[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/index.html?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
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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]
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