II 112th CONGRESS 2d Session S. 2216 IN THE SENATE OF THE UNITED STATES March 21, 2012 Mr. Merkley (for himself and Mr. Lugar) introduced the following bill; which was read twice and referred to the Committee on Agriculture, Nutrition, and Forestry A BILL To amend the Farm Security and Rural Investment Act of 2002 to authorize the Secretary of Agriculture to make loans to certain entities that will use the funds to make loans to consumers to implement cost-effective energy efficiency measures to promote energy cost savings and rural development.

1.

Short title

This Act may be cited as the Rural Energy Savings Program Act.

2.

Rural energy savings program

Subtitle E of title VI of the Farm Security and Rural Investment Act of 2002 (Public Law 107–71; 116 Stat. 424) is amended by adding at the end the following:

6407.

Rural energy savings program

(a)

Purpose

The purpose of this section is to create jobs, promote rural development, and help rural families and small businesses achieve cost savings by providing loans to qualified consumers to implement durable cost-effective energy efficiency measures. (b)

Definitions

In this section: (1)

Eligible entity

The term eligible entity means— (A)any public power district, public utility district, or similar entity, or any electric cooperative described in section 501(c)(12) or 1381(a)(2) of the Internal Revenue Code of 1986, that borrowed and repaid, prepaid, or is paying an electric loan made or guaranteed by the Rural Utilities Service (or any predecessor agency); (B)any entity primarily owned or controlled by one or more entities described in subparagraph (A); or (C)any other entity that is an eligible borrower of the Rural Utility Service, as determined under section 1710.101 of title 7, Code of Federal Regulations (or a successor regulation). (2)

Energy efficiency measures

The term energy efficiency measures means, for or at property served by an eligible entity, structural improvements and investments in cost-effective, commercial technologies to increase energy efficiency. (3)

Qualified consumer

The term qualified consumer means a consumer served by an eligible entity that has the ability to repay a loan made under subsection (d), as determined by the eligible entity. (4)

Secretary

The term Secretary means the Secretary of Agriculture, acting through the Administrator of the Rural Utilities Service. (c)

Loans to Eligible Entities

(1)

In general

Subject to paragraph (2), the Secretary shall make loans to eligible entities that agree to use the loan funds to make loans to qualified consumers for the purpose of implementing energy efficiency measures. (2)

Requirements

(A)

In general

As a condition of receiving a loan under this subsection, an eligible entity shall— (i)establish a list of energy efficiency measures that is expected to decrease energy use or costs of qualified consumers; (ii)prepare an implementation plan for use of the loan funds, including use of any interest to be received pursuant to subsection (d)(1)(A); (iii)provide for appropriate measurement and verification to ensure— (I)the effectiveness of the energy efficiency loans made by the eligible entity; and (II)that there is no conflict of interest in carrying out this section; and (iv)demonstrate expertise in effective use of energy efficiency measures at an appropriate scale. (B)

Revision of list of energy efficiency measures

Subject to the approval of the Secretary, an eligible entity may update the list required under subparagraph (A)(i) to account for newly available efficiency technologies. (C)

Existing energy efficiency programs

An eligible entity that, at any time before the date that is 60 days after the date of enactment of this section, has established an energy efficiency program for qualified consumers may use an existing list of energy efficiency measures, implementation plan, or measurement and verification system of that program to satisfy the requirements of subparagraph (A) if the Secretary determines the list, plan, or systems are consistent with the purposes of this section. (3)

No interest

A loan under this subsection shall bear no interest. (4)

Repayment

With respect to a loan under paragraph (1)— (A)the term shall not exceed 20 years from the date on which the loan is closed; and (B)except as provided in paragraph (6), the repayment of each advance shall be amortized for a period not to exceed 10 years. (5)

Amount of advances

Any advance of loan funds to an eligible entity in any single year shall not exceed 50 percent of the approved loan amount. (6)

Special advance for start-up activities

(A)

In general

In order to assist an eligible entity in defraying the appropriate start-up costs (as determined by the Secretary) of establishing new programs or modifying existing programs to carry out subsection (d), the Secretary shall allow an eligible entity to request a special advance. (B)

Amount

No eligible entity may receive a special advance under this paragraph for an amount that is greater than 4 percent of the loan amount received by the eligible entity under paragraph (1). (C)

Repayment

Repayment of the special advance— (i)shall be required during the 10-year period beginning on the date on which the special advance is made; and (ii)at the election of the eligible entity, may be deferred to the end of the 10-year period. (7)

Limitation

All special advances shall be made under a loan described in paragraph (1) during the first 10 years of the term of the loan. (d)

Loans to qualified consumers

(1)

Terms of loans

Loans made by an eligible entity to qualified consumers using loan funds provided by the Secretary under subsection (c)— (A)may bear interest, not to exceed 3 percent, to be used for purposes that include— (i)to establish a loan loss reserve; and (ii)to offset personnel and program costs of eligible entities to provide the loans; (B)shall finance energy efficiency measures for the purpose of decreasing energy usage or costs of the qualified consumer by an amount that ensures, to the maximum extent practicable, that a loan term of not more than 10 years will not pose an undue financial burden on the qualified consumer, as determined by the eligible entity; (C)shall not be used to fund purchases of, or modifications to, personal property unless the personal property is or becomes attached to real property (including a manufactured home) as a fixture; (D)shall be repaid through charges added to the electric bill for the property for, or at which, energy efficiency measures are or will be implemented, on the condition that this requirement does not prohibit— (i)the voluntary prepayment of a loan by the owner of the property; or (ii)the use of any additional repayment mechanisms that are— (I)demonstrated to have appropriate risk mitigation features, as determined by the eligible entity; or (II)required if the qualified consumer is no longer a customer of the eligible entity; and (E)shall require an energy audit by an eligible entity to determine the impact of proposed energy efficiency measures on the energy costs and consumption of the qualified consumer. (2)

Contractors

In addition to any other qualified general contractor, eligible entities may serve as general contractors. (e)

Contract for measurement and verification, training, and technical assistance

(1)

In general

Not later than 90 days after the date of enactment of this section, the Secretary— (A)shall establish a plan for measurement and verification, training, and technical assistance of the program; and (B)may enter into one or more contracts with a qualified entity for the purposes of— (i)providing measurement and verification activities; and (ii)developing a program to provide technical assistance and training to the employees of eligible entities to carry out this section. (2)

Use of subcontractors authorized

A qualified entity that enters into a contract under paragraph (1) may use subcontractors to assist the qualified entity in carrying out the contract. (f)

Fast Start demonstration projects

(1)

In general

The Secretary shall offer to enter into agreements with eligible entities (or groups of eligible entities) that have energy efficiency programs described in subsection (c)(2)(C) to establish an energy efficiency loan demonstration projects consistent with the purposes of this section. (2)

Evaluation criteria

In determining which eligible entities to award loans under this section, the Secretary shall take into consideration eligible entities that— (A)implement approaches to energy audits and investments in energy efficiency measures that yield measurable and predictable savings; (B)use measurement and verification processes to determine the effectiveness of energy efficiency loans made by eligible entities; (C)include training for employees of eligible entities, including any contractors of such entities, to implement or oversee the activities described in subparagraphs (A) and (B); (D)provide for the participation of a majority of eligible entities in a State; (E)reduce the need for generating capacity; (F)provide efficiency loans to— (i)in the case of a single eligible entity, not fewer than 20,000 consumers; or (ii)in the case of a group of eligible entities, not fewer than 80,000 consumers; and (G)serve areas in which, as determined by the Secretary, a large percentage of consumers reside— (i)in manufactured homes; or (ii)in housing units that are more than 50 years old. (3)

Deadline for implementation

To the maximum extent practicable, the Secretary shall enter into agreements described in paragraph (1) by not later than 90 days after the date of enactment of this section. (4)

Effect on availability of loans nationally

Nothing in this subsection shall delay the availability of loans to eligible entities on a national basis beginning not later than 180 days after the date of enactment of this section. (5)

Additional demonstration project authority

(A)

In general

The Secretary may conduct demonstration projects in addition to the project required by paragraph (1). (B)

Inapplicability of certain criteria

The additional demonstration projects may be carried out without regard to subparagraphs (D), (F), or (G) of paragraph (2). (g)

Additional authority

The authority provided in this section is in addition to any other authority of the Secretary to offer loans under any other law. (h)

Effective Period

Subject to the availability of funds and except as otherwise provided in this section, the loans and other expenditures required to be made under this section shall be available until expended, with the Secretary authorized to make new loans as loans are repaid. (i)

Regulations

(1)

In general

Except as otherwise provided in this subsection, not later than 180 days after the date of enactment of this section, the Secretary shall promulgate such regulations as are necessary to implement this section. (2)

Procedure

The promulgation of the regulations and administration of this section shall be made without regard to— (A)the Statement of Policy of the Secretary of Agriculture effective July 24, 1971 (36 Fed. Reg. 13804), relating to notices of proposed rulemaking and public participation in rulemaking; and (B)chapter 35 of title 44, United States Code (commonly known as the Paperwork Reduction Act). (3)

Congressional review of agency rulemaking

In carrying out this section, the Secretary shall use the authority provided under section 808 of title 5, United States Code. (4)

Interim regulations

Notwithstanding paragraphs (1) and (2), to the extent regulations are necessary to carry out any provision of this section, the Secretary shall implement such regulations through the promulgation of an interim rule.

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