[Federal Register Volume 81, Number 119 (Tuesday, June 21, 2016)]
[Notices]
[Pages 40262-40272]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-14617]


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DEPARTMENT OF AGRICULTURE

Rural Utilities Service


Announcement of Loan Application Procedures, and Deadlines for 
the Rural Energy Savings Program (RESP)

AGENCY: Rural Development, Rural Utilities Service, USDA.

ACTION: Notice of Solicitation for Applications (NOSA); the RESP 
Application Process and Deadlines.

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SUMMARY: The Rural Utilities Service (RUS), an agency of the United 
States Department of Agriculture (USDA), is soliciting letters of 
intent for loan applications under the Rural Energy

[[Page 40263]]

Savings Program (RESP), announcing the application process for those 
loans and deadlines for applications from eligible entities. These 
loans are made available under the authority of Section 6407 of the 
Farm Security and Rural Investment Act of 2002, as amended, (Section 
6407). This notice describes the eligibility requirements, the 
application process and deadlines, the criteria that will be used by 
RUS to assess Applicants' creditworthiness, and how to obtain 
application materials.

DATES: The application process consists of two steps. To be considered 
for this funding, Applicants must submit their documentation no later 
than the mandatory dates set forth herein. Failure to comply with both 
of the following deadlines will prevent RUS from considering the 
Applicant for financial assistance in FY 2016.
    Step 1: To be considered for financing in this fiscal year, an 
Applicant seeking financing must submit a Letter of intent to apply, as 
provided herein, in an electronic Portable Document Format (PDF) by 
electronic mail (email) to [email protected] no later than 11:59 p.m. 
(EST) on August 5, 2016. Late or incomplete Letters of Intent will not 
be considered by RUS.
    Step 2: An RESP Applicant that has been invited in writing by RUS 
to proceed with the loan application, as provided in this NOSA, will 
have up to sixty (60) calendar days to complete the documentation for a 
complete application. The sixty (60) day timeframe will begin from the 
date the RESP Applicant receives an email with RUS' Invitation to 
proceed. If the deadline to submit the completed application falls on 
Saturday, Sunday, or a Federal holiday, the application is due the next 
business day. Instructions on how to electronically submit the loan 
application package will be included in the RUS Invitation to proceed 
to the RESP Applicant.

ADDRESSES: Copies of this NOSA and other information on the Rural 
Energy Savings Program may be obtained by:
    (1) Contacting Titilayo Ogunyale at (202) 720-0736 to request a 
copy of this Notice.
    (2) Sending an electronic mail (email) to 
[email protected]. The email must be identified as RESP 
Notice of Solicitation for Applications in the subject field.
    (3) The Letter of intent must be submitted by the Applicant in an 
electronic PDF (PDF) not to exceed 10 Megabytes (10 MB) by electronic 
mail (email) to [email protected] on or before the deadline set forth 
herein. No paper letters of intent will be accepted.
    (4) The completed loan application package must be submitted 
electronically following the instructions that will be outlined in the 
RUS Invitation to proceed to the RESP Applicant. The loan application 
package must be marked with the subject line ``Attention: Titilayo 
Ogunyale, Senior Advisor; RESP Loan Application.''

FOR FURTHER INFORMATION CONTACT: Titilayo Ogunyale, Senior Advisor, 
Office of the Administrator, Rural Utilities Service, Rural 
Development, United States Department of Agriculture, 1400 Independence 
Avenue SW., STOP 1510, Room 5136-S, Washington DC 20250-1510; 
Telephone: (202) 720-0736; Email: [email protected].

SUPPLEMENTARY INFORMATION: 

Overview

    Federal Agency: Rural Utilities Service (RUS), USDA.
    Funding Opportunity Title: Rural Energy Savings Program (RESP).
    Announcement Type: Requests for Letter of intent and Applications.
    Catalog of Federal Domestic Assistance (CFDA) No.: 10.751.
    Dates: Submit the Letter of intent on or before August 5, 2016 and 
the completed loan application package on or before sixty (60) days 
from the receipt date of a written RUS Invitation to proceed.

Administrative Procedure Act Statement

    This NOSA is being issued without advance rulemaking or public 
comment. The Administrative Procedure Act of 1946, as amended (5 U.S.C. 
553) (APA), has several exemptions to rulemaking requirements. Among 
them is an exception for a matter relating to ``loans, grants, 
benefits, or contracts.'' Furthermore, the 30 day effective date policy 
is excepted for ``good cause.''
    USDA has determined, consistent with the APA that making these 
funds available under this NOSA for the RESP program is in the public 
interest since the Consolidated Appropriations Act, 2016, (Pub. L. 114-
113) appropriated a budget authority of $8,000,000 on the condition 
that the Agency launch RESP during the current fiscal year. In order to 
do this, the Agency decided to move forward with developing procedures 
for RESP within a NOSA instead of rulemaking in order to meet the 
statutory mandate to implement this new program. The Agency intends to 
test this new program this year with available funds under this NOSA 
and implement a permanent rule based on its findings.

Information Collection and Recordkeeping Requirements

    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
chapter 35), OMB approved an emergency information collection request 
on RESP so RUS can begin the application period in the timeframe noted 
in this notice. RUS invites comments on this information collection. 
Comments on this notice of information collection must be received by 
August 22, 2016.
    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 assumptions used; (c) ways to enhance the quality, 
utility and clarity of the information to be collected; and (d) ways to 
minimize the burden of the collection of information on those who are 
to respond, including through the use of appropriate automated, 
electronic, mechanical, or other technological collection techniques or 
other forms of information technology.
    Comments may be sent to Thomas P. Dickson, Acting Director, Program 
Development and Regulatory Analysis, USDA Rural Utilities Service, 1400 
Independence Avenue SW., STOP 1522, Room 5164, South Building, 
Washington, DC 20250-1522. Telephone: (202) 690-4492. FAX: (202) 720-
8435. Email: [email protected].
    Title: Rural Energy Savings Program.
    OMB Control No.: 0572-0151.
    Type of Request: New Collection.
    Estimate of Burden: Public reporting burden for this collection of 
information is estimated to average 6.39 hours per response.
    Respondents: For-profit institutions, Not-for-profit institutions, 
State, Local or Tribal Government.
    Estimated number of Respondents: 20.
    Estimated Number of Responses per Respondent: 10.6.
    Estimated Total Annual Burden on Respondents: 1,354.
     Copies of this information collection can be obtained from Rebecca 
Hunt, Program Development and Regulatory Analysis, at (202) 205-3660, 
FAX (202) 720-8435 or email: [email protected].
    Abstract: The collection of information consists of the items 
required to be submitted to the agency as part of the Letter of Intent 
and the application package. Entities seeking

[[Page 40264]]

funding under this program will have to submit applications that 
include information establishing applicant and project eligibility, 
certifications that the applicant is a legal entity in good standing 
(as applicable), and operating in accordance with the laws of the 
state(s) where the applicant has a place of business, and agreements 
that are required for similar loan programs. The collection of 
information is vital for the agency to make informed decisions 
regarding the eligibility of borrowers and to ensure that funds 
obtained from the Government under the program are used appropriately 
(e.g., used for the purposes for which the loans were awarded).

Definitions and Rules of Grammatical Construction

    For the purpose of RESP, the following terms must have the 
following meanings:
    Administrator means the Administrator of the Rural Utilities 
Service, an agency under the Rural Development mission area of the 
United States Department of Agriculture.
    Applicant means an Eligible entity interested in applying for a 
RESP that is planning to submit a Letter of intent.
    Commercially available technology means 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.
    Complete application means an application containing all 
information required by RUS to approve a loan and that is materially 
complete in form and substance satisfactory to RUS within the specified 
time.
    Conditional commitment letter means the notification issued by the 
Administrator to an RESP Applicant advising it of the total loan amount 
approved for it as a RESP borrower, the acceptable security 
arrangement, and such controls and conditions on the RESP borrower'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 transaction.
    Conflict of interest means a situation or situations, event or 
series of events, that jointly or severely undermines an individual's 
judgement, ability, or commitment to providing an accurate, unbiased, 
fair and reliable assessment or determination about the cost-
effectiveness of the Energy efficiency measures due to self-interest or 
cannot be justified by the prevailing and sound application of the 
generally accepted standards and principles of the industry.
    Eligible entity means an entity described in section C.1. of this 
NOSA.
    Energy audit means an inspection and analysis of energy flows in a 
building, process, or system with the goal of identifying opportunities 
to enhance energy efficiency. The activity should result in an 
objective standard-based technical report containing recommendations on 
the Energy efficiency measures to reduce energy costs or consumption of 
the Qualified consumer and an analysis of the estimated benefits and 
costs of pursuing each recommendation in a payback period not to exceed 
10 years.
    Energy efficiency measures means for or at property served by an 
Eligible entity, structural improvements and investments in cost-
effective, commercially available technologies to increase energy 
efficiency. The improvements and investments must be for the purpose of 
decreasing the Qualified consumer's energy usage or costs.
    Energy efficiency program (EE Program) means a program set up by an 
Eligible entity to provide financing to Qualified consumers so that 
they can reduce their energy use or costs by implementing energy 
efficiency measures.
    Financial feasibility means an Eligible entity's ability 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.
    Invitation to proceed means the written notification issued by RUS 
to the Eligible entity acknowledging that the Letter of intent was 
received and reviewed, describing the next steps in the application 
process and inviting the Eligible entity to submit a complete 
application.
    Letter of intent means a signed letter issued by an Applicant of 
notifying RUS of its intent to apply for a RESP loan and addressing all 
the elements identified in section D.2.a. of this NOSA.
    Qualified consumer means a consumer served by an Eligible entity 
that has the ability to repay a loan made by an RESP borrower under the 
RESP program, as determined by the Eligible entity.
    RESP applicant means an Eligible entity that has received a written 
Invitation to proceed from RUS to apply for a RESP loan.
    RESP borrower means an Eligible entity with an approved RESP loan.
    Small business means an entity that is in accordance with the Small 
Business Administration's (SBA) small business size standards found in 
13 CFR part 121.
    Special advance means an advance, not to exceed 4 percent of the 
total approved loan amount, that a RESP borrower may request to defray 
the start-up costs of establishing a new EE Program.
    Start-up costs mean amounts paid or incurred for: (a) Creating or 
implementing an active energy efficiency program; or (b) investing in 
the integration of an active energy efficiency program. Start-up costs 
may include, but are not limited to, amounts paid or incurred in the 
analysis or survey of potential markets, products such as software and 
hardware, labor supply, consultants, salaries and other working capital 
directly related to creation or enhancement of an energy efficiency 
program consistent with RESP.
    With regard to the rules of grammatical construction, unless the 
context otherwise indicates, ``includes'' and ``including'' are not 
limiting, and ``or'' is not exclusive.

Additional Items in Supplementary Information

A. Program Description
B. Federal Award Information
C. Eligibility Information
D. Application and Submission Information
E. Agency Review of Letter of Intent and Loan Application
F. Federal Award Administration Information
G. Federal Awarding Agency Contact
H. Other Information

A. Program Description

    The USDA through the Rural Utilities Service (RUS) provides RESP 
loans to Eligible entities that agree to, in turn, make loans to 
Qualified consumers for the purpose of implementing Energy efficiency 
measures. These loans are made available under the authority of Section 
6407. Eligible Energy efficiency measures funded under this NOSA must 
be for or at a property or properties served by an RESP borrower, using 
commercially available technologies that would allow Qualified 
consumers

[[Page 40265]]

to decrease their energy use or costs through cost-effective measures 
including structural improvements to the property. Loans made by RESP 
borrowers under this program may be repaid through charges added to the 
Qualified consumer's bill for the property or properties for, or at 
which, energy efficiencies are or will be implemented. The purpose of 
the program is to help rural families and small businesses achieve cost 
savings by providing loans to Qualified consumers to implement durable 
cost-effective Energy efficiency measures.
    It is to be noted that RESP and the Energy Efficiency and 
Conservation Loan Program (EECLP), 7 CFR 1710 Subpart H, are two 
separate energy efficiency programs that are both operated by RUS. 
These programs are distinct, however, the re-lending provisions of RESP 
are targeted at directly supporting EE actions undertaken by a more 
specific set of Qualified consumers. An additional distinction is that 
because the EECLP loan program level is anticipated at being 
significantly higher than that of RESP, entities seeking larger EE 
loans can pursue funding through EECLP. Also, applicants to RESP need 
not be utilities as in the case for EECLP. As a result, RUS anticipates 
that the primary applicants for RESP will be cooperatives with smaller-
scale EE programs and non-traditional borrowers seeking lower loan 
levels that what is typically sought through EECLP.

B. Federal Award Information

    Type of Award: Loan.
    Fiscal Year 2016 Funds: $8,000,000 in budget authority with the 
loan program level yet to be determined.
    Authority: RESP is a new program to be carried out by the Rural 
Utilities Service pursuant to Section 6407 of the Farm Security and 
Rural Investment Act of 2002, 7 U.S.C. 8107a, as amended; and Section 
744, Title VII, Division A of the Consolidated Appropriations Act of 
2016, Public Law 114-113, December 18, 2015.

C. Eligibility Information

1. Eligible Entities Include

    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 1 or more entities 
described in section C.1.a. of this NOSA; and
    c. Any other entity that is an eligible borrower of the Rural 
Utilities Service, as determined under 7 CFR 1710.101.

2. Equity Contributions

    a. To be eligible for a RESP loan, a newly created Eligible entity 
or an entity primarily owned or controlled by one (1) or more entities 
described in section C.1.a. of this NOSA must have a minimum equity 
position in the EE Program proposed to be funded with RESP at the time 
of the loan closing. The required equity position will be determined by 
the Administrator on a case-by-case basis based upon review of the risk 
profile of the Eligible entity and other security arrangements.
    b. If the Administrator determines that the RESP Applicant under 
this section does not have acceptable equity, in the Energy Efficiency 
Program at the time of application, the Administrator may consider the 
following to meet such shortfall regarding equity:
    i. The infusion of additional capital into the Energy efficiency 
program by an Investor to meet any shortfall. RUS may require that the 
additional capital be deposited into a RESP Applicant's special account 
subject to a deposit account control agreement with RUS prior to loan 
closing.
    ii. An unconditional, irrevocable letter of credit satisfactory to 
the Administrator in the amount of the shortfall. RUS must be an 
unconditional payee under the letter of credit and the letter of credit 
must be in place prior to loan closing and remain in place until the 
loan is repaid.
    iii. General obligation bonds issued by tribal, state or local 
governments in the amount of the shortfall. If the equity requirement 
is satisfied with general obligation bonds, any lien securing the bonds 
must be subordinate to the lien of the government securing the RESP 
loan.
    iv. Any other equity requirements determined necessary by the 
Administrator to meet the shortfall.

3. Other

    An Applicant may not submit more than one application in this 
funding cycle for the same EE Program. However, one or more Eligible 
entities may submit their applications using the same EE Program model.

D. Application and Submission Information

1. Sample Letter of Intent

    Interested parties may send an email to the contact listed in FOR 
FURTHER INFORMATION CONTACT section of this NOSA to obtain an 
electronic sample of the Letter of intent. The sample Letter of intent 
can also be found online using the following web address: http://www.rd.usda.gov/resp/.

2. Content of Letter of Intent and RESP Application

    Complete applications for loans to Eligible entities under this 
NOSA will be processed on a first-come-first-serve basis (queue) until 
funds appropriated to carry out RESP are expended. Applicants must 
submit the required information for Step 1, ``Letter of intent,'' (see 
paragraph a below), and upon a written Invitation to proceed from RUS 
must submit the required information for Step 2, ``Application,'' (see 
paragraph b). Loan applications for RESP funds will be processed in a 
two-step approach as described herein. Applicants must submit all the 
information identified in the Letter of intent ``Evaluation Criteria 
Checklist'' available online at the following web address: http://www.rd.usda.gov/resp//
    a. Step 1--Letter of intent. An Applicant interested in applying 
for a RESP loan must submit a Letter of intent to RUS. The following 
information must be included in the Letter of intent:
    i. The description of the project must not exceed five pages (size 
8.5 x 11) and must include the following:
    A. A description of the service to be provided to Qualified 
consumers.
    B. Identity of the staff or contractors that will be implementing 
the EE Program and their credentials.
    C. Implementation Plan that Briefly Addresses.
    (1) The marketing strategy.
    (2) How the Applicant will operate the relending process.
    (3) A schedule showing sources and uses of funds to implement the 
EE Program.
    (4) A brief description of the processes, procedures, and 
capabilities to quantify and verify the reduction in energy consumption 
or decrease in the energy costs of the Qualified consumers.
    D. A List of Eligible Energy Efficiency Measures that will be 
Implemented.
    ii. The Applicant must submit a copy of its balance sheet for the 
last 3 years. If applicable, the Applicant must provide the balance 
sheet for the last 3 years of the entity or entities providing equity 
or security for the RESP loan together with an explanation of the legal 
relationship among the legal entities.
    iii. The Applicant must provide evidence of its performance 
measures and indicators for the 5 complete years prior to the 
submission of the loan application if the total loan amount exceeds 5 
million dollars.

[[Page 40266]]

    An Applicant with an existing EE Program in place by April 8, 2014, 
may describe the Energy efficiency measures, its implementation plan 
and its measurement and verification system for the existing program in 
its Letter of intent to expedite the application process.
    b. Step 2--Loan Application. Upon delivery of an Invitation to 
proceed, RUS will assign a General Field Representative (GFR) to assist 
the RESP Applicant during step 2 of the application process. The RESP 
Applicant's application package must include the following documents:
    i. Cover Letter. A signed cover letter from the RESP Applicant's 
General Manager or highest ranking officer requesting a RESP loan under 
this NOSA.
    ii. Board Resolution. A signed copy of the board resolution or 
applicable authorizing document approving and establishing the EE 
Program.
    iii. Environmental Compliance Agreement. A copy of the duly 
executed Multi-tier Action Environmental Compliance Agreement (Multi-
tier Agreement). A template of a Multi-tier Agreement can be found in 
Exhibit H of RD Instruction 1970-A, Environmental Policies and 
Procedures (http://www.rd.usda.gov/files/1970a.pdf). A copy of the 
Multi-tier Agreement will be provided to the RESP Applicant with the 
Invitation to proceed.
    iv. Long-Range Financial Forecast. A long-range financial forecast 
approved by the applicable governing body of the RESP Applicant in 
support of its loan application. RUS encourages RESP Applicants to 
follow the format set forth in RUS Form 325, which may be obtained from 
a GFR. The financial forecast must cover a period of at least 10 years 
and must demonstrate that the RESP Applicant's operation is 
economically viable and that the proposed loan is financially feasible. 
RUS may request projections for a longer period of time if RUS deems it 
necessary based on the financial structure of the RESP Applicant. The 
financial forecast and related projections submitted in support of a 
loan application must include:
    A. The financial goals established for margins, debt service 
coverage, equity, and levels of general funds to be invested in the EE 
Program.
    B. A pro forma balance sheet, statement of operations, and general 
funds summary projected for each year during the forecast period.
    C. A full explanation of the assumptions, supporting data, and 
analysis used in the forecast, including the methodology used to 
project revenues, rates (if applicable), operating expenses, power 
costs (if applicable), and any other factors having a material effect 
on the balance sheet and the financial ratios such as equity and debt 
service coverage. The explanation should include a discussion of the 
historical experience of the RESP Applicant with respect to its's 
market competitiveness. RUS may require additional data and analysis on 
a case-by-case basis to assess the probable future competitiveness of 
the RESP Applicant.
    D. Current and projected cash flows.
    E. Projections of future borrowings and the associated interest and 
principal expenses required to meet the projected investment 
requirements of the RESP Applicant.
    F. Current and projected kW and kWh energy sales (if applicable).
    G. Current and projected unit prices of significant variables such 
as retail and wholesale power prices, average labor costs, and interest 
(if applicable).
    H. When applicable, current and projected system operating costs, 
including, but not limited to, wholesale power costs, depreciation 
expenses, labor costs and debt service costs.
    I. Current and projected revenues from sales of services, including 
but not limited to, electric power and energy (if applicable).
    J. Current and projected non-operating income and expense.
    K. A sensitivity analysis may be required by RUS on a case-by-case 
basis taking into account such factors as the number and type of loads 
(if applicable), projections of future borrowings and the associated 
interest, projected loads, projected revenues, and probable future 
competitiveness of the RESP Applicant. RUS may request the RESP 
Applicant to factor in other elements in its sensitivity analysis.
    L. The financial forecast must use the accrual method of accounting 
for analyzing costs and revenues and, as applicable, compare the 
economic results of the various alternatives on a present value basis.
    M. When applicable, the financial forecast must include the 
expenditures for any maintenance determined to be needed in the current 
system's operation and maintenance review and evaluation in order to 
comply with the covenants in the loan documents.
    N. An itemized budget for the activities to be implemented with the 
RESP funds and a discussion on how the loan loss reserve will be set 
up.
    v. EE Program Implementation Work Plan (IWP). The RESP Applicant 
must produce, to the satisfaction of the Administrator, an IWP duly 
approved by the applicable governing body of the Eligible entity. A 
RESP Applicant may submit evidence of the credentials of a third party 
retained, or to be retained, to carry out the EE program. The statement 
of qualifications must show the party's experience carrying out the 
financial and technical expertise components of an EE program at the 
desired scale. The IWP must:
    A. Describe the expected schedule to implement the EE Program with 
an itemized allocation of expected resources including anticipated 
costs assigned to each task.
    B. Project the expected amount of loans made by the RESP Applicant 
to the Qualified consumers over the next 10 years.
    C. Identify the anticipated amount of special advance for start-up 
costs and purposes over the expected schedule to draw down the funds 
attributable to such purposes.
    D. Describe the schedule and the mechanism to fund the loan loss 
reserve. In addition, it must describe how the RESP Applicant will be 
using the revenues from the interest rate charged to the Qualified 
consumers.
    E. Only include those activities and investments in an approved 
application as provided in the Multi-tier Agreement executed between 
RUS and the RESP Applicant.
    F. Address all the following core elements:
    (1) Marketing. In this section the RESP Applicant will identify the 
qualified customers by market segment that will benefit from the 
funding available under this NOSA and explains the marketing and 
outreach efforts to be executed in implementing the relending program. 
In the identification of the marketing effort to the qualified 
customers, the RESP Applicant should provide racial and ethnic 
demographics for the service area or individuals.
    (2) Operations. In this section the RESP Applicant will describe 
its energy efficiency program and how it will operate the relending 
process. The RESP Applicant must describe the Energy efficiency 
measures that it will fund and provide an estimate of the dollar amount 
of investment for each category of investments and/or activities. The 
RESP Applicant must also identify the staff that will be implementing 
the program and whether or not it will be outsourcing some or all of 
the execution of the program. In the event that an RESP Applicant 
partners with, or outsources to a third party to carry out the EE 
Program, it must describe the roles of each one of the parties involved 
in implementing the program and how the RESP Applicant will monitor 
third

[[Page 40267]]

parties for legal and regulatory compliance. The RESP Applicant must 
describe its expertise to effectively implement Energy efficiency 
measures at the scale pursued in the EE Program funded by RESP. If the 
RESP Applicant envisions partnering with a third party or outsourcing 
the implementation of the energy efficiency loan program, it must 
adequately describe the credentials of the third party to effectively 
use Energy efficiency measures at the scale pursued in the EE Program. 
The RESP Applicant will be held accountable to RUS for actions or 
omissions of those partners or contractors, arising from or in 
connection with a program funded under this NOSA. The operational plan 
must also describe the process for documenting and perfecting 
collateral arrangements for Qualified consumer loans, if applicable.
    (3) Financials. The RESP Applicant must submit a schedule showing 
sources and uses of funds to implement the EE program. This plan must 
include an itemized budget for each activity and investment category 
necessary to carry out the EE Program including, but not limited to, 
the loan loss reserve, the expected loan delinquency and default rates. 
The RESP Applicant must describe how it is going to use the interest to 
be received from the loans to the Qualified consumers--if the RESP 
Applicant determines to charge interest. RUS may request additional 
information from an RESP Applicant in order to make its determination 
regarding loan feasibility and reasonably adequate security for the 
loan.
    (4) Measurement and Verification. The RESP Applicant must describe 
the processes, procedures, and capabilities to quantify and verify the 
reduction in energy consumption or decrease in energy costs of the 
Qualified consumers. An RESP Applicant may provide a measurement and 
verification plan approved by a state or local regulatory body or 
sponsored by a governmental entity. A measurement and verification plan 
developed and certified by an industry recognized professional or 
entity will also be acceptable. Other measurement and verification 
plans may be acceptable if the Eligible entity can support, to the 
satisfaction of the Administrator, that the protocols and methodology 
used to verify the Energy efficiency measures cost-effective using 
generally accepted industry principles and standards. An RESP Applicant 
with an existing EE Program as of April 8, 2014, may submit the 
measurement and verification plan previously established with this 
program to fulfill this requirement.
    (5) The RESP Applicant must describe the processes and procedures 
that will be put in place to avoid a Conflict of interest in the 
implementation of the energy efficiency loan program for Qualified 
consumers.
    vi. An opinion of counsel, acceptable to the Administrator, opining 
that the RESP Applicant is properly organized and has the required 
corporate authority to enter into the proposed transaction. It must 
also identify the proposed collateral to secure the RESP loan and 
certify that such collateral is free of liens or identify any issues 
that may arise for the Government regarding the securing and perfecting 
of a first and prior lien on such property comprising the collateral. 
If real property owned by the Eligible entity will collateralize the 
transaction, the counsel's opinion must include a listing of the real 
property owned by the Eligible entity, the counties where it is 
located, and must certify that the descriptions in the property 
schedule are complete and adequate for inclusion in a security 
instrument to be executed by the Eligible entity to secure the RUS 
loan.
    vii. Articles of incorporation and bylaws or other applicable 
governing and organizational documents. The RESP Applicant's articles 
of incorporation or other applicable organizational documents currently 
in effect, as filed with the appropriate state office, setting forth 
the RESP applicant's corporate purpose; and the bylaws or other 
applicable governing documents currently in effect, as adopted by the 
RESP Applicant's applicable governing body. RESP Applicants that are 
active 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.

3. Compliance With Other Federal Statutes

    The RESP Applicant must provide statement of compliance with other 
federal statutes, including but not limited to the following:
    a. Nondiscrimination in Federally Assisted Programs. 7 CFR part 15, 
subpart A, Nondiscrimination in Federally-Assisted Programs of the 
Department of Agriculture-Effectuation on Title VI of the Civil Rights 
Act of 1964, RUS Bulletin 1790-1, ``Nondiscrimination Among 
Beneficiaries of RUS Program.'' Eligible entities must complete and 
submit RUS Form 266, ``Assurance Agreement.''
    b. Standard Form 100--Equal Employment Opportunity Employer Report 
EEO--1. This form, required by the Department of Labor, sets forth 
employment data for Eligible entities with 100 or more employees. A 
copy of this form, as submitted to the Department of Labor, is to be 
included in the application for an insured loan if the Eligible entity 
has more than 100 employees.
    c. Form AD-1049--Certificate Regarding Drug Free Workplace 
Requirements. This form is required as prescribed in 2 CFR parts 182 
and 421, Requirements for Drug Free Workplace (Financial Assistance). 
Information on all of your organization's known workplaces by including 
the actual address of buildings (or parts of buildings) or other sites 
where work under the award takes place. Workplace identification is 
required under the drug-free workplace requirements in Subpart B of 2 
CFR part 421, which adopts the Government-wide implementation (2 CFR 
part 182) of the Drug-Free Workplace Act.
    d. Form AD-1047--Certification Regarding Debarment, Suspension. 
This form is required in accordance with 2 CFR part 417 (Nonprocurement 
Debarment and Suspension) supplemented by 2 CFR part 180, if it 
applies. See the section heading is ``What information must I provide 
before entering into a covered transaction with the Federal 
Government?'' located at 2 CFR 180.335.
    e. Executive Order 13166, ``Improving Access to Services for 
Persons with Limited English Proficiency.'' For information on limited 
English proficiency and agency-specific guidance, go to http://www.LEP.gov.vi. Lobbying for Grants, Loans, Contracts and Cooperative 
Agreements. The following information on lobbying is required pursuant 
to 2 CFR part 418. The RESP Applicant should consult RUS before 
submitting this information.
    f. Report on Federal debt delinquency. This report indicates 
whether or not the RESP Applicant is delinquent on any Federal debt.
    g. Certify Accounting, Auditing, and Reporting Requirements. The 
RESP Applicant must certify to RUS that it is aware of and will abide 
by the accounting, auditing, and reporting requirements as described 
within the Federal Award Administration Information section of this 
NOSA.
    h. Dun and Bradstreet Universal Numbering System (DUNS). The Dun 
and Bradstreet Universal Numbering System (DUNS Unique entity 
identifier and System for Award Management (SAM). Applicants must 
supply a Dun and Bradstreet Data Universal Numbering System (DUNS) 
number with their Letters of Intent and RESP Applicants with their loan 
application.

[[Page 40268]]

Please see http://fedgov.dnb.com/webform. RESP Applicant are required 
to be registered in SAM before submitting an application, provide a 
valid unique entity identifier in the application, and continue to 
maintain an active SAM registration with current information at all 
times during which the entity has an active Federal award or an 
application or plan under consideration by a Federal awarding agency. 
The agency may not make a Federal award to an RESP Applicant until the 
RESP Applicant has complied with all applicable unique entity 
identifier and SAM requirements. If an RESP Applicant has not fully 
complied with the requirements by the time the Federal awarding agency 
is ready to make a Federal award, the Federal awarding agency may 
determine that the RESP Applicant is not qualified to receive a Federal 
award and use that determination as a basis for making a Federal award 
to another RESP Applicant. Applicants may register for the SAM at 
http://www.sam.gov/portal/public/SAM. To remain registered in SAM, the 
Applicant must review and update the information in the SAM database 
annually from the date of initial registration or last update. 
Applicants must ensure that the information in the database is current, 
accurate, and complete.

4. Funding Restriction

    a. Loan Disbursements. RUS will disburse RESP funds to the RESP 
borrower in accordance with the terms of the executed loan agreement. 
Any disbursements of loan funds to a RESP borrower in a single year 
must not exceed 50 percent of the approved loan amount.
    i. The RESP borrower must provide to the Qualified consumers all 
RESP loan funds that the RESP borrower receives within one year of 
receiving them from RUS. If the RESP borrower does not re-lend the RESP 
loan funds within one year, the unused RESP loan funds, and any 
interest earned on those RESP loan funds, must be returned to the 
Federal Government and will be applied to the RESP borrower's debt. The 
RESP borrower will not be eligible to receive additional RESP loan 
funds from RUS until providing evidence, satisfactory to RUS, that RESP 
loan funds from a previous advance have been fully relent to Qualified 
consumers or returned to the Federal Government.
    ii. RUS will disburse the RESP loan funds in advance if the 
following requirements are met:
    A. The RESP borrower has established written procedures that will 
minimize the time elapsing between the transfer of RESP loan funds from 
RUS and their disbursement to the Qualified consumer; and (ii) the 
requests for advances made by the RESP borrower are limited to the 
minimum amounts needed and timed to be in accordance with the actual 
immediate cash needs to carry out the Energy Efficiency program.
    B. Loan term for loans to Qualified consumers. Each loan made by 
the RESP borrower to a Qualified consumer may not exceed a term of 10 
years.
    C. Unauthorized uses of funds. The RESP borrower must not finance 
the purchase or modification of personal property with proceeds from 
the RESP loan unless the personal property is or becomes attached to 
real property (including a manufactured home) as a fixture. The RESP 
borrower must keep adequate processes, procedures and records and must 
not commingle RESP funds with other sources of funding in the 
implementation of an EE Program.

5. Submission Requirements

    The application process consists of two steps. To be considered for 
funding in this fiscal year, Applicants must submit their documentation 
no later than the mandatory dates set forth above.
    a. To be considered for financing this fiscal year, an Applicant 
must submit its mandatory Letter of intent, that complies with the 
requirements in section D(2) of this NOSA, in a PDF file, not to exceed 
10 MB in size, by electronic mail (email) to [email protected] no later 
than 11:59 p.m. (EST) on August 5, 2016.
    b. By submitting the Letter of intent, the Applicant certifies to 
RUS that it has the intent of submitting a complete RESP loan 
application on or before the date set forth as the application deadline 
in the event that RUS provides an Invitation to proceed. RUS will not 
consider Letters of intent where the project description exceeds five 
(5) pages. An Invitation to proceed with the loan application sent by 
the RUS is not to be deemed as an offer by the Agency. In extending an 
Invitation to proceed to an Applicant in the queue, RUS reserves the 
right to meet overall RUS Program objectives and therefore, may notify 
the Applicant that the amount of financing to be awarded is below the 
level sought by the Applicant.
    c. Completed Loan Application. A RESP Applicant that has received 
an Invitation to proceed, as provided herein, will have up to sixty 
(60) calendar days to complete the documentation required for the loan 
application package. The 60-day timeframe will begin from the date RUS 
delivers the Invitation to proceed to the point of contact identified 
in the Letter of intent. The Administrator may grant a short extension 
of time to complete the documentation required for an application if, 
in the Administrator's sole judgment, extraordinary circumstances 
prevented the RESP Applicant from completing the application within the 
timeframe herein stipulated (60 days).
    d. Applicants and RESP Applicants have appeal or review rights for 
Agency decisions made under this NOSA. Programmatic decisions based on 
clear and objective statutory or regulatory requirements are not 
appealable; however, such decisions are reviewable for appeal ability 
by the National Appeals Division (NAD). An Applicant can appeal any 
Agency decision that directly and adversely impacts it. Appeals will be 
conducted by USDA NAD and will be handled in accordance with 7 CFR part 
11.
    e. In the event of system problems during the submittal of the 
Letter of intent please contact: Titilayo Ogunyale, Senior Advisor, 
Office of the Administrator, Rural Utilities Service, Rural 
Development, United States Department of Agriculture, 1400 Independence 
Avenue SW., STOP 1510, Room 5136-S, Washington, DC 20250-1510; 
Telephone: (202) 720-0736; Email: [email protected]. 
[INSERT CONTACT INFORMATION FOR IT SUPPORT]

E. Agency Review of Letter of Intent and Loan Application

1. Letter of Intent

    RUS will consider complete Letters of intent as they are received. 
Letters of intent will be reviewed by RUS for the following:
    a. The legal identity and status of the entity and eligibility to 
participate in RESP in accordance with section C. of this NOSA.
    b. Compliance with meeting the purpose of Section 6407 to help 
rural families and small businesses achieve cost savings by providing 
loans to Qualified consumers to implement durable cost-effective Energy 
efficiency measures.
    c. The financial status of the Applicant to determine the 
Applicant's likelihood to complete the full application.
    d. The feasibility of the project.
    e. Upon review of the Letters of Intent, RUS will issue a 
notification to the Applicant indicating the status of its application 
by stating one of the following:
    i. Acknowledgment of receipt of the Letter of intent that was 
submitted

[[Page 40269]]

before the deadline but was deemed incomplete. This notification will 
include the reasons the Letter of intent was deemed incomplete. The 
Applicant may resubmit a completed Letter of intent within the original 
deadline of this NOSA.
    ii. Acknowledgement of receipt of the Letter of intent that was 
submitted before the deadline and was deemed complete but will not be 
receiving an Invitation to proceed for the reasons cited.
    iii. Acknowledgement of receipt of the Letter of intent that was 
submitted before the deadline and was deemed complete and issuance of 
an Invitation to proceed. This Invitation to proceed will include your 
placement in the queue and identification of the RUS staff that will be 
assisting the RESP Applicant in the application process.

2. Loan Application Review

    Loans made to RESP Applicants for eligible purposes under this 
program will be made only when the Administrator, in his judgment, 
finds that there is reasonably adequate security and the loan will be 
repaid within the time agreed.
    a. Term of the loan. The loan term must not exceed 20 years from 
the date on which the loan is closed. The Administrator will only make 
a loan offer to the RESP Applicant in a Conditional commitment letter. 
Upon receipt of the acceptance of the loan offer from the RUS Borrower, 
RUS will begin to prepare the loan documents with the assistance of the 
Eligible entity. Upon completion of the loan documents, RUS will 
forward the loan documents to the RESP borrower.
    b. Loan Feasibility. Based on the complete application, RUS must 
have reasonable assurance that the loan, together with all other 
outstanding loans and other obligations of the RESP Applicant, will be 
repaid in full as scheduled, in accordance with the loan documents. RUS 
will consider the following criteria to evaluate loan feasibility:
    i. The projections of the expected amount of loans to Qualified 
consumers per year and the average size of those loans per customer 
class. Those projections must be based on reasonable assumptions and 
adequate supporting data and analysis.
    ii. The expected rates to the Qualified consumers, including 
interest rate, application fees, servicing fees and any other fees 
expected to be charged to the Qualified consumer per customer class. 
The RESP Applicant must demonstrate the basis for its anticipated 
market penetration assuming these service charges.
    iii. The projected revenues, expenses, applicable margins and any 
other financial information or any other reliable source of revenue of 
the RESP Applicant that could enable RUS to assess its ability to repay 
the loan within a term not to exceed 20 years.
    iv. Ability of the RESP borrower to meet the required coverage 
ratios. The Administrator, on case-by-case basis, may set financial 
coverage ratios based on the risk profile of the RESP Applicant and 
specific loan terms. Those financial ratios will be included in the 
RESP borrower's loan documents with RUS. Existing RUS borrowers will be 
subject to their current debt service coverage ratios in their current 
loan documents, unless notified otherwise.
    v. The economics of the RESP Applicant's operations and service 
area are such that Qualified consumers may reasonably be expected to 
pay the proposed rates repay the loans for energy efficiency in such 
levels so that the RESP borrower may sufficiently cover all its 
expenses and meet the debt service coverage ratio set by the 
Administrator.
    vi. Possible risk of reduction in electric system demand associated 
with anticipated efficiency improvements within the consolidated pool 
of Qualified consumers that could impair the RESP Applicant's ability 
to repay the RUS loan within the agreed term of the loan.
    vii. Possible risk of loss of portions of the RESP Applicant's 
business in a given area to third party competitors, or other causes 
that could substantially impair loan feasibility.
    viii. The RESP Applicant's management experience implementing EE 
Programs similar in scale and type to the one to be financed with RESP 
funds.
    ix. Supplemental sources of funding available to the RESP Applicant 
to implement the Energy efficiency program that enhance the 
creditworthiness of the RESP applicant.
    x. The RESP Applicant has implemented adequate financial and 
management controls and there are and have been no significant 
irregularities.
    xi. Any other relevant information pertaining to credit enhancement 
mechanisms available to the RESP Applicant relevant to a determination 
by RUS of creditworthiness.
    c. Loan Security. The Administrator will make loans under the RESP 
only if, in his judgement, the security is reasonably adequate. Loans 
will ordinarily be secured by a first and prior lien on substantially 
all the RESP borrower's property, and in any event will be secured by 
the best security position practicable in a manner which will 
adequately protect the interest of the Government during the repayment 
period of the loan.
    i. Liens and Lien Sharing. RUS may in certain circumstances agree 
to share its first lien position with another lender provided the RESP 
loan is adequately secured and the security arrangements are acceptable 
to RUS. In such circumstances, RUS will consider entering into joint 
security arrangements with other lenders on a pari pasu, prorated 
basis. For existing RUS borrowers, the agency may, at its sole 
discretion, rely on existing security arrangements with RUS.
    ii. Collateral. Collateral that is used to secure a loan must be 
free from liens or security interests other those permitted by RUS or 
existing security documents. RUS generally requires that borrowers 
provide it with a first priority lien on all of the borrower's real and 
personal property, including intangible personal property and any 
property acquired after the date of the loan. This lien will ordinarily 
be in the form of a mortgage by the RESP borrower to the Government or 
a deed of trust between the RESP borrower and a trustee satisfactory to 
the Administrator, together with such additional security documents as 
RUS may deem necessary in a particular case. When a RESP borrower is 
unable by reason of preexisting encumbrances, or otherwise, to furnish 
a first priority lien on its entire system, the Administrator may 
accept other forms of security, such as a parent guarantee, state 
guarantee, an irrevocable letter of credit, or a pledge of revenues if 
the Administrator determines such credit support is reasonably adequate 
and otherwise acceptable in form and substance.
    iii. The requirements for coverage ratios will be set forth in the 
RESP borrower's loan documents with RUS. The minimum coverage ratios 
required of RESP borrowers, whether applied on an annual or average 
basis will be determined by the Administrator on case-by-case based on 
the risk profile of the RESP Applicant and specific loan features. 
Existing RUS borrowers will be subject to their current debt service 
coverage ratios.
    vi. When new loan documents are executed, the Administrator may, on 
a case-by-case basis, increase the coverage ratio of the RESP borrower 
if the Administrator determines that higher ratios are required to 
ensure the repayment made by RUS. Also, the Administrator may, on a 
case-by-case basis, reduce the coverage ratios if the Administrator 
determines that the lower

[[Page 40270]]

ratios are required to ensure the repayment of the loan made by RUS.

3. Loan Terms and Conditions

    a. General. This section provides the core terms and conditions 
that RUS will apply in making loans under the RESP. The Administrator, 
at his sole discretion, may add other terms and conditions in a loan 
under this NOSA to ensure the RESP loan is timely repaid and is 
adequately secured.
    b. Loan Term. RUS will make loans to RESP Applicant under RESP for 
a term not to exceed 20 years from the date on which the loan is 
closed.
    c. Interest rate. Loans made under RESP will not bear interest (0%) 
although indebtedness not paid when due will be subject to interest, 
penalties, administrative costs and late fees as provided in the loan 
documents.
    d. Repayment. The repayment of each advance to the RESP borrower 
must be amortized for a period not to exceed 10 years. However, the 
repayment of the special advance must be during the 10-year period 
beginning on the date on which the special advance is made. A RESP 
borrower may elect to defer the repayment of the special advance to the 
end of the 10-year period. However, all amounts advanced on the loan by 
RUS to the RESP borrower must be paid prior to the final maturity which 
must not exceed 20 years.
    e. Loan Disbursements. RUS will disburse loan funds to the RESP 
borrower in accordance with the terms of the loan documents. Excluding 
the special advance for start-up activities, all loan funds will be 
disbursed either as an advance in anticipation of consumer loans to be 
made by the RESP borrower; or as a reimbursement for eligible program 
costs, including consumer loans already made, once the RESP borrower 
has complied with the loan covenants. Within a 12-month consecutive 
period, any disbursements of loan funds to an RESP borrower must not 
exceed 50 percent of the approved loan amount.
    The RESP borrower must provide to the Qualified consumers all RESP 
loan funds that the RESP borrower receives as advances from RUS within 
one year of receiving them from RUS. If the RESP borrower does not re-
lend RUS funds within one year, the unused loan funds, and any interest 
earned on those loan funds, must be returned to the government and will 
be applied to the RESP borrower's debt. The RESP borrower will not be 
eligible to receive additional loan funds, if available, from RUS until 
providing evidence, satisfactory to RUS, that loan funds from a 
previous advance have been fully relent to Qualified consumers or 
returned to the government.
    RUS will disburse the RESP loan funds for anticipated consumer 
loans if the following requirements are met: (1) The RESP borrower has 
established written procedures that will minimize the time elapsing 
between the transfer of funds from RUS and their disbursement to the 
Qualified consumer; and (2) the requests for advances made by the RESP 
borrower are limited to the minimum amounts needed and timed to be in 
accordance with the actual immediate cash needs to carry out the EE 
Program.
    f. Equity Requirements. The required equity position would be 
determined by the Administrator on a case-by-case basis upon review of 
the risk profile of the RESP Applicant and the anticipated security 
arrangements as provided further in Section C(2)(b) in this NOSA.
    i. Any additional equity requirement determined necessary by the 
Administrator will be set forth in the loan documents as a condition to 
the RESP loan.
    ii. The Administrator reserves the right to modify or waive the 
requirements of this section if the Administrator believes such 
modifications or waiver are in the best interest of the government and 
the Administrator has determined that the loan will be repaid in the 
designated time period and the security is adequate.
    g. Loans to Qualified consumers--General. An Eligible entity must 
use the proceeds from a RESP loan only to make loans to Qualified 
consumers for the purpose of implementing Energy efficiency measures.
    i. Interest rate. Loans made by a RESP borrower to a Qualified 
consumer may bear interest not to exceed 3 percent. Proceeds from the 
interest charged to the Qualified consumers may be used to establish a 
loan loss reserve, and to offset personnel and program costs necessary 
to carry out the program.
    ii. Purpose of the loan to the Qualified consumer. Loans made to a 
Qualified consumer must be to finance Energy efficiency measures for 
the purpose of decreasing energy (not just electricity) 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 RESP borrower.
    iii. Loan term to Qualified consumers. Loans made by the RESP 
borrower to Qualified consumers may not exceed 10 years.
    iv. Repayment of the Qualified consumer loan. Qualified consumers 
must repay their loans to the RESP borrower through charges added by 
the RESP borrower to the electric bill for the property for, or at 
which, the Energy efficiency measures are or will be implemented. The 
repayment mechanism adopted to implement an EE Program under RESP must 
not prevent the voluntary prepayment of the loan by the owner of the 
property. A RESP borrower may adopt any additional repayment mechanism 
to carry out its EE Program with RESP proceeds as long as it can 
demonstrate that the proposed repayment mechanism has appropriate risk 
mitigation features or is required to ensure repayment to the RESP 
borrower if the Qualified consumer will no longer be a customer of the 
RESP borrower.
    v. Energy Audit. Loans made by a RESP borrower to a Qualified 
consumer using RESP loan funds must require an Energy audit by the RESP 
borrower to determine the impact of the proposed Energy efficiency 
measures on the energy costs and consumption of the Qualified consumer. 
The RESP borrower may engage contractors to carry out the Energy audits 
necessary to fulfill this requirement. In so doing, the RESP borrower 
must engage contractors with adequate expertise to perform the Energy 
audits according to the applicable standards of the industry. 
Contractor's adequate expertise may be determined by using the 
following criteria:
    A. Contractor's staff possesses a current residential or commercial 
Energy auditor or building analyst certification from a national, 
industry-recognized organization.
    B. Contractor's staff possesses proficiency in the knowledge, 
skills and abilities needed to conduct whole house assessments, 
building performance diagnostics and reasoning, and estimates of energy 
savings from improvement installations (via calculations or a modeling 
software tool) accredited by training and credentialing. The 
credentialing process must be at least as robust as those employed by 
nationally recognized certification bodies or suitable to meet or 
exceed the rigor of the standards of federal, state or local government 
entities.
    C. The contractor must demonstrate adequate capacity and resources 
to engage customers, conduct whole house assessments, building 
performance testing and diagnostic reasoning, and fulfillment of all 
program data collection and reporting requirements. This includes 
having access to satisfactory diagnostic equipment, tools, qualified 
staff, data systems and software, and administrative support.

[[Page 40271]]

    D. The contractor must be current and in good standing with all 
local registration and licensing requirements for their specific region 
and trade.
    E. The contractor must employ or sub-contract to companies with 
workers who are qualified to install or physically oversee the 
installation of home performance improvements in compliance with local 
building codes and industry-accepted protocols.
    F. In the absence of fulfilling the first criterion under this 
subsection, the contractor for commercial Energy audits, must meet one 
of the following criteria:
    (1) Be 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;
    (2) Be an individual with a four-year engineering or architectural 
degree with at least 3 years of experience and who has completed at 
least five similar type Energy audits; or
    (3) Be an individual with an energy auditor certification 
recognized by the U.S. Department of Energy through its Better 
Buildings Workforce Guidelines project. For related information please 
visit: https://www4.eere.energy.gov/workforce/projects/workforceguidelines.
    vi. The credentials of the energy auditors used or proposed to be 
used by the RESP Applicant will be subject to RUS review. RUS may 
reject a loan application or refuse to disburse loan proceeds to the 
RESP borrower that fails to demonstrate that the Energy audits will be 
or have been performed by qualified individuals.
    h. Repayment. The RESP borrower is responsible for fully repaying 
the RESP loan to RUS according to the loan documents regardless of 
repayment by its Qualified consumers.
    i. Material changes in borrower circumstances. A RESP Applicant 
must, after submitting a loan application, promptly notify RUS of any 
changes in its circumstances that materially affect the information 
contained in the loan application.
    j. Eligible Activities and Investments.
    i. General. A RESP borrower must make loans to Qualified consumers 
for the purpose of decreasing their energy (not just electricity) use 
or costs.
    ii. A RESP borrower may provide financing to Qualified consumers to 
implement or invest in one or more set of Energy efficiency measures 
listed below in this paragraph. However, a RESP borrower may be able to 
fund other Energy efficiency measures if it can justify, to the 
satisfaction of the Administrator, that the Energy efficiency measure 
is cost effective and the technology is commercially available. 
Eligible activities and investments include, but are not limited, to:
    A. Lighting:
    (1) Lighting fixture upgrades to improve efficiency.
    (2) Re-lamping to more energy efficient bulbs.
    (3) Lighting controls.
    B. Heating, Ventilation, and Air Conditioning (HVAC):
    (1) Central Air Systems--Energy Star qualified equipment.
    (2) Window AC Units--Energy Star qualified equipment.
    (3) Economizers.
    (4) Heat pumps.
    (5) Furnaces--Energy Star qualified equipment.
    (6) Air Handlers.
    (7) Programmable controls.
    (8) Duct sealing.
    C. Building Envelope Improvements:
    (1) Improved insulation--added insulation beyond existing levels, 
or for new construction, above existing building codes.
    (2) Caulking and weather stripping of doors and windows.
    (3) Window upgrades--Energy Star qualifying windows.
    (4) Door upgrades--door upgrades could include man-doors, and 
overhead doors with integrated insulation and energy efficient windows.
    (5) Any material listed in Appendix A to Part 440 of the U.S. 
Department of Energy's Weatherization Assistance Program, 10 CFR part 
440, Appendix A--Standards for Weatherization Materials.
    D. Water Heaters.
    E. Compressed Air Systems.
    F. Motors:
    (1) High efficiency motors--motors with a rated efficiency beyond 
the Energy Policy Act standards.
    (2) Variable frequency drive.
    G. Boilers, dryers, heaters and process-related equipment or 
equipment not otherwise specified, e.g., commercial coolers and 
freezers.
    H. Demand Management or Load Shifting.
    I. Energy audits.
    J. On or Off Grid Renewable energy systems if consistent with the 
statutory purpose of RESP.
    K. Energy storage devices.
    L. The replacement of existing fuel consuming equipment using a 
particular fuel with more efficient fuel consuming equipment that uses 
another fuel or the same fuel but with a more efficient output as long 
as in either of the cases there is no increase in direct greenhouse gas 
emissions.
    M. Energy efficient appliance upgrades if attached to real 
property.
    N. Irrigation or water and waste disposal system efficiency 
improvements.
    O. Necessary and incidental activities and investments directly 
related to implementation of an Energy efficiency measure.

F. Federal Award Administration Information

1. Federal Award Notices

    A successful loan RESP Applicant will receive a Conditional 
commitment letter from the Administrator notifying it of the total loan 
amount approved by RUS; any additional controls on the 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. Receipt of a Conditional commitment letter from the 
Administrator does not authorize the RESP borrower to commence 
performance under the award. Any RUS determinations still needed as 
specified in the Conditional commitment letter must be concluded before 
the loan will be made. RUS will notify the RESP borrower when it is 
authorized to commence performance using RESP funds.

2. Administrative and National Policy Requirements

    The items listed in Section D and Section E of this notice 
implement the appropriate administrative and national policy 
requirements, which include but are not limited to:
    a. Execution of a RESP loan agreement and related loan documents;
    b. Compliance with policies, guidance, and requirements as 
described in Section D(2)(c) of this notice, and any successor 
regulations.

3. Reporting

    a. Performance Reporting. RUS will establish periodic reporting 
requirements. These will be enumerated in the loan documents.
    b. Accounting Requirements. RESP borrowers must follow RUS' 
accounting requirements. These requirements, which will be specified in 
the Conditional commitment letter, include, but are not limited to, the 
following:
    i. RUS accounting requirements include compliance with Generally 
Accepted Accounting Principles, as well as compliance with the 
requirements of the applicable regulations: 7 CFR part 200 (for RESP 
borrowers, under this CFR Part, the term ``grant recipient'' will also 
mean loan recipient) or the system

[[Page 40272]]

of accounting prescribed by RUS Bulletin 1767. The Administrator may 
modify the accounting requirements if, in his judgement, it is 
necessary to satisfy the purpose of Section 6407.
    ii. RESP borrowers must comply with all reasonable RUS requests to 
support ongoing monitoring efforts. The RESP borrowers must afford RUS, 
through their representatives' 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 RESP borrowers 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.
    c. Audit Requirements. RESP borrowers will be required to prepare 
and furnish to RUS, at least once during each 12-month period, a full 
and complete report of its financial condition, operations, and cash 
flows, in form and substance satisfactory to RUS, audited and certified 
by an independent certified public accountant, satisfactory to RUS, and 
accompanied by a report of such audit, in form and substance 
satisfactory to RUS. RESP borrowers must follow the 7 CRF 1773, Policy 
on Audits for RUS borrowers or 2 CFR part 200, subpart F audit 
requirements. The Administrator may modify the audit requirements if, 
in his judgement, it is necessary to satisfy the purpose of Section 
6407.

G. FEDERAL AWARDING AGENCY CONTACT

    Titilayo Ogunyale, Senior Advisor, Office of the Administrator, 
Rural Utilities Service, Rural Development, United States Department of 
Agriculture, 1400 Independence Avenue SW., STOP 1510, Room 5136-S, 
Washington, DC 20250-1510; Telephone: (202) 720-0736; Email: 
[email protected].

H. OTHER INFORMATION

1. Other Funding Opportunities

    Applicants may also consider the funding opportunities under the 
Energy Efficiency and Conservation Loan Program, 7 CFR 1710, Subpart H.

2. USDA Non-Discrimination Statement

    In accordance with Federal civil rights law and U.S. Department of 
Agriculture (USDA) civil rights regulations and policies, the USDA, its 
Agencies, offices, and 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.
    Persons with disabilities who require alternative means of 
communication for program information (e.g., Braille, large print, 
audiotape, American Sign Language, etc.) should contact the responsible 
Agency or USDA's TARGET Center at (202) 720-2600 (voice and TTY) or 
contact USDA through the Federal Relay Service at (800) 877-8339. 
Additionally, program information may be made available in languages 
other than English.
    To file a program discrimination complaint, complete the USDA 
Program Discrimination Complaint Form, AD-3027, found online at http://www.ascr.usda.gov/complaint_filing_cust.html and at any USDA office or 
write a letter addressed to USDA and provide in the letter all of the 
information requested in the form.
    To request a copy of the complaint form, call (866) 632-9992. 
Submit your completed form or letter to USDA by:
    a. Mail: U.S. Department of Agriculture, Office of the Assistant 
Secretary for Civil Rights, 1400 Independence Avenue SW., Washington, 
DC 20250-9410;
    b. Facsimile: (202) 690-7442; or
    c. Email: [email protected].
    d. USDA is an equal opportunity provider, employer, and lender.

    Dated: June 15, 2016.
Brandon McBride,
Administrator, Rural Utilities Service.
[FR Doc. 2016-14617 Filed 6-20-16; 8:45 am]
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