[Federal Register Volume 88, Number 103 (Tuesday, May 30, 2023)]
[Rules and Regulations]
[Pages 34419-34437]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-11104]
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DEPARTMENT OF ENERGY
10 CFR Part 609
RIN 1901-AB59
Loan Guarantees for Clean Energy Projects
AGENCY: Loan Programs Office, Department of Energy.
ACTION: Interim final rule; request for comments.
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SUMMARY: The Department of Energy (``DOE'') issues this interim final
rule (``IFR'') amending the regulations implementing the loan guarantee
provisions in Title XVII of the Energy Policy Act of 2005 (``Title
XVII'') to implement provisions of the Inflation Reduction Act of 2022
(``IRA'') that expand or modify the authorities applicable to the Title
XVII Loan Guarantee Program. Specifically, this IFR: establishes
regulations necessary to implement the Energy Implementation
Reinvestment (``EIR'') Program and other categories of projects
authorized by the IRA for Title XVII loan guarantees; revises
provisions directly related to DOE's implementation of the Title XVII
Loan Guarantee Program as expanded by the IRA; amends provisions to
conform with the broader changes to the Title XVII Loan Guarantee
Program; and revises certain sections for clarity and organization. DOE
is issuing an IFR due to the urgency to implement an additional
potential $290 billion of loan authority for loan guarantees prior to
the loan guarantee authority expiration in 2026 and to provide the
opportunity for all eligible projects to seek loan guarantees under the
new IRA provisions. The amendments in this IFR also facilitate the
increased volume of applications resulting from the new authorities and
funding in the IRA and provide efficiencies in the loan processing.
DATES: This IFR is effective May 30, 2023. DOE will accept comments,
data, and information regarding this IFR no later than July 31, 2023.
ADDRESSES: Interested persons may submit comments, identified by RIN
1901-AB59, by any of the following methods:
Federal eRulemaking Portal: www.regulations.gov. Follow the
instructions for submitting comments.
Electronic Mail (Email): [email protected]. Include the RIN 1901-
AB59 in the subject line of the message.
Postal Mail: Loan Programs Office, Attn: LPO Legal Department, U.S.
Department of Energy, 1000 Independence Avenue SW, Washington, DC
20585-0121. Please submit one signed original paper copy. Due to
potential delays in DOE's receipt and processing of mail sent through
the U.S. Postal Service, we encourage respondents to submit comments
electronically to ensure timely receipt.
Hand Delivery/Courier: U.S. Department of Energy, Room 4B-122, 1000
Independence Avenue SW, Washington, DC 20585.
No telefacsimiles (faxes) will be accepted. For detailed
instructions on submitting comments and additional information on the
rulemaking process, see section IV of this document, Public
Participation.
Docket: The docket, which includes Federal Register notices,
comments, and other supporting documents and materials, is available
for review at www.regulations.gov. All documents in the docket are
listed in the www.regulations.gov index. However, some documents listed
in the index, such as those containing information that is exempt from
public disclosure, may not be publicly available. The docket web page
can be found at the www.regulations.gov web page associated with RIN
1901-AB59. The docket web page contains simple instructions on how to
access all documents, including public comments, in the docket. See
section IV of this document, Public Participation, for information on
how to submit comments through www.regulations.gov.
FOR FURTHER INFORMATION CONTACT: Mr. Steven Westhoff, Attorney-Adviser,
Loan Programs Office, email: [email protected], or phone: (240) 220-
4994.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Introduction
A. Inflation Reduction Act
B. Part 609 Background
II. Discussion
A. Expansion of Eligible Projects
1. Section 1703 Clean Energy Projects
2. Energy Infrastructure Reinvestment Program
B. Approach to Title XVII Applications and Program Guidance
C. Conditional Commitments & Credit Subsidy Cost
D. Fees
E. Transaction Costs
F. Project Costs
III. Section-by-Section Analysis
IV. Public Participation
V. Regulatory and Notices Analysis
A. Executive Order 12866
B. Administrative Procedure Act
C. Regulatory Flexibility Act
D. Paperwork Reduction Act of 1995
E. National Environmental Policy Act of 1969
F. Executive Order 12988
G. Executive Order 13132
H. Executive Order 13175
I. Unfunded Mandates Reform Act of 1995
J. Treasury and General Government Appropriations Act of 1999
K. Treasury and General Government Appropriations Act, 2001
L. Executive Order 13211
M. Congressional Review Act
VI. Approval of the Office of the Secretary
I. Introduction
A. Inflation Reduction Act
The Inflation Reduction Act of 2022 (``IRA'') \1\ makes the single
largest investment in climate and energy in American history, enabling
the United States to tackle the climate crisis, advancing environmental
justice, securing the nation's position as a world
[[Page 34420]]
leader in domestic clean energy manufacturing, and putting the United
States on a pathway to achieving the President's climate goals,
including a net-zero economy by 2050. Within its energy and climate
provisions, the IRA appropriates approximately $8.6 billion in credit
subsidy and provides loan authority of up to $290 billion in total
principal total for the Department of Energy's (``DOE'') Loan Programs
Office (``LPO'') programs administered under Title XVII of the Energy
Policy Act of 2005 (``Title XVII'').\2\ The IRA provisions increase the
authority to guarantee loans under section 1703 of Title XVII
(``section 1703'') \3\ by $40 billion in total principal. The IRA also
added a new loan guarantee program, the Energy Infrastructure
Reinvestment (``EIR'') Program, under section 1706 of Title XVII
(``section 1706''),\4\ to help retool, repower, repurpose, or replace
energy infrastructure that has ceased operations or to enable operating
energy infrastructure to avoid, reduce, utilize, or sequester air
pollutants or anthropogenic emissions of greenhouse gases. The IRA
authorizes the Secretary of Energy (``Secretary'') to guarantee loans
up to a total principal amount of $250 billion for the EIR Program. The
Infrastructure Investment and Jobs Act (``IIJA'') amended Title XVII to
authorize the Secretary to issue loan guarantees for new categories of
projects under section 1703, including projects involving critical
minerals processing, manufacturing, or recycling, as well as projects
that do not fulfill the innovation requirement but are receiving
financial support or credit enhancements from a State energy financing
institution.\5\ The loan authority and appropriations for section 1703
projects contained in the IRA enabled the Secretary to offer loan
guarantees for these types of projects for the first time, as the IIJA
provisions prohibited the use of previously appropriated funds for
those types of loan guarantees.\6\
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\1\ Public Law 117-169 (2022).
\2\ Public Law 109-58, title XVII (2005), as amended; 42 U.S.C.
16511 et seq.
\3\ 42 U.S.C. 16513.
\4\ 42 U.S.C. 16517, as added by Public Law 117-169, sec.
50144(c) (2022).
\5\ Public Law 117-169, sec. 50141 (2022). See also section
II.A.1 of this document, Section 1703 Clean Energy Projects.
\6\ DOE notes that this prohibition was eliminated by the
amendments to the IIJA set forth in the Consolidated Appropriations
Act, 2023 (Pub. L. 117-328).
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The loan authority and related appropriations for the credit
subsidy costs of loan guarantees under sections 1703 and 1706 made
available under the IRA are available through September 30, 2026. In
order to fully implement the Title XVII Loan Guarantee Program as
modified by the IRA and IIJA in a timely manner, DOE is revising 10 CFR
part 609 (``part 609'') through this interim final rule (``IFR''). The
IFR facilitates the submission of applications to DOE for the broader
array of projects eligible for Title XVII loan guarantees following the
enactment of the IRA and improves the application process for parties
considering applying for loan guarantees.\7\ The impact of the IRA on
the interest in DOE's loan programs, including the Title XVII program,
has been substantial. DOE has seen an increase from 61 to 111 active
applications for loans and loan guarantees to the Loan Programs Office
for Title XVII loan guarantees from August 1, 2022, through April 30,
2023, representing an increase in approximately $30.1 billion of new
loan requests.\8\
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\7\ On June 1, 2022, prior to passage of the IRA, DOE issued a
request for information (``RFI'') seeking comments from all
interested parties regarding the implementation of the Energy Act of
2020 (Pub. L. 116-260, Div. Z (2020)) and the Infrastructure
Investment and Jobs Act (``IIJA''; Pub. L. 117-58 (2021)), as well
as other Title XVII program improvements. 87 FR 33141 (June 1,
2022); comment period extended through 87 FR 39081 (June 30, 2022).
Aspects of this IFR address some of the topics covered in the RFI
regarding implementation of Energy Act of 2020 and IIJA as those
topics relate to amendments made by the IRA to the Title XVII
program. DOE considered comments received on the June 1, 2022 RFI in
addressing those topics in this IFR. Topics in the RFI, Energy Act
of 2020, or IIJA not addressed by this IFR may be addressed by DOE
in updated guidance of the Title XVII program, or in a subsequent
rulemaking action. DOE will consider the comments received on the
June 1, 2022 RFI in any future action.
\8\ Source: https://www.energy.gov/lpo/monthly-application-activity-report.
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B. Part 609 Background
Title XVII, as amended, provides the Secretary the authority to
issue loan guarantees for certain eligible projects, including
innovative clean energy projects and energy infrastructure reinvestment
projects.\9\ DOE has administered the Title XVII Loan Guarantee Program
pursuant to its regulations set forth at part 609, as required by the
authorizing statute.\10\ DOE has historically provided additional
guidance to applicants and established requirements applicable to the
Title XVII Loan Guarantee Program in the solicitations for loan
guarantee applications, which are issued and updated from time to time.
Part 609 sets forth the policies and procedures that DOE uses for the
application process, which includes receiving, evaluating, and
approving applications for loan guarantees to support eligible projects
under Title XVII.\11\ Part 609 applies to all applications, conditional
commitments, and loan guarantee agreements under the Title XVII Loan
Guarantee Program and provides specific guidance to program applicants
regarding eligibility for the program, the loan guarantee application
process and requirements, criteria for DOE's evaluation of
applications, and the process for negotiation and execution of a loan
guarantee agreement term sheet, conditional commitment, and loan
guarantee agreement. Part 609 also describes the terms applicable to
the loan guarantee.
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\9\ Public Law 109-58, title XVII (2005), as amended; 42 U.S.C.
16511 et seq.
\10\ 42 U.S.C. 16515(b), (d).
\11\ Public Law 109-58, title XVII (2005), as amended; 42 U.S.C.
16511 et seq.
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Following DOE's issuance of initial guidelines and an initial
solicitation for pre-applications for the program in 2006, DOE
promulgated the original part 609 to implement and issue loan
guarantees under the program in 2007.\12\ In 2009, DOE amended part 609
to accommodate additional flexibility regarding liens and other
collateral utilized for securing guaranteed loans.\13\ DOE subsequently
amended part 609 in 2011 to address the submission and treatment of
trade secrets and other privileged commercial or financial information
\14\ and in 2012 to incorporate certain statutory changes to section
1702 of Title XVII \15\ related to payment of credit subsidy costs.\16\
In 2016, DOE promulgated additional amendments to part 609 to provide
increased clarity and transparency, reduce paperwork, and provide a
more workable interpretation of certain statutory provisions in light
of DOE's experience with operation of the Title XVII program.\17\ These
amendments included removing a pre-application process and adopting a
Part I and Part II application process, clarifying certain application
limitations on technologies and locations, implementing the Risk-Based
Charge, and a number of additional changes. In 2021, DOE amended part
609 to incorporate directives from Executive Order 13953 to clarify the
eligibility of projects related to ``Critical Minerals,'' ``Critical
Minerals Production,'' and related activities.\18\
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\12\ 72 FR 60116 (October 23, 2007).
\13\ 74 FR 63544 (December 4, 2009).
\14\ 76 FR 26579 (May 9, 2011).
\15\ 42 U.S.C. 16512.
\16\ 77 FR 29853 (May 21, 2012).
\17\ 81 FR 90699 (December 15, 2016).
\18\ 86 FR 3747 (Jan. 15, 2021).
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II. Discussion
This IFR establishes regulations necessary to implement the EIR
Program
[[Page 34421]]
authorized under section 1706 and other categories of projects made
eligible for Title XVII loan guarantees by the IRA and revises
provisions directly related to DOE's implementation of the Title XVII
Loan Guarantee Program as expanded by the IRA and IIJA. The IFR retains
those provisions of part 609 that are not impacted by DOE's plans for
implementing the expanded Title XVII Loan Guarantee Program, which
remain in full force and effect. In addition, the IFR makes other
associated amendments to conform with the broader changes to part 609
to address the IRA, IIJA, and Energy Act of 2020 amendments.
Through publication of this IFR, DOE is also providing a comment
period until July 31, 2023. Comments submitted during this period will
be reviewed, and a final rule, responding to those comments as well as
reflecting the experience DOE gains in implementing this IFR, will be
issued at a later date.
A. Expansion of Eligible Projects
1. Section 1703 Clean Energy Projects
Under section 1703, DOE is authorized to support innovative energy
projects that fall into one or more of the 13 categories specified in
section 1703(b). With additional authority to guarantee up to a total
principal amount of $40 billion provided by the IRA, DOE is ensuring
that part 609 explicitly describes all categories of statutorily
eligible projects to provide certainty to potential loan guarantee
applicants regarding their ability to access the program. In the IFR,
DOE provides that eligible projects under section 1703 include both
innovative energy projects and innovative supply chain projects. (See
10 CFR 609.3(b), (c)). DOE has determined that supply chain projects
that manufacture a product with an end-use set forth in section 1703(b)
of Title XVII and that either (i) deploy a New or Significantly
Improved Technology in the manufacturing process; or (ii) manufacture a
product that represents a New or Significantly Improved Technology
satisfy Title XVII's innovation requirement, as those projects deploy
innovation within the scope of the DOE-funded project. In addition, the
IFR includes eligibility requirements for projects seeking loan
guarantees under section 1703 that receive financial support or credit
enhancements from State energy financing institutions, providing that
such projects are not required to satisfy Title XVII's innovation
requirement in order to be determined eligible under the program.\19\
(See 10 CFR 609.3(d)). The IIJA amended Title XVII to allow the
issuance of loan guarantees to projects receiving this type of support
from State energy financing institutions.\20\ However, the IIJA also
provided that DOE could not utilize amounts appropriated prior to the
enactment of the IIJA for the cost of loan guarantees receiving support
from State energy financing institutions, meaning that the IRA loan
authority provided DOE with its first opportunity to offer loan
guarantees to this type of project.\21\
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\19\ 42 U.S.C. 16512(r), as added by Public Law 117-58, sec.
40401(c)(2)(C) (2021).
\20\ See Public Law 117-58, sec. 40401(c) (2021).
\21\ 42 U.S.C. 16512(r)(3), as added by Public Law 117-58, sec.
40401(c)(2)(C) (2021), and repealed by Public Law 117-328, div. D,
tit. III, sec. 308 (2022).
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Finally, the IRA enabled DOE to offer loan guarantees to projects
that increase the domestically produced supply of critical minerals
\22\ by providing appropriations and loan authority for such projects.
Similar to the State energy financing institution IIJA amendment, the
IIJA's addition of critical minerals projects to the categories of
projects eligible for Title XVII loan guarantees was coupled with a
prohibition on the use of previously appropriated funds and commitment
authority for those projects.\23\ The enactment of the IRA and its
authorization of additional Title XVII loan guarantee authority and
appropriations allowed DOE to support critical minerals projects under
Title XVII for the first time.
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\22\ See 42 U.S.C. 16513(b)(13), added by the IIJA (Pub. L. 117-
58, sec. 40401(a)(2)(A) (2021)).
\23\ Public Law 117-58, sec. 40401(a)(2)(B), (C) (2021),
repealed by Public Law 117-328, div. D, tit. III, sec. 308 (2022).
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2. Energy Infrastructure Reinvestment Program
The IRA creates the new EIR Program under section 1706 to guarantee
loans to projects that retool, repower, repurpose, or replace energy
infrastructure that has ceased operations, or enable operating energy
infrastructure to avoid, reduce, utilize, or sequester air pollutants
or anthropogenic emissions of greenhouse gases. The IRA appropriates $5
billion through September 30, 2026, to carry out the EIR Program, with
a limitation on commitments to guarantee loans the total principal
amount of which is not greater than $250 billion.\24\
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\24\ Public Law 117-169, sec. 50144(a), (c) (2022).
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Potential projects could include repurposing shuttered fossil
energy facilities for clean energy production, retooling infrastructure
from power plants that have ceased operations for new clean energy
uses, or updating operating energy infrastructure with emissions
control technologies, including carbon capture, utilization, and
storage (``CCUS''). EIR could also support the transition of an oil or
gas pipeline or refinery into a clean energy project, such as clean
hydrogen or carbon dioxide transportation infrastructure. While the EIR
Program does not have the same requirements as section 1703 loan
guarantees with respect to projects utilizing innovative technology,
all EIR projects are required to avoid, reduce, utilize, or sequester
air pollutants or anthropogenic emissions of greenhouse gases.
Since the passage of the IRA, DOE has engaged in significant
stakeholder outreach, participating in over 11 listening sessions
regarding EIR that have convened over 75 organizations and over 162
participants. A repeated comment received in the listening sessions is
the need for DOE to provide additional clarity regarding the
eligibility requirements and application process for EIR projects,
including through updates to part 609.
The IFR includes provisions expanding the rule to describe the
eligibility requirements for Title XVII loan guarantees for the
categories of projects described in section 1706 and includes such
projects as ``Eligible Projects'' for the purposes of the Title XVII
Loan Guarantee Program. (See 10 CFR 609.3(e)).
B. Approach to Title XVII Applications and Program Guidance
The cumulative effect of the amendments to the Title XVII Loan
Guarantee Program enacted through the IRA and provision of
appropriations and loan authority under the IRA for categories of
projects added by the Energy Act of 2020 and the IIJA is to materially
expand the types of projects eligible for loan guarantees from DOE
under Title XVII. The additional $40 billion of loan guarantee
commitment authority for section 1703 projects is not allocated to
specific technology categories as certain pre-IRA loan authority was,
meaning that the program no longer needs to adopt technology-specific
solicitations. The ability to support EIR projects, critical minerals
projects, and State energy financing institution projects opens the
door to a wide range of new project characteristics, and expands Title
XVII to support both innovative and non-innovative projects. The prior
version of part 609 and the solicitations for applications to the
program contemplated relatively uniform, large scale infrastructure
projects, such as utility scale power generation projects. However,
both the changes to Title XVII
[[Page 34422]]
resulting from recently enacted legislation and the rapidly evolving
and advancing technologies in the United States energy sector require
that DOE be able to support a more diverse set of clean energy
projects. A single set of application requirements and factors for
evaluating such projects impedes DOE's objectives of properly
evaluating such diverse sets of potential projects and ensuring that
the Title XVII Loan Guarantee Program is accessible to all potentially
eligible projects. In addition, DOE expects that the additional loan
authority granted by the IRA will result in a significant increase in
the volume of applications submitted to the Title XVII Loan Guarantee
Program, escalating the need for part 609 to provide clear direction
with respect to eligibility and the administration of the program.
With the IFR, DOE removes from the Code of Federal Regulations the
specific minimum application requirements applicable to potential
applicants to the Title XVII program as well as eliminates from the
regulation the detailed evaluation criteria applicable to DOE's review
of Title XVII loan guarantee applications. DOE will subsequently issue
guidance for the Title XVII Loan Guarantee Program, which will include
the information historically set forth in the specific solicitations
issued in connection with the program. DOE expects that these changes
to the Title XVII Loan Guarantee Program will significantly improve the
ability of applicants and potential applicants to understand the
program requirements as they apply to specific categories of eligible
projects and to navigate the Title XVII Loan Guarantee Program more
efficiently. The IFR is a critical foundation allowing DOE to finalize
comprehensive materials for potential applicants, improving access to,
and administration of, this important program.
DOE will also capture and make public many of the recommendations
made with respect to DOE's administration of the Title XVII Loan
Guarantee Program in the course of the 2022 request for
information.\25\ This will include additional guidance regarding how
DOE addresses matters pertaining to Justice40 \26\ objectives,
supporting the domestic clean energy supply chain, and addressing
community, environmental, and labor matters with respect to the
program.
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\25\ See footnote 7, supra.
\26\ See Executive Order 14008, ``Tackling the Climate Crisis at
Home and Abroad,'' sec. 223, 86 FR 7619, 7631-7632 (February 1,
2021). See also https://www.energy.gov/diversity/justice40-initiative.
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C. Conditional Commitments & Credit Subsidy Cost
In the IFR, DOE specifies that it will obligate the credit subsidy
cost of a loan guarantee at the time of Conditional Commitment, rather
than its current practice of obligating credit subsidy cost at
financial close of the Loan Guarantee Agreement. Under the prior
version of part 609, the Secretary was authorized to terminate a
Conditional Commitment for any reason at any time prior to the
execution of the Loan Guarantee Agreement. This program modification
represents an alignment of the Title XVII Loan Guarantee Program with
other federal lending programs pursuant to the Federal Credit Reform
Act of 1990. The impact of this change is to structure the Title XVII
Loan Guarantee Program such that Conditional Commitments utilizing the
loan authority and appropriations for the cost of loan guarantees
provided by the IRA must be entered into prior to September 30, 2026,
which represents the end of availability of these funds under the IRA.
While not likely in the next several years, if appropriated funds are
not available for the Secretary to pay credit subsidy costs at the time
of Conditional Commitment, such costs may instead paid by the
borrower.\27\ In such a case, subject to the terms agreed upon as part
of Conditional Commitment, the borrower-paid credit subsidy costs may
be refunded if the parties do not close on a Loan Guarantee Agreement
or if subsequent changes warrant a downward adjustment of the credit
subsidy cost calculation.
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\27\ 42 U.S.C. 16512(b).
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D. Fees
In connection with the expected increase in the number of loan
guarantee applications following the passage of the IRA, DOE has
assessed the types and amounts of fees it expects to collect in
connection with the administration of the Title XVII Loan Guarantee
Program. In the IFR, DOE describes the categories of fees it will
collect at the financial closing of a Title XVII loan guarantee and the
other fees and charges it may collect from a Borrower after the
issuance of a loan guarantee to provide additional clarity to the
public with respect to fees associated with the program.
DOE has also determined it will no longer assess application fees
in connection with the program. The Energy Act of 2020 amendments
provide that a fee for the guarantee sufficient to cover the applicable
administrative expenses of the Title XVII Loan Guarantee Program may be
charged on or after financial close.\28\ Historically, the application
fee combined with the facility fee served to reimburse the federal
government for the costs of administering the loan guarantee program.
However, DOE believes it may be confusing to potential applicants to
charge an ``application fee'' at financial closing of a loan guarantee.
DOE has assessed the adequacy of the facility fee and has determined
that it is sufficient to cover the applicable administrative expenses
of the Title XVII Loan Guarantee Program without requiring a separate
application fee. In the IFR, DOE confirms that it will charge the
facility fee only at the financial closing of a loan guarantee, rather
than charging a portion of the facility fee at conditional commitment
in accordance with the Energy Act of 2020 amendments.
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\28\ 42 U.S.C. 16512(h)(1), as amended by Public Law 116-260,
sec. 9010(a)(3) (2020).
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E. Transaction Costs
In the IFR, DOE confirms that the third-party advisor costs of DOE
as loan guarantor represent the transaction costs associated with
providing financing to the applicable project. For each of the
categories of projects DOE has determined to be eligible under Title
XVII, including those expanded categories allowed by the passage of the
IRA, the financing of the relevant project will require the engagement
by the applicant, any eligible lender, and DOE of third-party advisors
to assist in the structuring and negotiation of the project's
financing. The costs of such third-party advisors are directly
attributable to the review, processing, closing and management of
specific loan transactions and vary significantly in relation to the
maturity and organization of the applicant and the complexity of the
proposed project, among other factors. Third-party advisor costs are
financing costs that may be included in the overall amount of Project
Costs for an Eligible Project receiving a Title XVII loan guarantee.
The services provided by third-party advisors directly support the
financing and potential deployment of the project that is being
proposed by an applicant and thus are appropriately borne by the
applicant. This arrangement is customary in project finance.
DOE has confirmed that the costs associated with third-party
advisors are easily distinguished from the administrative expenses
associated with administering the Title XVII Loan
[[Page 34423]]
Guarantee Program, which includes payroll, expenses associated with
third-party contractors and consultants that have been engaged by DOE
in support of administering the Title XVII Loan Guarantee Program, and
other overhead costs of LPO, which are incurred irrespective of the
volume or complexity of loan guarantee applications. Transaction costs
also exclude credit subsidy cost amounts.
Under the IFR, Transaction Costs are defined in Sec. 609.2, and
the method for the payment of these Transaction Costs as an element of
Project Costs is retained within the rule in Sec. 609.11.
F. Project Costs
In the IFR, DOE specifies that environmental remediation costs
constitute eligible Project Costs for Energy Infrastructure
Reinvestment Projects, as specified in the IRA. In addition, the
definition of Project Costs in Sec. 609.10 is modified to provide that
in DOE's discretion, the costs of refinancing outstanding indebtedness
that is directly associated with the Eligible Project may be included.
III. Section-by-Section Analysis
The amendments in this IFR redesignate and add additional sections
to 10 CFR part 609 for organization and clarity and to conform to the
IRA provisions. The following table displays the changes as follows:
Summary Table of Section Additions, Revisions, and Redesignations
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Section Former title Action New title
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Sec. 609.1......................... Purpose and scope...... Revised................ N/A.
Sec. 609.2......................... Definitions and Revised................ Definitions.
interpretation.
Sec. 609.3......................... Solicitations.......... New section added; Title XVII eligible
redesignated as Sec. projects.
609.19 and revised.
Sec. 609.4......................... Submission of Revised................ N/A.
applications.
Sec. 609.5......................... Programmatic, Revised................ Evaluation of
technical, and applications.
financial evaluation
of applications.
Sec. 609.6......................... Term sheets and Revised................ N/A.
conditional
commitments.
Sec. 609.7......................... Closing on the loan Revised................ N/A.
guarantee agreement.
Sec. 609.8......................... Loan guarantee Revised................ N/A.
agreement.
Sec. 609.9......................... Lender servicing Revised................ N/A.
requirements.
Sec. 609.10........................ Project costs.......... Revised................ N/A.
Sec. 609.11........................ Fees and charges....... New section added, Transaction costs.
redesignated as Sec.
609.13 and revised.
Sec. 609.12........................ Full faith and credit New section added, Credit ratings.
and incontestability. redesignated as Sec.
609.14 and revised.
Sec. 609.13........................ Default, demand, Redesignated as Sec. Fees and charges.
payment, and 609.15 and revised.
foreclosure on
collateral.
Sec. 609.14........................ Preservation of Redesignated as Sec. Full faith and credit
collateral. 609.16 and revised. and incontestability.
Sec. 609.15........................ Audit and access to Redesignated as Sec. Default, demand,
records. 609.17 and revised. payment, and
foreclosure on
collateral.
Sec. 609.16........................ Deviations............. Redesignated as Sec. Preservation of
609.18 and revised. collateral.
Sec. 609.17........................ N/A.................... Sec. 609.15 Audit and access to
redesignated as Sec. records.
609.17 and revised.
Sec. 609.18........................ N/A.................... Sec. 609.16 Deviations.
redesignated as Sec.
609.18 and revised.
Sec. 609.19........................ N/A.................... Sec. 609.3 Title XVII loan
redesignated as Sec. guarantee program
609.19 and revised. guidance.
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Provided below is a section-by-section analysis of the changes made
by this IFR.
Title
The title of part 609 is revised from ``Loan Guarantees for
Projects That Employ Innovative Technologies'' to ``Loan Guarantees for
Clean Energy Projects,'' reflecting the expansion of Title XVII
eligibility beyond projects that employ or deploy a New or
Significantly Improved Technology.
Sec. 609.1
Part 609 prescribes policies and procedures for receiving,
evaluating, and approving applications for loan guarantees. DOE is
revising Sec. 609.1(a) and (c) for clarity and updated legal
references. DOE is also deleting Sec. 609.1(d) because critical
minerals projects are now specifically eligible and authorized for loan
guarantees under section 1703(b).
Sec. 609.2
Section 609.2 is revised to incorporate definitions associated with
the IRA and to make changes conforming to the remainder of revisions
set forth in the IFR. DOE is adding the following definitions: ``Energy
Infrastructure'', ``Energy Infrastructure Reinvestment Project'',
``Innovative Energy Project'', ``Innovative Supply Chain Project'',
``Maintenance Fee'', ``Reasonable Prospect of Repayment'', ``State'',
``State Energy Financing Institution'', ``State Energy Financing
Institution Project'', ``Title XVII'', ``Title XVII Loan Guarantee
Program'', and ``Transaction Costs''. DOE is revising the following
definitions: ``Administrative Cost of a Loan Guarantee'',
``Applicant'', ``Application'', ``Borrower'', ``Commercial
Technology'', ``Conditional Commitment'', ``Credit Subsidy Cost'',
``Davis-Bacon Act'', ``Eligible Lender'', ``Eligible Project'',
``Energy Infrastructure'', ``Equity'', ``Facility Fee'', ``Guaranteed
Obligation'', ``Holder'', ``New or Significantly Improved Technology'',
``Project Costs'', ``Project Sponsor'', and ``Term Sheet''. The
following definitions are deleted: ``Act'', ``Application Fee'',
``Preliminary Term Sheet'', and ``Solicitation''.
The interpretations in Sec. 609.2(b) are deleted. These
interpretations are not statutorily required and do not add or
[[Page 34424]]
reduce obligations, burdens, prohibitions, or restrictions. Given that
DOE's understanding of how the implementation of the IRA-related
provisions will be evolving and DOE's processing of higher volume
applications may require further guidance, DOE will be issuing guidance
at a future date. This will allow DOE to modify the guidance more
quickly to ensure efficient processing of loan applications.
Sec. 609.3
Section 609.3, ``Solicitations,'' is redesignated and revised as
Sec. 609.19, ``Title XVII loan guarantee program guidance,'' to change
the method for publishing invitations for applications for loan
guarantees from a solicitation-based application process to a standing
invitation published through DOE's Title XVII Loan Guarantee Program
website; and to make conforming and clarifying changes.
DOE is adding a new Sec. 609.3, ``Title XVII eligible projects,''
to distinguish and describe the expanded categories of eligible
projects under Title XVII, as amended and authorized by the IRA and the
IIJA. The new Sec. 609.3 further defines these ``Eligible Project''
categories under Title XVII, including ``Innovative Energy Project'',
``Innovative Supply Chain Project'', ``State Energy Financing
Institution Project'', and ``Energy Infrastructure Reinvestment
Project''.
Sec. 609.4
Section 609.4, ``Submission of applications,'' is revised to
incorporate the application references for the categories of projects
made eligible for loan guarantees under the IRA and IIJA; to
consolidate provisions regarding additional information, including
credit assessment and credit rating requirements (moving language
formerly at Sec. 609.4(d)(22) and (e) to Sec. 609.12; see also Sec.
609.5(a)); to remove provisions related to the application fee that DOE
will no longer assess; to delete other specific minimum application
requirements previously set forth in the section; to reduce the period
of time after which DOE may reject an incomplete application from four
to two years; to further describe DOE's obligation to provide responses
to applicant inquiries regarding the status of applications; and to
make conforming and clarifying changes.
Sec. 609.5
Section 609.5, ``Programmatic, technical, and financial evaluation
of applications,'' is revised to be titled ``Evaluation of
applications''; to identify the application evaluation criteria
applicable to specific categories of eligible projects; to add failure
to meet ``know your customer'' requirements as a basis for application
denial; to eliminate certain specific application evaluation criteria
from the rule; and to make conforming and clarifying changes.
Sec. 609.6
Section 609.6, ``Term Sheets and conditional commitments,'' is
revised to reduce the period of time for the negotiation of a term
sheet from four years to two years; to remove references to fees
payable in connection with the term sheet; to reflect the obligation of
the credit subsidy cost at conditional commitment rather than loan
guarantee closing; and to make conforming and clarifying changes.
Sec. 609.7
Section 609.7, ``Closing on the loan guarantee agreement,'' is
revised to reflect the obligation of the credit subsidy cost at
conditional commitment rather than loan guarantee closing (moving
language formerly at Sec. 609.7(b)(1) and (3) to Sec. 609.6); to move
the applicant requirements regarding credit ratings to a single section
of the rule (moving language formerly at Sec. 609.7(b)(9) to Sec.
609.12); to add an explicit requirement, consistent with existing law,
that review under the National Environmental Policy Act of 1969 (NEPA)
be completed prior to closing; and to make conforming and clarifying
changes.
Sec. 609.8
Section 609.8, ``Loan guarantee agreement,'' is revised to clarify
certain terms applicable to all Title XVII loan guarantee agreements;
to reflect the differing repayment terms for certain categories of
Eligible Projects; and to make conforming and clarifying changes.
Sec. 609.9
Section 609.9, ``Lender servicing requirements,'' is revised for
clarity.
Sec. 609.10
Section 609.10, ``Project costs,'' is revised to include all
provisions of the rule pertaining to project costs in a single section
of the rule; to incorporate the defined term ``Transaction Costs''; to
specifically include interconnection costs; to include, in DOE's
discretion, the costs of refinancing outstanding indebtedness relating
to the Eligible Project; to include environmental remediation costs of
Energy Infrastructure Reinvestment Projects as provided by the IRA; to
include, in DOE's discretion with respect to projects consisting of
distributed energy resources, the costs incurred by the end-user of
each distributed energy resource pursuant to contractual arrangements
with the Project Sponsor. to refer to cost information and criteria
published in guidance on the Title XVII Loan Guarantee Program website;
and to make conforming and clarifying changes.
Sec. 609.11
Section 609.11, ``Fees and Charges,'' is redesignated in part and
revised as Sec. 609.13. This IFR adds a new Sec. 609.11,
``Transaction Costs,'' to reflect in a single rule provision all
requirements applicable to the arrangements for third-party advisors,
including retaining substantial portions of the latter part of the
prior Sec. 609.11 (former paragraphs (f)-(h)).
Sec. 609.12
Section 609.12, ``Full faith and credit and incontestability,'' is
redesignated as Sec. 609.14 and a new Sec. 609.12, ``Credit
Ratings,'' is added to reflect and further specify in a single rule
provision all requirements regarding the submission of credit
assessments or credit ratings in connection with an application for a
loan guarantee. As discussed above, Sec. 609.12 under this IFR
incorporates certain provisions related to credit rating that had been
in prior Sec. 609.4 and 609.7. Based upon DOE's experience
administering the Title XVII Loan Guarantee Program for over 15 years,
credit assessments and credit ratings are no longer required by
regulation simply because Project Costs exceed a certain threshold, but
the Secretary retains the authority and discretion to require a credit
assessment or credit rating for any project.
Sec. Sec. 609.13-609.19
Sections 609.13-609.16 have been redesignated, and Sec. Sec.
609.17-609.19 have been added, due to the changes described previously.
The redesignated Sec. 609.18, ``Deviations,'' has been amended to
remove unnecessary specificity regarding the Secretary's discretion
over charging and collection of fees. DOE has also made minor revisions
to Sec. Sec. 609.13-609.18 for clarity and organization. Redesignated
Sec. 609.19, ``Title XVII loan guarantee program guidance,'' is
described in further detail previously, under the analysis of Sec.
609.3.
IV. Public Participation
DOE will accept comments, data, and information regarding this IFR
on or before the date provided in the DATES
[[Page 34425]]
section at the beginning of this IFR. Interested parties may submit
comments, data, and other information using any of the methods
described in the ADDRESSES section at the beginning of this document.
Submitting comments via www.regulations.gov. The
www.regulations.gov web page will require you to provide your name and
contact information. Your contact information will not be publicly
viewable except for your first and last names, organization name (if
any), and submitter representative name (if any). If your comment is
not processed properly because of technical difficulties, DOE will use
this information to contact you. If DOE cannot read your comment due to
technical difficulties and cannot contact you for clarification, DOE
may not be able to consider your comment.
However, your contact information will be publicly viewable if you
include it in the comment itself or in any documents attached to your
comment. Any information that you do not want to be publicly viewable
should not be included in your comment, nor in any document attached to
your comment. Otherwise, persons viewing comments will see only first
and last names, organization names, correspondence containing comments,
and any documents submitted with the comments.
Do not submit to www.regulations.gov information the disclosure of
which is restricted by statute, such as trade secrets and commercial or
financial information (hereinafter referred to as Confidential Business
Information (``CBI'')). Comments submitted through www.regulations.gov
cannot be claimed as CBI. Comments received through the website will
waive any CBI claims for the information submitted. For information on
submitting CBI, see the Confidential Business Information section.
DOE processes submissions made through www.regulations.gov before
posting. Normally, comments will be posted within a few days of being
submitted. However, if large volumes of comments are being processed
simultaneously, your comment may not be viewable for up to several
weeks. Please keep the comment tracking number that www.regulations.gov
provides after you have successfully uploaded your comment.
Submitting comments via email, hand delivery/courier, or postal
mail. Comments and documents submitted via email, hand delivery/
courier, or postal mail also will be posted to www.regulations.gov. If
you do not want your personal contact information to be publicly
viewable, do not include it in your comment or any accompanying
documents. Instead, provide your contact information in a cover letter.
Include your first and last names, email address, telephone number, and
optional mailing address. The cover letter will not be publicly
viewable as long as it does not include any comments.
Include contact information each time you submit comments, data,
documents, and other information to DOE. If you submit via postal mail
or hand delivery/courier, please provide all items on a CD, if
feasible, in which case it is not necessary to submit printed copies.
No telefacsimiles (faxes) will be accepted.
Comments, data, and other information submitted to DOE
electronically should be provided in PDF (preferred), Microsoft Word or
Excel, WordPerfect, or text (ASCII) file format. Provide documents that
are written in English, and that are free of any defects or viruses.
Documents should not contain special characters or any form of
encryption. If possible, documents should carry the electronic
signature of the author.
Confidential Business Information. Pursuant to 10 CFR 1004.11, any
person submitting information that they believe to be confidential and
exempt by law from public disclosure should submit via email, postal
mail, or hand delivery/courier two well-marked copies: One copy of the
document marked ``confidential'' including all the information believed
to be confidential, and one copy of the document marked ``non-
confidential'' that deletes the information believed to be
confidential. Submit these documents via email or on a CD, if feasible.
DOE will make its own determination about the confidential status of
the information and will treat it according to its determination. It is
DOE's policy that all comments, including any personal information
provided in the comments, may be included in the public docket, without
change and as received, except for information deemed to be exempt from
public disclosure.
V. Regulatory and Notices Analysis
A. Executive Order 12866
This IFR has been determined to be a ``significant regulatory
action'' under Executive Order 12866, ``Regulatory Planning and
Review,'' 58 FR 51735 (October 4, 1993). Accordingly, this action was
subject to review under that Executive Order by the Office of
Information and Regulatory Affairs (``OIRA'') of the Office of
Management and Budget (``OMB'').
B. Administrative Procedure Act
Section 553(a)(2) of the Administrative Procedure Act (``APA'')
exempts from the APA's notice and comment procedures rulemakings that
involve matters relating to public property, loans, grants, benefits,
or contracts. As a rulemaking relating to the issuance of loans, DOE
has determined that a notice of proposed rulemaking (and comment
thereon) is not required for the amendments to part 609 in this
IFR.\29\
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\29\ DOE has historically used notice and comment procedures for
Title XVII Loan Guarantee Program rulemakings, but notes that this
exemption is nonetheless available under the APA.
---------------------------------------------------------------------------
Moreover, section 553(b)(3)(B) of the APA (5 U.S.C. 551 et seq.)
authorizes agencies to dispense with notice and comment procedures for
rules when the agency, for ``good cause,'' finds that those procedures
are ``impracticable, unnecessary, or contrary to the public interest.''
Under this section, an agency, upon finding good cause, may issue a
final rule without providing notice and seeking comment prior to
issuance. Further, section 553(d) of the APA authorizes agencies to
make rules effective in less than thirty days, upon a finding of good
cause.
DOE has determined that prior notice and comment are contrary to
the public interest given the ambitious timeline Congress has imposed
on DOE for guaranteeing loans up to a total principal amount of $290
billion prior to the loan guarantee authority expiration in 2026 and to
provide the opportunity for all eligible projects to seek loan
guarantees under the new IRA provisions. Given the short award period,
it is imperative that DOE put the IFR provisions in place concurrent
with solicitation of comment to process the influx of applications that
DOE has already received in response to the passage of the IRA and to
best advise stakeholders on how to obtain loan funding. Specifically,
DOE has seen an increase in active applications from 61 to 111 active
applications to the Loan Programs Office for Title XVII loan guarantees
from August 1, 2022 through April 30, 2023, representing an increase of
approximately $30.1 billion in new Title XVII financing requests.
Making the amendments in this IFR effective immediately helps
facilitate the increased volume of applications resulting from the new
authorities and funding in the IRA and IIJA and provide efficiencies in
the loan processing. DOE anticipates the number of new active
[[Page 34426]]
applications to continue to increase. In addition, with respect to
specific stakeholder engagement regarding the new Energy Infrastructure
Reinvestment program added by the IRA, DOE has held over a dozen
stakeholder listening sessions where participants have requested
additional information regarding program requirements and
implementation. Thus, DOE believes that there is good cause that it is
in the public interest to implement provisions in line with the IRA in
an expeditious manner prior to notice and comment.
As noted previously, DOE is concurrently accepting comments on this
IFR. DOE is committed to considering all comments received in response
to this IFR and promptly publishing a final rule.
C. Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires that
an agency prepare an initial regulatory flexibility analysis for any
rule that by law must be proposed for public comment, unless the agency
certifies that the rule, if promulgated, will not have a significant
economic impact on a substantial number of small entities. As required
by Executive Order 13272, ``Proper Consideration of Small Entities in
Agency Rulemaking,'' 67 FR 53461 (August 16, 2002), DOE published
procedures and policies on February 19, 2003, to ensure that the
potential impacts of its rules on small entities are properly
considered during the rulemaking process (68 FR 7990).
This IFR updates part 609. As noted in prior part 609 rulemaking
actions, DOE is not obligated to prepare a regulatory flexibility
analysis for this rulemaking because there is not a requirement to
publish a general notice of proposed rulemaking for rules related to
loans under the Administrative Procedure Act (5 U.S.C. 553(a)(2)).
D. Paperwork Reduction Act of 1995
Information collection requirements for the DOE regulations at 10
CFR part 609 pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C.
3501 et seq.) and the procedure implementing that Act (5 CFR 1320.1 et
seq.) are under OMB Control Number 1910-5134. On February 28, 2023, OMB
approved a three-year extension of the information collection request
previously approved under OMB Control Number 1910-5134. Because the
information requested of applicants under the IFR and the Title 17
Program Guidance is materially the same as that collected under the
current Title XVII Solicitations, and burdens and costs are the same,
the Title 17 Program Guidance will utilize the same ICR authority as
currently utilized for Title XVII applications. DOE is submitting a
revision to its information collection request under OMB Control Number
1910-5134 in connection with this IFR. The revision adds the ``Program
Guidance for Title 17 Clean Energy Financing Program'' as a collection
instrument under the control number. The revision also explains the
public reporting burden associated with the information collection
under the Program Guidance for Title 17 Clean Energy Financing Program.
LPO uses the information an Applicant provides to determine whether
the project proposed by the Applicant meets the eligibility and other
legal requirements of the applicable Loan Guarantee Program. In
addition, the information collected through the ICR assists the
Department to meet its public transparency and accountability
obligations, such as requirements and requests to deliver timely
information on Title XVII Program and TELGP activities to OMB,
Congress, and the public.
Public reporting burden for the requirements in this IFR is
estimated to average 146.5 hours per response, including the time for
reviewing instructions, searching existing data sources, gathering and
maintaining the data needed, and completing and reviewing the
collection of information. All responses are expected to be collected
electronically. The public reporting burden anticipates that there will
be 89 respondents to the information collection request annually. The
burden estimate reflects an increase of 14 hours per response compared
to the prior burden estimate. This increase results from the inclusion
of information regarding an applicant's Community Benefits Plan in the
information collection request. All Title XVII project applicants are
required to submit a Community Benefits Plan with Part II of their
application. To support the goal of building a clean and equitable
energy economy, DOE projects are expected to (1) support meaningful
community and labor engagement; (2) invest in America's workforce; (3)
advance diversity, equity, inclusion, and accessibility; and (4)
contribute to the President's goal that 40% of the overall project
benefits flow to Disadvantaged Communities (DACs) (the Justice40
Initiative). The Justice40 Initiative aims to ensure that 40% of
overall benefits of clean energy investment flow to disadvantaged
communities, which can be identified by the Climate and Economic
Justice Screening Tool.\30\ A Community Benefits Plan for an LPO
application does not need to entail extraordinary additional
requirements beyond the normal course of project development
activities. The Community Benefits Plan should be approximately 3-8
pages in length, and written in an executive summary format to identify
project benefits described elsewhere in the application.
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\30\ Additional information can be found here: https://www.energy.gov/diversity/justice40-initiative; https://www.whitehouse.gov/environmentaljustice/justice40/; https://screeningtool.geoplatform.gov/en/#3/33.47/-97.5; https://www.whitehouse.gov/wp-content/uploads/2023/01/M-23-09_Signed_CEQ_CPO.pdf.
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The revised recordkeeping and reporting requirements associated
with this rulemaking are not mandatory until the information collection
is approved by OMB.
Notwithstanding any other provision of law, a person is not
required to respond to, and will not be subject to a penalty for
failure to comply with, a collection of information subject to the
requirements of the Paperwork Reduction Act unless that collection of
information displays a currently valid OMB control number. Applying for
benefits under Title XVII is voluntary.
E. National Environmental Policy Act of 1969
Pursuant to NEPA, DOE has analyzed this IFR in accordance with NEPA
and DOE's NEPA implementing regulations (10 CFR part 1021). DOE has
determined that this IFR qualifies for categorical exclusion under 10
CFR part 1021, subpart D appendix A5 as a rulemaking that amends an
existing rule or regulation (i.e., part 609) without changing the
environmental effect of that rule. Therefore, DOE has determined that
this IFR is not a major Federal action significantly affecting the
quality of the human environment within the meaning of NEPA and does
not require an Environmental Assessment or an Environmental Impact
Statement.
F. Executive Order 12988
With respect to the review of existing regulations and the
promulgation of new regulations, section 3(a) of Executive Order 12988,
``Civil Justice Reform,'' 61 FR 4729 (February 7, 1996), imposes on
executive agencies the general duty to adhere to the following
requirements: (1) eliminate drafting errors and ambiguity; (2) write
regulations to minimize litigation; and (3) provide a clear legal
standard for affected conduct rather than a general
[[Page 34427]]
standard and promote simplification and burden reduction.
With regard to the review required by section 3(a), section 3(b) of
Executive Order 12988 specifically requires, in pertinent part, that
executive agencies make every reasonable effort to ensure that the
regulation: (1) clearly specifies the preemptive effect, if any; (2)
clearly specifies any effect on existing Federal law or regulation; (3)
provides a clear legal standard for affected conduct while promoting
simplification and burden reduction; (4) specifies the retroactive
effect, if any; (5) adequately defines key terms; and (6) addresses
other important issues affecting clarity and general draftsmanship
under any guidelines issued by the Attorney General.
Section 3(c) of Executive Order 12988 requires Executive agencies
to review regulations in light of applicable standards in section 3(a)
and section 3(b) to determine whether they are met or it is
unreasonable to meet one or more of them.
DOE has completed the required review and determined that, to the
extent permitted by law, this rule meets the relevant standards of
Executive Order 12988.
G. Executive Order 13132
Executive Order 13132, ``Federalism,'' \31\ imposes certain
requirements on agencies formulating and implementing policies or
regulations that preempt State law or that have federalism
implications. Agencies are required to examine the constitutional and
statutory authority supporting any action that would limit the
policymaking discretion of the States and to carefully assess the
necessity for such actions. The executive order also requires agencies
to have an accountable process to ensure meaningful and timely input by
State and local officials in the development of regulatory policies
that have federalism implications. On March 14, 2000, DOE published a
statement of policy describing the intergovernmental consultation
process it will follow in the development of such regulations.\32\
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\31\ 64 FR 43255 (August 4, 1999).
\32\ 65 FR 13735 (March 14, 2000).
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DOE has examined this IFR and has determined that it will not
preempt State law and will not have a substantial direct effect on the
States, on the relationship between the national government and the
States, or on the distribution of power and responsibilities among the
various levels of government. Accordingly, no further action is
required by Executive Order 13132.
H. Executive Order 13175
Under Executive Order 13175, ``Consultation and Coordination with
Indian Tribal Governments,'' \33\ DOE may not issue a discretionary
rule that has ``Tribal'' implications and imposes substantial direct
compliance costs on Indian Tribal governments. DOE has determined that
this IFR will not have such effects and has concluded that Executive
Order 13175 does not apply to this IFR.
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\33\ 65 FR 67249, (November 9, 2000).
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I. Unfunded Mandates Reform Act of 1995
Title II of the Unfunded Mandates Reform Act of 1995 (``UMRA'')
\34\ requires each Federal agency to assess the effects of Federal
regulatory actions on State, local, and tribal governments and the
private sector. For a proposed regulatory action likely to result in a
rule that may cause the expenditure by State, local, and tribal
governments, in the aggregate, or by the private sector of $100 million
or more in any one year (adjusted annually for inflation), section 202
of UMRA requires a Federal agency to publish a written statement that
estimates the resulting costs, benefits, and other effects on the
national economy (2 U.S.C. 1532(a) and (b)). UMRA also requires a
Federal agency to develop an effective process to permit timely input
by elected officers of State, local, and tribal governments on a
proposed ``significant intergovernmental mandate'' and requires an
agency plan for giving notice and opportunity for timely input to
potentially affected small governments before establishing any
requirements that might significantly or uniquely affect small
governments. On March 18, 1997, DOE published a statement of policy on
its process for intergovernmental consultation under UMRA.\35\ DOE
examined this IFR according to UMRA and its statement of policy and has
determined that the IFR contains neither an intergovernmental mandate
nor a mandate that may result in the expenditure of $100 million or
more in any year by State, local, and tribal governments, in the
aggregate, or by the private sector. The IFR establishes only
requirements that are a condition of Federal assistance or a duty
arising from participation in a voluntary program. Accordingly, no
further assessment or analysis is required under UMRA.
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\34\ Public Law 104-4 (1995).
\35\ 62 FR 12820 (March 18, 1997); also available at
www.energy.gov/gc/office-general-counsel.
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J. Treasury and General Government Appropriations Act of 1999
Section 654 of the Treasury and General Government Appropriations
Act, 1999 \36\ requires Federal agencies to issue a Family Policymaking
Assessment for any proposed rule that may affect family well-being.
This IFR will not have any impact on the autonomy or integrity of the
family as an institution. Accordingly, DOE has concluded that it is not
necessary to prepare a Family Policymaking Assessment.
---------------------------------------------------------------------------
\36\ Public Law 105-277 (1998); 5 U.S.C. 601 note.
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K. Treasury and General Government Appropriations Act, 2001
Section 515 of the Treasury and General Government Appropriations
Act, 2001 \37\ provides for Federal agencies to review most
disseminations of information to the public under guidelines
established by each agency pursuant to general guidelines issued by
OMB. OMB's guidelines were published at 67 FR 8452 (February 22, 2002),
and DOE's guidelines were published at 67 FR 62446 (October 7, 2002).
Pursuant to OMB Memorandum M-19-15, ``Improving Implementation of the
Information Quality Act'' (April 24, 2019), DOE published updated
guidelines which are available at: https://www.energy.gov/sites/prod/files/2019/12/f70/DOE%20Final%20Updated%20IQA%20Guidelines%20Dec%202019.pdf.
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\37\ Public Law 106-554 (2000); 44 U.S.C. 3516 note.
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DOE has reviewed this IFR under the OMB and DOE guidelines and has
concluded that it is consistent with applicable policies in those
guidelines.
L. Executive Order 13211
Executive Order 13211, ``Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution, or Use,'' \38\
requires Federal agencies to prepare and submit to the OMB, a Statement
of Energy Effects for any proposed significant energy action. A
``significant energy action'' is defined as any action by an agency
that promulgated or is expected to lead to promulgation of a final
rule, and that: (1) Is a significant regulatory action under Executive
Order 12866, or any successor order; and (2) is likely to have a
significant adverse effect on the supply, distribution, or use of
energy, or (3) is designated by the Administrator of OIRA as a
significant energy action. For
[[Page 34428]]
any proposed significant energy action, the agency must give a detailed
statement of any adverse effects on energy supply, distribution, or use
should the proposal be implemented, and of reasonable alternatives to
the action and their expected benefits on energy supply, distribution,
and use. This regulatory action will not have a significant adverse
effect on the supply, distribution, or use of energy and is therefore
not a significant energy action. Accordingly, DOE has not prepared a
Statement of Energy Effects.
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\38\ 66 FR 28355 (May 22, 2001).
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M. Congressional Review Act
As required by 5 U.S.C. 801, DOE will report to Congress on the
promulgation of this rule. The report will state that it has been
determined that the rule is a ``major rule'' as defined by 5 U.S.C.
804(2). In accordance with 5 U.S.C. 808(2), this IFR will be effective
upon publication based upon DOE's finding of good cause that prior
notice and public procedure thereon are contrary to the public
interest. See section V.B of this document, Administrative Procedure
Act.
VI. Approval of the Office of the Secretary
The Secretary of Energy has approved publication of this Interim
final rule; request for comments.
List of Subjects in 10 CFR Part 609
Administrative practice and procedure, Energy, Loan programs,
Reporting and recordkeeping requirements.
Signing Authority
This document of the Department of Energy was signed on May 19,
2023, by Robert Marcum, Deputy Director, Loan Programs Office, pursuant
to delegated authority from the Secretary of Energy. That document with
the original signature and date is maintained by DOE. For
administrative purposes only, and in compliance with requirements of
the Office of the Federal Register, the undersigned DOE Federal
Register Liaison Officer has been authorized to sign and submit the
document in electronic format for publication, as an official document
of the Department of Energy. This administrative process in no way
alters the legal effect of this document upon publication in the
Federal Register.
Signed in Washington, DC, on May 19, 2023.
Treena V. Garrett,
Federal Register Liaison Officer, U.S. Department of Energy.
0
For the reasons stated in the preamble, DOE revises part 609 of chapter
II of title 10 of the Code of Federal Regulations to read as follows:
PART 609--LOAN GUARANTEES FOR CLEAN ENERGY PROJECTS
Sec.
609.1 Purpose and scope.
609.2 Definitions.
609.3 Title XVII eligible projects.
609.4 Submission of applications.
609.5 Evaluation of applications.
609.6 Term sheets and conditional commitments.
609.7 Closing on the loan guarantee agreement.
609.8 Loan guarantee agreement.
609.9 Lender servicing requirements.
609.10 Project costs.
609.11 Transaction costs.
609.12 Credit ratings.
609.13 Fees and charges.
609.14 Full faith and credit and incontestability.
609.15 Default, demand, payment, and foreclosure on collateral.
609.16 Preservation of collateral.
609.17 Audit and access to records.
609.18 Deviations.
609.19 Title XVII loan guarantee program guidance.
Authority: 42 U.S.C. 7254, 16511-16517.
Sec. 609.1 Purpose and scope.
(a) This part sets forth the policies and procedures that DOE uses
for receiving, evaluating, and approving applications for loan
guarantees to support Eligible Projects under Title XVII, including
sections 1703 and 1706, of the Energy Policy Act of 2005.
(b) This part applies to all Applications, Conditional Commitments,
and Loan Guarantee Agreements.
(c) Section 600.22 of title 10 of the Code of Federal Regulations
shall not apply to actions taken under this part.
Sec. 609.2 Definitions.
When used in this part the following words have the following
meanings.
Administrative Cost of a Loan Guarantee means
(1) The total of all administrative expenses that DOE incurs
during:
(i) The evaluation of an Application for a Guarantee;
(ii) The negotiation and offer of a Term Sheet;
(iii) The negotiation of a Loan Guarantee Agreement and related
documents, including the issuance of a Guarantee; and
(iv) The servicing and monitoring of a Loan Guarantee Agreement,
including during the construction, startup, commissioning, shakedown,
and operational phases of an Eligible Project.
(2) The Administrative Cost of a Loan Guarantee does not include
Transaction Costs.
Applicant means a prospective Borrower, Project Sponsor, or
Eligible Lender that submits an Application to DOE.
Application means a submission of written materials to DOE
completed in accordance with the applicable requirements published by
DOE in guidance on the Title XVII website.
Attorney General means the Attorney General of the United States.
Borrower means any Person that enters into a Loan Guarantee
Agreement with DOE and issues or otherwise becomes obligated for the
Guaranteed Obligations.
Cargo Preference Act means the Cargo Preference Act of 1954, 46
U.S.C. 55305, as amended.
Commercial Technology means a technology in general use in the
commercial marketplace in the United States at the time the Term Sheet
is offered by DOE. A technology is in general use if it is being used
in three or more facilities that are in commercial operation in the
United States for the same general purpose as the proposed project, and
has been used in each such facility for a period of at least five
years. The five-year period for each facility shall start on the in-
service date of the facility employing that particular technology or,
in the case of a retrofit of a facility to employ a particular
technology, the date the facility resumes commercial operation
following completion and testing of the retrofit. For purposes of this
section, facilities considered to be in commercial operation for five
years include projects that have been the recipients of a loan
guarantee from DOE under this part whether or not commercial operations
have commenced.
Conditional Commitment means a Term Sheet offered by DOE and
accepted by the offeree of the Term Sheet, all in accordance with Sec.
609.6.
Contracting Officer means the Secretary of Energy or a DOE official
authorized by the Secretary to enter into, administer or terminate DOE
Loan Guarantee Agreements and related contracts on behalf of DOE.
Credit Subsidy Cost has the same meaning as ``cost of a loan
guarantee'' in section 502(5)(C) of the Federal Credit Reform Act of
1990.
Davis-Bacon Act means the statute referenced in section 1702(k) of
Title XVII.
DOE means the United States Department of Energy.
Eligible Lender means:
(1) Any Person formed for the purpose of, or engaged in the
business of, lending money, including State Energy Financing
Institutions, financial
[[Page 34429]]
institutions, and trusts or other entities designated as trustees or
agents acting on behalf of institutional investors, bondholders, or
other lenders that, as determined by DOE in each case, is:
(i) Not debarred or suspended from participation in a Federal
Government contract or participation in a non-procurement activity
(under a set of uniform regulations implemented for numerous agencies,
such as DOE, at 2 CFR part 180);
(ii) Not delinquent on any Federal debt or loan;
(iii) Legally authorized and empowered to enter into loan guarantee
transactions authorized by Title XVII and this part;
(iv) Able to demonstrate experience in originating and servicing
loans for commercial projects similar in size and scope to the Eligible
Project, or able to procure such experience through contracts
acceptable to DOE; and
(v) Able to demonstrate experience as the lead lender or
underwriter by presenting evidence of its participation in large
commercial projects or energy-related projects or other relevant
experience, or able to procure such experience through contracts
acceptable to DOE; or
(2) The Federal Financing Bank.
Eligible Project has the meaning set forth in Sec. 609.3.
Energy Infrastructure means a facility, and associated equipment,
used for:
(1) The generation or transmission of electric energy; or
(2) The production, processing, and delivery of fossil fuels, fuels
derived from petroleum, or petrochemical feedstocks.
Energy Infrastructure Reinvestment Project has the meaning set
forth in Sec. 609.3.
Equity means cash, and at DOE's sole discretion and subject to
DOE's sole determination of value, in-kind contributions and property,
in each case contributed to the permanent capital stock (or equivalent)
of the Borrower or the Eligible Project by the shareholders or other
owners of the Borrower or the Eligible Project. In-kind contributions
may not include services, but may include physical and/or intellectual
property. Equity does not include proceeds from the non-guaranteed
portion of a Guaranteed Obligation, proceeds from any other non-
guaranteed loan or obligation of the Borrower, or the value of any
Federal, State, or local government assistance or support or any cost-
share requirements under a Federal award.
Facility Fee means the fee, to be paid in the amount and in the
manner provided in the Term Sheet, to cover the Administrative Cost of
a Loan Guarantee for the period from the Application through issuance
of the Guarantee.
Federal Financing Bank means an instrumentality of the United
States Government created by the Federal Financing Bank Act of 1973,
under the general supervision of the Secretary of the Treasury.
Guarantee means the undertaking of the United States of America,
acting through the Secretary pursuant to Title XVII, to pay in
accordance with the terms thereof, principal and interest of a
Guaranteed Obligation.
Guaranteed Obligation means any loan or other debt obligation of
the Borrower for an Eligible Project for which DOE guarantees all or
any part of the payment of principal and interest under a Loan
Guarantee Agreement entered into pursuant to Title XVII.
Holder means any Person that holds a promissory note made by the
Borrower evidencing the Guaranteed Obligation (or his or her designee
or agent).
Innovative Energy Project has the meaning set forth in Sec. 609.3.
Innovative Supply Chain Project has the meaning set forth in Sec.
609.3.
Intercreditor Agreement means any agreement or instrument (or
amendment or modification thereof) among DOE and one or more other
Persons providing financing or other credit arrangements to the
Borrower (or an Eligible Project) or that otherwise provides for rights
of DOE in respect of a Borrower or in respect of an Eligible Project,
in each case in form and substance satisfactory to DOE.
Loan Agreement means a written agreement between a Borrower and an
Eligible Lender containing the terms and conditions under which the
Eligible Lender will make a loan or loans to the Borrower for an
Eligible Project.
Loan Guarantee Agreement means a written agreement that, when
entered into by DOE and a Borrower, and, if applicable, an Eligible
Lender, establishes the obligation of DOE to guarantee the payment of
all or a portion of the principal of, and interest on, specified
Guaranteed Obligations, subject to the terms and conditions specified
in the Loan Guarantee Agreement.
Maintenance Fee means the fee, to be paid in the amount and manner
provided in the Term Sheet, to cover the Administrative Cost of a Loan
Guarantee, other than extraordinary expenses, incurred in servicing and
monitoring a Loan Guarantee Agreement after the issuance of the
Guarantee.
New or Significantly Improved Technology means
(1) A technology, or a defined suite of technologies, concerned
with the production, storage, consumption, or transportation of energy,
including of associated critical minerals and other components or other
eligible energy-related project categories under section 1703(b) of
Title XVII, and that is not a Commercial Technology, and that either:
(i) Has only recently been developed, discovered, or learned; or
(ii) Involves or constitutes one or more meaningful and important
improvements in productivity or value, in comparison to Commercial
Technologies in use in the United States at the time the Term Sheet is
issued.
(2) If regional variation significantly affects the deployment of a
technology, such technology may still be considered ``New or
Significantly Improved Technology'' if no more than 6 projects employ
the same or similar technology as another project, provided no more
than 2 projects that use the same or a similar technology are located
in the same region of the United States.
OMB means the Office of Management and Budget in the Executive
Office of the President.
Person means any natural person or any legally constituted entity,
including a state or local government, tribe, corporation, company,
voluntary association, partnership, limited liability company, joint
venture, and trust.
Project Costs mean those costs, including escalation and
contingencies, that are expended or accrued by a Borrower and are
necessary, reasonable, customary, and directly related to the design,
engineering, financing, construction, startup, commissioning, and
shakedown of an Eligible Project, as specified in Sec. 609.10. Project
Costs do not include costs for the items set forth in Sec. 609.10(d).
Project Sponsor means any Person that assumes substantial
responsibility for the development, financing, and structuring of an
Eligible Project and owns or controls, by itself and/or through
individuals in common or affiliated business entities, a five percent
or greater interest in the proposed Eligible Project or the Borrower.
Reasonable Prospect of Repayment has the meaning set forth in 42
U.S.C. 16512(d)(1)(B).
Risk-Based Charge means a charge that, together with the principal
and interest on the Guaranteed Obligation, or at such other times as
DOE may determine, is payable on specified dates during the term of a
Guaranteed Obligation.
[[Page 34430]]
Secretary means the Secretary of Energy or a duly authorized
designee or successor in interest.
State means any State, the District of Columbia, the Commonwealth
of Puerto Rico, the Virgin Islands, Guam, American Samoa, and any
territory or possession of the United States.
State Energy Financing Institution means
(1) A quasi-independent entity or an entity within a State agency
or financing authority established by a State:
(i) To provide financing support or credit enhancements, including
loan guarantees and loan loss reserves, for Eligible Projects; and
(ii) To create liquid markets for eligible projects, including
warehousing and securitization, or take other steps to reduce financial
barriers to the deployment of existing and new Eligible Projects.
(2) The term ``State Energy Financing Institution'' includes an
entity or organization established by an Indian Tribal entity or an
Alaska Native Corporation to achieve the purposes described in
paragraphs (1)(i) and (ii) of this definition.
State Energy Financing Institution Project has the meaning set
forth in Sec. 609.3.
Term Sheet means a written offer for the issuance of a loan
guarantee, executed by the Secretary (or a DOE official authorized by
the Secretary to execute such offer), delivered to the Applicant, that
sets forth the detailed terms and conditions under which DOE and the
Applicant will execute a Loan Guarantee Agreement.
Title XVII means Title XVII of the Energy Policy Act of 2005 (42
U.S.C. 16511-16517), as amended.
Title XVII Loan Guarantee Program means the program administered by
DOE pursuant to Title XVII, regulations under this part, DOE guidance
and policy documents, and other applicable laws and requirements.
Transaction Costs mean:
(1)(i) Out-of-pocket costs of financial, legal, and other
professional services associated with the financing of an Eligible
Project, including services necessary to obtain required licenses and
permits, prepare environmental reports and data, conduct legal and
technical due diligence, develop and audit a financial model, negotiate
the terms and provisions of project contracts and financing documents,
including those costs associated with the advisors to DOE and any other
Eligible Lender; and
(ii) Costs of issuing Eligible Project debt, such as commitment
fees, upfront fees, and other applicable financing fees, costs and
expenses imposed by Eligible Lenders.
(2) Transaction Costs do not include the Administrative Cost of a
Loan Guarantee or Credit Subsidy Costs.
United States means the several States, the District of Columbia,
the Commonwealth of Puerto Rico, the Virgin Islands, Guam, American
Samoa, and any territory or possession of the United States of America.
Sec. 609.3 Title XVII eligible projects.
(a)(1) DOE is authorized to provide loan Guarantees for certain
categories of projects under Title XVII including:
(i) Innovative Energy Projects under section 1703 of Title XVII;
(ii) Innovative Supply Chain Projects under section 1703 of Title
XVII;
(iii) State Energy Financing Institution Projects under section
1703 of Title XVII; and
(iv) Energy Infrastructure Reinvestment Projects under section 1706
of Title XVII.
(2) A Project meeting the applicable eligibility requirements set
forth herein constitutes an ``Eligible Project'' under Title XVII.
(b) An eligible Innovative Energy Project is a project that:
(1) Falls within a category set forth in section 1703(b) of Title
XVII;
(2) Is located in the United States;
(3) Is at one location, except that the project may be located at
two or more locations if the project is comprised of installations or
facilities employing a single New or Significantly Improved Technology
that is deployed pursuant to an integrated and comprehensive business
plan. An Innovative Energy Project located in more than one location is
a single Eligible Project;
(4) Deploys a New or Significantly Improved Technology; and
(5) Avoids, reduces, utilizes, or sequesters air pollutants or
anthropogenic emissions of greenhouse gases.
(c) An eligible Innovative Supply Chain Project is a project that:
(1) Manufactures a product with an end-use set forth in section
1703(b) of Title XVII;
(2) Is located in the United States;
(3) Is at one location, except that the project may be located at
two or more locations if the project is comprised of installations or
facilities employing a single New or Significantly Improved Technology
that is deployed pursuant to an integrated and comprehensive business
plan. An Innovative Supply Chain Project located in more than one
location is a single Eligible Project;
(4) Either:
(i) Deploys a New or Significantly Improved Technology in the
manufacturing process; or
(ii) Manufactures a product that represents a New or Significantly
Improved Technology; and
(5) Avoids, reduces, utilizes, or sequesters air pollutants or
anthropogenic emissions of greenhouse gases through:
(i) The relevant manufacturing process of the relevant product; or
(ii) The end-use of the component on a full life-cycle basis.
(d) An eligible State Energy Financing Institution Project is a
project that:
(1) Falls within a category set forth in section 1703(b) of Title
XVII;
(2) Is located at one or more locations in the United States;
(3) Avoids, reduces, utilizes, or sequesters air pollutants or
anthropogenic emissions of greenhouse gases;
(4) Receives financial support or credit enhancements from a State
Energy Financing Institution; and
(5) May include a partnership between one or more State Energy
Financing Institutions and private entities, Tribal entities, or Alaska
Native corporations in carrying out the project.
(e) An eligible Energy Infrastructure Reinvestment Project is a
project that:
(1) Is located in the United States;
(2) Either:
(i) Enables operating Energy Infrastructure to avoid, reduce,
utilize, or sequester air pollutants or anthropogenic emissions of
greenhouse gases; or
(ii) Retools, repowers, repurposes, or replaces Energy
Infrastructure that has ceased operations; provided that if such
project involves electricity generation through the use of fossil
fuels, such project shall be required to have controls or technologies
to avoid, reduce, utilize, or sequester air pollutants and
anthropogenic emissions of greenhouse gases; and
(3) May include the remediation of environmental damage associated
with Energy Infrastructure.
Sec. 609.4 Submission of applications.
(a) DOE may direct that Applications be submitted in more than one
part; provided, that the parts of such Application, taken as a whole,
contain such information published by DOE in guidance on the Title XVII
Loan Guarantee Program website pursuant to Sec. 609.19. In such event,
subsequent parts of an Application may be filed only after DOE invites
an Applicant to make an additional submission. If DOE directs that
Applications be submitted in more than one part, the initial part of
[[Page 34431]]
an Application shall contain information sufficient for DOE to
determine that the project proposed by an Applicant will be, or may
reasonably become, an Eligible Project, and to evaluate such project's
readiness to proceed. If there have been any material amendments,
modifications, or additions made to the information previously
submitted by an Applicant, the Applicant shall provide a detailed
description thereof, including any changes in the proposed project's
financing structure or other terms, promptly upon request by DOE.
(b) An Applicant may submit Applications for multiple proposed
projects and for projects using different technologies; provided that
an Applicant for an Innovative Energy Project or Innovative Supply
Chain Project may not submit an Application or Applications for
multiple Innovative Energy Projects or multiple Innovative Supply Chain
Projects using the same technology. For purposes of this paragraph (b),
the term ``Applicant'' shall include the Project Sponsor and any
subsidiaries or affiliates of the Project Sponsor.
(c) DOE has no obligation to evaluate an Application that is not
complete, and may proceed with such evaluation, or a partial
evaluation, only in its discretion. DOE will not design an Eligible
Project for Applicants, but may respond, in its discretion, in general
terms to specific proposals. DOE's response to questions from potential
Applicants are pre-decisional and preliminary in nature.
(d) Unless an Applicant requests an extension and such an extension
is granted by DOE in its discretion, an Application may be rejected if
it is not complete within two years from the date of submission (or
date of submission of the first part thereof, in the case of
Applications made in more than one part).
(e) DOE shall respond, in writing, to any inquiry by an Applicant
about the status of its Application within ten (10) days of receipt of
such request. If an Application has been pending before DOE for 180
days or more, such response shall include:
(1) A description of the current status of review of the
Application;
(2) A summary of any factors that are delaying a final decision on
the Application, a list of what items are required in order to reach a
final decision, citations to authorities stating the reasons why such
items are required, and a list of actions the Applicant can take to
expedite the process; and
(3) An estimate of when a final decision on the Application will be
made.
Sec. 609.5 Evaluation of applications.
(a) Applications will be considered in a merit-based review
process, considering such factors determined and published by DOE in
guidance on its Title XVII Loan Guarantee Program website pursuant to
Sec. 609.19. At any time, DOE may request additional information or
supporting documentation from an Applicant.
(b) Applications will be denied if:
(1) The proposed project is not an Eligible Project;
(2) With respect to applications for Innovative Energy Projects and
Innovative Supply Chain Projects, the applicable technology is not
ready to be deployed commercially in the United States, cannot yield a
commercially viable product or service in the use proposed in the
Application, does not have the potential to be deployed in other
commercial projects in the United States, or is not or will not be
available for further commercial use in the United States;
(3) The Person proposed to issue the loan or purchase other debt
obligations constituting the Guaranteed Obligations is not an Eligible
Lender;
(4) The proposed project is for demonstration, research, or
development;
(5) Significant Equity for the proposed project will not be
provided by the date of issuance of the Guaranteed Obligations, or such
later time as DOE in its discretion may determine;
(6) The proposed project does not present a Reasonable Prospect of
Repayment of the Guaranteed Obligations;
(7) With respect to applications for Energy Infrastructure
Reinvestment Projects such application fails to include an analysis of
how the proposed project will engage with and affect associated
communities or, where the Applicant is an electric utility, an
assurance that Applicant will pass on the financial benefit from the
Guarantee to the customers of, or associated communities served by, the
electric utility; or
(8) The Applicant or Project Sponsor does not satisfy DOE's ``know
your customer'' requirements.
(c) If an Application has not been denied pursuant to paragraph (b)
of this section, DOE will evaluate the proposed project based on the
criteria published by DOE in guidance on its Title XVII Loan Guarantee
Program website pursuant to Sec. 609.19.
(d) After DOE completes its review and evaluation of a proposed
project, DOE will notify the Applicant in writing of its determination
whether to proceed with due diligence and negotiation of a Term Sheet.
DOE will proceed only if it determines that the proposed project is
highly qualified and suitable for a Guarantee. Upon written
confirmation from the Applicant that it desires to proceed, DOE and the
Applicant will commence negotiations.
(e) DOE shall provide all Applicants with a reasonable opportunity
to correct or amend any Application in order to meet the criteria set
forth in this part or any other conditions required by DOE, prior to
any denial of such Application. A determination by DOE not to proceed
with a proposed project shall be final and non-appealable, but shall
not prejudice the Applicant or other affected Persons from applying for
a Guarantee in respect of a different proposed project pursuant to
another, separate Application. Prior to DOE's denial of any
Application, DOE shall advise the Applicant in writing, not less than
ten (10) business days prior to the effective date of such denial. If
an Application could be amended or corrected such that DOE would
determine that the project is highly qualified and suitable for a
Guarantee, DOE may set forth the reasons for such proposed denial along
with a list of items that may be corrected or amended by the Applicant.
If requested by any Applicant, DOE shall meet with such Applicant in
order to address questions or concerns raised by the Applicant.
Sec. 609.6 Term sheets and conditional commitments.
(a) DOE, after negotiation of a Term Sheet with an Applicant, may
offer such Term Sheet to an Applicant or such other Person that is an
affiliate of the Applicant and that is acceptable to DOE. DOE's offer
of a Term Sheet shall be in writing and signed by the Contracting
Officer. DOE's negotiation of a Term Sheet imposes no obligation on the
Secretary to offer a Term Sheet to the Applicant.
(b) DOE shall terminate its negotiations of a Term Sheet if it has
not offered a Term Sheet in respect of an Eligible Project within two
years after the date of the written notification set forth in Sec.
609.5(d), unless extended in writing by DOE.
(c) If and when the offeree specified in a Term Sheet satisfies all
terms and conditions for acceptance of the Term Sheet, including
written acceptance thereof, the Term Sheet shall become a Conditional
Commitment. Each Conditional Commitment shall include
[[Page 34432]]
an expiration date no more than two years from the date it is issued,
unless extended in writing in the discretion of the Contracting
Officer. When and if all of the terms and conditions specified in the
Conditional Commitment have been met, DOE and the Applicant may enter
into a Loan Guarantee Agreement. If applicable, the Conditional
Commitment shall include the terms and conditions pursuant to which any
Credit Subsidy Cost payment made by the Borrower to the Secretary is
subject to refund to the Borrower in the event that the closing date of
the Loan Guarantee Agreement does not occur.
(d) Prior to or on the date of the Conditional Commitment, DOE will
ensure that:
(1) OMB has reviewed and approved DOE's calculation of the Credit
Subsidy Cost of the Guarantee;
(2) One of the following has occurred:
(i) Appropriated funds for the Credit Subsidy Cost are available;
(ii) The Secretary has received from the Borrower payment in full
for the Credit Subsidy Cost and deposited the payment into the
Treasury; or
(iii) A combination of one or more appropriations under paragraph
(d)(2)(i) of this section and one or more payments from the Borrower
under paragraph (d)(2)(ii) of this section has been made that is equal
to the Credit Subsidy Cost; and
(3) The Department of the Treasury has been consulted as to the
proposed terms and conditions of the Loan Guarantee Agreement.
(e) If, subsequent to execution of a Conditional Commitment, the
financing arrangements of the Borrower, or in respect of an Eligible
Project, change from those described in the Conditional Commitment, the
Applicant shall promptly provide updated financing information in
writing to DOE. All such updated information shall be deemed to be
information submitted in connection with an Application. Based on such
updated information, DOE may take one or more of the following actions:
(1) Determine that such changes are not material to the Borrower,
the Eligible Project or DOE;
(2) Amend the Conditional Commitment accordingly, including by re-
calculating the Credit Subsidy Cost in accordance with Sec. 609.6(d);
(3) Postpone the expected closing date of the associated Loan
Guarantee Agreement; or
(4) Terminate the Conditional Commitment.
Sec. 609.7 Closing on the loan guarantee agreement.
(a) Subsequent to entering into a Conditional Commitment with an
Applicant, DOE, after consultation with the Applicant, will set a
closing date for execution of a Loan Guarantee Agreement.
(b) Prior to or on the closing date of a Loan Guarantee Agreement
DOE will ensure that:
(1) Pursuant to section 1702(h) of Title XVII, DOE will receive
from the Applicant the Facility Fee referred to in Sec. 609.13(b) on
the closing date;
(2) The Department of the Treasury has been consulted as to the
terms and conditions of the Loan Guarantee Agreement.
(2) The Loan Guarantee Agreement and related documents contain all
terms and conditions DOE deems reasonable and necessary to protect the
interest of the United States;
(3) Each holder of the Guaranteed Obligations is an Eligible
Lender, and the servicer of the Guaranteed Obligations meets the
servicing performance requirements of Sec. 609.9(b);
(4) DOE has determined the principal amount of the Guaranteed
Obligations expected to be issued in respect of the Eligible Project,
as estimated at the time of issuance, will not exceed 80 percent of the
Project Costs of the Eligible Project;
(5) DOE has completed all necessary reviews under the National
Environmental Policy Act of 1969; and
(6) All conditions precedent specified in the Conditional
Commitment are either satisfied or waived in writing by the Contracting
Officer. If the counterparty to the Conditional Commitment has not
satisfied all such terms and conditions on or prior to the closing date
of the Loan Guarantee Agreement, DOE may, in its discretion, set a new
closing date, or terminate the Conditional Commitment.
Sec. 609.8 Loan guarantee agreement.
(a) Only a Loan Guarantee Agreement executed by the Contracting
Officer can obligate DOE to issue a Guarantee in respect of Guaranteed
Obligations. DOE is not bound by oral representations.
(b) Each Loan Guarantee Agreement shall contain the following
requirements and conditions, and shall not be executed until the
Contracting Officer determines that the following requirements and
conditions are satisfied:
(1) The Federal Financing Bank shall be the only Eligible Lender in
transactions where DOE guarantees 100 percent (but not less than 100
percent) of the principal and interest of the Guaranteed Obligations
issued under a Loan Guarantee Agreement. Where DOE guarantees 90
percent or less of the Guaranteed Obligation, the guaranteed portion
may be separated from or ``stripped'' from the non-guaranteed portion
of the Guaranteed Obligation, if the loan is participated, syndicated
or otherwise resold in the secondary debt market.
(2) The Borrower shall be obligated to make full repayment of the
principal and interest on the Guaranteed Obligations and other debt of
a Borrower over a period not to exceed:
(i) In the case of an Innovative Energy Project, an Innovative
Supply Chain Project, or a State Energy Financing Institution Project,
the lesser of 30 years or 90 percent of the projected useful life of
the Eligible Project's major physical assets, as calculated in
accordance with U.S. generally accepted accounting principles and
practices; and
(ii) In the case of an Energy Infrastructure Reinvestment Project,
30 years.
(3) If any financing or credit arrangement of the Borrower or
relating to the Eligible Project, other than the Guaranteed
Obligations, has an amortization period shorter than that of the
Guaranteed Obligations, DOE shall have determined that the resulting
financing structure allocates to DOE a reasonably proportionate share
of the default risk, in light of:
(i) DOE's share of the total debt financing of the Borrower;
(ii) Risk allocation among the credit providers to the Borrower;
and
(iii) Internal and external credit enhancements.
(4) The Guarantee does not finance, either directly or indirectly
tax-exempt debt obligations, consistent with the requirements of
section 149(b) of the Internal Revenue Code.
(5) The principal amount of the Guaranteed Obligations, when
combined with funds from other sources committed and available to the
Borrower, shall be sufficient to pay for expected Project Costs
(including adequate contingency amounts) and otherwise to carry out the
Eligible Project.
(6) There shall be a Reasonable Prospect of Repayment by the
Borrower of the principal of and interest on the Guaranteed Obligations
and all of its other debt obligations.
(7) The Borrower shall pledge collateral or surety determined by
DOE to be necessary to secure the repayment of the Guaranteed
Obligations. Such collateral or security may include Eligible Project
assets and assets not related to the Eligible Project.
(8) The Loan Guarantee Agreement and related documents shall
include detailed terms and conditions that DOE deems necessary and
appropriate to
[[Page 34433]]
protect the interests of the United States in the case of default,
including ensuring availability of all relevant intellectual property
rights, technical data including software, and technology necessary for
DOE or any Person selected by DOE, to complete, operate, convey, and
dispose of the defaulted Borrower or the Eligible Project.
(9) The Guaranteed Obligations shall not be subordinate in payment
or lien priority to other financing. In DOE's discretion, Guaranteed
Obligations may share a lien position with other financing on a pari
passu basis.
(10) There is satisfactory evidence that the Borrower will
diligently pursue the Eligible Project and is willing, competent, and
capable of performing its obligations under the Loan Guarantee
Agreement and the loan documentation relating to its other debt
obligations.
(11) The Borrower shall have paid all fees and expenses due to DOE
or the U.S. Government, including such amount of the Credit Subsidy
Cost as may be due and payable from the Borrower at the time of the
Conditional Commitment.
(12) The Borrower, any Eligible Lender, and each other relevant
party shall take, and be obligated to continue to take, those actions
necessary to perfect and maintain liens on collateral in respect of the
Guaranteed Obligations.
(13) DOE or its representatives shall have access to the offices of
the Borrower and the Eligible Project site at all reasonable times in
order to monitor the--
(i) Performance by the Borrower of its obligations under the Loan
Guarantee Agreement; and
(ii) Performance of the Eligible Project.
(14) DOE and Borrower have reached an agreement regarding the
information that will be made available to DOE and the information that
will be made publicly available.
(15) The Borrower shall have filed applications for or obtained any
required regulatory approvals for the Eligible Project and is in
compliance, or promptly will be in compliance, where appropriate, with
all Federal, State, and local regulatory requirements.
(16) The Borrower shall have no delinquent Federal debt.
(17) The Project Sponsors have made or will make a significant
Equity investment in the Borrower or the Eligible Project, and will
maintain control of the Borrower or the Eligible Project as agreed in
the Loan Guarantee Agreement.
(18) The Loan Guarantee Agreement and related agreements shall
include such other terms and conditions as DOE deems necessary or
appropriate to protect the interests of the United States.
(c) The Loan Guarantee Agreement shall provide that, in the event
of a default by the Borrower:
(1) Interest on the Guaranteed Obligations shall accrue at the rate
or penalty rate, as applicable, stated in the Loan Guarantee Agreement
or the Loan Agreement until DOE makes full payment of the defaulted
Guaranteed Obligations and, except when such Guaranteed Obligations are
funded through the Federal Financing Bank, DOE shall not be required to
pay any premiums, defaults, or prepayment penalties; and
(2) The holder of collateral pledged in respect of the Guaranteed
Obligations shall be obligated to take such actions as DOE may
reasonably require to provide for the care, preservation, protection,
and maintenance of such collateral so as to enable the United States to
achieve maximum recovery.
(d)(1) An Eligible Lender or other Holder may sell, assign or
transfer a Guaranteed Obligation to another Eligible Lender that meets
the requirements of Sec. 609.9. Such latter Eligible Lender shall be
required to assume all servicing, monitoring, and reporting
requirements as provided in the Loan Guarantee Agreement. Any transfer
of the servicing, monitoring, and reporting functions shall be subject
to the prior written approval of DOE.
(2) The Secretary, or the Secretary's designee or contractual
agent, for the purpose of identifying Holders with the right to receive
payment under the Guaranteed Obligations, shall include in the Loan
Guarantee Agreement or related documents a procedure for tracking and
identifying Holders of Guaranteed Obligations. Any contractual agent
approved by the Secretary to perform this function may transfer or
assign this responsibility only with the Secretary's prior written
approval.
(e) Each Loan Guarantee Agreement shall require the Borrower to
make representations and warranties, agree to covenants, and satisfy
conditions precedent to closing and to each disbursement that, in each
case, relate to its compliance with the Davis-Bacon Act and the Cargo
Preference Act.
(f) The Applicant, the Borrower, or the Project Sponsor must
estimate, calculate, record, and provide to DOE any time DOE requests
such information and at the times provided in the Loan Guarantee
Agreement all costs incurred in the design, engineering, financing,
construction, startup, commissioning, and shakedown of the Eligible
Project in accordance with generally accepted accounting principles and
practices.
Sec. 609.9 Lender servicing requirements.
(a) When reviewing and evaluating a proposed Eligible Project, all
Eligible Lenders (other than the Federal Financing Bank) shall at all
times exercise the level of care and diligence that a reasonable and
prudent lender would exercise when reviewing, evaluating, and
disbursing a loan made by it without a Federal guarantee.
(b) Loan servicing duties shall be performed by an Eligible Lender,
DOE, or another qualified loan servicer approved by DOE. When
performing its servicing duties, the loan servicer shall at all times
exercise the level of care and diligence that a reasonable and prudent
lender would exercise when servicing a loan made without a Federal
guarantee, including:
(1) During the construction period, monitoring the satisfaction of
all of the conditions precedent to all loan disbursements, as provided
in the Loan Guarantee Agreement, Loan Agreement, or related documents;
(2) During the operational phase, monitoring and servicing the
Guaranteed Obligations and collection of the outstanding principal and
accrued interest as well as undertaking to ensure that the collateral
package securing the Guaranteed Obligations remains uncompromised; and
(3) Until the Guaranteed Obligations have been repaid, providing
annual or more frequent financial and other reports on the status and
condition of the Guaranteed Obligations and the Eligible Project, and
promptly notifying DOE if it becomes aware of any problems or
irregularities concerning the Eligible Project or the ability of the
Borrower to make payment on the Guaranteed Obligations or its other
debt obligations.
Sec. 609.10 Project costs.
(a) The Project Costs of an Eligible Project are those costs,
including escalation and contingencies, that are expended or accrued by
a Borrower and are necessary, reasonable, customary, and directly
related to the design, engineering, financing, construction, startup,
commissioning, and shakedown of an Eligible Project.
(b) Project Costs include:
(1) Costs of acquisition, lease, or rental of real property,
including engineering fees, surveys, title insurance, recording fees,
and legal fees incurred in connection with land acquisition, lease or
rental, site
[[Page 34434]]
improvements, site restoration, access roads, and fencing;
(2) Costs of engineering, architectural, legal and bond fees, and
insurance paid in connection with construction of the facility;
(3) Costs of equipment purchases, including a reasonable reserve of
spare parts to the extent required;
(4) Costs to provide facilities and services related to safety and
environmental protection;
(5) Transaction Costs;
(6) Costs of necessary and appropriate insurance and bonds of all
types including letters of credit and any collateral required therefor;
(7) Costs of design, engineering, startup, commissioning, and
shakedown;
(8) Costs of obtaining licenses to intellectual property necessary
to design, construct, and operate the Eligible Project;
(9) To the extent required by the Loan Guarantee Agreement and not
intended or available for any cost referred to in paragraph (d) of this
section, costs of funding any reserve fund, including without
limitation, a debt service reserve, a maintenance reserve, and a
contingency reserve for cost overruns during construction; provided
that proceeds of a Guaranteed Obligation deposited to any reserve fund
shall not be removed from such fund except to pay Project Costs, to pay
principal of the Guaranteed Obligation, or otherwise to be used as
provided in the Loan Guarantee Agreement;
(10) Capitalized interest necessary to meet market requirements and
other carrying costs during construction;
(11) In DOE's sole discretion, the cost of refinancing outstanding
indebtedness that is directly associated with the Eligible Project,
including the principal amount of such indebtedness, accrued interest
thereon, and any reasonable and customary prepayment premium or
breakage costs; provided that DOE determines that the refinancing
furthers the purpose of the Eligible Project.
(12) With respect to Energy Infrastructure Reinvestment Projects,
the cost of remediation of environmental damage associated with the
Energy Infrastructure; and
(13) Other necessary and reasonable costs, including, without
limitation, previously acquired real estate, equipment, or other
materials, costs of interconnection, and any engineering, construction,
make-ready, design, permitting, or other work completed on an existing
facility or project;
(c) Where a Project consists of the financing and installation of a
series of distributed energy resources, DOE may deem the eligible
Project Costs to consist of the reasonable and documented costs
incurred by the end-user of each distributed energy resource in
connection with the contractual agreement between the end-user and the
Project Sponsor or its agent, provided that:
(1) DOE is able to validate such reasonable and documented costs
through standard customer contracts and standard distributed energy
resource system attributes; and
(2) The Borrower institutes a compliance system satisfactory to DOE
to ensure that each distributed energy resource supported by a
Guarantee complies with any eligibility criteria required by DOE,
including with respect to approved customer contracts and approved
distributed energy resource systems.
(d) Project Costs do not include:
(1) Fees and commissions charged to Borrower, including finder's
fees, for obtaining Federal or other funds;
(2) Parent corporation or other affiliated entity's general and
administrative expenses, and non-Eligible Project related parent
corporation or affiliated entity assessments, including organizational
expenses;
(3) Goodwill, franchise, trade, or brand name costs;
(4) Dividends and profit sharing to stockholders, employees, and
officers;
(5) Research, development, and demonstration costs of readying an
innovative technology for employment in a commercial project;
(6) Costs that are excessive or are not directly required to carry
out the Eligible Project, as determined by DOE;
(7) Expenses incurred after startup, commissioning, and shakedown
of the facility, or, in DOE's discretion, any portion of the facility
that has completed startup, commissioning, and shakedown;
(8) Borrower-paid Credit Subsidy Costs, the Administrative Cost of
a Loan Guarantee, and any other fee collected by DOE; and
(9) Operating costs.
(e) Costs incurred in connection with an Eligible Project may be
subject to such other criteria for inclusion as Project Costs as
published by DOE from time to time in guidance on the Title XVII Loan
Guarantee Program website pursuant to Sec. 609.19.
Sec. 609.11 Transaction costs.
(a) Upon making a determination to engage independent consultants
or outside counsel with respect to an Application, DOE will proceed to
evaluate and process such Application only following execution by an
Applicant or Project Sponsor, as appropriate, of an agreement
satisfactory to DOE to pay the Transaction Costs charged by the
independent consultants and outside legal counsel. Each Applicant,
Borrower, or Project Sponsor, as applicable, shall be responsible for
the payment of Transaction Costs associated with DOE's independent
consultants and outside legal counsel in connection with an
Application, Conditional Commitment, or Loan Guarantee Agreement, as
applicable. Appropriate provisions regarding payment of such
Transaction Costs shall also be included in each Term Sheet and Loan
Guarantee Agreement or, upon a determination by DOE, in other
appropriate agreements.
(b) Notwithstanding payment by Applicant, Borrower, or Project
Sponsor, all services rendered by an independent consultant or outside
legal counsel to DOE in connection with an Application, Conditional
Commitment, or Loan Guarantee Agreement shall be solely for the benefit
of DOE (and such other creditors as DOE may agree in writing). DOE may
require, in its discretion, the payment of an advance retainer to such
independent consultants or outside legal counsel as security for the
collection of the fees and expenses charged by the independent
consultants and outside legal counsel. In the event an Applicant,
Borrower, or Project Sponsor fails to comply with the provisions of
such payment agreement, DOE in its discretion, may stop work on or
terminate an Application, a Conditional Commitment, or a Loan Guarantee
Agreement, or may take such other remedial measures in its discretion
as it deems appropriate.
(c) DOE shall not be financially liable under any circumstances to
any independent consultant or outside counsel for services rendered in
connection with an Application, Conditional Commitment, or Loan
Guarantee Agreement except to the extent DOE has previously entered
into an express written agreement to pay for such services.
Sec. 609.12 Credit ratings.
(a) Where conditions justify, in the sole discretion of the
Secretary, DOE may require that an Applicant submit a preliminary
credit assessment for the proposed project, reflecting the project
without a Guarantee, from a nationally recognized statistical ratings
organization.
(b) Where conditions justify, in the sole discretion of the
Secretary, DOE may require that an Applicant provide
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a credit rating for the proposed project, and subsequently provide
updated ratings, from a nationally recognized statistical ratings
organization.
Sec. 609.13 Fees and charges.
(a) Unless explicitly authorized by statute, no funds obtained from
the Federal Government, or from a loan or other instrument guaranteed
by the Federal Government, may be used to pay for the Credit Subsidy
Cost, the Facility Fee, the Maintenance Fee, and any other fees charged
by or paid to DOE relating to Title XVII or any Guarantee thereunder.
An Applicant may, at any time, use non-Federal monies to pay the Credit
Subsidy Cost or DOE fees.
(b) DOE may charge Applicants a non-refundable Facility Fee,
payable on the closing date for the Loan Guarantee Agreement.
(c) In order to encourage and supplement private lending activity
DOE may collect from Borrowers for deposit in the United States
Treasury a non-refundable Risk-Based Charge which, together with the
interest rate on the Guaranteed Obligation that LPO determines to be
appropriate, will take into account the prevailing rate of interest in
the private sector for similar loans and risks. The Risk-Based Charge
shall be paid at such times and in such manner as may be determined by
DOE, but no less frequently than once each year, commencing with
payment of a pro-rated payment on the date the Guarantee is issued. The
amount of the Risk-Based Charge will be specified in the Loan Guarantee
Agreement.
(d) DOE may collect a Maintenance Fee as set forth in the Loan
Guarantee Agreement. The Maintenance Fee shall accrue from the date of
execution of the Loan Guarantee Agreement through the date of payment
in full of the related Guaranteed Obligations. If DOE determines to
collect a Maintenance Fee, it shall be paid by the Borrower each year
(or portion thereof) in advance in the amount specified in the
applicable Loan Guarantee Agreement.
(e) In the event a Borrower or an Eligible Project experiences
difficulty relating to technical, financial, or legal matters or other
events (e.g., engineering failure or financial workouts), the Borrower
shall be liable as follows:
(1) If such difficulty requires DOE to incur time or expenses
beyond those customarily expended to monitor and administer performing
loans, DOE may collect an extraordinary expenses fee from the Borrower
that will reimburse DOE for such time and expenses, as determined by
DOE; and
(2) For all fees and expenses of DOE's independent consultants and
outside counsel, to the extent that such fees and expenses are elected
to be paid by DOE notwithstanding the provisions of Sec. 609.11.
Sec. 609.14 Full faith and credit and incontestability.
The full faith and credit of the United States is pledged to the
payment of principal and interest of Guaranteed Obligations pursuant to
Guarantees issued in accordance with Title XVII and this part. The
issuance by DOE of a Guarantee shall be conclusive evidence that it has
been properly obtained; that the underlying loan qualified for such
Guarantee; and that, but for fraud or material misrepresentation by the
Holder, except when the Holder is the Federal Financing Bank, such
Guarantee shall be legal, valid, binding, and enforceable against DOE
in accordance with its terms.
Sec. 609.15 Default, demand, payment, and foreclosure on collateral.
(a) If a Borrower defaults in making a required payment of
principal or interest on a Guaranteed Obligation and such default has
not been cured within the applicable grace period, the Holder may make
written demand for payment upon the Secretary in accordance with the
terms of the applicable Guarantee. If a Borrower defaults in making a
required payment of principal or interest on a Guaranteed Obligation
and such default has not been cured within the applicable grace period,
the Secretary shall notify the Attorney General.
(b) Subject to the terms of the applicable Guarantee, the Secretary
shall make payment within 60 days after receipt of written demand for
payment from the Holder, provided that the demand for payment complies
in all respects with the terms of the applicable Guarantee. Interest
shall accrue to the Holder at the rate stated in the promissory note
evidencing the Guaranteed Obligation, without giving effect to the
Borrower's default in making a required payment of principal or
interest on the applicable Guarantee Obligation or any other default by
the Borrower, until the Guaranteed Obligation has been fully paid by
DOE. Payment by the Secretary on the applicable Guarantee does not
change Borrower's obligations under the promissory note evidencing the
Guaranteed Obligation, Loan Guarantee Agreement, Loan Agreement, or
related documents, including an obligation to pay default interest.
(c) Following payment by the Secretary pursuant to the applicable
Guarantee, upon demand by DOE, the Holder shall transfer and assign to
the Secretary (or his or her designee or agent) the promissory note
evidencing the Guaranteed Obligation, all rights and interests of the
Holder in the Guaranteed Obligation, and all rights and interests of
the Holder in respect of the Guaranteed Obligation, except to the
extent that the Secretary determines that such promissory note or any
of such rights and interests shall not be transferred and assigned to
the Secretary. Such transfer and assignment shall include, without
limitation, all of the liens, security, and collateral rights of the
Holder (or his or her designee or agent) in respect of the Guaranteed
Obligation.
(d) Following payment by the Secretary pursuant to a Guarantee or
other default of a Guaranteed Obligation, the Secretary is authorized
to protect and foreclose on the collateral, take action to recover
costs incurred by, and all amounts owed to, the United States as a
result of the defaulted Guarantee Obligation, and take such other
action necessary or appropriate to protect the interests of the United
States. In respect of any such authorized actions that involve a
judicial proceeding or other judicial action, the Secretary shall act
through the Attorney General. The foregoing provisions of this
paragraph (d) shall not relieve the Secretary from his or her
obligations pursuant to any applicable Intercreditor Agreement. Nothing
in this paragraph (d) shall limit the Secretary from exercising any
rights or remedies pursuant to the terms of the Loan Guarantee
Agreement.
(e) The cash proceeds received as a result of any foreclosure on
the collateral, or other action, shall be distributed in accordance
with the Loan Guarantee Agreement (subject to any applicable
Intercreditor Agreement).
(f) The Loan Guarantee Agreement shall provide that cash proceeds
received by the Secretary (or his or her designee or agent) as a result
of any foreclosure on the collateral or other action shall be applied
in the following order of priority:
(1) Toward the pro rata payment of any costs and expenses
(including unpaid fees, fees and expenses of counsel, contractors and
agents, and liabilities and advances made or incurred) of the
Secretary, the Attorney General, the Holder, a collateral agent, or
other responsible person of any of them (solely in their individual
capacities as such and not on behalf of or for the benefit of their
principals),
[[Page 34436]]
incurred in connection with any authorized action following payment by
the Secretary pursuant to a Guarantee or other default of a Guaranteed
Obligation, or as otherwise permitted under the Loan Agreement or Loan
Guarantee Agreement;
(2) To pay all accrued and unpaid fees due and payable to the
Secretary, the Attorney General, the Holder, a collateral agent, or
other responsible person of any of them on a pro rata basis in respect
of the Guaranteed Obligation;
(3) To pay all accrued and unpaid interest due and payable to the
Secretary, the Attorney General, the Holder, a collateral agent, or
other responsible person of any of them on a pro rata basis in respect
of the Guaranteed Obligation;
(4) To pay all unpaid principal of the Guaranteed Obligation;
(5) To pay all other obligations of the Borrower under the Loan
Guarantee Agreement, the Loan Agreement, and related documents that are
remaining after giving effect to the preceding provisions and are then
due and payable; and
(6) To pay to the Borrower, or its successors and assigns, or as a
court of competent jurisdiction may direct, any cash proceeds then
remaining following the application of all payment described in
paragraphs (f)(1) through (5) of this section.
(g) No action taken by the Holder or its agent or designee in
respect of any collateral will affect the rights of any person,
including the Secretary, having an interest in the Guaranteed
Obligations or other debt obligations, to pursue, jointly or severally,
legal action against the Borrower or other liable persons, for any
amounts owing in respect of the Guaranteed Obligation or other
applicable debt obligations.
(h) In the event that the Secretary considers it necessary or
desirable to protect or further the interest of the United States in
connection with exercise of rights as a lien holder or recovery of
deficiencies due under the Guaranteed Obligation, the Secretary may
take such action as he determines to be appropriate under the
circumstances.
(i) Nothing in this part precludes, nor shall any provision of this
part be construed to preclude, the Secretary from purchasing any
collateral or Holder's or other Person's interest in the Eligible
Project upon foreclosure of the collateral.
(j) Nothing in this part precludes, nor shall any provision of this
part be construed to preclude, forbearance by any Holder with the
consent of the Secretary for the benefit of the Borrower and the United
States.
(k) The Holder and the Secretary may agree to a formal or informal
plan of reorganization in respect of the Borrower, to include a
restructuring of the Guaranteed Obligation and other applicable debt of
the Borrower on such terms and conditions as the Secretary determines
are in the best interest of the United States.
Sec. 609.16 Preservation of collateral.
(a) If the Secretary exercises his or her right under the Loan
Guarantee Agreement to require the holder of pledged collateral to take
such actions as the Secretary (subject to any applicable Intercreditor
Agreement) may reasonably require to provide for the care,
preservation, protection, and maintenance of such collateral so as to
enable the United States to achieve maximum recovery from the
collateral, the Secretary shall, subject to compliance with the
Antideficiency Act, 31 U.S.C. 1341 et seq., reimburse the holder of
such collateral for reasonable and appropriate expenses incurred in
taking actions required by the Secretary (unless otherwise provided in
applicable agreements). Except as provided in Sec. 609.15, no party
may waive or relinquish, without the consent of the Secretary, any such
collateral to which the United States would be subrogated upon payment
under the Loan Guarantee Agreement.
(b) In the event of a default, the Secretary may enter into such
contracts as he determines are required or appropriate, taking into
account the term of any applicable Intercreditor Agreement, to care
for, preserve, protect or maintain collateral pledged in respect of
Guaranteed Obligations. The cost of such contracts may be charged to
the Borrower.
Sec. 609.17 Audit and access to records.
Each Loan Guarantee Agreement and related documents shall provide
that:
(a) The Eligible Lender, or DOE in conjunction with the Federal
Financing Bank where loans are funded by the Federal Financing Bank or
other Holder or other party servicing the Guaranteed Obligations, as
applicable, and the Borrower, shall keep such records concerning the
Eligible Project as are necessary, including the Application, Term
Sheet, Conditional Commitment, Loan Guarantee Agreement, Credit
Agreement, mortgage, note, disbursement requests and supporting
documentation, financial statements, audit reports of independent
accounting firms, lists of all Eligible Project assets and non-Eligible
Project assets pledged in respect of the Guaranteed Obligations, all
off-take and other revenue producing agreements, documentation for all
Eligible Project indebtedness, income tax returns, technology
agreements, documentation for all permits and regulatory approvals, and
all other documents and records relating to the Borrower or the
Eligible Project, as determined by the Secretary, to facilitate an
effective audit and performance evaluation of the Eligible Project; and
(b) The Secretary and the Comptroller General, or their duly
authorized representatives, shall have access, for the purpose of audit
and examination, to any pertinent books, documents, papers, and records
of the Borrower, Eligible Lender, or DOE or other Holder or other party
servicing the Guaranteed Obligation, as applicable. Such inspection may
be made during regular office hours of the Borrower, Eligible Lender,
DOE or other Holder, or other party servicing the Eligible Project and
the Guaranteed Obligations, as applicable, or at any other time
mutually convenient.
Sec. 609.18 Deviations.
(a) Subject to the requirements of Title XVII and as otherwise
permitted by applicable law, the Secretary may authorize deviations
from the requirements of this part upon:
(1) Either receipt from the Applicant, Borrower, or Project
Sponsor, as applicable, of--
(i) A written request that the Secretary deviate from one or more
requirements; and
(ii) A supporting statement briefly describing one or more
justifications for such deviation; or
(iii) A determination by the Secretary in his or her discretion to
undertake a deviation;
(2) A finding by the Secretary that such deviation supports program
objectives and the special circumstances stated in the request make
such deviation clearly in the best interest of the Government; and
(3) If the waiver would constitute a substantial change in the
financial terms of the Loan Guarantee Agreement and related documents,
DOE's consultation with OMB and the Secretary of the Treasury.
(b) If a deviation under this section results in an increase in the
applicable Credit Subsidy Cost, such increase shall be funded either by
additional fees paid by the Borrower or on behalf of the Borrower by
any third party or, if an appropriation is available, by means of an
appropriations act. The Secretary has
[[Page 34437]]
discretion to determine how the cost of a deviation is funded.
Sec. 609.19 Title XVII loan guarantee program guidance.
(a) Invitations for the submission of Applications for loan
guarantees for Eligible Projects shall be published on DOE's Title XVII
Loan Guarantee Program website. The Title XVII Loan Guarantee Program
website shall contain guidance for potential Title XVII Applicants and
solicit applications for a Guarantee.
(b) The Title XVII Loan Guarantee Program website must include, at
a minimum, the following guidance:
(1) The dollar amount of loan guarantee authority potentially being
made available by DOE for Guarantees under Title XVII;
(2) The method and further instructions for submission of
Applications;
(3) The name and address of the DOE representative whom a potential
Applicant may contact to receive further information;
(4) The programmatic, technical, financial, and other factors and
criteria that DOE will use to evaluate Applications, including but not
limited to consideration of the Reasonable Prospect of Repayment, the
amount of Equity provided, and the reliance on other Federal
assistance;
(5) The required contents of the Application, which may vary by
category of Eligible Project; and
(6) Such other information as DOE may deem appropriate.
(c) Using procedures as may be announced by DOE, a potential
Applicant may request a meeting with DOE to discuss its potential
Application. At its discretion, DOE may meet with a potential
Applicant, either in person or electronically, to discuss its potential
Application. DOE's responses to questions from potential Applicants and
DOE's statements to potential Applicants, including any initial
thoughts on the eligibility of the project, are pre-decisional and
preliminary in nature. Any such responses and statements are subject in
their entirety to any final action by DOE with respect to an
Application submitted in accordance with Sec. 609.4.
[FR Doc. 2023-11104 Filed 5-26-23; 8:45 am]
BILLING CODE 6450-01-P