rd.usda.gov/programs-services/electric-programs/powering-affordable-clean-energy-pace-program on or before 
June 30, 2023.
    Application Submissions. LOI submitters chosen to proceed with the 
loan Application must submit a completed loan Application package in 
accordance with the instructions provided in the RUS' Invitation to 
Proceed.
    Other information. Additional information and resources are 
available at https://www.rd.usda.gov/programs-services/electric-programs/powering-affordable-clean-energy-pace-program. Information on 
IRA Funding for RD is located at the following website: https://www.rd.usda.gov/inflation-reduction-act#fn.

FOR FURTHER INFORMATION CONTACT: Christopher A. McLean, Assistant 
Administrator, Electric Program, RUS, RD, USDA, 1400 Independence 
Avenue SW, STOP 1568, Washington, DC 20250-1560; Telephone: 202-690-
4492; Email: [email protected].

SUPPLEMENTARY INFORMATION:

Overview

    Federal Awarding Agency Name: Rural Utilities Service (RUS).
    Funding Opportunity Title: Powering Affordable Clean Energy (PACE) 
Program.
    Announcement Type: Notice of Funding Opportunity (NOFO).
    Assistance Listing: 10.757.
    Dates: Letters of Interest (LOIs) can be submitted beginning at 
11:59 a.m. Eastern Time (ET) on June 30, 2023 until 11:59 a.m. ET 
September 29, 2023.
    An applicant that is invited by RUS to proceed with the loan 
Application

[[Page 31233]]

will have 60 days, or within a time agreeable to the Agency to complete 
and submit a loan Application beginning from the date the Invitation to 
Proceed is emailed to the PACE Applicant. If the deadline to submit the 
completed Application falls on Saturday, Sunday, or a Federal holiday, 
the Application is due the next business day. RUS reserves the right, 
in its sole discretion, to extend the deadline upon the written request 
of the applicant if the applicant demonstrates to the satisfaction of 
the Administrator that exceptional circumstances exist to warrant the 
extension.
    Rural Development Key Priorities: The Agency encourages applicants 
to consider projects that will advance the following key priorities:
     Assisting rural communities to recover economically 
through more and better market opportunities and through improved 
infrastructure;
     Ensuring all rural residents have equitable access to 
Rural Development (RD) programs and benefits from RD funded projects; 
and
     Reducing climate pollution and increasing resilience to 
the impacts of climate change through economic support to rural 
communities.

A. Program Description

    1. Purpose of the Program. The IRA contains many transformative 
provisions. Importantly, it makes the largest investment in clean 
energy in U.S. history, allowing communities that have previously been 
left out of the clean energy economy to access affordable, reliable, 
and clean energy. The IRA also marks the largest investment in rural 
electrification since the 1930s, providing unique opportunities to 
advance economic development and quality of life in rural communities. 
The Biden-Harris Administration has prioritized these initiatives, 
elevating the role of infrastructure and the needs of rural America in 
its policies and their implementation.
    The goal of the PACE Program is to support clean, affordable energy 
growth across America. The PACE Program provides loans to eligible 
entities, with varying levels of loan forgiveness, for Projects that 
generate and/or store electricity from RER.
    2. Statutory and Regulatory Authority. PACE is authorized under 
Section 22001 of the Inflation Reduction Act, (IRA) Public Law 117-169 
(IRA). Other Federal statutes and regulations that apply to this notice 
are: Section 317 of the Rural Electrification Act of 1936, 7 U.S.C. 
940g (RE Act), 7 U.S.C. 8103, 7 CFR parts 1700-1730, 1767, 1773, and 
1787, and 7 CFR part 1970.
    The PACE Program is to be carried out by the RUS pursuant to 
Section 22001 of the IRA. Section 22001 of the IRA amends Section 9003 
of the Farm Security and Rural Investment Act of 2002 by adding new 
subsection (h). Section 22001 of the IRA provides RUS with 
$1,000,000,000 in appropriated funds ``for the cost of loans under 
Section 317 of the RE Act.'' Additionally, Section 22001 of the IRA 
provides that PACE funds may be utilized to finance Projects that store 
electricity generated from eligible renewable energy sources listed 
under Section 317 of the RE Act. These Project Loans or System Loans 
will be forgiven up to 50 percent, or more under certain circumstances, 
provided the Awardee and the Project otherwise meet the term and 
conditions of the loan forgiveness.
    Pursuant to Section 317(b) of the RE Act, loans shall be made for 
the purpose of constructing electric generation from renewable energy 
sources. Section 22001 of the IRA also provides that loan funds may be 
utilized for Projects that store electricity for such generation 
facilities. Further, Section 317(b) requires that the power generated 
from the eligible renewable energy source be for resale to rural and 
nonrural residents. Lastly, Section 317(c) requires that the rate of a 
loan shall be equal to the average tax-exempt municipal rate of similar 
maturities.
    3. Definitions. The definitions applicable to this notice are as 
follows:
    Administrator. The Administrator of the RUS, an agency under the RD 
mission area of the USDA.
    Agency. The Rural Utilities Service (RUS).
    Application. An application containing all information required by 
RUS as identified in the Invitation to Proceed. The application is 
materially complete in form and substance satisfactory to RUS within 
the specified time.
    Award. The financial assistance offered to a PACE Applicant.
    Awardee. An entity that has been awarded a PACE Award.
    Commercially Available Technology. Equipment, devices, 
applications, or systems that have a proven, reliable performance, and 
replicable operating history specific to the proposed application. The 
equipment, device, application, or system is based on established 
patented design or has been certified by an industry-recognized 
organization and subject to installation, operating, and maintenance 
procedures generally accepted by industry practices and standards. 
Service and replacement parts for the equipment, device, application, 
or system must be readily available in the marketplace with established 
warranty applicable to parts, labor, and performance.
    Commitment Letter. The notification issued by the Administrator to 
a PACE Applicant containing the total Award amount, the acceptable 
security arrangement, the proposed level of loan forgiveness, and such 
controls and conditions on the PACE Awardee's financial, investment, 
operational and managerial activities deemed necessary by the 
Administrator to adequately secure the Government's interest. This 
notification will also describe the accounting standards and audit 
requirements applicable to the Award.
    Community Benefit Plan. The PACE Applicant's explanation as to how 
the Project will benefit the residents of the service area identified 
in the Application.
    Distressed and Disadvantaged Communities. A Disadvantaged Community 
is determined by the Agency by using the Council on Environmental 
Quality's Climate and Economic Justice Screening Tool (which is 
incorporated into the USDA look-up map) which identifies communities 
burdened by climate change and environmental injustice. Distressed 
Community is determined by the Agency by using the Economic Innovation 
Group's Distressed Communities Index (which is incorporated into the 
USDA look-up map), which uses several socio-economic measures to 
identify communities with low economic well-being. To determine if your 
Project is located in a Disadvantaged Community or a Distressed 
Community, please use the following USDA look-up map: https://ruraldevelopment.maps.arcgis.com/apps/webappviewer/?id=4acf083be4c44bb7864d90f97de0c788.
    Energy Community. A community as defined by the Department of 
Treasury and the Internal Revenue Service at https://www.irs.gov/pub/irs-drop/n-23-29.pdf or through future governmental guidance.
    Energy Storage System (ESS). A facility capable of accepting 
energy, storing the energy for a period of time, and then later 
releasing the stored energy in support of a Renewable Energy Resource 
(RER).
    Environmental Attributes. All financial attributes that are created 
or otherwise arise from the Project's generation of electricity from a 
renewable or zero emission energy system that include but are not 
limited to, any environmental air quality

[[Page 31234]]

credits, green credits, renewable energy credits (RECs), carbon 
credits, emissions reduction credits, emission rate credits, 
certificates, tags, offsets, allowances, etc.
    Environmental and Historic Preservation Requirements. The National 
Environmental Policy Act of 1969, as amended (NEPA) (42 U.S.C 4321, et 
seq.), Section 7 of the Endangered Species Act (16 U.S.C. 1531 et 
seq.), and Section 106 of the National Historic Preservation Act 
(NHPA)(54 U.S.C. 300101 et seq.), as well as their implementing 
regulations at 7 CFR part 1970, Environmental Policies and Procedures 
(including Farmland Protection Policy Act Implementation Policy), 50 
CFR part 402, Interagency Cooperation, and 36 CFR part 800, Protection 
of Historic Properties.
    Financial Feasibility. An eligible entity's ability as determined 
by the Administrator to generate sufficient revenues to cover its 
expenses, sufficient cash flow to service its debts and obligations as 
they come due, and meet the financial ratios set forth in the 
applicable loan documents.
    Indian Tribe. The term ``Indian Tribe'' has the meaning given the 
term in 25 U.S.C 5304.
    Invitation to Proceed. A written notification issued by RUS to the 
applicant acknowledging that the Letter of Interest (LOI) was received 
and reviewed and inviting the applicant to submit an Application. The 
notification also provides the applicant instructions on how to submit 
the loan Application package and details of the next steps in the 
Application process.
    Letter of Interest (LOI). An electronically signed submission made 
through the RUS window completed by an eligible entity notifying RUS of 
its intent to apply for a loan and addressing all the elements 
identified in Section D.2(a) of this notice.
    Non-Federal Entities. As defined in 2 CFR 200.1, Non-Federal 
Entities are States, local governments, Indian Tribes, institutions of 
higher education (IHE), or nonprofit organizations. The definition of 
what constitutes a non-profit is also located in 2 CFR 200.1.
    Off-Taker. Shall mean: (1) the customers or members of the PACE 
Applicant that purchase and receive the electrical power and energy 
from the PACE Applicant; or (2) the entity that has or will execute a 
Power Purchase Agreement (PPA) with the PACE Applicant to purchase and 
receive electrical capacity and associated energy produced by the 
Project. The Off-Taker may also be referred to in the PPA as the 
``Buyer'', ``Customer'', ``Purchaser'' or another name that describes 
the entity purchasing the power.
    Power Purchase Agreement (PPA). A binding agreement executed 
between the PACE Applicant and an Off-Taker under which the Off-Taker 
agrees to purchase and receive from the PACE Applicant the electrical 
capacity and associated energy produced by the Project at a pre-
determined price and term. The PPA may include other transactions such 
as the selling and purchasing of Environmental Attributes or ancillary 
services (e.g., voltage regulation and synchronization, contingency 
reserves).
    Powering Affordable Clean Energy (PACE) Applicant. An eligible 
entity that has submitted an Application pursuant to an Invitation to 
Proceed.
    Project. New facilities constructed after the effective date of the 
IRA and compliant with all other applicable requirements of this notice 
used to generate electricity from an RER, and/or to store electricity 
that support the types of RERs that are eligible to be financed with 
PACE Program loan funds, as provided in Section 22001 of the IRA and 
Section 317 of the RE Act, which will result in the deployment of 
renewable energy generation or storage capacity.
    Project Loans. A PACE Award secured by a security interest in the 
assets and revenues of the Project and supporting credit enhancements 
relating to the Project rather than by a security interest in all of 
the assets of the PACE Applicant's electric utility system. Any PACE 
Award to a PACE Applicant that is not a current operating utility shall 
be a Project Loan.
    Renewable Energy Resource or Renewable Energy Source (RER). An 
energy conversion system fueled from a solar, wind, hydropower, 
biomass, or geothermal source of energy as defined in Section 317(a) of 
the RE Act.
    Rural Area. A rural area shall mean:
    (a) Any area other than a city, town, or unincorporated area that 
has a population of greater than 20,000 inhabitants. or
    (b) Service areas of current RUS Borrowers or former RUS and Rural 
Electrification Act (REA) borrowers which will be deemed rural for the 
purposes of their Applications.
    Rural Partners Network (RPN). The RPN is an alliance of Federal 
agencies and commissions working directly with rural communities to 
expand rural prosperity through job creation, infrastructure 
development, and community improvement.
    RUS Borrower. A current RUS borrower under the RE Act.
    Secretary. The Secretary of the United States Department of 
Agriculture.
    Substantially Underserved Trust Area (SUTA). An area defined under 
Section 306F of the RE Act.
    System Loans. PACE Awards secured through a senior security 
interest in all assets of the PACE Applicant, which must be a currently 
operating electric utility.
    4. Application of Awards. LOIs will be queued as they are received 
and reviewed on rolling basis in the order they are received. The 
Agency will review and evaluate LOIs based on the criteria found in 
Section E.1(a) of this notice. Upon review of the LOI, RUS may issue an 
Invitation to Proceed to the applicant. The Agency will review the loan 
Application and evaluate it based on the criteria found in Section 
E.1(b) of this notice. The Agency advises all interested parties that 
the applicant bears the full burden in preparing and submitting an LOI, 
as well as its Application submission as a PACE Applicant, in response 
to this notice.

B. Federal Award Information

    1. Type of Award: Loan & Loan Forgiveness.
    2. Fiscal Year Funds: 2023 & 2024.
    3. Available Funds: Total appropriated amount of $1 billion in 
appropriated funds through September 30, 2031. However, based on 
projected subsidy rates, RUS expects to have approximately $2.7 billion 
available to lend for the PACE Program. There will be a minimum of $300 
million of appropriated funds committed to each category outlined in 
this Section of the notice.
    RUS may, at its discretion, increase the total level of funding 
available in this funding round or in any category in this funding 
round from any available source provided the Awards meet the 
requirements of the statute which made the funding available to the 
Agency.
    4. Award Amounts: The maximum loan amount, inclusive of the 
forgivable portion, of any individual Award is limited to $100,000,000. 
The minimum amount of any individual Award is $1,000,000.
    5. Loan Type: RUS will offer both Project Loans and System Loans as 
described below.
    (a) Project Loans. This loan type applies to applicants that are 
not eligible for, or have decided not to pursue, a System Loan. Project 
Loans will be used to finance specific eligible Projects where the 
Award will be secured through a senior security interest on the 
Project's assets and the revenues generated from the Project's assets. 
A Project may also require the Awardee to commit additional cash 
reserves. Further, to the extent that a

[[Page 31235]]

PPA is in place with respect to the Project's assets, the Awardee must 
collaterally assign the PPA to RUS as security, with the Off-Taker's 
consent to such assignment. The Administrator may consider tax credits 
or direct payments in lieu of tax credits the Awardee receives under 
the Internal Revenue Code when calculating equity investment 
requirements for a PACE Applicant's proposed Project. If the 
Administrator allows a PACE Applicant to meet the financial equity 
requirement by utilizing applicable tax benefits, the Administrator may 
require additional credit support from the PACE Applicant pending the 
PACE Applicant's receipt of the tax benefit. Further, the Agency may 
utilize its authority under Section 306F of the RE Act and finance up 
to 100% of the cost of Projects benefitting SUTA areas. Project Award 
funds will only be released after commercial operation of the Project 
is commenced and RUS has confirmed that the Awardee has satisfied all 
other conditions specified in the Award.
    (b) System Loans. System Loans are only available to currently 
operating electric utilities. The PACE Applicant will provide, if it 
has not already provided, RUS with a perfected senior lien on all of 
its existing assets, both real and personal, including intangible 
personal property, as well as after-acquired property. At the 
Administrator's discretion, PACE Applicants which are generation and 
transmission suppliers may be permitted to secure a System Loan through 
an indenture, provided that RUS is granted a perfected senior security 
interest in all its assets by the trustee. System Loans may finance 
100% of the Project costs included in an Application. At the discretion 
of the Administrator, System Loan funds can be released to finance 
Projects for costs incurred during construction of the facilities; 
however, loan forgiveness will not occur until the Project has been 
completed and RUS has confirmed that the Awardee has satisfied all 
other conditions specified in the Award.
    6. Loan Forgiveness Categories: The following percentages shall be 
forgiven on Awards meeting the requirements outlined in Sections E and 
F of this notice. RUS will initially allocate a minimum of $300 million 
to each category.
    (a) Category I. Up to 20 percent total loan forgiveness;
    (b) Category II. Up to 40 percent total loan forgiveness if 50 
percent or more of the population served by the proposed service area 
is located within the following areas:
    (1) Energy Communities; or
    (2) Distressed or Disadvantaged Communities.
    (c) Category III. Up to 60 percent total loan forgiveness if:
    (1) The proposed service area is located in Puerto Rico, United 
States Virgin Islands (USVI), Guam, American Samoa or other U.S. 
territories or Compact of Free Association (COFA) states; or
    (2) The proposed service area consists of 60 percent or more of a 
Tribal area or serves an area that constitutes a SUTA; or
    (3) The Project is owned by an Indian Tribe defined by the 
Federally Recognized Indian Tribe List Act of 1994 (Pub. L. 103-454; 
108 Stat. 4791, 4792), including their wholly owned arms and 
instrumentalities, or an Alaska Native Corporation, including regional 
or village corporations, as defined under or established pursuant to 
the Alaska Native Claims Settlement Act (Pub. L. 104-42; 85 State. 
688).
    7. Anticipated Award Date: From September 2023 to December 2025.
    8. Performance Period: Five (5) years from the date of 
environmental clearance, but no later than September 30, 2031.
    9. Use of other governmental funds: The Agency will generally allow 
the Awardee to combine the incentives contained in this notice with 
other governmental benefits, provided such combinations are otherwise 
permitted by law or regulation.
    10. Renewal or Supplemental Awards: None.
    11. Type of Assistance Instrument: Loan Agreement.

C. Eligibility Information

    1. Eligible Applicants. RUS will accept LOIs and Applications from 
entities as described below:
    (a) For-profit organizations.
    (b) State or local governments.
    (c) Indian Tribes defined by the Federally Recognized Indian Tribe 
List Act of 1994 (Pub. L. 103-454; 108 Stat. 4791, 4792), including 
their wholly arms and instrumentalities.
    (d) Alaska Native Corporations, including regional or village 
corporations as defined under or established pursuant to the Alaska 
Native Claims Settlement Act (Pub. L. 104-42; 85 State. 688)
    (e) Nonprofits.
    (f) Institutions of higher education.
    (g) Community-based organizations, distribution electric 
cooperatives, and generation and transmission electric cooperatives.
    LOIs and Applications from any entity in the above categories will 
be evaluated for funding. Where applicable and possible, applicants are 
encouraged to work with Distressed and Disadvantaged Communities, 
Energy Communities, Puerto Rico, the United States Virgin Islands 
(USVI), Guam, American Samoa or other U.S. territories or Compact of 
Free Association (COFA) states, tribal entities, and RPN communities.
    2. Cost Sharing and Matching.
    (a) Project Loans. Awards will finance up to 75% of the total 
capitalized costs of a Project. Awardees will be required to provide at 
least 25% of the Project's total capitalized cost in the form of cash 
or equity investments, which may not be derived from debt instruments.
    (b) System Loans. PACE System Loans may cover 100% of the total 
costs of the Project.
    3. Other.
    (a) Eligible Service Areas.
    (1) Electricity generated or stored from facilities shall be 
provided to ``rural and nonrural residents'' in eligible service areas.
    (2) Rural Percentage of the Service Territory. The rural percentage 
will be calculated at the applicant's choosing by either:
    (i) The population located in the Rural Areas of a service 
territory versus the total population of the entire service territory; 
or
    (ii) Meters served in the Rural Areas of a service territory versus 
meters served in the entire service territory.
    For the purpose of this notice, the minimum rural percentage by the 
chosen methodology must be at least 50 percent, unless waived by the 
Administrator based upon a showing that there exist social equity 
considerations, such as SUTA, significant energy burdens, severe 
economic needs, or substantial added benefits to rural consumers.
    (3) Rural Determination. If the PACE Applicant is not a RUS 
Borrower, a rural determination will be conducted by RUS in order to:
    (i) Identify the service territory where electricity from the 
facilities to be financed by PACE Award would be delivered and 
consumed; and
    (ii) Further identify those areas within the service territory that 
are rural.
    (b) Project Eligibility.
    (1) Projects can be developed by eligible applicants developing new 
renewable power generation from RER and ESS for use by Off-Takers 
through a PPA or a financial guarantee that ensures Financial 
Feasibility.
    (2) New facilities that generate electricity from an RER, including 
facilities that store electricity that support such assets. However, 
RUS will not approve facilities that violate the

[[Page 31236]]

terms of a PACE Applicant's existing wholesale power contract.
    (3) New linear facilities, including microgrids, and equipment that 
are necessary to operate the Project including, but not limited to, 
transmission or distribution facilities that are needed to export, 
transmit, and deliver power from the generating facility to the Off-
Taker.
    (4) The upgrading of existing linear facilities and equipment that 
are necessary to operate the Project including, but not limited to, 
transmission or distribution facilities that are needed to export, 
transmit, and deliver power from the generating facility to the Off-
Taker.
    (5) The Project may include one or more RERs and/or ESSs.
    (6) Facilities may be co-located to operate interconnectedly or 
independently or constructed at separate sites.
    (7) RERs and ESSs must be installed so that the RER can provide 
energy and any ancillary services for resale to rural and nonrural 
residents located in eligible service areas.
    (8) Applicants can request interconnection and other costs 
associated with being able to deliver the RER and/or the ESS to Off-
Takers, including related microgrid investments. Successful applicants 
may also recover a portion of their capitalizable pre-application costs 
pursuant to 7 CFR part 1767 and this notice.
    (9) Applicant may include in its loan Application the costs 
specified in 7 CFR 1710.106, including interest during construction 
(IDC) pursuant to 7 CFR 1710.106(a)(4).

D. Application and Submission Information

    1. Address to Request Application Package. The Agency will finalize 
the on-line application window by notice in the Federal Register on or 
before June 30, 2023. The PACE Program Application Guide and copies of 
necessary forms and samples will become available at https://www.rd.usda.gov/programs-services/electric-programs/powering-affordable-clean-energy-pace-program. If you require alternative means 
of communication for program information (e.g., Braille, large print, 
audiotape) please contact USDA's TARGET Center at (202) 720-2600 (voice 
and TDD) or the 711 Relay Service.
    2. Content and Form of Application Submission.
    (a) Letter of Interest (LOI) Submission. The LOI must include the 
information as listed below in this Section. LOI submitters should be 
aware that the final Application will require more information as 
included in Section D.2(b) of this notice.
    (1) LOI submitter's profile and point of contact information.
    (i) Legal name and status of the LOI submitter.
    (ii) The LOI submitter's address and principal place of business.
    (iii) The LOI submitter's tax identification number and its Unique 
Entity Identifier (UEI) number from the System for Award Management 
(SAM) registry.
    (iv) Legal structure of LOI submitter (e.g., cooperative, 
corporation, limited-liability company, State or local government 
entity, municipality, federally recognized Tribe). If the applicant is 
a non-governmental entity, a statement as to whether the entity is 
organized as a non-profit.
    (v) If the LOI submitter is a State or local governmental entity, a 
certification that it can enter into contracts with the Federal 
government, incur debt, and provide security for such debt. Federal 
government entities are not eligible for financing.
    (vi) Name and title of LOI submitter's manager and/or point of 
contact, which must include general contact information, as well as an 
email address to receive RUS' Invitation to Proceed.
    (vii) The location of the Project and the applicable service area 
using a digital Shapefile. The applicable service area must demonstrate 
that the Project will provide economical clean energy to rural 
residents as outlined in Section C.3(a) of this notice.
    (viii) The LOI submitter's net assets value.
    (ix) A certification as to whether the LOI submitter over the last 
10 years has been placed in receivership liquidation, has been under a 
workout agreement, has declared bankruptcy, or has had a decree or 
order issued for relief in any bankruptcy, insolvency, or other similar 
action.
    (x) A statement as to whether the Project(s) will serve a SUTA area 
as defined in Section A.3 of this notice.
    (2) Financial Information. A copy of the LOI submitter's balance 
sheet and income statements for the shorter of the last three years or 
the years the LOI submitter has been in operation. If the LOI submitter 
has no operating history, the LOI submitter must provide RUS with 
information RUS deems necessary to evaluate the financial strength of 
the LOI submitter. The LOI submitter must also provide the balance 
sheet and income statements for the last three years of any entity or 
entities providing equity or security for the loan, with an explanation 
of the legal relationship to the LOI submitter.
    (3) Technical Description of the Project. A technical description 
of the Project, which shall not exceed 1,500 words, and must include 
the following:
    (i) Type of loan being requested, Project Loan or System Loan. See 
Section B.5 of this notice.
    (ii) A description of each RER and ESS being requested for PACE 
financing including Project name, location, type, size, and renewable 
energy units generated and saved.
    (iii) Verification that the Project(s) will be designed, 
constructed, and operated based on Commercially Available Technology.
    (iv) For each Project, the estimated dates to start construction 
and to achieve commercial operation.
    (v) The estimated total capital cost of each Project and the amount 
of Award funds being requested to finance each Project.
    (vi) Proposed financial structure of the owners, equity investors 
and other participants, which shall include estimated sources and uses 
of all funds.
    (vii) If applicable, a description and status of any PPA that will 
be used to sell and deliver the electrical output of the Project(s) to 
Off-Takers.
    (viii) If applicable, a description of any existing power sales 
contracts, such as wholesale power contracts, between Off-Takers and 
its members.
    (ix) Status of, and estimated timelines to complete, if known, any 
applicable Federal, State, or local permitting or environmental review 
processes.
    (x) Ratepayer and Community Benefit. A brief discussion from the 
LOI submitter that if it is invited to submit an Application, it will 
demonstrate in its Application how it will pass on a portion of the 
savings from the loan forgiveness to the Off-Taker as described in 
Section B.6 of this notice and that the LOI submitter will provide the 
required information from Section D.2(b)(19) for the Community Benefit 
Plan.
    (xi) Prevailing wage. Pursuant to 7 U.S.C. 8103(f), a certification 
that, pursuant to 7 U.S.C. 8103(f), the LOI submitter will comply with 
the provisions of the Davis-Bacon Act so that any laborers and 
mechanics employed on the Project or any contractor or subcontractor 
in: (A) the construction of such facility, and (B) with respect to any 
taxable year, for any portion of such taxable year the alteration or 
repair of such facility, shall be paid wages at rates not less than the 
prevailing rates for construction, alteration, or repair of a similar 
character in the locality in which such facility is located as most 
recently

[[Page 31237]]

determined by the Secretary of Labor, in accordance with subchapter IV 
of chapter 31 of title 40, United States Code.
    (xii) Loan Forgiveness Level. A statement as to what level of loan 
forgiveness outlined in Section B.6 of the notice that the LOI 
submitter believes it is eligible and the reason(s) why it believes it 
is eligible for that specific level of loan forgiveness.
    If the LOI submitter cannot provide any of the information or 
documents listed above, it must notify RUS prior to submitting an 
Application.
    (b) Application Submission. An LOI submitter that receives an 
Invitation to Proceed must submit Application packages containing the 
information and documents required in 7 CFR 1710.501, as well as the 
following information and documentation:
    (1) Loan Application letter. The letter may be signed by any 
authorized representative of the PACE Applicant; however, the 
authorization must also be submitted with the Application.
    (2) Articles of incorporation and bylaws and other governing and 
organizational documents. The PACE Applicant must provide the articles 
of incorporation, bylaws, and other organizational documents currently 
in effect. PACE Applicants that are RUS Borrowers may comply with this 
requirement by notifying in writing to RUS that there are no material 
changes to the documents already on file with RUS. Other governmental 
applicants must only provide evidence of their ability to enter into 
debt obligations.
    (3) Environmental and Historic Preservation Requirements. If the 
PACE Applicant has not received written notice from RUS that the 
Project environmental review process is formally concluded as provided 
in 7 CFR 1970.11, it must submit documents that establish that a review 
is in progress and no ground disturbance activities have started prior 
to receiving notice that the Environmental and Historic Preservation 
review requirements have been completed. This requirement requires the 
PACE Applicant to include a certification that construction has not 
started and that it will not start prior to obtaining written notice 
from RUS. The PACE Applicant must further state the type of 
environmental review document it believes needs to be prepared in 
accordance with 7 CFR part 1970 (e.g., a Categorical Exclusion with an 
Environmental Report, an Environmental Assessment, or Environmental 
Impact Statement in accordance with subparts B, C, or D, respectively). 
The PACE Applicant must provide a description of any potential 
environmental controversy or extraordinary circumstances, and the 
estimated timelines for completing the environmental process. PACE 
Applicants are strongly advised that commencing construction prior to 
environmental or historic preservation clearance could make a Project 
ineligible for RUS financing, regardless of a Project's place in the 
queue.
    (4) Financial Forecast. In order to demonstrate that the loan is 
feasible as required in 7 CFR 1710.112, the PACE Applicant must submit 
a financial forecast. For System Loans, the financial forecast must 
cover at least 10 years from the commercial operating date of the 
Project to be financed, must demonstrate that the PACE Applicant's 
operation is economically viable and that the proposed loan is 
financially feasible. RUS may request projections for a longer period 
of time or additional information, if RUS deems it necessary based on 
the financial structure of the PACE Applicant. The PACE Applicant must 
submit the financial forecast in the form prescribed by RUS in the 
Invitation to Proceed.
    (5) PPA. If the PACE Applicant proposes to sell power generated 
from the Project to an Off-Taker under a PPA, the PACE Applicant must 
provide a draft copy of the PPA with the Application, which must be 
structured to allow two different rate schedules; one for the case 
without loan forgiveness and the other for the case with loan 
forgiveness. Because the PPA is essentially the mechanism by which 
consumers will benefit from the PACE program, all draft PPAs must be 
approved by RUS prior to being executed. RUS approval of the PACE 
Application is predicated upon an executed PPA that has been approved 
by the Agency.
    (6) Power Resources Owned, Co-owned or Leased. If applicable, 
provide a discussion or table of the existing power resources available 
to the applicant that includes generation facilities owned, co-owned or 
leased. The information provided should include: name of plant and 
unit, ownership interest (%), type of unit and fuel used, net peak 
capacity, and in-service date.
    (7) Power Purchase Contracts. If applicable, provide a discussion 
of the applicant's power purchase contracts (with terms greater than 
two years) that describes the capacity and energy resources purchased. 
The information should include: type of contract (take-or pay, unit 
power purchase, etc.), parties to the contract, amount (capacity and 
energy); and term and expiration date.
    (8) Power Sales Contracts. A description of any existing power 
sales contracts, such as wholesale power contracts, between an Off-
Taker and its members must be provided that includes the type of 
agreements (e.g., all or partial requirements), the initial execution 
dates, and the dates the agreements expire. The PACE Applicant must 
provide copies of the agreements if requested by the Agency.
    (9) Engineering Report. A signed final engineering report or final 
engineering and power cost study must be provided with the Application, 
or soon thereafter. The report must describe the purpose, design, 
costs, construction, and operation of the Project(s). A draft 
engineering report must be submitted for RUS approval prior to it being 
finalized and signed. An approved engineering report is a prerequisite 
to the obligation of PACE funds; however, the PACE borrower may amend 
the engineering report with RUS' written approval. The finalized 
engineering report must be signed or approved by licensed professional 
engineer.
    (10) Project Contracting. The PACE Applicant must provide a list of 
all engineering, procurement, and construction contracts it intends to 
use on the Project(s), with a brief description and cost estimate of 
each contract. At the Agency's discretion, any contracts selected by 
the Agency for review and approval must be submitted within the period 
of time requested by the Agency. In no event will Award funds be 
disbursed prior to the selected Project contracts receiving Agency 
approval and any other necessary approvals.
    (11) Interconnection Agreements. If an interconnection agreement is 
needed, draft agreements required to interconnect an RER, ESS, or 
related microgrid system to a distribution or transmission network must 
be included with the Application. These agreements must be approved by 
the Agency before the Award funds are disbursed.
    (12) System Impact Studies. The status and summary of any related 
system impact studies as they may pertain to the interconnection of the 
Project with a distribution or transmission network must be provided 
with the Application. System impact studies must be conducted, as 
applicable, to include load flow studies, short circuit analysis, 
system stability analysis, and conclusions (e.g., identify voltage, 
overload, stability problems and proposed actions or contingencies; 
single contingency analysis of proposed facilities; transmission 
constraints; and system improvements needed). The nature of any 
required system upgrades

[[Page 31238]]

and associated costs to be incurred by the Awardee, Off-Taker, or other 
entity must be identified. The Agency may request a copy of any system 
impact studies or links to review such studies.
    (13) Transmission Service Agreements. Transmission service 
agreements required to export, transmit or deliver the power from the 
Project to the Off-Taker, if any, must be included with the 
Application. These agreements must receive Agency approval before Award 
funds are disbursed.
    (14) Other Major Agreements. The PACE Applicant must provide a list 
and a brief description of all other major agreements that will need to 
be executed for the Project. Such agreements, if applicable, include, 
but are not limited to O&M arrangements, joint ownership arrangements, 
fuel management, and fuel supply and transportation. Agreements 
selected for approval by the Agency should be submitted within the 
period of time requested by the Agency. RUS will not approve the PACE 
Application until all agreements requested for review have been 
approved by the Agency.
    (15) Meteorological Data and Studies. RERs such as solar and wind 
Projects must be supported with meteorological data and studies to 
determine the expected energy generation of the facility during the 
initial year of operation. The PACE Applicant must identify the amount 
and basis of any annual degradation in energy output of the RERs.
    (16) Fuel and Fuel Transportation Strategies. If applicable to the 
Project, the PACE Applicant must describe the fuel and fuel 
transportation strategies of the Project and show that the fuel supply 
for the life of the Project is adequate. Fuel supply contracts and fuel 
transportation contracts must be identified, including the term of each 
contract. Copies of the fuel contracts or arrangements must be provided 
if requested by the Agency.
    (17) Sources and Uses of Water. The PACE Applicant must identify 
the uses and source of water for the Project, as well as evidence that 
the water supply will be adequate to meet both daily demands and 
demands for the life of the Project. If requested by the Agency, the 
PACE Applicant must provide copies of any agreements or arrangements 
that would be used to purchase or receive water used and consumed by 
the Project and the applicable water balance diagram of the facilities.
    (18) Real Estate Matters. If the PACE Applicant is leasing the real 
estate upon which it will build and operate the Project, the PACE 
Applicant must submit an executed copy of the lease agreement with the 
Application. Lease agreements must contain, or be amended to contain, a 
provision that allows the PACE Applicant to collaterally assign the 
lease to RUS as security for the loan. Further, to the extent that the 
lessor under any lease with the PACE Applicant has executed a mortgage 
or deed of trust with respect to the real estate to another party, that 
party must execute an attornment and non-disturbance agreement in favor 
of the PACE Applicant that will allow the PACE Applicant to continue to 
lease the real property and operate the Project in the event of the 
lessor's default under the mortgage or deed of trust. The PACE 
Applicant must submit any attornment and non-disturbance agreements to 
RUS with its PACE Application.
    (19) Community Benefit Plan. The PACE Applicant must submit a 
Community Benefit Plan, which should be implemented within the first 
year of receiving Award funds, but which is expected to be provided 
beyond the Project itself, including, but not limited to:
    (i) Investments in the American workforce such as local worker 
retention, retraining and job creation;
    (ii) The launch or expansion of systemic or consumer-based energy 
efficiency and carbon reduction measures such as providing on-bill 
financing or Pay as You Save programs to improve the energy efficiency 
and beneficial electrification for consumers;
    (iii) Land use agricultural integration that demonstrates ways for 
traditional farming and ranching to benefit from clean energy Projects; 
and
    (iv) Diversity, equity, inclusion, and accessibility goals set 
forth in the Justice40 Initiative.
    (20) Tribal Government Resolution of Consent. A certification from 
the appropriate Tribal official is required if the Project, or any part 
of it, will be sited on Tribal land where a Tribal government has 
regulatory authority. Any non-Tribal PACE Applicant that fails to 
provide a certification to provide service on the Tribal lands 
identified in the proposed Project or the proposed service area will 
not be considered for funding.
    (21) Estimated Costs. The applicant must include in its loan 
Application a breakdown of the estimated costs listed in Section 
C.3(b)(9) of this notice for which it intends to seek reimbursement.
    3. System for Award Management and Unique Entity Identifier.
    (a) At the time of Application, each PACE Applicant must have an 
active registration in the System for Award Management (SAM) before 
submitting its Application in accordance with 2 CFR part 25. In order 
to register in SAM, entities will be required to obtain a Unique Entity 
Identifier (UEI). Instructions for obtaining the UEI are available at 
https://sam.gov/content/entity-registration.
    (b) PACE Applicants must maintain an active SAM registration, with 
current, accurate and complete information, at all times during which 
it has an active Federal award or an Application under consideration by 
a Federal awarding agency.
    (c) PACE Applicants must ensure they complete the Financial 
Assistance General Certifications and Representations in SAM.
    (d) PACE Applicants must provide a valid UEI in its Application, 
unless determined exempt under 2 CFR 25.110.
    (e) The Agency will not make an Award until the PACE Applicant has 
complied with all SAM requirements. If a PACE Applicant has not fully 
complied with the requirements by the time the Agency is ready to make 
an Award, the Agency may determine that the PACE Applicant is not 
qualified to receive a Federal Award and use that determination as a 
basis for making a Federal Award to another PACE Applicant.
    4. Submission Dates and Times.
    (a) LOI Submissions. LOIs can be submitted beginning at 11:59 a.m. 
Eastern Time (ET) on June 30, 2023 until 11:59 a.m. ET on September 29, 
2023.
    (b) Application Submissions. A LOI submitter that receives an 
Invitation to Proceed will have 60 days, or a time agreeable to the 
Agency, to complete and submit its loan Application. If the deadline to 
submit the Application falls on Saturday, Sunday, or a Federal holiday, 
the Application is due the next business day. The Administrator may 
grant an extension of time to complete the documentation required for 
an Application if, in the Administrator's sole judgment, extraordinary 
circumstances prevented the PACE Applicant from completing the 
Application within the timeframe herein stipulated. In extending an 
Invitation to Proceed to a LOI submitter in the queue, RUS reserves the 
right to meet overall RUS program objectives and therefore, may notify 
the PACE Applicant that the amount of financing to be Awarded is below 
the level sought by the PACE Applicant.
    (c) General. RUS reserves the right to ask PACE Applicants for 
clarifying information on, or additional information related to, the 
LOI or Application.
    5. Intergovernmental Review. Intergovernmental Review under

[[Page 31239]]

Executive Order 12372 is not required in this program.
    6. Funding Restrictions.
    (a) Entities that plan to submit or have submitted Applications 
under the RUS Empowering Rural America (New ERA) Program may not apply 
for the same Project under the PACE Program. Failure to follow this 
limitation will cause the PACE Applicant to be disqualified from all 
potential Awards.
    (b) Only Projects where construction began after August 16, 2022, 
the effective date of the IRA, will be eligible for funding under PACE 
Program.
    (c) Funding will not be provided for merchant power Projects or 
Projects where a non-utility entity is generating power for its own 
use.
    (d) Funding will not be provided for the purchase of any existing 
RER or ESS.
    (e) There are no Application or origination fees for loans under 
the PACE Program.
    (f) RUS will only finance Projects that utilize Commercially 
Available Technology under this notice.
    (g) PACE Applicants can request interconnection and other costs 
associated with being able to deliver the RER and/or the ESS to Off-
Takers.
    7. Other Submission Requirements.
    (a) An entity may only submit one LOI. RUS will not accept paper 
LOIs. A sample LOI and additional information is available at https://www.rd.usda.gov/programs-services/electric-programs/powering-affordable-clean-energy-pace-program.
    (b) Each LOI submitter may only submit one Application, upon 
receiving a RUS Invitation to Proceed.
    (c) Each PACE Applicant may only receive one Award.
    (d) An Invitation to Proceed or RUS' approval of a PACE Application 
does not constitute approval of any agreement or document that the PACE 
Applicant must provide to RUS for RUS' approval as outlined in this 
notice or in the applicable PACE loan agreement.
    (e) A PACE Applicant must, after submitting a LOI or loan 
Application, promptly notify RUS of any changes in its circumstances 
that materially affect the information contained in the loan 
Application.
    (f) Applicants (``co-applicants'') may submit a joint/consolidated 
LOI or a Joint Application for consideration (collectively the ``Joint 
LOI'' or ``Joint Application''). If a joint LOI contains two or more 
proposed Projects, the Agency may evaluate each proposed Project 
separately as to whether to provide an Invitation to Proceed concerning 
each proposed Project. The Agency may also disaggregate its review of 
the technical and Financial Feasibility of the individual Projects 
contained in a joint LOI or a joint Application. Further, the Agency 
may require co-applicants to accept separate contractual and financial 
commitments relating to the Project or Projects contained in the joint 
Application.

E. Application Review Information

    1. Criteria.
    (a) LOI. RUS will process and evaluate complete LOI on a rolling 
basis in the order they are received. In reviewing LOIs, RUS will 
assess the following:
    (1) Applicant eligibility. The applicant's eligibility to 
participate in the PACE Program.
    (2) Project eligibility. The eligibility of the proposed Project 
under the terms of Section 22001 of the IRA and the technical 
feasibility of the proposed Project.
    (3) Geographic Diversity. The Administrator may consider geographic 
diversity in reviewing and evaluating LOIs.
    (4) Financial status. The financial status of the applicant to 
determine the applicant's likelihood to successfully secure and repay 
the PACE loan.
    (6) Allocation of Funds Among Categories. The amount of funding 
available in the category due to a disproportionate number of LOI in 
that category and whether RUS will be able to reallocate funding from 
another category listed in Section B.6 of this notice.
    (b) Application. RUS will evaluate and review each Application 
based on the criteria provided in 7 CFR part 1710 subpart D and will 
assess the following:
    (1) Financial coverage ratios. The Administrator may set financial 
coverage ratios based on the risk profile of the PACE Applicant and 
specific loan terms. Those financial ratios will be included in the 
PACE borrower's loan documents with RUS. RUS Borrowers will be subject 
to their current debt service coverage ratios in their current loan 
documents, unless notified otherwise.
    (2) Financial Equity Requirements. As noted in Section C.2 of this 
notice, RUS will require the Awardee to provide at least 25% equity in 
the Project for PACE Project loans. However, the Administrator may 
consider requests to waive the 25% financial equity requirement for 
PACE Awards where the Project will serve areas covered under SUTA. 
System Loans that provided RUS with a perfected senior lien on all 
assets of the PACE Applicant will not have an additional equity 
requirement. The required financial equity position will be set forth 
in the Commitment Letter and the loan documents as a condition to the 
PACE loan. RUS may consider allowing the Awardee to meet the financial 
equity requirements by utilizing any appliable direct payment or tax 
credit relating to the Project as provided in Internal Revenue Code of 
1986 and its implementing regulations. If the Administrator allows a 
PACE Applicant to meet the financial equity requirement by utilizing 
applicable tax credits or direct payments relating to the Project, the 
Agency may require additional security or credit support from the PACE 
Applicant pending the PACE Applicant's receipt of the tax credit or 
direct payment.
    (3) Community Benefit Plan.
    (4) Loan forgiveness minimum requirements.
    (i) Ratepayer Benefit: Loan forgiveness must provide demonstrable 
benefits to rate payers located in the service area. The PACE Applicant 
must demonstrate in its LOI that the consumer benefits and financial 
benefits resulting from the forgivable portion of the loan will be 
shared between the Awardee and the Off-Taker. This must be shown 
through a long-range financial forecast scenario that establishes that 
the revenue per kilowatt hour (KWh) the PACE Applicant will receive 
from the sale of the power to the Off-Taker would have been higher but 
for the loan forgiveness. Additionally, a net present value (NPV) 
calculation should be performed to demonstrate the financial benefit to 
the rate payer with the addition of the loan forgiveness versus 
business as usual without loan forgiveness.
    (ii) Technical Feasibility and Commercially Available Technology. 
RUS must determine that the Project is technically feasible and confirm 
that the Project uses a Commercially Available Technology.
    (iii) Financially Feasible. The proposal must be financially 
feasible and adequately securable, as outlined in 7 CFR 1710.112.
    2. Review and Selection Process.
    (a) LOI. RUS will consider only complete LOIs as they are received. 
LOIs will be accepted on a rolling basis and evaluated as received 
based on the criteria described in Section E.1(a) of this notice. Only 
LOIs selected to receive an Invitation to Proceed will be able to 
proceed with the Application.
    (b) Application. LOI submitters that receive an Invitation to 
Proceed will have 60 days, or a time agreeable to the Agency, from the 
date RUS sends the Invitation to Proceed to submit an Application to 
the Agency. A General Field Representative (GFR) will be

[[Page 31240]]

assigned to assist the PACE Applicant during this part of the 
Application process. RUS will process Applications in the order they 
are received.
    All Applications will be reviewed based on the criteria provided in 
Section E.1(b) of this notice. RUS will make Awards under the PACE 
Program based on Applications that meet the requirements contained in 
this notice. The Agency reserves the right to offer the PACE Applicant 
less than the loan funding and loan forgiveness requested.

F. Federal Award Administration Information

    1. Loan Terms and Conditions. A successful PACE Applicant will 
receive a Commitment Letter from the Administrator notifying of the 
following: total Award amount approved by RUS; the amount of the loan 
that will be forgiven; any additional controls on its financial, 
investment, operational and managerial activities; acceptable security 
arrangements; and such other conditions deemed necessary by the 
Administrator to adequately secure the Government's interest and ensure 
repayment. Upon receipt of the acceptance of the Award offer by the 
PACE Awardee, RUS will begin to prepare the loan documents. Upon 
completion of the loan documents, RUS will forward the loan documents 
to the PACE Applicant.
    Receipt of a Commitment Letter from the Administrator does not 
authorize the PACE Awardee to commence performance under the Award. All 
RUS requirements and loan conditions specified in the Commitment Letter 
must be met before the Awardee may commence construction on the Project 
and before RUS will disperse the proceeds of the Award, including but 
not limited to the Awardee receiving notice that the Environmental and 
Historic Preservation requirements have been completed. RUS will notify 
the Awardee when it is authorized to commence construction of the 
Projects.
    (a) Maturity of a PACE Loan. The maturity of a PACE loan will be 
the lesser of:
    (1) The expected useful life of the Project,
    (2) The term of the PPA (if required for execution between the PACE 
Applicant and the Off-Taker),
    (3) The term of the lease for the land that the Project will occupy 
(if such land is not owned by the PACE Applicant),
    (4) The expiration dates of power sales contracts between the PACE 
Applicant and its members should the PACE Applicant provide the power 
supply needs of the members under such power sales contracts,
    (5) The loan term requested by the PACE Applicant, or
    (6) 35 years.
    (b) Waiver and Modification of Term and Conditions. The 
Administrator reserves the right to modify or waive certain 
requirements if:
    (1) The Administrator believes such modifications or waivers are in 
the best interest of the government,
    (2) The Administrator has determined that the loan will be repaid 
on or before the maturity date, and
    (3) The security is adequate.
    The Awardee may be required to establish and maintain reserves 
sufficient for timely loan payments, emergency maintenance, extensions 
to the facilities, and replacement of short-lived assets.
    (c) Interest rate. Loans made under PACE Program will bear interest 
equal to the municipal rate as provided in Section 317(c) of the RE 
Act, and as further described in the first sentence of 7 CFR 1714.4(a) 
and 7 CFR 1714.5(a)-(c). Municipal rates can be found at https://www.rd.usda.gov/page/rural-utilities-loan-interest-rates. Note that 
because there is no interest rate cap for the PACE Program, the third 
sentence of 7 CFR 1714.4(a) and 7 CFR 1714.5(d) shall not apply.
    (d) Prepayment. Prepayment of PACE loans will be governed by 
Sections 305(c) and 306B of the RE Act and the provisions of 7 CFR part 
1714, subpart A and 7 CFR 1786, subpart F that relate to municipal rate 
loans. If the Awardee prepays a PACE loan, its obligations under the 
Community Benefit Plan will continue for a period equal to the shorter 
of: (1) the original term of the Award, or (2) five years from the date 
the Project was placed in service.
    (e) Repayment. The repayment of each advance to the PACE borrower 
must be amortized over the term on the PACE loan, such that the Awardee 
will make equal monthly payments that will pay all principal and 
interest on such advance no later than the maturity date.
    (f) Financial Ratios. Financial ratios shall be determined as set 
forth in Section E.1(b)(1) of this notice.
    (g) Collateral. Project Loans will be secured through a senior 
security interest on the Project's assets and the revenues generated 
from the Project's assets. System Loans will be secured by assets of 
the Awardee. For RUS Borrowers, the Agency may rely, at its sole 
discretion, on existing security arrangements with RUS if it is 
determined that the government has adequate collateral. When an Awardee 
is unable by reason of preexisting encumbrances, or otherwise, to 
furnish a senior perfected security interest on its entire system, the 
Administrator may accept other forms of security, such as a guarantee 
from the appropriate party, an irrevocable letter of credit, or revenue 
pledges, if the Administrator determines that such credit support is 
reasonably adequate and acceptable.
    (h) Opinion of counsel. An opinion of counsel is required at 
closing and must be acceptable to the Administrator, opining, inter 
alia, that the Awardee is properly organized and has the authority to 
enter into the Award and that RUS has a first priority, senior lien on 
the required collateral, unless other collateral arrangements have been 
agreed to with the Agency.
    (i) Cybersecurity. An Awardee must certify that it has adopted and 
implemented a cybersecurity risk mitigation and remediation plan that 
is consistent with prudent utility practice. Additionally, the Awardee 
must certify that such cybersecurity risk mitigation and remediation 
plan is in effect at the time of each advance request.
    (j) General Provisions. Unless otherwise stated in this notice or 
in the loan documents, a PACE loan will be governed by the municipal 
rate loan provisions contained in 7 CFR parts 1710, 1714, and 1721.
    (k) Funding Disbursements and Restriction.
    (1) General. RUS will disburse funds to the Awardee in accordance 
with the terms of the Award documents. All Award funds will be 
disbursed as a reimbursement for eligible program costs after the 
Project is complete, and its performance verified in a manner that is 
sufficient to RUS. RUS reserves the right to consider requests to 
disburse funds prior to completion of the Project by Awardees with 
System Loans. Pursuant to Section 22001 of the IRA, the Award 
agreements must contain a provision that requires the advance of all 
loan funds on or before September 30, 2031. All undisbursed funds as of 
close of business on September 30, 2031, will automatically be 
rescinded; however, the Agency will set a last day for advance in the 
Award agreements well in advance of the statutory limit.
    (2) Advances and Loan Forgiveness Information. RUS will disburse 
Award funds to the Awardee after the Awardee has satisfied all 
conditions of its Award agreement with respect to the release of funds. 
This may include, but not be limited to, certain milestone conditions 
being achieved during construction to the satisfaction of RUS or the 
results of any required performance testing of the Project that RUS has 
reviewed and determined to be acceptable. RUS will

[[Page 31241]]

forgive the portion of the loan specified in the Award agreement at the 
time RUS disburses the Award proceeds if the Awardee demonstrates to 
RUS' satisfaction that the Project is functioning as represented in the 
PACE Application. The maximum loan forgiveness amount for each loan 
forgiveness category is described in Section B.6 of this notice.
    If, however, RUS determines after having forgiven a portion of the 
loan that the Awardee is no longer in compliance with the terms of the 
Award agreement, RUS will require the Awardee to repay the entire PACE 
loan in full.
    (3) Signage. The Awardee is encouraged to display USDA standard 
infrastructure investment signage, available for download from the 
Agency, during construction of the Project. Expenditures for such 
signage shall be a permitted eligible cost of the Project.
    2. Administrative and National Policy Requirements. The items 
listed in this notice implement the appropriate administrative and 
national policy requirements, which include but are not limited to:
    (a) Execution of a PACE loan agreement and related loan documents;
    (b) Compliance with policies, guidance, and requirements as 
described in Section A.2 of this notice, and any successor regulations.
    (c) Except as provided in the notice and in the executed loan 
agreements, all other generally applicable regulations contained in 7 
CFR parts 1700-1730, 1767, 1773, and 1787, and 7 CFR part 1970 will 
apply to PACE loans, as well as relevant Bulletins published by the RUS 
Electric Program.
    As required by 7 U.S.C. 8103(f), the Projects financed through the 
PACE Program will be subject to the Wage Rate Requirements (formerly 
Davis-Bacon Act) prevailing wage requirements contained in Subchapter 
IV of Chapter 31 of Title 40 of the United States Code and the 
Department of Labor's implementing regulations contained in 29 CFR 
parts 1, 3, and 5.
    (d) Pursuant to the Defense Production Act of 1950 and the Foreign 
Investment Risk Review Modernization Act of 2018, RUS will require PACE 
Applicants to disclose any foreign person or foreign entity that has an 
ownership, management rights, or voting interesting in the PACE 
Applicant or the Project.
    3. Reporting.
    (a) Performance Reporting. RUS will establish periodic reporting 
requirements that will be outlined in the Award documents.
    (b) Accounting Requirements. Awardees must comply with Accounting 
Principles Generally Accepted in the United States, (GAAP), as well as 
compliance with the requirements of the applicable regulations: 2 CFR 
part 200 subpart E Cost Principles, 48 CFR 31 Federal Acquisition 
Regulations Contract Cost Principles, and the system of accounting 
prescribed by 7 CFR part 1767 Accounting Requirements for RUS Electric 
Borrowers.
    (c) Audit Requirements. Awardees will be required to prepare and 
furnish to RUS audits as follows:
    (1) Awardees that are Non-Federal Entities shall provide RUS with 
an audit pursuant to 2 CFR part 200, subpart F, Audit Requirements. The 
Non-Federal Entity Awardee must follow subsection 2 CFR 200.502 in 
determining federal awards expended.
    All RUS loans impose an ongoing compliance requirement for the 
purpose of determining federal awards expended during a fiscal year. In 
addition, the Awardee must include the value of new federal loans made 
along with any grant expenditures from all federal sources during the 
Awardee's fiscal year. Therefore, the audit submission requirement for 
this program begins in the Awardee's fiscal year that the loan is made 
and thereafter, based on the balance of federal loan(s) at the 
beginning of the audit period. All required audits must be submitted 
within the earlier of:
    (i) 30 calendar days after receipt of the auditor's report; or
    (ii) nine months after the end of the Awardee's audit period.
    (2) For all other entities, Awardees shall provide RUS with an 
audit within 120 days after the as of audit date in accordance with 7 
CFR part 1773. Note that with respect to advances that contain loan 
funds, the audit is required after an advance has been made, and, 
thereafter, from the close of each subsequent fiscal year until the 
loan is repaid in full. While an audit is required, Awardees must also 
submit a report on compliance and internal controls over financial 
reporting, as well as a report on compliance with aspects of 
contractual agreements and regulatory requirements.
    (d) Monitoring Requirements. Awardees must comply with all 
reasonable RUS requests to support ongoing monitoring efforts. Awardees 
must afford RUS, through their representatives, a reasonable 
opportunity, at all times during business hours and upon prior notice, 
to have access to and the right to inspect any or all books, records, 
accounts, invoices, contracts, leases, payrolls, timesheets, cancelled 
checks, statements, and other documents, electronic or paper of every 
kind belonging to or in possession of the Awardee or in any way 
pertaining to its property or business, including its parents, 
affiliates, and subsidiaries, if any, and to make copies or extracts 
therefrom. Failure to comply with reasonable RUS requests could result 
in a termination of the Award agreement.

G. Federal Awarding Agency Contact(s)

    For general questions about this announcement, please contact the 
point of contact listed in the FOR FURTHER INFORMATION CONTACT Section 
of this notice.

H. Build America, Buy America Requirements

    Infrastructure Project Awards under this announcement must meet the 
following domestic preference requirements:
    1. Funding to Non-Federal Entities. Awardees that are Non-Federal 
Entities shall be governed by the requirements of Section 70914 of the 
Build America, Buy America Act (BABAA) within the Infrastructure 
Investment and Jobs Act (IIJA), and its implementing regulations. The 
Act requires the following Buy America preference:
    (a) All iron and steel used in the Project are produced in the 
United States. This means all manufacturing processes, from the initial 
melting stage through the application of coatings, occurred in the 
United States.
    (b) All manufactured products used in the Project are produced in 
the United States. This means the manufactured product was manufactured 
in the United States, and the cost of the components of the 
manufactured product that are mined, produced, or manufactured in the 
United States is greater than 55 percent of the total cost of all 
components of the manufactured product, unless another standard for 
determining the minimum amount of domestic content of the manufactured 
product has been established under applicable law or regulation.
    (c) All construction materials (excludes cement and cementitious 
materials, aggregates such as stone, sand, or gravel, or aggregate 
binding agents or additives) are manufactured in the United States. 
This means that all manufacturing processes for the construction 
material occurred in the United States.
    BABAA only applies to articles, materials, and supplies that are 
consumed in, incorporated into, or affixed to an infrastructure 
project. As such, it does not apply to tools,

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equipment, and supplies, such as temporary scaffolding, brought to the 
construction site and removed at or before the completion of the 
infrastructure project. Nor does BABAA apply to equipment and 
furnishings, such as movable chairs, desks, and portable computer 
equipment, that are used at or within the finished infrastructure 
project. Any requests for waiver of these requirements must be 
submitted pursuant to USDA's guidance available online at https://www.usda.gov/ocfo/federal-financial-assistance-policy/USDABuyAmericaWaiver.
    2. Funding to all other entities. All other Awardees shall be 
governed by the Agency's Buy American requirement at 7 CFR part 1787. 
For purposes of BABAA compliance, for-profit organizations are not 
considered Non-Federal Entities. However, this does not alter 
independent statutory authorities that USDA may have to include 
domestic content requirements in awards of Federal financial assistance 
issued to for-profit organizations. Any requests for waiver of these 
requirements must be submitted pursuant to those regulations.

I. Other Information

    1. Administrative Procedure Act Statement. This notice is being 
issued without advance rulemaking or public comment. The Administrative 
Procedure Act of 1946 (APA), as amended (5 U.S.C. 553), has several 
exemptions to rulemaking requirements. Among them is an exception for a 
matter relating to ``loans, grants, benefits, or contracts.''
    2. Congressional Review Act Statement. Pursuant to Subtitle E of 
the Small Business Regulatory Enforcement Fairness Act of 1996 (also 
known as the Congressional Review Act or CRA); 5 U.S.C. 801 et seq., 
the Office of Information and Regulatory Affairs in the Office of 
Management and Budget designated this action as a major rule as defined 
by 5 U.S.C. 804(2), because it is likely to result in an annual effect 
on the economy of $100,000,000 or more. Accordingly, there is a 60-day 
delay in the effective date of this action, and the Agency will not 
take action on LOIs until the later of 60 days after notification to 
Congress or July 17, 2023. The 60-day delay required by the CRA is not 
expected to have a material impact upon the administration and/or 
implementation of this program.
    3. Paperwork Reduction Act. In accordance with the Paperwork 
Reduction Act of 1995 (44 U.S.C. chapter 35), USDA requested that the 
Office of Management and Budget (OMB) conduct an emergency review of a 
new information collection that contains the Information Collection and 
Recordkeeping requirements contained in this notice.
    In addition to the emergency clearance, the regular clearance 
process is hereby being initiated to provide the public with the 
opportunity to comment under a full comment period, as the Agency 
intends to request regular approval from OMB for this information 
collection. Comments from the public on new, proposed, revised, and 
continuing collections of information help the Agency assess the impact 
of its information collection requirements and minimize the public's 
reporting burden. Comments may be submitted regarding this information 
collection through the Federal eRulemaking Portal at https://www.regulations.gov. In the ``Search for dockets and documents on 
agency actions'' box, type in the DOCKET # from this notice to submit 
or view public comments and to view supporting and related materials 
available electronically. Information on using Regulations.gov, 
including instructions for accessing documents, submitting comments, 
and viewing the docket after the close of the comment period, is 
available through the site's ``FAQ'' link. Comments on this information 
collection must be received by July 17, 2023.
    Title: Powering Affordable Clean Energy (PACE) Program.
    OMB Control Number: 0572-NEW.
    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 10.632 hours per response.
    Respondents: Private entities, governmental entities, nonprofits, 
Indian Tribes, district organizations, institutions of higher 
education.
    Estimated Number of Respondents: 200.
    Estimated Number of Responses per Respondent: 8.47.
    Estimated Number of Responses: 1,694.
    Estimated Total Annual Burden (hours) on Respondents: 18,010.
    Copies of this information collection may be obtained from 
Katherine Anne Mathis, Management Analyst, Regulatory Division, RD 
Innovation Center, telephone: 202-713-7565; 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.
    4. National Environmental Policy Act. All recipients under this 
notice are subject to the requirements of 7 CFR part 1970.
    5. Federal Funding Accountability and Transparency Act. All 
applicants, in accordance with 2 CFR part 25, must be registered in SAM 
and have a UEI number as stated in Section D.3 of this notice. All 
recipients of Federal financial assistance are required to report 
information about first-tier sub-awards and executive total 
compensation in accordance with 2 CFR part 170.
    6. Wage Rate Requirements. As provided in 7 U.S.C. 8103(f) all 
Projects funded under the PACE Program, as a condition of receiving a 
grant or loan under this Section, an eligible entity shall ensure that 
all laborers and mechanics employed by contractors or subcontractors in 
the performance of construction work financed, in whole or in part, 
with the grant or loan, as the case may be, shall be paid wages at 
rates not less than those prevailing on similar construction in the 
locality, as determined by the Secretary of Labor in accordance with 40 
U.S.C. 31, Sections 3141 through 3144, 3146, and 3147.
    7. Civil Rights Act. All grants made under this notice are subject 
to Title VI of the Civil Rights Act of 1964 as required by the USDA in 
7 CFR part 15, subpart A (eCFR:: 7 CFR part 15 Subpart A--
Nondiscrimination in Federally-Assisted Programs of the Department of 
Agriculture--Effectuation of Title VI of the Civil Rights Act of 1964) 
and Section 504 of the Rehabilitation Act of 1973, Title VIII of the 
Civil Rights Act of 1968, Title IX, Executive Order 13166 (Limited 
English Proficiency), Executive Order 11246, and the Equal Credit 
Opportunity Act of 1974.
    8. Nondiscrimination Statement. In accordance with Federal civil 
rights laws and the USDA civil rights regulations and policies, the 
USDA, its Mission Areas, agencies, staff offices, employees, and 
institutions participating in or administering USDA programs are 
prohibited from discriminating based on race, color, national origin, 
religion, sex, gender identity (including gender expression), sexual 
orientation, disability, age, marital status, family/parental status, 
income derived from a public assistance program, political beliefs, or 
reprisal or retaliation for prior civil rights activity, in any program 
or activity conducted or funded by USDA (not all bases apply to all 
programs). Remedies and complaint filing deadlines vary by program or 
incident.
    Program information may be made available in languages other than

[[Page 31243]]

English. Persons with disabilities who require alternative means of 
communication to obtain program information (e.g., Braille, large 
print, audiotape, American Sign Language) should contact the 
responsible Mission Area, agency, or staff office; the USDA TARGET 
Center at (202) 720-2600 (voice and TTY); or the 711 Relay Service.
    To file a program discrimination complaint, a complainant should 
complete a Form AD-3027, USDA Program Discrimination Complaint Form, 
which can be obtained online at https://www.usda.gov/sites/default/files/documents/ad-3027.pdf from any USDA office, by calling (866) 632-
9992, or by writing a letter addressed to USDA. The letter must contain 
the complainant's name, address, telephone number, and a written 
description of the alleged discriminatory action in sufficient detail 
to inform the Assistant Secretary for Civil Rights (ASCR) about the 
nature and date of an alleged civil rights violation. The completed AD-
3027 form or letter must be submitted to USDA by:
    (1) Mail: U.S. Department of Agriculture, Office of the Assistant 
Secretary for Civil Rights, 1400 Independence Avenue SW, Washington, DC 
20250-9410; or
    (2) Fax: (833) 256-1665 or (202) 690-7442; or
    (3) Email: [email protected].
    USDA is an equal opportunity provider, employer, and lender.

Andrew Berke,
Administrator, Rural Utilities Service, USDA Rural Development.
[FR Doc. 2023-10388 Filed 5-15-23; 8:45 am]
BILLING CODE P