[Federal Register Volume 82, Number 167 (Wednesday, August 30, 2017)]
[Rules and Regulations]
[Pages 41157-41158]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-18400]

Rules and Regulations
                                                Federal Register

This section of the FEDERAL REGISTER contains regulatory documents 
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The Code of Federal Regulations is sold by the Superintendent of Documents. 


Federal Register / Vol. 82 , No. 167 / Wednesday, August 30, 2017 / 
Rules and Regulations

[[Page 41157]]


10 CFR Part 611

Advanced Technology Vehicles Manufacturer Assistance Program

AGENCY: Loan Programs Office, Department of Energy.

ACTION: Interpretive rule.


SUMMARY: The Department of Energy (``DOE'') is adopting an interpretive 
rule to clarify its interpretation of Section 136 of the Energy 
Independence and Security Act of 2007, as amended (``EISA'') and its 
implementing regulations for the Advanced Technology Vehicle 
Manufacturing Loan Program (the ``ATVM Loan Program'') authorized by 
Section 136. Section 136(f), which establishes requirements for the 
administrative costs associated with loans under the ATVM Loan Program, 
was implemented by DOE pursuant to a 2008 interim final rule governing 
the operation of the ATVM Program. The implementing regulation in part 
provided that the borrower would be required to pay at the time of the 
closing of the loan, an ``Administrative Fee'' equal to 10 basis points 
of the principal amount of the loan. DOE is adopting this interpretive 
rule to explain its view that the administrative costs imposed by 
Congress under Section 136(f) is separate from the cost of the outside 
advisors engaged by DOE in connection with the review and processing of 
their respective loan applications, negotiation of conditional 
commitments, and closing of loans.

DATES: This interpretive rule is effective on August 30, 2017.

FOR FURTHER INFORMATION CONTACT: Herbert A. Glaser, Chief Counsel, Loan 
Programs Office, U.S. Department of Energy, 1000 Independence Ave. SW., 
Washington, DC 20585-0121, email: [email protected].

I. Introduction and Background
II. Approval of the Office of the Secretary

I. Introduction and Background

    Section 136 of EISA authorizes the Secretary of Energy (the 
``Secretary'') to issue grants and direct loans to applicants for the 
costs of reequipping, expanding, or establishing manufacturing 
facilities in the United States to produce qualified advanced 
technology vehicles, or qualifying components. Section 136 also 
authorizes the Secretary to issue grants and direct loans for the costs 
of engineering integration performed in the United States of qualifying 
advanced technology vehicles and qualifying components. DOE promulgated 
regulations implementing Section 136 at 10 CFR part 611, 73 FR 66721 
(November 12, 2008). The regulations included implementation of Section 
136(f), ``Fees,'' which specifies that administrative costs shall be no 
more than $100,000 or 10 basis points of the loan. This statutory 
requirement is implemented at 10 CFR 611.107(e), which states that 
``[t]he Borrower will be required to pay at the time of the closing of 
the loan a fee equal to 10 basis points of the principal amount of the 
loan.'' This payment is referred to as the ``Administrative Fee.''
    Although the Administrative Fee has been the sole fee imposed by 
DOE under the ATVM Loan Program to date, DOE does not interpret Section 
136(f) as restricting its ability to assess other fees and charges on 
borrowers or other applicants, as defined in the implementing 
regulation at 10 CFR 611.2. Moreover, DOE does not interpret 
Section136(f) as limiting the Secretary's discretion to impose on 
borrowers or other applicants the cost of outside advisors engaged by 
DOE in connection with the processing and review of their respective 
loan applications or the negotiation and closing of their respective 
loan commitments and closings (collectively, ``Transaction Advisory 
Costs''). In the 2008 rulemaking, DOE discussed its interpretation of 
Section 136(f), explaining that DOE interprets the statute as 
authorizing DOE to charge borrowers an administrative fee and as 
providing DOE with the flexibility to choose either monetary option set 
forth in the statute. DOE decided in the 2008 rulemaking that 
administrative costs imposed on each borrower will be 10 basis points 
of the loan, to be paid by the borrower on the closing date of the 
loan. DOE based its decision on the need for fairness among borrowers 
and the belief that administrative costs for a loan would be in excess 
of 10 basis points, and by selecting 10 basis points as the fee for all 
loans, DOE ensured that borrowers of smaller loans would pay smaller 
Administrative Fees. Nothing in the rulemaking sought to define 
``administrative costs,'' nor did it suggest that Section 136(f) 
limited DOE's authority to recover costs not considered 
``administrative costs.'' In this regard, the preamble to the 2008 
interim final rule refers to a ``fee'', but does not suggest that the 
fee is exclusive. Moreover, both Section 136(f) and the implementing 
regulations are silent as to the allocation, between DOE and 
applicants, of Transaction Advisory Costs or other costs that fall 
outside of the scope of administrative costs.
    Generally, the costs incurred by DOE to date to carry out the ATVM 
Loan Program can be divided into two categories: Those costs 
attributable generally to the overall administration of the ATVM 
Program, including payroll and other overhead costs of the Loan 
Programs Office ATVM Division, which are incurred irrespective of the 
volume or complexity of loan applications (``Category I Costs''), and 
those costs attributable directly to the review, processing, closing 
and management of specific loan transactions, including Transaction 
Advisory Costs (``Category II Costs''). Transaction Advisory Costs and 
other Category II Costs vary significantly in relation to the maturity 
and organization of the applicant and the complexity of the proposed 
project, among other factors.
    In this rulemaking, DOE interprets ``administrative costs'' as used 
in Section 136(f) not to include Category II Costs, including 
Transactional Advisory Costs. DOE interprets Section 136(f) to instead 
establish a limit on the Category I Costs of the ATVM Loan Program that 
can be recovered through the imposition of the Administrative Fee. 
Allocating to the applicant the responsibility for Transaction Advisory 
Costs associated with the applicant's transaction is consistent with 
the prevailing practices of similar federal financing programs and 
commercial lenders in similar transactions. Accordingly, DOE does not 
interpret either Section 136(f) or the

[[Page 41158]]

implementing regulations to restrict DOE's ability to allocate the 
Transaction Advisory Costs or other Category II Costs associated with a 
particular application to the relevant applicant.
    Based on its interpretation of the statute as explained in this 
rule, applicants for ATVM loans can bear all Transaction Advisory Costs 
associated with their respective applications. Applicants would pay 
Transaction Advisory Costs pursuant to direct agreements executed by 
and between the applicant and each relevant outside transaction 
advisor, in a form acceptable to DOE and each such transaction advisor, 
no later than the date determined by DOE in its discretion with respect 
to such pending application.

II. Approval of the Office of the Secretary

    The Secretary of Energy has approved publication of this 
interpretive rule.

List of Subjects in 10 CFR Part 611

    Administrative practice and procedure, Loan programs--energy, 
Reporting and recordkeeping requirements.

    Issued in Washington, DC, on August 24, 2017.
John Sneed,
Executive Director, Loan Programs Office.
[FR Doc. 2017-18400 Filed 8-29-17; 8:45 am]