RD Instruction 4280-B

Table of Contents

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Part 4280 -- LOANS AND GRANTS

Subpart B - Renewable Energy Systems and Energy Efficiency Improvements
Program

[TABLE OF CONTENTS]{.underline}

[Sec]{.underline}. [Page]{.underline}

**General**

4280.101 Purpose. 1

4280.102 General. 1

4280.103 Definitions. 2

4280.104 Exception authority. 9

4280.105 Appeals. 9

4280.106 Conflict of interest. 9

4280.107 Applicant eligibility. 10

4280.108 Project eligibility. 11

**Section A. Grants**

4280.109 Qualification for simplified applications. 12

\(a\) Simplified application criteria. 12

\(b\) Application processing and administration. 12

4280.110 Grant funding. 14

4280.111 Application and documentation. 16

\(a\) General. 16

\(b\) Grant application content. 16

4280.112 Evaluation of grant applications. 26

\(a\) General review. 26

\(b\) Ineligible applications. 26

\(c\) Incomplete applications. 26

\(d\) Technical merit. 26

\(e\) Evaluation criteria. 26

4280.113 Insurance requirements. 32

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4280.114 Laws that contain other compliance requirements. 32

\(a\) Equal employment opportunity. 32

\(b\) Equal opportunity and nondiscrimination. 32

\(c\) Civil rights compliance. 32

\(d\) Environmental analysis. 33

\(e\) Executive Order 12898. 33

\(f\) Uniform federal assistance regulations. 33

4280.115 Construction planning and performing development. 33

\(a\) Technical services. 34

\(b\) Design policies. 34

\(c\) Owners accomplishing work. 34

\(d\) Equipment purchases. 34

\(e\) Simple contract method. 34

\(f\) Design/build contracts. 37

\(g\) Contract method. 40

4280.116 Grantee requirements. 42

4280.117 Servicing grants. 42

4280.118 - 4280.120 \[Reserved\] 42

**Section B. Guaranteed Loans**

4280.121 Borrower eligibility. 42

4280.122 Project eligibility. 42

4280.123 Guaranteed loan funding. 42

4280.124 Interest rates. 44

4280.125 Terms of loan. 44

4280.126 Guarantee/annual renewal fee percentages. 45

4280.127 \[Reserved\] 46

4280.128 Application and documentation. 46

\(a\) General. 46

\(b\) Application content for guaranteed loans

greater than \$600,000 46

\(c\) Application content for guaranteed loans of

\$600,000 or less. 50

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4280.129 Evaluation of guaranteed loan applications. 51

\(a\) General review. 51

\(b\) Ineligible applications. 52

\(c\) Incomplete applications. 52

\(d\) Technical merit determination. 52

\(e\) Evaluation criteria. 52

4280.130 Eligible lenders. 52

4280.131 Lender's functions and responsibilities. 52

\(a\) General. 53

\(b\) Credit evaluation. 53

\(c\) Environmental information. 53

\(d\) Construction planning and performing development. 53

\(e\) Loan closing. 53

4280.132 Access to records. 53

4280.133 Conditions of guarantee. 53

4280.134 Sale or assignment of guaranteed loan. 53

4280.135 Participation. 53

4280.136 Minimum retention. 54

4280.137 Repurchase from holder. 54

4280.138 Replacement of document. 54

4280.139 Credit quality. 54

\(a\) Cashflow. 54

\(b\) Collateral. 54

\(c\) Industry. 54

\(d\) Equity. 55

\(e\) Lien priorities. 55

4280.140 Financial statements. 55

4280.141 Appraisals. 56

\(a\) Conduct of appraisals. 56

\(b\) Specialized appraisers. 56

4280.142 Personal and corporate guarantees. 56

4280.143 Loan approval and obligation of funds. 56

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4280.144 Transfer of lenders. 57

4280.145 Changes in borrower. 58

4280.146 Conditions precedent to issuance of Loan Note Guarantee. 58

4280.147 Issuance of the guarantee. 58

4280.148 Refusal to execute Loan Note Guarantee. 59

4280.149 Requirements after project construction. 59

\(a\) Renewable energy projects. 59

\(b\) Energy efficiency improvement projects. 60

4280.150 Insurance requirements. 60

4280.151 Laws that contain other compliance requirements. 60

4280.152 Servicing guaranteed loans. 60

\(a\) Routine servicing. 60

\(b\) Interest rate adjustment. 60

\(c\) Release of collateral. 60

\(d\) Subordination of lien position. 61

\(e\) Alterations of loan instruments. 61

\(f\) Loan transfer and assumption. 61

4280.153 Substitution of lender. 62

4280.154 Default by borrower. 62

4280.155 Protective advances. 62

4280.156 Liquidation. 63

4280.157 Determination of loss and payment. 63

4280.158 Future recovery. 63

4280.159 Bankruptcy. 63

4280.160 Termination of guarantee. 63

**Section C. Direct Loans**

4280.161 Direct loan process. 63

4280.162 - 4280.192 \[Reserved\] 63

RD Instruction 4280-B

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[Sec]{.underline}. [Page]{.underline}

**Section D. Combined Funding**

4280.193 Combined funding. 64

\(a\) Eligibility. 65

\(b\) Funding. 65

\(c\) Application and documentation. 65

\(d\) Evaluation. 65

\(e\) Interest rate and terms of loan. 65

\(f\) Other provisions. 66

4280.194 - 4280.199 \[Reserved\] 66

4280.200 OMB control number. 66

Appendix A -- Technical Reports for Projects with Total Eligible Project
Costs of \$200,000 or Less

Appendix B -- Technical Reports for Projects with Total Eligible Project
Costs of Greater than \$200,000

Appendix C -- Renewable Energy and Energy Efficiency Improvement Program
-- Evaluation Criteria Scoring Guideline

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RD Instruction 4280-B

PART 4280 - LOANS AND GRANTS

Subpart B - Renewable Energy Systems and Energy Efficiency Improvements
Program

**§ 4280.101 [Purpose]{.underline}.**

\(a\) The purpose of this subpart is to provide financial assistance to
agricultural producers and rural small businesses for the purpose of
purchasing and installing renewable energy systems and energy efficiency
improvements in rural areas. Financial assistance to any single entity
may be provided as a direct loan, guaranteed loan or grant, or a
combination of a loan and grant. This subpart contains the procedures
and requirements for providing such financial assistance.

\(b\) The Agency will allocate funds between the direct, guaranteed, and
grant programs each year, including any other terms such as the transfer
of funds between these allocations.

§ 4280.102 [General]{.underline}.

\(a\) Sections 4280.103 through 4280.106 discuss definitions, exception
authority, appeals, and conflict of interest, which are applicable to
all of the funding programs under this subpart.

\(b\) Eligibility is discussed in terms of both applicants and projects.
Section 4280.107 contains the eligibility requirements for applicants
and § 4280.108 contains the eligibility requirements for projects.

\(c\) Section A, §§ 4280.109 through 4280.117, discusses grants. Section
4280.109 discusses the circumstances under which an applicant may
qualify to submit a simplified application for a grant. Sections
4280.110 through 4280.114 address grant funding, grant application
procedures, required documentation, the evaluation process, and
post-grant Federal requirements for both the simplified and full
application processes. Sections 4280.115 through 4280.117 address
project planning, development, and completion as related to grant
servicing.

Distribution: WSAL Loans and Grants

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RD Instruction 4280-B

§ 4280.102 (con.)

\(d\) Section B, §§ 4280.121 through 4280.160, discusses guaranteed
loans. Sections 4280.121 through 4280.126 discuss procedures and
requirements for making and processing loans guaranteed by the Agency.
Section 4280.128 addresses the application and documentation
requirements, separating the requirements for loans over \$600,000 and
for loans of \$600,000 or less. Section 4280.129 addresses the
evaluation of guaranteed loan applications. Sections 4280.130 through
4280.160 provide guaranteed loan origination and servicing requirements.
These requirements apply to lenders, holders, and other parties involved
in making, guaranteeing, holding, servicing, or liquidating such loans.

\(e\) Section D presents the process by which the Agency will make
direct loans.

\(f\) Section E presents the process by which the Agency will make
combined loan and grant funding available.

\(g\) Appendix A contains the Technical Report requirements for projects
with total eligible project costs of \$200,000 or less and Appendix B
contains the Technical Report requirements for projects with total
eligible project costs greater than \$200,000.

§ 4280.103 [Definitions]{.underline}.

Terms used in this subpart are defined in either § 4279.2 or in this
section. If a term is defined in both § 4279.2 and this section, it will
have, for purposes of this subpart only, the meaning given in this
section.

[Agency]{.underline}**.** The Rural Business-Cooperative Service or
successor Agency assigned by the Secretary of Agriculture to administer
the 9006 program. References to the National Office, Finance Office,
State Office, or other Agency offices or officials should be read as
prefaced by "Agency" or "Rural Development" as applicable.

[Agricultural producer]{.underline}. An individual or entity directly
engaged in the production of agricultural products, including crops
(including farming); livestock (including ranching); forestry products;
hydroponics; nursery stock; or aquaculture, whereby 50 percent or
greater of their gross income is derived from the operations.

[Anaerobic digester project]{.underline}. A renewable energy system that
uses animal waste and other organic substrates to produce thermal or
electrical energy via anaerobic digestion.

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RD Instruction 4280-B

§ 4280.103 (Con.)

[Annual receipts]{.underline}. The total income or gross income (sole
proprietorship) plus cost of goods sold.

[Applicant]{.underline}. The agricultural producer or rural small
business that is seeking a grant, guaranteed loan, or direct loan, or a
combination of a grant and loan, under this subpart.

[Assignment guarantee agreement (Form RD 4279-6) or successor
form]{.underline}. A signed agreement among the Agency, the lender, and
the holder containing the terms and conditions of an assignment of a
guaranteed portion of a loan.

[Bioenergy project]{.underline}. A renewable energy system that produces
fuel, thermal energy, or electric power from a biomass source, other
than an anaerobic digester project.

[Biogas]{.underline}. Biomass converted to gaseous fuels.

[Biomass]{.underline}. Any organic material that is available on a
renewable or recurring basis, including agricultural crops; trees grown
for energy production; wood waste and wood residues; plants, including
aquatic plants and grasses; fibers; animal waste and other waste
materials; and fats, oils, and greases, including recycled fats, oils,
and greases. It does not include paper that is commonly recycled or
unsegregated solid waste.

[Borrower]{.underline}. Any party or parties liable for a direct or
guaranteed loan made under this subpart except guarantors.

[Capacity]{.underline}. The maximum load that an apparatus or heating
unit is able to meet on a sustained basis as rated by the manufacturer.

[Commercially available]{.underline}. A system that has a proven
operating history specific to the proposed application. Such a system is
based on established design, and installation procedures and practices.
Professional service providers, trades, large construction equipment
providers, and labor are familiar with installation procedures and
practices. Proprietary and balance of system equipment and spare parts
are readily available. Service is readily available to properly maintain
and operate the system. An established warranty exists for parts, labor,
and performance.

[Conditional Commitment (Form RD 4279-3) or successor form]{.underline}.
Agency notice to the lender that the loan guarantee is approved subject
to the completion of all conditions and requirements set forth by the
Agency.

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RD Instruction 4280-B

§ 4280.103 (Con.)

[Default]{.underline}. The condition where a borrower or grantee is not
in compliance with one or more loan covenants or grant conditions as
stipulated in the Letter of Conditions, Conditional Commitment, or Loan
or Grant Agreement.

[Delinquent loan]{.underline}. A loan for which a scheduled loan payment
has not been received by the due date or within any grace period as
stipulated in the promissory note and loan agreement.

[Demonstrated financial need]{.underline}. The demonstration by an
applicant that the applicant is unable to finance the project from its
own and commercially available resources without grant assistance, or
that the project proposed by the applicant cannot achieve the income and
cashflows to sustain it financially over the long term without grant
assistance.

[Design/build method]{.underline}. A method of project development
whereby all design, engineering, procurement, construction, and other
related project activities are performed under a single contract. The
prime contractor is solely responsible and accountable for successful
delivery of the project to the owner.

[Eligible project costs]{.underline}. The total project costs that are
eligible to be paid with program funds.

[Energy assessment]{.underline}. A report conducted by an experienced
energy assessor, certified energy manager or professional engineer
assessing energy cost and efficiency by analyzing energy bills and
briefly surveying the target building, machinery, or system. The report
identifies and provides a savings and cost analysis of low-cost/no-cost
measures. The report will estimate the overall costs and expected energy
savings from these improvements, and dollars saved per year. The report
will estimate weighted-average payback period in years.

[Energy assessor]{.underline}. An individual or entity that conducts an
energy assessment.

[Energy audit]{.underline}. A report conducted by a Certified Energy
Manager or Professional Engineer that focuses on potential
capital-intensive projects and involves detailed gathering of field data
and engineering analysis. The report will provide detailed project costs
and savings information with a high level of confidence sufficient for
major capital investment decisions. It will estimate costs, expected
energy savings from the subject improvements, and dollars saved per
year. The report will estimate weighted-average payback period in years.

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RD Instruction 4280-B

§ 4280.103 (Con.)

[Energy auditor]{.underline}. An individual or entity that conducts an
energy audit.

[Energy efficiency improvement]{.underline}. Improvements to a facility,
building, or process that reduces energy consumption, or reduces energy
consumed per square foot.

[Existing business]{.underline}. A business that has completed at least
one full business cycle.

[Fair market value of equity in real property]{.underline}. Fair market
value of real property, as established by appraisal, less the
outstanding balance of any mortgages, liens, or encumbrances.

[Feasibility study]{.underline}. An analysis of the economic, market,
technical, financial, and management feasibility of a proposed project
or business.

[Financial feasibility]{.underline}. The ability of a project or
business to achieve the income, credit, and cashflows to financially
sustain a project over the long term. The concept of financial
feasibility includes assessments of the cost-accounting system, the
availability of short-term credit for seasonal businesses, and the
adequacy of raw materials and supplies.

[Geothermal, direct use]{.underline}. A system that uses thermal energy
directly from a geothermal source.

[Geothermal, electric generation]{.underline}. A system that uses
geothermal energy to produce high pressure steam for electric power
production.

[Holder]{.underline}. A person or entity, other than the lender, who
owns all or part of the guaranteed portion of the loan with no servicing
responsibilities. When the single note option is used and the lender
assigns a part of the guaranteed note to an assignee, the assignee
becomes a holder only when the Agency receives notice and the
transaction is completed through the use of Form RD 4279-6.

[Hydrogen project]{.underline}. A renewable energy system that produces
hydrogen or, a renewable energy system that uses mechanical or electric
power or thermal energy from a renewable resource using hydrogen as an
energy transport medium.

[In-kind contributions]{.underline}. Applicant or third-party real or
personal property or services benefiting the Federally assisted project
or program that are contributed by the applicant or a third-party
entity. The identifiable value of goods and services must directly
benefit the project.

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RD Instruction 4280-B

§ 4280.103 (Con.)

[Interconnection agreement]{.underline}. The terms and conditions
governing the interconnection and parallel operation of the grantee's or
borrower's electric generation equipment and the utility's electric
power system.

[Interim financing]{.underline}. A temporary or short-term loan made
with the clear intent that it will be repaid through another loan, cash,
or other financing mechanism. Interim financing is frequently used to
pay construction and other costs associated with a planned project, with
permanent financing to be obtained after project completion.

[Large solar, electric]{.underline}. Large solar electric systems are
those for which the rated power of the system is larger than 10
kilowatts (kW). Large solar electric systems are either stand-alone (off
grid) or interconnected to the grid (on grid).

[Large solar, thermal]{.underline}. Large solar thermal systems are
those for which the rated storage volume of the system is greater than
240 gallons or that have a collector area of more than 1,000 square
feet.

[Large wind system]{.underline}. A wind energy project for which the
rated power of the individual wind turbine(s) is larger than 100kW.

[Lender]{.underline}. The organization making, servicing, and collecting
the loan that is guaranteed under the provisions of this subpart.

[Lender's agreement (Form RD 4279-4) or successor form]{.underline}.
Agreement between the Agency and the lender setting forth the lender's
loan responsibilities.

[Loan Note Guarantee (Form RD 4279-5) or successor form]{.underline}.
Issued and executed by the Agency containing the terms and conditions of
the guarantee.

[Loan-to-value]{.underline}. The ratio of the dollar amount of a loan to
the dollar value of the discounted collateral pledged as security for
the loan.

[Matching funds]{.underline}. The funds needed to pay for the portion of
the eligible project costs not funded or guaranteed by the Agency
through a grant, direct loan, or guaranteed loan under this program.
Unless authorized by statute, matching funds cannot include grants from
any Federal grant program.

[Necessary capital improvement]{.underline}. A capital improvement
required to keep an existing system in compliance with regulations or to
maintain technical or operational feasibility.

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RD Instruction 4280-B

§ 4280.103 (Con.)

[Parity]{.underline}. A lien position whereby two or more lenders share
a security interest of equal priority in collateral. In the event of
default, each lender is affected on a pro rata basis.

[Participation]{.underline}. The sale of interest in a loan by the
lender wherein the lender retains the note, collateral securing the
note, and all responsibility for loan servicing and liquidation.

[Passive investor]{.underline}. An equity investor that does not
actively participate in management and operation decisions of the
business entity as evidenced by a contractual arrangement.

[Post-application]{.underline}. The date that the Agency receives an
essentially completed application. An "essentially completed"
application is an application that contains all parts necessary for the
Department of Agriculture (USDA) to determine applicant and project
eligibility, to score the application, and to conduct the technical
evaluation.

[Power purchase arrangement]{.underline}. The terms and conditions
governing the sale and transportation of electricity produced by the
grantee or borrower to another party.

[Pre-commercial technology]{.underline}. Technology that has emerged
through the research and development process and has technical and
economic potential for commercial application, but is not yet
commercially available.

[Promissory Note]{.underline}. Evidence of debt. A note that a borrower
signs promising to pay a specific amount of money at a stated time or on
demand.

[Qualified consultant]{.underline}. A third-party entity possessing the
knowledge, expertise, and experience to perform in an efficient,
effective, and authoritative manner the specific task required.

[Qualified party]{.underline}. An entity possessing the knowledge,
expertise, and experience to perform a specific task.

[Renewable energy]{.underline}. Energy derived from a wind, solar,
biomass, or geothermal source; or hydrogen derived from biomass or water
using wind, solar, biomass, or geothermal energy sources.

[Renewable energy system]{.underline}. A system that produces or
produces and delivers usable energy from a renewable energy source.

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§ 4280.103 (Con.)

[Rural]{.underline}. Any area other than a city or town that has a
population of greater than 50,000 inhabitants and the urbanized area
contiguous and adjacent to such a city or town according to the latest
decennial census of the United States.

[Simplified application]{.underline}. An application that conforms to
the criteria and procedures specified in § 4280.109.

[Small business]{.underline}. An entity is considered a small business
in accordance with the Small Business Administration's (SBA) small
business size standards by the North American Industry Classification
System (NAICS) found in Title 13 CFR part 121. A private entity,
including a sole proprietorship, partnership, corporation, cooperative
(including a cooperative qualified under section 501(c)(12) of the
Internal Revenue Code), and an electric utility, including a Tribal or
governmental electric utility, that provides service to rural consumers
on a cost-of-service basis without support from public funds or subsidy
from the Government authority establishing the district, provided such
utilities meet SBA's definition of small business. These entities must
operate independent of direct Government control. With the exception of
the entities described above, all other non-profit entities are
excluded.

[Small solar, electric]{.underline}. Small solar electric projects are
those for which the rated power of the system is 10kW or smaller. Small
solar electric projects are either stand-alone (off grid) or
interconnected to the grid at less than 600 volts (on grid).

[Small solar, thermal]{.underline}. Small solar thermal projects are
those for which the rated storage volume of the system is 240 gallons or
smaller or that have a collector area of 1,000 square feet or less.

[Small wind system]{.underline}. Wind energy system for which the rated
power of the wind turbine is 100kW or smaller and with a generator hub
height of 120 feet or less. A small wind system is either stand-alone or
connected to the local electrical system at less than 600 volts.

[Spreadsheet]{.underline}. A table containing data from a series of
financial statements of a business over a period of time. Financial
statement analysis normally contains spreadsheets for balance sheets and
income statements and may include cashflow statement data and commonly
used ratios. The spreadsheets enable a reviewer to easily scan the data,
spot trends, and make comparisons.

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RD Instruction 4280-B

§ 4280.103 (Con.)

[State]{.underline}. Any of the 50 States, the Commonwealth of Puerto
Rico, the District of Columbia, the Virgin Islands of the United States,
Guam, American Samoa, the Commonwealth of the Northern Mariana Islands,
the Republic of Palau, the Federated States of Micronesia, and the
Republic of the Marshall Islands.

[Total project cost]{.underline}. The sum of all costs associated with a
completed project.

[Used equipment]{.underline}. Any equipment that has been used in any
previous application and is provided in an "as is" condition.

[Very small business]{.underline}. A business with fewer than 15
employees and less than \$1 million in annual receipts.

§ 4280.104 [Exception authority]{.underline}.

The Administrator may, on a case-by-case basis, make an exception to any
requirement or provision of this subpart that is not inconsistent with
any authorizing statute or applicable law, if the Administrator
determines that application of the requirement or provision would
adversely affect the USDA's interest.

§ 4280.105 [Appeals]{.underline}.

Only the grantee, borrower, lender, or holder can appeal an Agency
decision made under this subpart. In cases where the Agency has denied
or reduced the amount of final loss payment to the lender, the adverse
decision may be appealed by the lender only. An adverse decision that
only impacts the holder may be appealed by the holder only. A decision
by a lender adverse to the interest of the borrower is not a decision by
the Agency, whether or not concurred in by the Agency. An adverse
decision regarding a grant or direct loan application may be appealed by
the applicant only. Appeals will be handled in accordance with 7 CFR
part 11 of this title. Any party adversely affected by an Agency
decision under this subpart may request a determination of appealability
from the Director, National Appeals Division, USDA, within 30 days of
the adverse decision.

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§ 4280.106 [Conflict of interest]{.underline}.

No conflict of interest or appearance of conflict of interest will be
allowed. For purposes of this subpart, conflict of interest includes,
but is not limited to, distribution or payment of grant, loan, and
guaranteed loan funds or award of project contracts to an individual
owner, partner, stockholder, or beneficiary of the applicant or borrower
or a close relative of such an individual when such individual will
retain any portion of the ownership of the applicant or borrower.

§ 4280.107 [Applicant eligibility]{.underline}**.**

\(a\) To receive a grant or loan under this subpart, an applicant must
meet each of the criteria, as applicable, as set forth in paragraphs
(a)(1) through (5) of this section.

\(1\) The applicant must be an agricultural producer or rural small
business.

\(2\) Individuals must be citizens of the United States (U.S.) or reside
in the U.S. after being legally admitted for permanent residence.

\(3\) Entities must be at least 51 percent owned, directly or
indirectly, by individuals who are either citizens of the U.S. or reside
in the U.S. after being legally admitted for permanent residence.

\(4\) Applicants and owners will be ineligible to receive funds under
this subpart as discussed in paragraphs (a)(4)(i) and (ii) of this
section.

\(i\) If an applicant or owner has an outstanding judgment obtained by
the U.S. in a Federal Court (other than in the United States Tax Court),
is delinquent in the payment of Federal income taxes, or is delinquent
on a Federal debt, the applicant is not eligible to receive a grant,
direct loan, or guaranteed loan until the judgment is paid in full or
otherwise satisfied or the delinquency is resolved.

\(ii\) If an applicant has been debarred from receiving Federal
assistance, the applicant is not eligible to receive a grant, direct
loan, or guaranteed loan under this subpart.

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RD Instruction 4280-B

§ 4280.107(a) (Con.)

\(5\) A grant applicant must have demonstrated financial need.

\(b\) An applicant that has received one or more grants and/or loans
under this program must make satisfactory progress, as determined by the
Agency, toward completion of any previously funded projects before it
will be considered for subsequent funding.

§ 4280.108 [Project eligibility]{.underline}.

For a renewable energy system or energy efficiency improvement project
to be eligible to receive a grant or loan under this subpart, the
proposed project must meet each of the criteria, as applicable, in
paragraphs (a) through (g) of this section.

\(a\) The project must be for the purchase of a renewable energy system
or to make energy efficiency improvements.

\(b\) The project must be for a pre-commercial or commercially
available, and replicable technology.

\(c\) The project must have technical merit, as determined using the
procedures specified in § 4280.112(d).

\(d\) The project must be located in a rural area, as defined in
§ 4280.103.

\(e\) The applicant must be the owner of the project and control the
revenues and expenses of the project, including operation and
maintenance. A third-party under contract to the owner may be used to
control revenues and expenses and manage the operation and/or
maintenance of the project.

\(f\) Sites must be controlled by the agricultural producer or small
business for the financing term of any associated Federal loans or loan
guarantees.

\(g\) Satisfactory sources of revenue in an amount sufficient to provide
for the operation, management, maintenance, and debt service of the
project must be available for the life of the project.

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RD Instruction 4280-B

## § 4280.109 [Qualification for simplified applications]{.underline}.

When applying for a grant, applicants may qualify for the simplified
application process. In order to use the simplified application process,
each of the conditions specified in paragraphs (a)(1) through (8) of
this section must be met.

\(a\) [Simplified application criteria]{.underline}.

\(1\) The applicant must be eligible in accordance with § 4280.107.

\(2\) The project must be eligible in accordance with § 4280.108.

\(3\) Total eligible project costs must be \$200,000 or less.

\(4\) The proposed project must use commercially available renewable
energy systems or energy efficiency improvements.

\(5\) Construction planning and performing development must be performed
in compliance with § 4280.115. The applicant or the applicant's prime
contractor must assume all risks and responsibilities of project
development.

\(6\) The applicant or the applicant's prime contractor is responsible
for all interim financing.

\(7\) The proposed project is scheduled to be completed within 24 months
after entering into a grant agreement. The Agency may extend this period
if the Agency determines, at its sole discretion, that the applicant is
unable to complete the project for reasons beyond the applicant's
control.

\(8\) The applicant agrees not to request reimbursement from funds
obligated under this program until after project completion, including
all operational testing and certifications acceptable to the Agency.

\(b\) [Application processing and administration]{.underline}.

\(1\) [Application documents]{.underline}. Application documents shall
be submitted in accordance with § 4280.111 or, if applying for a
combined grant and loan, also in accordance with § 4280.193(c).

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RD Instruction 4280-B

§ 4280.109(b) (Con.)

\(2\) [Demonstrated financial need]{.underline}. The applicant must
certify that it meets the definition of demonstrated financial need, as
defined in § 4280.103. The Agency may require the applicant to provide
supplemental information that will allow the Agency to make its own
determination of the applicant's financial need.

\(3\) Project [development]{.underline}. Section 4280.115 applies,
except as follows:

\(i\) Any grantee may participate in project development without direct
compensation subject to the approval in writing by the prime contractor,
provided that all applicable construction practices, manufacturer
instructions, and all safety codes and standards are followed during
construction and testing, and the work product meets all applicable
manufacture specifications, and all applicable codes and standards. The
prime contractor remains responsible for all the overall successful
completion of the project, including any work done by the grantee, or

\(ii\) A grantee who can demonstrate to the Agency that the grantee has
the necessary experience and other resources to successfully complete
the project may serve as the prime contractor/installer. Projects where
the grantee serves as the prime contractor will need to secure the
services of an independent, professionally responsible, qualified
consultant to certify testing specifications, procedures, and testing
results.

\(4\) [Project completion]{.underline}. The project is complete when the
applicant has provided a written final project development, testing, and
performance report acceptable to the Agency. Upon notification of
receipt of an acceptable project completion report, the applicant may
request grant reimbursement. The Agency reserves the right to observe
the testing.

\(5\) [Insurance]{.underline}. Section 4280.113 applies, except business
interruption insurance is not required.

13

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RD Instruction 4280-B

## § 4280.110 [Grant funding]{.underline}.

\(a\) The amount of grant funds that will be made available to an
eligible project under this subpart will not exceed 25 percent of total
eligible project costs. Eligible project costs are specified in
paragraph (c) of this section.

\(b\) The applicant is responsible in securing the remainder of the
total eligible project costs not covered by grant funds. The amount
secured by the applicant must be the remainder of total eligible project
costs.

\(1\) Without specific statutory authority, other Federal grant funds
and applicant in-kind contributions cannot be used to meet the matching
fund requirement. Third-party, in-kind contributions are limited to 10
percent of the matching fund requirement of the grant. The Agency will
advise if the proposed third-party, in-kind contributions are acceptable
in accordance with 7 CFR part 3015 of this title.

\(2\) Passive third-party equity contributions are acceptable for
renewable energy system projects, including those that are eligible for
Federal production tax credits, provided the applicant meets the
requirements of § 4280.107.

\(c\) Eligible project costs are only those costs associated with the
items identified in paragraphs (c)(1) through (9) of this section, as
long as the items are an integral and necessary part of the renewable
energy system or energy efficiency improvement.

\(1\) Post-application purchase and installation of equipment (new,
refurbished, or remanufactured), except agricultural tillage equipment,
used equipment, and vehicles.

\(2\) Post-application construction or improvements, except residential.

\(3\) Energy audits or assessments.

\(4\) Permit and license fees.

\(5\) Professional service fees, except for application preparation.

\(6\) Feasibility studies and Technical Reports.

14

RD Instruction 4280-B

§ 4280.110(c) (Con.)

\(7\) Business plans.

\(8\) Retrofitting.

\(9\) Construction of a new energy efficient facility only when the
facility is used for the same purpose, is approximately the same size,
and based on the energy audit will provide more energy savings than
improving an existing facility. Only costs identified in the energy
audit for energy efficiency improvements are allowed.

\(d\) The maximum amount of grant assistance to one individual or entity
will not exceed \$750,000 per Federal fiscal year. For those applicants
that have not received a grant award during the previous 2 Federal
fiscal years, additional points will be added to their priority score.

\(e\) Applications for renewable energy system grants will be accepted
for a minimum grant request of \$2,500 up to a maximum of \$500,000.

\(f\) Applications for energy efficiency improvement grants will be
accepted for a minimum grant request of \$1,500 up to a maximum of
\$250,000.

\(g\) In determining the amount of a grant awarded, the Agency will take
into consideration the following six criteria:

\(1\) The type of renewable energy system to be purchased;

\(2\) The estimated quantity of energy to be generated by the renewable
energy system;

\(3\) The expected environmental benefits of the renewable energy
system;

\(4\) The extent to which the renewable energy system will be
replicable;

\(5\) The amount of energy savings expected to be derived from the
activity, as demonstrated by an energy audit comparable to an energy
audit under 7 U.S.C. 8105; and

\(6\) The estimated length of time it would take for the energy savings
generated by the activity to equal the cost of the activity.

## 

## 

## 

## 

## 

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RD Instruction 4280-B

## § 4280.111 [Application and documentation]{.underline}.

The requirements in this section apply to grant applications under this
subpart.

\(a\) [General]{.underline}. Separate applications must be submitted for
renewable energy system and energy efficiency improvement projects.
Applicants may only submit one application for each type of project per
Federal fiscal year. An original and one complete copy of each
application are required that follow the outline below. Each application
must include a Table of Contents with clear pagination and chapter
identification.

\(b\) [Grant application content]{.underline}. Applications and
documentation for projects using the simplified application process, as
described in § 4280.109, must provide the required information organized
pursuant to the Table of Contents in a chapter format presented in the
order shown in paragraphs (b)(1) through (3) and (b)(5) through (7) of
this section; paragraph (b)(4)of this section does not apply for
projects using the simplified application process. Applications and
documentation for projects not using the simplified application process
must provide the required information organized pursuant to the Table of
Contents in a chapter format presented in the order shown in paragraphs
(b)(1) through (8) of this section.

\(1\) [Forms, certifications, and organizational documents]{.underline}.
Each application must contain the items identified in paragraphs
(b)(1)(i) through (iii) in this section.

\(i\) [Project specific forms]{.underline}.

\(A\) Form SF-424, "Application for Federal Assistance."

\(B\) Form SF-424C, "Budget Information -- Construction Programs." A
more detailed budget breakdown is required in the Technical Report.

\(C\) Form SF-424D, "Assurances -- Construction Programs."

\(D\) Form RD 1940-20, "Request for Environmental Information."

16

RD Instruction 4280-B

§ 4280.111(b)(1) (Con.)

\(ii\) [Certifications]{.underline}.

\(A\) AD-1049, "Certification Regarding Drug-Free Workplace Requirements
(Grants) Alternative 1 -- For Grantees Other than Individuals."

\(B\) AD-1048, "Certification Regarding Debarment, Suspension,
Ineligibility and Voluntary Exclusion - Lower Tiered Covered
Transactions."

\(C\) Exhibit A-1 of RD Instruction 1940-Q, "Certification for
Contracts, Grants and Loans," required by 7 CFR 3018.110 if the grant
exceeds \$100,000.

\(D\) Form SF-LLL, "Disclosure of Lobbying Activities," must be
completed if the applicant or borrower has made or agreed to make
payment using funds other than Federal appropriated funds to influence
or attempt to influence a decision in connection with the application.

\(E\) AD-1047, "Certification Regarding Debarment, Suspension, and Other
Responsibility Matters - Primary Covered Transactions."

\(F\) Form RD 400-1, "Equal Opportunity Agreement."

\(G\) Form RD 400-4, "Assurance Agreement."

\(H\) Intergovernmental consultation comments in accordance with 7 CFR
part 3015, subpart V, of this title.

\(I\) Applicants and borrowers must provide a certification indicating
whether or not there is a known relationship or association with an
Agency employee.

\(J\) Applicants must provide certification that they meet the
definition of demonstrated financial need, as defined in § 4280.103.
*The Agency may request the applicant to provide sufficient information
to allow the Agency to make its own determination of the applicant's
financial need.*

17

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RD Instruction 4280-B

§ 4280.111(b)(1) (Con.)

\(iii\) [Organizational documents]{.underline}. Except for sole
proprietors, each applicant must submit, with the application, a copy of
the legal organizational documents.

\(2\) [Table of Contents]{.underline}. Include page numbers for each
component of the application in the table of contents. Begin pagination
immediately following the Table of Contents.

\(3\) Project [Summary]{.underline}. Provide a concise summary of the
project proposal and applicant information, project purpose and need,
and project goals that includes the following:

\(i\) [Title]{.underline}. Provide a descriptive title of the project
(identified on SF 424).

\(ii\) [Applicant eligibility]{.underline}. Describe how each of the
applicable criteria identified in § 4280.107(a)(1) through (5) is met.

\(iii\) [Project eligibility]{.underline}. Describe how each of the
criteria, as applicable, in § 4280.108(a) through (g) is met. Clearly
state whether the application is for the purchase of a renewable energy
system or to make energy efficiency improvements. The response to
§ 4280.108(a) must include a brief description of the system or
improvement. This description must be sufficient to provide the reader
with a frame of reference when reviewing the rest of the application.
Additional project description information may be needed later in the
application.

\(iv\) [Operation description]{.underline}. Describe the applicant's
total farm/ranch/business operation and the relationship of the proposed
project to the applicant's total farm/ranch/business operation. Provide
a description of the ownership of the applicant, including a list of
individuals and/or entities with ownership interest, names of any
corporate parents, affiliates, and subsidiaries, as well as a
description of the relationship, including products, between these
entities.

\(v\) Financial [information for size determination]{.underline}.
Provide financial information to allow the Agency to determine the
applicant's size. All information submitted under this paragraph must be
substantiated by authoritative records.

18

RD Instruction 4280-B

§ 4280.111(b)(3)(v) (Con.)

\(A\) [Rural small businesses]{.underline}. Provide sufficient
information to determine total annual receipts for and number of
employees of the business and any parent, subsidiary, or affiliates at
other locations. Voluntarily providing tax returns is one means of
satisfying this requirement. The information provided must be sufficient
for the Agency to make a determination of business size as defined by
SBA.

\(B\) Agricultural producers. Provide the gross market value of your
agricultural products, gross agricultural income, and gross nonfarm
income of the applicant for the calendar year preceding the year in
which you submit your application.

\(4\) [Financial information]{.underline}. Financial information is
required on the total operation of the agricultural producer/rural small
business and its parent, subsidiary, or affiliates at other locations.
All information submitted under this paragraph must be substantiated by
authoritative records.

\(i\) [Historical financial statements]{.underline}. Provide historical
financial statements prepared in accordance with Generally Accepted
Accounting Practices (GAAP) for the past 3 years, including income
statements and balance sheets. If agricultural producers are unable to
present this information in accordance with GAAP, they may instead
present financial information for the past years in the format that is
generally required by commercial agriculture lenders.

\(ii\) Current balance sheet and income statement. Provide a current
balance sheet and income statement prepared in accordance with GAAP and
dated within 90 days of the application. Agricultural producers should
present financial information in the format that is generally required
by commercial agriculture lenders.

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RD Instruction 4280-B

§ 4280.111(b)(4) (Con.)

\(iii\) [Pro forma financial statements]{.underline}. Provide pro forma
balance sheet at start-up of the agricultural producer's/rural small
business' business that reflects the use of the loan proceeds or grant
award; and 3 additional years, indicating the necessary start-up
capital, operating capital, and short-term credit; and projected
cashflow and income statements for 3 years supported by a list of
assumptions showing the basis for the projections.

\(iv\) [Demonstration of Financial Need]{.underline}. Provide sufficient
information or documentation that allows the Agency to make its own
determination of the applicant's financial need.

\(5\) [Matching funds]{.underline}. Submit a spreadsheet identifying
sources of matching funds, amounts, and status of matching funds. The
spreadsheet must also include a directory of matching funds source
contact information. Attach any applications, correspondence, or other
written communication between applicant and matching fund source.

\(6\) Self-Evaluation Score. Self-score the project using the evaluation
criteria in § 4280.112(e). To justify the score, submit the total score
along with appropriate calculations and attached documentation, or
specific cross-references to information elsewhere in the application.

\(7\) Renewable Energy and Energy Efficiency Improvements Technical
Report. A Technical Report must be submitted as part of the application
to allow the Agency to determine the overall technical merit of the
renewable energy system or energy efficiency improvement project.

\(i\) [Simplified applications]{.underline}. Simplified applications,
which are submitted for renewable energy projects or energy efficiency
improvement projects with total eligible project costs of \$200,000 or
less, must include a Technical Report prepared in accordance with the
requirements specified in paragraphs (b)(7)(i)(A) through (C) of this
section.

20

RD Instruction 4280-B

§ 4280.111(b)(7)(i) (Con.)

\(A\) The Technical Report must be prepared in accordance with Appendix
A of this subpart. If a renewable energy project does not fit one of the
technologies identified in Appendix A, the applicant must submit a
Technical Report in accordance with paragraph (b)(7)(ii) of this
section. The information in all Technical Reports must be of sufficient
detail to allow the Agency to score the project and evaluate its
technical feasibility.

\(B\) Either an energy assessment or an energy audit is required for
energy efficiency improvement projects. For energy efficiency
improvement projects with total eligible project costs greater than
\$50,000, an energy audit must be conducted; it must be conducted by or
reviewed and certified by an energy auditor. For energy efficiency
improvement projects with total eligible project costs of \$50,000 or
less, an energy assessment or an energy audit may be conducted by either
an energy assessor or an energy auditor.

\(C\) Technical Reports prepared prior to the applicant's selection of a
prime contractor may be modified after selection, pursuant to input from
the prime contractor, and submitted to the Agency, provided the overall
scope of the project is not materially changed as determined by the
Agency. Changes in the report must be accompanied by an updated Form RD
1940-20.

\(ii\) [Full applications]{.underline}. Full applications, which must be
submitted for applications for renewable energy projects or energy
efficiency improvement projects with total eligible project costs
greater than \$200,000, must include a full Technical Report prepared in
accordance with Appendix B of this subpart and with paragraphs
(b)(7)(ii)(A) through (G) of this section, as applicable.

\(A\) The Technical Report must demonstrate that the renewable energy
system or energy efficiency improvement project can be installed and
perform as intended in a reliable, safe, cost-effective, and legally
compliant manner.

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RD Instruction 4280-B

§ 4280.111(b)(7)(ii) (Con.)

\(B\) Either an energy assessment or an energy audit is required for
energy efficiency improvement projects. For energy efficiency
improvement projects with total eligible project costs greater than
\$50,000, an energy audit must be conducted; it must be conducted by or
reviewed and certified by an energy auditor. For energy efficiency
improvement projects with total eligible project costs of \$50,000 or
less, an energy assessment or an energy audit may be conducted by either
an energy assessor or an energy auditor.

\(C\) For renewable energy projects with total eligible project costs
greater than \$400,000 and for energy efficiency improvement projects
with total eligible project costs greater than \$200,000, the design
review, installation monitoring, testing prior to commercial operation,
and project completion certification will require the services of a
licensed professional engineer (PE) or team of licensed PEs.

\(D\) For projects with total eligible project costs greater than
\$1,200,000, the Technical Report must be reviewed and include an
opinion and recommendation by an independent qualified consultant.

\(E\) Technical Reports prepared prior to the applicant's selection of a
final design, equipment vendor, or prime contractor, or other
significant decision may be modified and resubmitted to the Agency,
provided the overall scope of the project is not materially changed as
determined by the Agency. Changes in the Technical Report must be
accompanied by an updated Form RD 1940-20.

\(F\) All information provided in the Technical Report will be evaluated
against the requirements provided in Appendix B of this subpart. Any
Technical Report not prepared in the following format and in accordance
with Appendix B, where applicable, will be penalized under scoring for
technical merit. Technical merit is scored under § 4280.112(e)(4). Use
the Evaluation Criteria Scoring Guideline in Appendix C to facilitate
scoring applications.

22

RD Instruction 4280-B

§ 4280.111(b)(7)(ii) (Con.)

\(G\) All Technical Reports shall follow the outline presented below and
shall contain the information described in paragraphs (b)(7)(ii)(G)(1)
through (10) of this section and Appendix B, if the technology is
identified in Appendix B for the particular project. If none of the
Technical Reports in Appendix B apply to the proposed technology, the
applicant may submit a Technical Report that conforms to the overall
outline and subjects specified in paragraph (b)(7)(ii)(G) of this
section. For Technical Reports prepared for technologies not identified
in Appendix B, the Agency will review the reports and notify, in
writing, the applicant of the changes to the report required in order
for the Agency to accept the report.

([1]{.underline}) [Qualifications of the project team]{.underline}.
Describe the project team, their professional credentials, and relevant
experience. The description must support that the project team service,
equipment, and installation providers have the necessary professional
credentials, licenses, certifications, or relevant experience to develop
the proposed project.

([2]{.underline}) [Agreements and permits]{.underline}. Describe the
necessary agreements and permits required for the project and the
anticipated schedule for securing those agreements and permits. For
example, interconnection agreements and purchase power arrangements are
necessary for all renewable energy projects electrically interconnected
to the utility grid. The applicant must demonstrate that the applicant
is familiar with the regulations and utility policies and that these
arrangements will be secured in a reasonable timeframe.

([3]{.underline}) [Energy or resource assessment]{.underline}. Describe
the quality and availability of the renewable resource, and an
assessment of expected energy savings through the deployment of the
proposed system or increased production created by the system.

23

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RD Instruction 4280-B

§ 4280.111(b)(7)(ii)(G) (Con.)

([4]{.underline}) [Design and engineering]{.underline}. Describe the
intended purpose of the project and the design, engineering, testing,
and monitoring needed for the proposed project. The description must
support that the system will be designed, engineered, tested, and
monitored so as to meet its intended purpose, ensure public safety, and
comply with applicable laws, regulations, agreements, permits, codes,
and standards. In addition, the applicant must identify all the major
equipment that is proprietary equipment and justify how this unique
equipment is needed to meet the requirements of the proposed design.

([5]{.underline}) [Project development]{.underline}. Describe the
overall project development method, including the key project
development activities and the proposed schedule for each activity. The
description must identify each significant historical and projected
activity, its beginning and end, and its relationship to the time needed
to initiate and carry the activity through to successful project
completion. The description must address applicant project development
cashflow requirements. Details for equipment procurement and
installation shall be addressed in paragraphs (b)(7)(ii)(G)(7) and (8)
of this section.

([6]{.underline}) [Project economic assessment]{.underline}. Describe
the financial performance of the proposed project. The description must
address project costs, energy savings, and revenues, including
applicable investment and production incentives. Cost centers include,
but are not limited to, administrative and general, fuel supply,
operations and maintenance, product delivery and debt service. Revenues
to be considered must accrue from the sale of energy, offset or savings
in energy costs, byproducts, and green tags. Incentives to be considered
must accrue from government entities.

([7]{.underline}) [Equipment procurement]{.underline}. Describe the
availability of the equipment required by the system. The description
must support that the required equipment is available and can be
procured and delivered within the proposed project development schedule.

24

RD Instruction 4280-B

§ 4280.111(b)(7)(ii)(G) (Con.)

([8]{.underline}) [Equipment installation]{.underline}. Describe the
plan for site development and system installation, including any special
equipment requirements. In all cases, the system or improvement must be
installed in conformance with manufacturer's specifications and design
requirements, and comply with applicable laws, regulations, agreements,
permits, codes, and standards.

([9]{.underline}) [Operations and maintenance]{.underline}. Describe the
operations and maintenance requirements of the system, including major
rebuilds and component replacements necessary for the system to operate
as designed over the design life. All systems or improvements must have
a warranty. The warranty must cover and provide protection against both
breakdown and a degradation of performance. The performance of the
renewable energy system or energy efficiency improvement must be
monitored and recorded as appropriate to the specific technology.

([10]{.underline}) [Dismantling and disposal of project
components]{.underline}. Describe a plan for dismantling and disposing
of project components and associated wastes at the end of their useful
lives. The budget for and any unique concerns associated with the
dismantling and disposal of project components and their wastes must
also be described.

\(8\) [Business-level feasibility study for renewable energy
systems]{.underline}. For each application for a renewable energy system
project, with total eligible project costs greater than \$200,000, a
business-level feasibility study by an independent, qualified consultant
will be required by the Agency for start-up businesses or existing
businesses. An acceptable business-level feasibility study must at least
include an evaluation of economic, market, technical, financial, and
management feasibility.

25

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RD Instruction 4280-B

§ 4280.112 [Evaluation of grant applications]{.underline}.

\(a\) [General review]{.underline}. The Agency will evaluate each
application and make a determination as to whether the applicant is
eligible, the proposed grant is for an eligible project, and the
proposed grant complies with all applicable statutes and regulations.

\(b\) [Ineligible applications]{.underline}. If either the applicant or
the project is ineligible, the Agency will inform the applicant in
writing of the decision, reasons therefore, and any appeal rights. No
further evaluation of the application will occur.

\(c\) [Incomplete applications]{.underline}. If the application is
incomplete, the Agency will return it to the applicant to provide the
applicant the opportunity to resubmit the application. The Agency will
identify those parts of the application that are incomplete. Upon
receipt of a complete application, the Agency will complete its
evaluation of the application.

\(d\) [Technical merit]{.underline}. The Agency's determination of a
project's technical merit will be based on the information provided by
the applicant. The Agency may engage the services of other government
agencies or other recognized industry experts in the applicable
technology field, at its discretion, to evaluate and rate the
application. The Agency may use this evaluation and rating to determine
the level of technical merit of the proposed project. Projects that the
Agency determines are without technical merit shall be deemed
ineligible.

\(e\) [Evaluation criteria]{.underline}. Agency personnel will score and
fund each application based on the evaluation criteria specified in
paragraphs (e)(1) through (9) of this section.

\(1\) [Quantity of energy replaced, produced, or saved]{.underline}.
Points may only be awarded for energy replacement, energy savings, or
energy generation. Points will not be awarded for more than one
category.

26

RD Instruction 4280-B

§ 4280.112(e)(1) (Con.)

\(i\) [Energy replacement]{.underline}. If the proposed renewable energy
system is intended primarily for self-use by the agricultural producer
or rural small business and will provide energy replacement of greater
than zero, but equal to or less than 25 percent, 5 points will be
awarded; greater than 25 percent, but equal to or less than 50 percent,
10 points will be awarded; or greater than 50 percent, 15 points will be
awarded. Energy replacement is to be determined by dividing the
estimated quantity of renewable energy to be generated over a 12-month
period by the estimated quantity of energy consumed over the same
12-month period during the previous year by the applicable energy
application. The estimated quantities of energy must be converted to
either British thermal units (BTUs), Watts, or similar energy
equivalents to facilitate scoring. If the estimated energy produced
equals more than 150 percent of the energy requirements of the
applicable process(es), the project will be scored as an energy
generation project.

\(ii\) [Energy savings]{.underline}. If the estimated energy expected to
be saved by the installation of the energy efficiency improvements will
be from 20 percent up to, but not including 30 percent, 5 points will be
awarded; 30 percent up to, but not including 35 percent, 10 points will
be awarded; or, 35 percent or greater, 15 points will be awarded. Energy
savings will be determined by the projections in an energy assessment or
audit. Projects with total eligible project costs of \$50,000 or less
that opt to obtain a professional energy audit will be awarded an
additional 5 points.

\(iii\) [Energy generation]{.underline}. If the proposed renewable
energy system is intended primarily for production of energy for sale,
10 points will be awarded.

\(2\) [Environmental benefits]{.underline}. If the purpose of the
proposed system contributes to the environmental goals and objectives of
other Federal, State, or local programs, 10 points will be awarded.
Points will only be awarded for this paragraph if the applicant is able
to provide documentation from an appropriate authority supporting this
claim.

27

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RD Instruction 4280-B

§ 4280.112(e) (Con.)

\(3\) [Commercial availability]{.underline}. If the proposed system or
improvement is currently commercially available and replicable, 5 points
will be awarded. If the proposed system or improvement is commercially
available and replicable and is also provided with a 5-year or longer
warranty providing the purchaser protection against system degradation
or breakdown or component breakdown, 10 points will be awarded.

\(4\) [Technical merit score]{.underline}. The Technical Merit of each
project will be determined using the procedures specified in paragraphs
(e)(4)(i) and (ii) of this section. The procedures specified in
paragraph (e)(4)(i) will be used to score paragraphs (e)(4)(i)(A)
through (J) of this section. The final score awarded will be calculated
using the procedures described in paragraph (e)(4)(ii) of this section.

\(i\) [Technical merit]{.underline}. Each subparagraph has its own
maximum possible score and will be scored according to the following
criteria: If the description in the subparagraph has no significant
weaknesses and exceeds the requirements of the subparagraph, 100 percent
of the total possible score for the subparagraph will be awarded. If the
description has one or more significant strengths and meets the
requirements of the subparagraph, 80 percent of the total possible score
will be awarded for the subparagraph. If the description meets the basic
requirements of the subparagraph, but also has several weaknesses, 60
percent of the points will be awarded. If the description is lacking in
one or more critical aspects, key issues have not been addressed, but
the description demonstrates some merit or strengths, 40 percent of the
total possible score will be awarded. If the description has serious
deficiencies, internal inconsistencies, or is missing information, 20
percent of the total possible score will be awarded. If the description
has no merit in this area, 0 percent of the total possible score will be
awarded. The total possible points for Technical Merit is 35 points.

28

RD Instruction 4280-B

§ 4280.112(e)(4)(i) (Con.)

\(A\) [Qualifications of the project team (maximum score of 10
points)]{.underline}. The applicant has described the project team
service providers, their professional credentials, and relevant
experience. The description supports that the project team service,
equipment, and installation providers have the necessary professional
credentials, licenses, certifications, or relevant experience to develop
the proposed project.

\(B\) [Agreements and permits (maximum score of 5 points)]{.underline}.
The applicant has described the necessary agreements and permits
required for the project and the schedule for securing those agreements
and permits.

\(C\) [Energy or resource assessment (maximum score of 10
points)]{.underline}. The applicant has described the quality and
availability of a suitable renewable resource or an assessment of
expected energy savings for the proposed system.

\(D\) [Design and engineering (maximum score of 30 points)]{.underline}.
The applicant has described the design, engineering, and testing needed
for the proposed project. The description supports that the system will
be designed, engineered, and tested so as to meet its intended purpose,
ensure public safety, and comply with applicable laws, regulations,
agreements, permits, codes, and standards.

\(E\) [Project development schedule (maximum score of 5
points)]{.underline}. The applicant has described the development
method, including the key project development activities and the
proposed schedule for each activity. The description identifies each
significant task, its beginning and end, and its relationship to the
time needed to initiate and carry the project through to successful
completion. The description addresses grantee or borrower project
development cashflow requirements.

29

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RD Instruction 4280-B

§ 4280.112(e)(4)(i) (Con.)

\(F\) [Project economic assessment (maximum score of 20
points)]{.underline}. The applicant has described the financial
performance of the proposed project, including the calculation of simple
payback. The description addresses project costs and revenues, such as
applicable investment and production incentives, and other information
to allow the assessment of the project's cost effectiveness.

\(G\) [Equipment procurement (maximum score of 5 points)]{.underline}.
The applicant has described the availability of the equipment required
by the system. The description supports that the required equipment is
available, and can be procured and delivered within the proposed project
development schedule.

\(H\) [Equipment installation (maximum score of 5 points)]{.underline}.
The applicant has described the plan for site development and system
installation.

\(I\) [Operation and maintenance (maximum score of 5
points)]{.underline}. The applicant has described the operations and
maintenance requirements of the system necessary for the system to
operate as designed over the design life.

\(J\) [Dismantling and disposal of project components (maximum score of
5 points)]{.underline}. The applicant has described the requirements for
dismantling and disposing of project components at the end of their
useful life and associated wastes.

\(ii\) [Calculation of Technical Merit Score]{.underline}. To determine
the actual points awarded a project for Technical Merit, the following
procedure will be used: The score awarded for paragraphs (e)(4)(i)(A)
through (J) of this section will be added together and then divided by
100, the maximum possible score, to achieve a percentage. This
percentage will then be multiplied by the total possible points of 35 to
achieve the points awarded for the proposed project for Technical Merit.

30

RD Instruction 4280-B

§ 4280.112(e) (Con)

\(5\) [Readiness]{.underline}. If the applicant has written commitments
from the source(s) confirming commitment of 50 percent up to but not
including 75 percent of the matching funds prior to the Agency receiving
the complete application, 5 points will be awarded. If the applicant has
written commitments from the source(s) confirming commitment of 75
percent up to but not including 100 percent of the matching funds prior
to the Agency receiving the complete application, 10 points will be
awarded. If the applicant has written commitments from the source(s) of
matching funds confirming commitment of 100 percent of the matching
funds prior to the Agency receiving the complete application, 15 points
will be awarded.

\(6\) [Small agricultural producer/very small business]{.underline}. If
the applicant is an agricultural producer producing agricultural
products with a gross market value of less than \$600,000 in the
preceding year, 5 points will be awarded. If the applicant is an
agricultural producer producing agricultural products with a gross
market value of less than \$200,000 in the preceding year or is a very
small business, as defined in § 4280.103, 10 points will be awarded.

\(7\) [Simplified application/low cost projects]{.underline}. If the
applicant is eligible for and uses the simplified application process or
the project has total eligible project costs of \$200,000 or less, 5
points will be awarded.

\(8\) [Previous grantees and borrowers]{.underline}. If an applicant has
not been awarded a grant or loan under this program within the 2
previous Federal fiscal years, 5 points will be awarded.

\(9\) [Return on investment]{.underline}. If the proposed project will
return the cost of the investment in less than 4 years, 10 points will
be awarded; 4 years up to but not including 8 years, 4 points will be
awarded; or 8 years up to 11 years, 2 point will be awarded.

31

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RD Instruction 4280-B

§ 4280.113 [Insurance requirements]{.underline}.

Agency approved insurance coverage must be maintained for the life of
the grant unless this requirement is waived or modified by the Agency in
writing.

\(a\) National flood insurance is required in accordance with 7 CFR part
1806, subpart B, of this title, if applicable.

\(b\) Business interruption insurance is required except for projects
with total eligible project costs of \$200,000 or less.

§ 4280.114 [Laws that contain other compliance
requirements]{.underline}.

\(a\) [Equal employment opportunity]{.underline}. For all construction
contracts and grants in excess of \$10,000, the contractor must comply
with Executive Order 11246, as amended by Executive Order 11375, and as
supplemented by applicable Department of Labor regulations (41 CFR part
60). The applicant is responsible for ensuring that the contractor
complies with these requirements.

\(b\) [Equal opportunity and nondiscrimination]{.underline}. The Agency
will ensure that equal opportunity and nondiscriminatory requirements
are met in accordance with the Equal Credit Opportunity Act and 7 CFR
15d, Nondiscrimination in Programs and Activities, conducted by USDA.
The Agency will not discriminate against applicants on the basis of
race, color, religion, national origin, sex, marital status, or age
(provided that the applicant has the capacity to contract); to the fact
that all or part of the applicant's income derives from public
assistance program; or to the fact that the applicant has in good faith
exercised any right under the Consumer Credit Protection Act.

\(c\) [Civil rights compliance]{.underline}. Recipients of grants must
comply with the Americans with Disabilities Act of 1990, Title VI of the
Civil Rights Act of 1964, and Section 504 of the Rehabilitation Act of
1973. This may include collection and maintenance of data on the race,
sex, and national origin of the recipient\'s membership/ownership and
employees. These data must be available to conduct compliance reviews in
accordance with 7 CFR part 1901, subpart E, § 1901.204 of this title.
Initial reviews will be conducted after Form RD 400-4 is signed and all
subsequent reviews every 3 years thereafter for loans. The last review
shall occur 3 years after the date of loan closing. Grants will require
one subsequent compliance review after the last disbursement of grant
funds have been made, and the facility has been in full operation for 90
days.

32

RD Instruction 4280-B

§ 4280.114 (Con.)

\(d\) [Environmental analysis]{.underline}. Subpart G of part 1940 of
this title outlines environmental procedures and requirements for this
subpart. Prospective applicants are advised to contact the Agency to
determine environmental requirements as soon as practicable after they
decide to pursue any form of financial assistance directly or indirectly
available through the Agency.

\(1\) Any required environmental review must be completed by the Agency
prior to the Agency obligating any funds.

\(2\) The applicant will be notified of all specific compliance
requirements, including, but not limited to, the publication of public
notices, and consultation with State Historic Preservation Offices and
the U.S. Fish and Wildlife Service.

\(3\) A site visit by the Agency may be scheduled, if necessary, to
determine the scope of the review.

\(4\) The applicant taking any actions or incurring any obligations
during the time of application or application review and processing that
would either limit the range of alternatives to be considered or that
would have an adverse effect on the environment, such as the initiation
of construction, will result in project ineligibility.

\(e\) [Executive Order 12898]{.underline}. When a project is proposed
and financial assistance requested, the Agency will conduct a Civil
Rights Impact Analysis (CRIA) with regards to environmental justice. The
CRIA must be conducted and the analysis documented utilizing Form RD
2006-38, "Civil Rights Impact Analysis Certification." This
certification must be done prior to loan approval, obligation of funds,
or other commitments of Agency resources, including issuance of a Letter
of Conditions or Form RD 4279-3 of guarantee, whichever occurs first.

\(f\) [Uniform federal assistance regulations]{.underline}. Grants will
be administered in accordance with 7 CFR part 3015 of this title.

§ 4280.115 [Construction planning and performing
development]{.underline}.

The requirements of this section apply for planning, designing, bidding,
contracting, and constructing renewable energy systems and energy
efficiency improvement projects as applicable. For contracts of
\$200,000 or less, the simple contract method, as specified in paragraph
(e) of this section, may be used. Contracts greater than \$200,000 shall
use the contract method specified in paragraph (g) of this section.

33

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RD Instruction 4280-B

§ 4280.115 (Con.)

\(a\) [Technical services]{.underline}. Applicants are responsible for
providing the engineering, architectural, and environmental services
necessary for planning, designing, bidding, contracting, inspecting, and
constructing their facilities. Services may be provided by the
applicant's "in-house" engineer or architect or through contract,
subject to Agency concurrence. Engineers and architects must be licensed
in the State where the facility is to be constructed.

\(b\) [Design policies]{.underline}. Facilities funded by the Agency
will meet the requirements of 7 CFR subpart C of part 1780,
§ 1780.57(b), (c), (d), and (o) of this title. Final plans and
specifications must be reviewed by the Agency and approved prior to the
start of construction.

\(c\) [Owners accomplishing work]{.underline}. In some instances, owners
may wish to perform a part of the work themselves. For an owner to
perform project development work, the owner must meet the experience
requirements of 7 CFR subpart C of part 1780, § 1780.67 of this title.
For an owner to provide a portion of the work, with the remainder to be
completed by a contractor, a clear understanding of the division of work
must be established and delineated in the contract. In such cases, the
contractor will be required to inspect the owner's work and accept it.
Owners are not eligible for payment for their own work as it is not an
eligible project cost. See § 4280.110(c) of this subpart for further
details on eligible project costs.

\(d\) [Equipment purchases]{.underline}. Equipment purchases of less
than \$200,000 will not require a performance and payment bond, unless
required by the applicant, as long as the contract purchase is a lump
sum payment and the manufacturer provides the required warranties on the
equipment as outlined in paragraph (i) in the applicable section found
in Appendices A and B of this subpart. Payment shall be certified by
copies of the Manufacturer's paid invoices and warranty documents.

\(e\) [Simple contract method]{.underline}. The simple contract method
may be used for small projects with a contract not greater than
\$200,000. In smaller projects, Agency funds will typically be used to
reimburse project costs upon completion of the work as a lump sum
payment. Partial payments will be made in accordance with Form RD
4280-2, "Grant Agreement," and Form RD 1924-6, "Construction Contract,"
or other Agency approved contract. All construction work will be
performed under a written contract, as described below. A design/build
method, where the same person or entity provides design and engineering
work, as well as construction or installation, may be used under this
method.

34

RD Instruction 4280-B

§ 4280.115(e) (Con.)

\(1\) [Contracting requirements threshold]{.underline}. For contracts
above \$100,000, certain Federal requirements, including surety, must be
met. An attachment to the contract may be used to incorporate language
for these requirements.

\(2\) [Forms used]{.underline}. Form RD 1924-6 or other Agency approved
contract must be used. Other contracts must be approved by the Agency
and may be used only if they are customarily used in the area and
protect the interest of the applicant and the Government with respect to
compliance with items such as the drawings, specifications, payments for
work, inspections, completion, nondiscrimination in construction work
and acceptance of the work. The Agency will not become a party to a
construction contract or incur any liability under it. No contract shall
become effective until concurred in writing by the Agency. Such
concurrence statement shall be attached to and made a part of the
contract.

\(3\) [Contract provisions]{.underline}. Contracts will have a listing
of attachments and the minimum provisions of the contract will include:

\(i\) The contract sum;

\(ii\) The dates for starting and completing the work;

\(iii\) The amount of liquidated damages to be charged;

\(iv\) The amount, method, and frequency of payment;

\(v\) Whether or not surety bonds will be provided. If not, a latent
defects bond may be required, as described in paragraph (e)(4) of this
section;

\(vi\) The requirement that changes or additions must have prior written
approval of the Agency; and

\(vii\) The warranty period to be provided in accordance with Appendices
A and B, sections 1 through 10, paragraph (i)(1).

35

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RD Instruction 4280-B

§ 4280.115(e) (Con.)

\(4\) [Surety]{.underline}. Surety per 7 CFR subpart C of part 1780,
§ 1780.75(c) of this title will be required, and made a part of the
contract, if the applicant requests it, or if the contractor requests
partial payments for construction work. If the contractor will receive a
lump sum payment at the end of work, the Agency will not require surety.
In such cases where no surety is provided and the project involves
pre-commercial technology, first of its type in the U.S., or new designs
without sufficient operating hours to prove their merit, a latent
defects bond may be required to cover the work.

\(5\) [Equal opportunity]{.underline}. Section 1901.205 of subpart E of
part 1901 of this title applies to all financial assistance involving
construction contracts and subcontracts in excess of \$10,000. Language
for this requirement is included in Form RD 1924-6. If this form is not
used, such language must be made a part of the Agency approved contract.

\(6\) [Obtaining bids and selecting a contractor]{.underline}.

\(i\) The applicant may select a contractor and negotiate a contract or
contact several contractors and request each to submit a bid. The
applicant will provide a statement to the Agency describing the process
for obtaining the bid(s) and what alternatives were considered.

\(ii\) When a price has already been negotiated by an applicant and a
contractor, the Agency will review the proposed contract. If the
contractor is qualified to perform the development and provide a
warranty of the work and the price compares favorably with the cost of
similar construction in the area, further negotiation is unnecessary. If
the Agency determines the price is too high or otherwise unreasonable,
the applicant will be required to negotiate further with the contractor.
If a reasonable price cannot be negotiated or if the contractor is not
qualified, the applicant will be required to negotiate with another
contractor.

\(iii\) When an applicant has proposed development with no contractor in
mind, competition will be required. The applicant must obtain bids from
as many qualified contractors, dealers, or trades people as feasible
depending on the method and type of construction.

36

RD Instruction 4280-B

§ 4280.115(e)(6) (Con.)

\(iv\) If the award of the contract is by competitive bidding, Form RD
1924-5, "Invitation for Bid (Construction Contract)," or another similar
Agency approved invitation bid form containing the requirements of
subpart E of part 1901 of this title may be used. All contractors from
whom bids are requested should be informed of all conditions of the
contract, including the time and place of opening bids. Conditions shall
not be established which would give preference to a specific bidder or
type of bidder. When applicable, copies of Forms RD 1924-6 and RD 400-6,
"Compliance Statement," also should be provided to the prospective
bidders.

\(7\) [Awarding the contract]{.underline}. The applicant, with the
concurrence of the Agency, will consider the amount of the bids or
proposals, and all conditions listed in the invitation. On the basis of
these considerations, the applicant will select and notify the lowest
responsible bidder. The contract will be awarded using Form RD 1924-6 or
similar Agency approved document as described in this section.

\(8\) [Final payments]{.underline}. Prior to making final payment on the
contract when a surety bond is not used, the Agency will be provided
with Form RD 1924-9, "Certificate of Contractor\'s Release," and Form RD
1924-10, "Release by Claimants," executed by all persons who furnished
materials or labor in connection with the contract. The applicant should
furnish the contractor with a copy of Form RD 1924-10 at the beginning
of the work in order that the contractor may obtain these releases as
the work progresses.

\(f\) [Design/build contracts]{.underline}. The design/build method,
where the same person or entity provides design and engineering work, as
well as construction or installation, may be used with Agency written
approval. If the design/build contract amount is \$200,000 or less,
development and contracting will follow paragraph (e) of this section.
If the design/build contract amount is greater than \$200,000, Agency
prior concurrence must be obtained as described below, and the remaining
requirements of this section apply.

\(1\) [Concurrence information]{.underline}. The applicant will request
Agency concurrence by providing the Agency at least the information
specified in paragraphs (f)(1)(i) through (viii) of this section.

37

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RD Instruction 4280-B

§ 4280.115(f)(1) (Con.)

\(i\) The owner\'s written request to use the design/build method with a
description of the proposed method.

\(ii\) A proposed scope of work describing in clear, concise terms the
technical requirements for the contract. It should include a
nontechnical statement summarizing the work to be performed by the
contractor and the results expected, and a proposed construction
schedule showing the sequence in which the work is to be performed.

\(iii\) A proposed firm-fixed-price contract for the entire project
which provides that the contractor shall be responsible for any extra
cost which may result from errors or omissions in the services provided
under the contract, as well as compliance with all Federal, State, and
local requirements effective on the contract execution date.

\(iv\) Where noncompetitive negotiation is proposed, an evaluation of
the contractor\'s performance on previous similar projects in which the
contractor acted in a similar capacity.

\(v\) A detailed listing and cost estimate of equipment and supplies not
included in the construction contract but which are necessary to
properly operate the facility.

\(vi\) Evidence that a qualified construction inspector who is
independent of the contractor has or will be hired.

\(vii\) Preliminary plans and outline specifications. However, final
plans and specifications must be completed and reviewed by the Agency
prior to the start of construction.

\(viii\) The owner\'s attorney\'s opinion and comments regarding the
legal adequacy of the proposed contract documents and evidence that the
owner has the legal authority to enter into and fulfill the contract.

\(2\) [Agency concurrence of design/build method]{.underline}. The
Agency shall review the material submitted by the applicant. When all
items are acceptable, the loan approval official will concur in the use
of the design/build method for the proposal.

38

RD Instruction 4280-B

§ 4280.115(f) (Con.)

\(3\) [Forms used]{.underline}. The American Institute of Architects
(AIA) Form A191, "Standard Form of Agreement Between Owner and
Design/Builder," should be used. Other Agency approved contract
documents may be used provided they are customarily used in the area and
protect the interest of the applicant and the Agency with respect to
compliance with items such as the drawings, specifications, payments for
work, inspections, completion, nondiscrimination in construction work,
and acceptance of the work. The Agency will not become a party to a
construction contract or incur any liability under it. No contract shall
become effective until concurred in writing by the Agency. Such
concurrence statement shall be attached to and made a part of the
contract.

\(4\) [Contract provisions]{.underline}. Contracts will have a listing
of attachments and shall meet the following requirements:

\(i\) The contract sum;

\(ii\) The dates for starting and completing the work;

\(iii\) The amount of liquidated damages, if any, to be charged;

\(iv\) The amount, method, and frequency of payment;

\(v\) Surety provisions that meet the requirements of 7 CFR subpart C of
part 1780, § 1780.75(c) of this title;

\(vi\) The requirement that changes or additions must have prior written
approval of the Agency;

\(vii\) The warranty period to be provided in accordance with Appendices
A and B, sections 1 through 10, paragraph (i);

\(viii\) Contract review and concurrence in accordance with 7 CFR
subpart C of part 1780, § 1780.61(b) of this title;

\(ix\) Owner's contractual responsibility in accordance with 7 CFR
subpart C of part 1780, § 1780.68 of this title; and

39

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RD Instruction 4280-B

§ 4280.115(f)(4) (Con.)

\(x\) Further contract provisions concerning remedies, termination,
surety, equal employment opportunity, anti-kickback, records, State
energy conservation plan, change orders, Agency concurrence, retainage,
and other compliance requirements must be met in accordance with 7 CFR
subpart C of part 1780, § 1780.75 of this title.

\(5\) [Obtaining bids and selecting a contractor]{.underline}. The
applicant may select a contractor based on competitive sealed bids,
competitive negotiation, or noncompetitive negotiation as described in 7
CFR subpart C of part 1780, § 1780.72(b), (c), or (d) of this title.

\(g\) [Contract method]{.underline}. If the contract amount is greater
than \$200,000 and is not of the design/build method, the following
conditions must be met:

\(1\) [Procurement method]{.underline}. Procurement method shall comply
with the requirements of 7 CFR subpart C of part 1780, §§ 1780.72,
1780.75, and 1780.76 of this title.

\(2\) [Forms used]{.underline}. The AIA Form A101, "Standard Form of
Agreement Between Owner/Contractor," or Engineering Joint Counsel
Document Committee (EJCDC) Form C-521, "Suggested Form of Agreement
Between Owner and Contractor (Stipulated Price) Funding Agency Edition,"
should be used. Other Agency approved contract documents may be used
provided they are customarily used in the area and protect the interest
of the applicant and the Agency with respect to compliance with items
such as the drawings, specifications, payments for work, inspections,
completion, nondiscrimination in construction work, and acceptance of
the work. The Agency will not become a party to a construction contract
or incur any liability under it. No contract shall become effective
until concurred in writing by the Agency. Such concurrence statement
shall be attached to and made a part of the contract.

\(3\) [Contract provisions]{.underline}. Contracts will have a listing
of attachments and shall meet the requirements of 7 CFR subpart C of
part 1780, § 1780.75 of this title and the following requirements:

\(i\) The contract sum;

\(ii\) The dates for starting and completing the work;

\(iii\) The amount of liquidated damages, if any, to be charged;

40

RD Instruction 4280-B

§ 4280.115(g)(3) (Con.)

\(iv\) The amount, method, and frequency of payment;

\(v\) Surety provisions that meet the requirements of 7 CFR subpart C of
part 1780, § 1780.75(c) of this title;

\(vi\) The requirement that changes or additions must have prior written
approval of the Agency;

\(vii\) The warranty period to be provided in accordance with Appendices
A and B, sections 1 through 10, paragraph (i);

\(viii\) Contract review and concurrence in accordance with 7 CFR
subpart C of part 1780, § 1780.61(b) of this title;

\(ix\) Owner's contractual responsibility in accordance with 7 CFR
subpart C of part 1780, § 1780.68 of this title; and

\(x\) Further contract provisions concerning remedies, termination,
surety, equal employment opportunity, anti-kickback, records, State
energy conservation plan, change orders, Agency concurrence, retainage,
and other compliance requirements must be met in accordance with 7 CFR
subpart C of part 1780, § 1780.75 of this title.

\(4\) [Obtaining bids and selecting a contractor]{.underline}. The
applicant may select a contractor based on competitive sealed bids,
competitive negotiation, or noncompetitive negotiation as described in 7
CFR subpart C of part 1780, § 1780.72(b), (c), or (d) of this title.

\(5\) [Contract award]{.underline}. Applicants awarding contracts must
comply with 7 CFR subpart C of part 1780, § 1780.70(h) of this title.

\(6\) [Contracts awarded prior to applications]{.underline}. Applicants
awarding contracts prior to filing an application must comply with 7 CFR
subpart C of part 1780, § 1780.74 of this title.

\(7\) [Contract administration]{.underline}. Contract administration
must comply with 7 CFR subpart C of part 1780, § 1780.76 of this title.
If another authority, such as a Federal or State Agency, is providing
funding and requires oversight of inspections, change orders, and pay
requests, the Agency may accept copies of their reports or forms as
meeting oversight requirements of the Agency.

41

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RD Instruction 4280-B

§ 4280.116 [Grantee requirements]{.underline}.

\(a\) A Letter of Conditions will be prepared by the Agency,
establishing conditions that must be understood and agreed to by the
applicant before any obligation of funds can occur. The applicant must
sign a "Letter of Intent to Meet Conditions" and Form RD 1940-1,
"Request for Obligation of Funds," if they accept the conditions of the
grant.

\(b\) The grantee must sign and abide by all requirements contained in
Form RD 4280-2 and this subpart.

## 

§ 4280.117 [Servicing grants]{.underline}.

Grants will be serviced in accordance with subparts E and O of part 1951
of this title and Form RD 4280-2.

§§ 4280.118 - 4280.120 \[Reserved\]

§ 4280.121 [Borrower eligibility]{.underline}.

To receive a guaranteed loan under this subpart, a borrower must meet
each of the criteria, as applicable, identified in § 4280.107(a)(1)
through (4).

§ 4280.122 [Project eligibility]{.underline}.

For a project to be eligible to receive a guaranteed loan under this
subpart, the project must meet each of the criteria, as applicable, in\
§ 4280.108(a) through (g). In addition, guaranteed loan funds may be
used for necessary capital improvements to an existing renewable energy
system.

§ 4280.123 [Guaranteed loan funding]{.underline}.

\(a\) The amount of the loan that will be made available to an eligible
project under this subpart will not exceed 50 percent of total eligible
project costs. Eligible project costs are specified in paragraph (e) of
this section.

\(b\) The minimum amount of a guaranteed loan made to a borrower will be
\$5,000, less any program grant amounts. The maximum amount of a
guaranteed loan made to a borrower is \$10 million.

42

RD Instruction 4280-B

§ 4280.123 (Con.)

\(c\) The percentage of guarantee, up to the maximum allowed by this
section, will be negotiated between the lender and the Agency. The
maximum percentage of guarantee is 85 percent for loans of \$600,000 or
less; 80 percent for loans greater than \$600,000 up to and including
\$5 million; and 70 percent for loans greater than \$5 million up to and
including \$10 million.

\(d\) The total amount of the loans guaranteed by the Agency under this
program to one borrower, including the outstanding principal and
interest balance of any existing loans guaranteed by the Agency under
this program, and new loan request, must not exceed \$10 million.

\(e\) Eligible project costs are only those costs associated with the
items identified in paragraphs (e)(1) through (11) of this section, as
long as the items are an integral and necessary part of the renewable
energy system or energy efficiency improvement.

\(1\) Post-application purchase and installation of equipment (new,
refurbished, or remanufactured), except agricultural tillage equipment,
used equipment, and vehicles.

\(2\) Post-application construction or improvements, except residential.

\(3\) Energy audits or assessments.

\(4\) Permit and license fees.

\(5\) Professional service fees, except for application preparation.

\(6\) Feasibility studies and technical reports.

\(7\) Business plans.

\(8\) Retrofitting.

\(9\) Construction of a new energy efficient facility only when the
facility is used for the same purpose, is approximately the same size,
and based on the energy audit will provide more energy savings than
improving an existing facility. Only costs identified in the energy
audit for energy efficiency improvements are allowed.

43

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RD Instruction 4280-B

§ 4280.128(e) (Con.)

\(10\) Working capital.

\(11\) Land acquisition.

\(f\) In determining the amount of a loan awarded, the Agency will take
into consideration the following six criteria:

\(1\) The type of renewable energy system to be purchased;

\(2\) The estimated quantity of energy to be generated by the renewable
energy system;

\(3\) The expected environmental benefits of the renewable energy
system;

\(4\) The extent to which the renewable energy system will be
replicable;

\(5\) The amount of energy savings expected to be derived from the
activity, as demonstrated by an energy audit comparable to an energy
audit under 7 U.S.C. 8105; and

\(6\) The estimated length of time it would take for the energy savings
generated by the activity to equal the cost of the activity.

## 

## § 4280.124 [Interest rates]{.underline}.

\(a\) The interest rate for the guaranteed loan will be negotiated
between the lender and the applicant and may be either fixed or variable
as long as it is a legal rate. The variable rate must be based on
published indices, such as money market indices. In no case, however,
shall the rate be more than the rate customarily charged borrowers in
similar circumstances in the ordinary course of business. The interest
rate charged is subject to Agency review and approval.

\(b\) Comply with § 4279.125(a), (b), and (d) of this chapter.

## § 4280.125 [Terms of loan]{.underline}.

\(a\) The repayment term for a loan for:

\(1\) real estate must not exceed 30 years;

44

RD Instruction 4280-B

§ 4280.125(a) (Con.)

\(2\) machinery and equipment must not exceed 20 years, or the useful
life, including major rebuilds and component replacement, whichever is
less;

\(3\) combined loans on real estate and equipment must not exceed 30
years; and

\(4\) working capital loans must not exceed 7 years.

\(b\) The first installment of principal and interest will, if possible,
be scheduled for payment after the project is operational and has begun
to generate income.

\(c\) Payment terms must comply with § 4279.126(c) of this chapter.

\(d\) The maturity of a loan will be based on the use of proceeds, the
useful life of the assets being financed, and the borrower\'s ability to
repay.

\(e\) All loans guaranteed through this program must be sound, with
reasonably assured repayment.

\(f\) Guarantees must be provided only after consideration is given to
the borrower's overall credit quality and to the terms and conditions of
renewable energy and energy efficiency subsidies, tax credits, and other
such incentives.

\(g\) A principal plus interest repayment schedule is permissible.

## 

## § 4280.126 [Guarantee/annual renewal fee percentages]{.underline}.

\(a\) [Fee ceilings]{.underline}. The maximum guarantee fee that may be
charged is 1 percent. The maximum annual renewal fee that may be charged
is 0.5 percent. The Agency will establish each year the guarantee fee
and annual renewal fee and a notice will be published in the Federal
Register.

\(b\) [Guarantee fee]{.underline}. The guarantee fee will be paid to the
Agency by the lender and is nonrefundable. The guarantee fee may be
passed on to the borrower. The guarantee fee must be paid at the time
the Loan Note Guarantee is issued.

45

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RD Instruction 4280-B

§ 4280.126 (Con.)

\(c\) [Annual renewal fee]{.underline}. The annual renewal fee will be
calculated on the unpaid principal balance as of close of business on
December 31 of each year. It will be calculated by multiplying the
outstanding principal balance times the percent of guarantee times the
annual renewal fee. The fee will be billed to the lender in accordance
with the [Federal Register]{.underline} publication. The annual renewal
fee may not be passed on to the borrower.

## 

## § 4280.127 \[Reserved\] 

## 

## § 4280.128 [Application and documentation]{.underline}.

The requirements in this section apply to guaranteed loan applications
under this subpart.

\(a\) [General]{.underline}. Applications must be submitted in
accordance with the requirements specified in § 4280.111(a).

\(b\) [Application content for guaranteed loans greater than
\$600,000]{.underline}. Applications and documentation for guaranteed
loans greater than \$600,000 must provide the required information
organized pursuant to a Table of Contents in a chapter format presented
in the order shown in paragraphs (b)(1) and (2) of this section.

\(1\) [Guaranteed loan application content]{.underline}.

\(i\) [Table of Contents]{.underline}. Include page numbers for each
component of the application in the table of contents. Begin pagination
immediately following the Table of Contents.

\(ii\) [Project Summary]{.underline}. Provide a concise summary of the
proposed project and applicant information, project purpose and need,
and project goals, including the following:

\(A\) [Title]{.underline}. Provide a descriptive title of the project
(identified on SF 424).

\(B\) [Borrower eligibility]{.underline}. Describe how each of the
criteria, identified in § 4280.107(a)(1) through (4), is met.

46

RD Instruction 4280-B

§ 4280.128(b)(1)(ii) (Con.)

\(C\) [Project eligibility]{.underline}. Describe how each of the
criteria, as applicable in § 4280.108(a) through (g), is met. Clearly
state whether the application is for the purchase of a renewable energy
system (including making necessary capital improvements to an existing
renewable energy system) or to make energy efficiency improvements. The
response to § 4280.108(a) must include a brief description of the system
or improvement. This description is to provide the reader with a frame
of reference for reviewing the rest of application. Additional project
description information will be needed later in the application.

\(D\) [Operation description]{.underline}. Describe the applicant's
total farm/ranch/business operation and the relationship of the proposed
project to the applicant's total farm/ranch/business operation as
specified in § 4280.111(b)(3)(iv).

\(iii\) [Financial information for size determination]{.underline}.
Provide financial information to allow the Agency to determine the
applicant's size as specified in § 4280.111(b)(3)(v).

\(iv\) [Matching funds]{.underline}. Submit a spreadsheet identifying
sources, amounts, and status of matching funds as specified in
§ 4280.111(b)(5).

\(v\) [Self-evaluation score]{.underline}. Self-score the project using
the evaluation criteria in § 4280.112(e) as specified in
§ 4280.111(b)(6).

\(vi\) [Renewable energy and energy efficiency technical
report]{.underline}. For both renewable energy projects and energy
efficiency improvement projects, submit a Technical Report in accordance
with applicable provisions of Appendix B of this subpart and as
specified in § 4280.111(b)(7)(ii). For loan requests in excess of
\$600,000, the services of a licensed professional engineer (P.E.) or a
team of licensed P.E.'s is required. If none of the Technology Reports
in Appendix B apply to the proposed technology, the applicant may submit
a Technical Report that conforms to the overall outline and subjects
specified in applicable provisions of § 4280.111(b)(7)(ii)(A) through
(G).

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RD Instruction 4280-B

§ 4280.128(b)(1) (Con.)

\(vii\) [Business-level feasibility study for renewable energy
systems]{.underline}. For each application for a renewable energy system
project submitted by a start-up or existing business, a business-level
feasibility study by an independent qualified consultant will be
required by the Agency. An acceptable business-level feasibility study
must at least include an evaluation of economic, market, technical,
financial, and management feasibility.

\(2\) [Lender forms, certifications, and agreements]{.underline}. Each
application submitted under paragraph (b)(1) of this section must
contain applicable items described in paragraphs (b)(2)(i) through (xii)
of this section.

\(i\) A completed Form RD 4279-1, "Application for Loan Guarantee."

\(ii\) Form RD 1940-20.

\(iii\) A personal credit report from an Agency approved credit
reporting company for each owner, partner, officer, director, key
employee, and stockholder owning 20 percent or more interest in the
borrower's business, except passive investors and those corporations
listed on a major stock exchange.

\(iv\) Appraisals completed in accordance with § 4280.141. Completed
appraisals should be submitted when the application is filed. If the
appraisal has not been completed when the application is filed, the
applicant must submit an estimated appraisal. In all cases, a completed
appraisal must be submitted prior to the loan being closed.

\(v\) Commercial credit reports obtained by the lender on the borrower
and any parent, affiliate, and subsidiary firms.

\(vi\) Current personal and corporate financial statements of any
guarantors.

\(vii\) Intergovernmental consultation comments in accordance with 7 CFR
part 3015, subpart V, of this title.

48

RD Instruction 4280-B

§ 4280.128(b)(2) (Con.)

\(viii\) Financial statements as specified in § 4280.111(b)(4)(i)
through (iii) Financial information is required on the total operation
of the agricultural producer/rural small business and its parent,
subsidiary, or affiliates at other locations. All information submitted
under this paragraph must be substantiated by authoritative records.

\(ix\) Business-level feasibility study.

\(x\) Lender's complete comprehensive written analysis in accordance
with § 4280.139.

\(xi\) A certification by the lender that it has completed a
comprehensive written analysis of the proposal, the borrower is
eligible, the loan is for authorized purposes with technical merit, and
there is reasonable assurance of repayment ability based on the
borrower\'s history, projections, equity, and the collateral to be
obtained.

\(xii\) A proposed Loan Agreement or a sample Loan Agreement with an
attached list of the proposed Loan Agreement provisions. The following
requirements must be addressed in the proposed or sample Loan Agreement:

\(A\) Prohibition against assuming liabilities or obligations of others;

\(B\) Restriction on dividend payments;

\(C\) Limitation on the purchase or sale of equipment and fixed assets;

\(D\) Limitation on compensation of officers and owners;

\(E\) Minimum working capital or current ratio requirement;

\(F\) Maximum debt-to-net worth ratio;

\(G\) Restrictions concerning consolidations, mergers, or other
circumstances;

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RD Instruction 4280-B

§ 4280.128(b)(2)(xii) (Con.)

\(H\) Limitations on selling the business without the concurrence of the
lender;

\(I\) Repayment and amortization of the loan;

\(J\) List of collateral and lien priority for the loan, including a
list of persons and corporations guaranteeing the loan with a schedule
for providing the lender with personal and corporate financial
statements. Financial statements for corporate and personal guarantors
must be updated at least annually once the guarantee is provided;

\(K\) Type and frequency of financial statements to be required from the
borrower for the duration of the loan;

\(L\) The addition of any requirements imposed by the Agency in Form RD
4279-3;

\(M\) A reserved section for any Agency environmental requirements; and

\(N\) A provision for the lender or the Agency to have reasonable access
to the project and its performance information during its useful life or
the term of the loan, whichever is longer, including the periodic
inspection of the project by a representative of the lender or the
Agency.

\(c\) [Application content for guaranteed loans of \$600,000 or
less]{.underline}. Applications and documentation for guaranteed loans
\$600,000 or less must comply with paragraphs (c)(1) and (2) of this
section.

\(1\) [Application Contents]{.underline}. Applications and documentation
for guaranteed loans \$600,000 or less must provide the required
information organized pursuant to a Table of Contents in a chapter
format presented in the order shown in § 4280.111(b)(2) through (8),
except as specified in paragraphs (c)(1)(i) through (iii) of this
section.

\(i\) Section 4280.111(b)(7)(i) does not apply.

\(ii\) Technical Reports must be submitted according to paragraph
(c)(1)(ii)(A) or (B) of this section, as applicable.

50

RD Instruction 4280-B

§ 4280.128(c)(1)(ii) (Con.)

\(A\) For renewable energy projects and energy efficiency projects
utilizing commercially available systems or improvements and with total
eligible project costs of \$200,000 or less, submit a Technical Report
as described in Appendix A of this subpart. If a renewable energy
project does not fit on of the technologies identified in Appendix A,
the applicant must submit a Technical Report that conforms to the
overall outline and subjects specified in § 4280.111(b)(7)(ii)(G).

\(B\) For renewable energy projects and energy efficiency projects
utilizing pre-commercial technology or with total eligible project costs
greater than \$200,000, submit a Technical Report as described in
Appendix B of this subpart and as specified in
§ 4280.111(b)(7)(ii)(G)([1]{.underline}) through ([10]{.underline}), as
applicable.

\(iii\) [Business-level feasibility study for renewable energy
systems]{.underline}. For each application for a renewable energy system
project submitted by a start-up or existing business, a business-level
feasibility study by an independent qualified consultant will be
required by the Agency. An acceptable business-level feasibility study
must at least include an evaluation of economic, market, technical,
financial, and management feasibility. Renewable energy projects with
total eligible project costs of \$200,000 or less are exempt from the
feasibility study requirement.

\(2\) [Lender forms, certifications, and agreements]{.underline}.
Applications submitted under paragraph (c) of this section must use Form
RD 4279-1A, "Application for Loan Guarantee, Short Form," and include
the documentation contained in paragraphs (b)(2)(ii), (vii), (viii),
(ix), (x), and (xii) of this section. The lender must have the
documentation contained in paragraphs (b)(2)(iii), (iv), (v), (vi), and
(xi) available in its files for the Agency's review.

§ 4280.129 [Evaluation of guaranteed loan applications]{.underline}.

\(a\) [General review]{.underline}. The Agency will evaluate each
application to confirm that both the borrower and project are eligible,
the project has technical merit, there is reasonable assurance of
repayment, there is sufficient collateral and equity, and the proposed
loan complies with all applicable statutes and regulations. If the
Agency determines it is unable to guarantee the loan, the lender will be
informed in writing. Such notification will include the reasons for
denial of the guarantee.

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RD Instruction 4280-B

§ 4280.129 (Con.)

\(b\) [Ineligible applications]{.underline}. If either the borrower or
the project is ineligible, the Agency will inform the lender in writing
of the reasons and provide any appeal rights. No further evaluation of
the application will occur.

\(c\) [Incomplete applications]{.underline}. If the application is
incomplete, the Agency will identify those parts of the application that
are incomplete and return it, with a written explanation, to the lender
for possible future resubmission. Upon receipt of a complete
application, the Agency will complete its evaluation.

\(d\) [Technical merit determination]{.underline}. The Agency's
determination of a project's technical merit will be based on the
information provided by the applicant. The Agency may engage the
services of other government agencies or recognized industry experts in
the applicable technology field, at its discretion, to evaluate and rate
the application. The Agency may use this evaluation and rating to
determine the level of technical merit of the proposed project. Projects
determined by the Agency to be without technical merit shall be deemed
ineligible.

\(e\) [Evaluation criteria]{.underline}. The Agency will score each
application based on the evaluation criteria specified in § 4280.112(e)
(except for the criteria specified in § 4280.112(e)(5)) and in
paragraphs (e)(1) and (2) of this section. Points will be awarded for
either paragraph (e)(1) or (2) of this section, but not both.

\(1\) If the interest rate on the loan is to be below the prime rate (as
published in The Wall Street Journal) plus 1.5 percent, 5 points will be
awarded.

\(2\) If the interest rate on the loan is to be below the prime rate (as
published in The Wall Street Journal) plus 1 percent, 10 points will be
awarded. *Use the Evaluation Criteria Scoring Guideline in Appendix C to
facilitate scoring an application.*

§ 4280.130 [Eligible lenders]{.underline}.

Eligible lenders are those identified in § 4279.29 of this chapter,
excluding mortgage companies that are part of a bank-holding company.

52

RD Instruction 4280-B

§ 4280.131 [Lender's functions and responsibilities]{.underline}.

\(a\) [General]{.underline}. Lenders are responsible for implementing
the guaranteed loan program under this subpart. All lenders requesting
or obtaining a loan guarantee must comply with § 4279.30(a)(1)(i)
through (ix) of this chapter.

\(b\) [Credit evaluation]{.underline}. The lender's credit evaluation
must comply with § 4279.30(b).

\(c\) [Environmental information]{.underline}. Lenders must ensure that
borrowers furnish all environmental information required under 7 CFR
part 1940, subpart G, of this title and must comply with § 4279.30(c) of
this chapter.

\(d\) [Construction planning and performing development]{.underline}.
The lender must comply with § 4279.156(a) and (b) of this chapter,
except under paragraph § 4279.156(a) of this chapter, the lender must
also ensure that all project facilities are designed utilizing accepted
architectural and engineering practices that conform to the requirements
of this subpart.

\(e\) [Loan closing]{.underline}. The loan closing must be in compliance
with § 4279.30(d) of this chapter.

§ 4280.132 [Access to records]{.underline}.

Both the lender and borrower must permit representatives of the Agency
(or other agencies of the U.S.) to inspect and make copies of any
records pertaining to any Agency guaranteed loan during regular office
hours of the lender or borrower or at any other time upon agreement
between the lender, the borrower, and the Agency, as appropriate.

§ 4280.133 [Conditions of guarantee]{.underline}.

All loan guarantees will be subject to § 4279.72 of this chapter.

§ 4280.134 [Sale or assignment of guaranteed loan]{.underline}.

Any sale or assignment of the guaranteed loan must be in accordance with
§ 4279.75 of this chapter.

§ 4280.135 [Participation]{.underline}.

All participation must be in accordance with § 4279.76 of this chapter.

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RD Instruction 4280-B

§ 4280.136 [Minimum retention]{.underline}.

Minimum retention must be in accordance with § 4279.77 of this chapter.

§ 4280.137 [Repurchase from holder]{.underline}.

Any repurchase from a holder must be in accordance with § 4279.78 of
this chapter.

§ 4280.138 [Replacement of document]{.underline}.

Documents must be replaced in accordance with § 4279.84 of this chapter,
except, in § 4279.84(b)(1)(v), a full statement of the circumstances of
any defacement or mutilation of the Loan Note Guarantee or Assignment
Guarantee Agreement would also need to be provided.

§ 4280.139 [Credit quality]{.underline}.

The lender must determine credit quality and must address all of the
elements of credit quality in a written credit analysis, including
adequacy of equity, cashflow, collateral, history, management, and the
current status of the industry for which credit is to be extended.

\(a\) [Cashflow]{.underline}. All efforts will be made to structure debt
so that the business has adequate debt coverage and the ability to
accommodate expansion.

\(b\) [Collateral]{.underline}. Collateral must have documented value
sufficient to protect the interest of the lender and the Agency. The
discounted collateral value will normally be at least equal to the loan
amount. Lenders will discount collateral consistent with sound
loan-to-value policy. Guaranteed loans made under this subpart shall
have at least parity position with guaranteed loans made under subpart B
of part 4279 of this title.

\(c\) [Industry]{.underline}. The current status of the industry will be
considered. Borrowers developing well established commercially available
renewable energy systems with significant support infrastructure may be
considered for better terms and conditions than those borrowers
developing systems with limited infrastructure.

54

RD Instruction 4280-B

§ 4280.139 (Con.)

\(d\) [Equity]{.underline}. In determining the adequacy of equity, the
lender must meet the criteria specified in paragraph (d)(1) of this
section for loans over \$600,000 and the criteria in paragraph (d)(2) of
this section for loans of \$600,000 or less. Cash equity injection, as
discussed in paragraphs (d)(1) and (2) of this section, must be in the
form of cash. Federal grant funds may be counted as cash equity.

\(1\) For loans over \$600,000, borrowers shall demonstrate evidence of
cash equity injection in the project of not less than 25 percent of
eligible project costs. The fair market value of equity in real property
that is to be pledged as collateral for the loan may be substituted in
whole or in part to meet the cash equity requirement. However, the
appraisal completed to establish the fair market value of the real
property must not be more than 1 year old and must meet Agency appraisal
standards.

\(2\) For loans of \$600,000 or less, borrowers shall demonstrate
evidence of cash equity injection in the project of not less than 15
percent of eligible project costs. The fair market value of equity in
real property that is to be pledged as collateral for the loan may be
substituted in whole or in part to meet the cash equity requirement.
However, the appraisal completed to establish the fair market value of
the real property must not be more than 1 year old and must meet Agency
appraisal standards.

\(e\) [Lien priorities]{.underline}. The entire loan will be secured by
the same security with equal lien priority for the guaranteed and
unguaranteed portions of the loan. The unguaranteed portion of the loan
will neither be paid first nor given any preference or priority over the
guaranteed portion. A parity or junior position may be considered
provided that discounted collateral values are adequate to secure the
loan in accordance with paragraph (b) of this section after considering
prior liens.

§ 4280.140 [Financial statements]{.underline}.

\(a\) The financial information required in § 4280.111(b)(3)(v) and
(b)(4) is required for the guaranteed loan program.

\(b\) If the proposed guaranteed loan exceeds \$3 million, the Agency
may require annual audited financial statements, at its sole discretion
when the Agency is concerned about the applicant's credit risk.

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RD Instruction 4280-B

§ 4280.141 [Appraisals]{.underline}.

\(a\) [Conduct of appraisals]{.underline}. All appraisals must be in
accordance with § 4279.144 of this chapter.

\(1\) For loans of \$600,000 or more, a complete self-contained
appraisal must be conducted. Lenders must complete at least a
Transaction Screen Questionnaire for any undeveloped sites and a Phase I
environmental site assessment on existing business sites, which should
be provided to the appraiser for completion of the self-contained
appraisal.

\(2\) For loans for less than \$600,000, a complete summary appraisal
may be conducted in lieu of a complete self-contained appraisal as
required under paragraph (a)(1) of this section. Summary appraisals must
be conducted in accordance with Uniform Standards of Professional
Appraisal Practice (USPAP).

\(b\) [Specialized appraisers]{.underline}. Specialized appraisers will
be required to complete appraisals in accordance with paragraphs (a)(1)
and (2) of this section. The Agency may approve a waiver of this
requirement only if a specialized appraiser does not exist in a specific
industry or hiring one would cause an undue financial burden to the
borrower.

§ 4280.142 [Personal and corporate guarantees]{.underline}.

\(a\) All personal and corporate guarantees must be in accordance with
§ 4279.149(a) of this chapter.

\(b\) Except for passive investors, unconditional personal and corporate
guarantees for those owners with a beneficial interest greater than 20
percent of the borrower will be required where legally permissible.

§ 4280.143 [Loan approval and obligation of funds]{.underline}.

The lender and applicant must comply with § 4279.173 of this chapter,
except that either or both parties may also propose alternate conditions
to the Conditional Commitment if certain conditions cannot be met.

### 

56

RD Instruction 4280-B

§ 4280.143 (Con.)

### *For guaranteed loans that exceed the State's delegation of authority, the State Office will be required to submit the complete application to the National Office for review and funding consideration.* 

### 

Section 9006 closed and obligated loans within the delegated authorities
of the State will be randomly selected for review by the National
Office. If selected for review, the State Office will provide the
following information:

*a. Copy of the Project Summary, including supporting documentation,
financial analysis software reports, and spreads analyzed by the State
Office.*

*b. Copy of RD Form 4279-1 "Application for Loan Guarantee."*

*c. Projects that exceed \$200,000 in total eligible project costs, a
copy of the project specific Technical Report, and National Renewable
Energy Laboratory's (NREL) merit determination document.*

*d. Projects that exceed \$200,000 in total eligible project costs, and
a copy of the project specific feasibility study will be provided.*

*e. Lenders complete comprehensive written analysis as required by
4280-B section 4280.139, including pro forma balance sheet projected for
loan closing and spreads of historic and projected financial
statements.*

*f. Summary pages of the appraisal report(s), including the
qualifications of the appraiser and a copy of the desk or technical
review by the State Review Appraiser, if applicable.*

*g. Copy of State loan committee minutes.*

*h. Business Loan Agreement executed between the Lender and Borrower.*

*i. Copy of the executed Conditional Commitment.*

*j. Copy of the Lenders Agreement.*

§ 4280.144 [Transfer of lenders]{.underline}.

All transfers of lenders must be in accordance with § 4279.174 of this
chapter, except that it will be the Agency rather than the loan approval
official who may approve the substitution of a new eligible lender.

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RD Instruction 4280-B

§ 4280.145 [Changes in borrower]{.underline}.

All changes in borrowers must be in accordance with § 4279.180 of this
chapter, but the eligibility requirements of this program apply.

§ 4280.146 [Conditions precedent to issuance of Loan Note
Guarantee]{.underline}.

\(a\) The Loan Note Guarantee will not be issued until the lender
certifies to the conditions identified in paragraphs § 4279.181(a)
through (o) of this chapter and paragraph (b) of this section.

\(b\) All planned property acquisitions and development have been
performing at a steady state operating level in accordance with the
technical requirements, plans, and specifications, conforms with
applicable Federal, State, and local codes, and costs have not exceeded
the amount approved by the lender and the Agency.

§ 4280.147 [Issuance of the guarantee]{.underline}.

\(a\) When loan closing plans are established, the lender must notify
the Agency in writing. At the same time, or immediately after loan
closing, the lender must provide the following to the Agency:

\(1\) Lender\'s certifications as required by § 4280.146;

\(2\) An executed Form RD 4279-4; and

\(3\) An executed Form RD 1980-19, "Guaranteed Loan Closing Report," and
appropriate guarantee fee.

\(b\) When the Agency is satisfied that all conditions for the guarantee
have been met, the Loan Note Guarantee and the following documents, as
appropriate, will be issued:

\(1\) Assignment Guarantee Agreement. If the lender assigns the
guaranteed portion of the loan to a holder, the lender, holder, and the
Agency must execute the Assignment Guarantee Agreement;

\(2\) Certificate of Incumbency. If requested by the lender, the Agency
will provide the lender with a copy of Form RD 4279-7, "Certificate of
Incumbency and Signature," with the signature and title of the Agency
official responsible for signing the Loan Note Guarantee, Lender\'s
Agreement, and Assignment Guarantee Agreement;

58

RD Instruction 4280-B

§ 4280.147(b) (Con.)

\(3\) Copies of legal loan documents; and

\(4\) Disbursement plan, if working capital is a purpose of the project.

§ 4280.148 [Refusal to execute Loan Note Guarantee]{.underline}.

If the Agency determines that it cannot execute the Loan Note Guarantee,
§ 4279.187 of this chapter will apply.

§ 4280.149 [Requirements after project construction]{.underline}.

Once the project has been constructed, the lender must provide the
Agency periodic reports from the borrower. The borrower's reports will
include the information specified in paragraphs (a) and (b) of this
section, as applicable.

\(a\) [Renewable energy projects]{.underline}. For renewable energy
projects, commencing the first full calendar year following the year in
which project construction was completed and continuing for 3 full
years, provide a report detailing the information specified in
paragraphs (a)(1) through (7) of this section.

\(1\) The actual amount of energy produced in BTUs, kilowatt-hours, or
similar energy equivalents.

\(2\) If applicable, documentation that any identified health and/or
sanitation problem has been solved.

\(3\) The annual income and/or energy savings of the renewable energy
system.

\(4\) A summary of the cost of operating and maintaining the facility.

\(5\) A description of any maintenance or operational problems
associated with the facility.

\(6\) Recommendations for development of future similar projects.

\(7\) Actual jobs created or saved.

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RD Instruction 4280-B

§ 4280.149 (Con.)

\(b\) [Energy efficiency improvement projects]{.underline}. For energy
efficiency improvement projects, commencing the first full calendar year
following the year in which project construction was completed and
continuing for 2 full years, provide a report detailing the actual
amount of energy saved due to the energy efficiency improvements.

§ 4280.150 [Insurance requirements]{.underline}.

Each borrower must obtain the insurance required in § 4280.113. The
coverage required by this section must be maintained for the life of the
loan unless this requirement is waived or modified by the Agency in
writing.

§ 4280.151 [Laws that contain other compliance
requirements]{.underline}.

Each lender and borrower must comply with the requirements specified in
§ 4280.114(d), §§ 4279.58, and 4279.156(c) and (d) of this chapter.

§ 4280.152 [Servicing guaranteed loans]{.underline}.

The lender must service the entire loan and must remain mortgagee and
secured party of record notwithstanding the fact that another party may
hold a portion of the loan. The entire loan must be secured by the same
security with equal lien priority for the guaranteed and unguaranteed
portions of the loan. The unguaranteed portion of a loan will neither be
paid first nor given any preference or priority over the guaranteed
portion of the loan.

\(a\) [Routine servicing]{.underline}. Comply with § 4287.107 of this
chapter, except that all notifications from the lender to the Agency
shall be in writing and all actions by the lender in servicing the
entire loan must be consistent with the servicing actions that a
reasonable, prudent lender would perform in servicing its own portfolio.

\(b\) [Interest rate adjustments]{.underline}. Comply with § 4287.112 of
this chapter, except that under § 4287.112(a)(3) of this chapter the
interest rates, after adjustments, must comply with the requirements for
interest rates on new loans as established by § 4280.124.

\(c\) [Release of collateral]{.underline}.

\(1\) Collateral may only be released in accordance with § 4287.113(a)
and (b) of this chapter and paragraph (c)(2) of this section.

60

RD Instruction 4280-B

§ 4280.152(c) (Con.)

\(2\) Within the parameters of paragraph (c)(1) of this section, lenders
may, over the life of the loan, release collateral (other than personal
and corporate guarantees) with a cumulative value of up to 20 percent of
the original loan amount without Agency concurrence, if the proceeds
generated are used to reduce the guaranteed loan or to buy replacement
collateral or real estate equal to or greater than the collateral being
replaced.

\(d\) [Subordination of lien position]{.underline}. All subordinations
of the lender's lien position must comply with § 4287.123 of this
chapter.

\(e\) [Alterations of loan instruments]{.underline}. All alterations of
loan instruments must comply with § 4287.124 of this chapter.

\(f\) [Loan transfer and assumption]{.underline}. All loan transfers and
assumptions must comply with § 4287.134(c), (d), (f), (g), and (i)
through (k) of this chapter in addition to the following:

\(1\) [Documentation of request]{.underline}. All transfers and
assumptions must be approved in writing by the Agency and must be to
eligible applicants in accordance with § 4280.121. An individual credit
report must be provided for transferee proprietors, partners, offices,
directors, and stockholders with 20 percent or more interest in the
business, along with such other documentation as the Agency may request
to determine eligibility.

\(2\) [Terms]{.underline}. Loan terms must not be changed unless the
change is approved in writing by the Agency with the concurrence of any
holder and the transferor (including guarantors), if they have not been
or will not be released from liability. Any new loan terms must be
within the terms authorized by § 4280.125. The lender's request for
approval of new loan terms will be supported by an explanation of the
reasons for the proposed change in loan terms.

\(3\) [Additional loans]{.underline}. Loans to provide additional funds
in connection with a transfer and assumption must be considered as a new
loan application under § 4280.128.

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RD Instruction 4280-B

§ 4280.152(f) (Con.)

\(4\) [Loss resulting from transfer]{.underline}. If a loss should occur
upon consummation of a complete transfer and assumption for less than
the full amount of the debt and the transferor (including personal
guarantors) is released from liability, the lender, if it holds the
guaranteed portion, may file Form RD 449-30, "Loan Note Guaranteed Loss
of Report," to recover its pro rata share of the actual loss. If a
holder owns any of the guaranteed portion, such portion must be
repurchased by the lender or the Agency in accordance with § 4279.78(c)
of this chapter. In completing the report of loss, the amount of the
debt assumed will be entered as net collateral (recovery). Approved
protective advances and accrued interest thereon made during the
arrangement of a transfer and assumption will be included in the
calculations.

§ 4280.153 [Substitution of lender]{.underline}.

\(a\) All substitutions of lenders must comply with § 4287.135(a)(2) and
(b) of this chapter and paragraph (b) of this section.

\(b\) The Agency may approve the substitution of a new lender if the
proposed substitute lender:

\(1\) Is an eligible lender in accordance with § 4280.130;

\(2\) Is able to service the loan in accordance with the original loan
documents; and

\(3\) Acquires title to the unguaranteed portion of the loan held by the
original lender and assumes all original loan requirements, including
liabilities and servicing responsibilities.

§ 4280.154 [Default by borrower]{.underline}.

If the loan goes into default, the lender must comply with § 4287.145 of
this chapter.

§ 4280.155 [Protective advances]{.underline}.

All protective advances made by the lender must comply with § 4287.156
of this chapter.

## 62

##  

RD Instruction 4280-B

§ 4280.156 [Liquidation]{.underline}.

All liquidations must comply with § 4287.157 of this chapter, except as
follows:

\(a\) Under § 4287.157(d)(13) of this chapter, whenever \$200,000 is
used substitute \$100,000; and

\(b\) Under § 4287.157(d)(13) of this chapter, replace the sentence "The
appraisal shall consider this aspect" with "Both the estimate and the
appraisal shall consider this aspect."

§ 4280.157 [Determination of loss and payment]{.underline}.

Loss and payments will be determined in accordance with § 4287.158 of
this chapter.

§ 4280.158 [Future recovery]{.underline}.

Future recoveries will be conducted in accordance with § 4287.169 of
this chapter.

§ 4280.159 [Bankruptcy]{.underline}.

Bankruptcies will be handled in accordance with § 4287.170 of this
chapter, except that the notification required under § 4287.170(b)(4) of
this chapter shall be made in writing.

§ 4280.160 [Termination of guarantee]{.underline}.

Guarantees will be terminated in accordance with § 4287.180 of this
chapter.

§ 4280.161 [Direct Loan Process]{.underline}.

\(a\) The Agency will determine each year whether or not direct loan
funds are available. For each year in which direct loan funds are
available, the Agency will publish a Notice of Funds Availability (NOFA)
in the Federal Register.

## 63

## 

(07-18-05) SPECIAL PN

RD Instruction 4280-B

§ 4280.161 (Con.)

\(b\) In each direct loan NOFA, the Agency will identify the following:

\(1\) The amount of funds available for direct loans;

\(2\) Applicant and project eligibility criteria;

\(3\) Minimum and maximum loan amounts;

\(4\) Interest rates;

\(5\) Terms of loan;

\(6\) Application and documentation requirements;

\(7\) Evaluation of applications;

\(8\) Actions required of the applicant/borrower (e.g., appraisals, land
and property acquisition);

\(9\) Insurance requirements;

\(10\) Laws that contain other compliance requirements;

\(11\) Construction planning and performing development;

\(12\) Requirements after project construction;

\(13\) Letter of Conditions, loan agreement, and loan closing process;

\(14\) Processing and servicing of direct loans by the Agency; and

\(15\) Any applicable definitions.

## 

## § 4280.162 - 4280.192 \[Reserved\]

§ 4280.193 [Combined funding]{.underline}.

The requirements for a project for which an applicant is seeking a
combined grant and guaranteed loan are defined as follows:

64

RD Instruction 4280-B

§ 4280.193 (Con.)

\(a\) [Eligibility]{.underline}. Applicants must meet the applicant
eligibility requirements specified in § 4280.107 and the borrower
eligibility requirements specified in § 4280.121. Projects must meet the
project eligibility requirements specified in §§ 4280.108 and 4280.122.
Applicants may submit simplified applications if the project meets the
requirements specified in § 4280.109.

\(b\) [Funding]{.underline}. Funding provided under this section is
subject to the limits described in paragraphs (b)(1) through (3) of this
section.

\(1\) The amount of any combined grant and guaranteed loan must not
exceed 50 percent of total eligible project costs. For purposes of
combined funding requests, total eligible project costs are based on the
total costs associated with those items specified in §§ 4280.110(c) and
4280.123(e). The applicant must provide the remaining total funds needed
to complete the project.

\(2\) Third-party, in-kind contributions will be limited to 10 percent
of the matching fund requirement of any financial assistance provided to
the applicant.

\(3\) The minimum combined funding request allowed is \$5,000, with the
grant portion of the funding request being at least \$1,500.

\(c\) [Application and documentation]{.underline}. When applying for
combined funding, the applicant must submit separate applications for
both types of assistance (grant and guaranteed loan). Each application
must meet the requirements, including the requisite forms and
certifications, specified in §§ 4280.111 and 4280.128. The separate
applications must be submitted simultaneously. The applicant must submit
at least one set of documentation, but does not need to submit duplicate
forms or certifications.

\(d\) [Evaluation]{.underline}. The Agency will evaluate each
application according to applicable procedures specified in §§ 4280.112
and 4280.129.

\(e\) [Interest rate and terms of loan]{.underline}. The interest rate
and terms of the loan for the loan portion of the combined funding
request will be determined based on the procedures specified in
§§ 4280.124 and 4280.125 for guaranteed loans.

65

(07-18-05) SPECIAL PN

RD Instruction 4280-B

§ 4280.193 (Con.)

\(f\) [Other provisions]{.underline}. In addition to the requirements
specified in paragraphs (a) through (e) of this section, the combined
funding request shall be subject to the other requirements specified in
this subpart, including, but not limited to, processing and servicing
requirements, as applicable, as described in paragraphs (f)(1) and (2)
of this section.

\(1\) All other provisions of Section A of this subpart shall apply to
the grant portion of the combined funding request.

\(2\) All other provisions of Section B of this subpart shall apply to
the guaranteed loan portion of the combined funding request.

§§ 4280.194 -- 4280.199 \[Reserved\]

§ 4280.200 [OMB control number]{.underline}.

The information collection requirements contained in the regulation have
been approved by the Office of Management and Budget (OMB) and have been
assigned OMB control number 0570-0050. A person is not required to
respond to a collection of information unless it displays a currently
valid OMB control number.

66

RD Instruction 4280-B

Appendix A

Page 1

**TECHNICAL REPORTS FOR PROJECTS WITH\
TOTAL ELIGIBLE PROJECT COSTS OF \$200,000 OR LESS**

The Technical Report for projects with total eligible project costs of
\$200,000 or less must demonstrate that the project design, procurement,
installation, startup, operation, and maintenance of the renewable
energy system or energy efficiency improvement will operate or perform
as specified over its design life in a reliable and a cost-effective
manner. The Technical Report must also identify all necessary project
agreements, demonstrate that those agreements will be in place, and that
necessary project equipment and services are available over the design
life.

All technical information provided must follow the format specified in
Sections 1 through 10 of this appendix. Supporting information may be
submitted in other formats. Design drawings and process flowcharts are
encouraged as exhibits. A discussion of each topic is not necessary if
the topic is not applicable to the specific project. Questions
identified in the Agency's technical review of the project must be
answered to the Agency's satisfaction before the application will be
approved. The applicant must submit the original technical report plus
one copy to the Rural Development State Office. Depending on the level
of engineering required for the specific project or if necessary to
ensure public safety, the services of a licensed professional engineer
or a team of licensed professional engineers may be required.

(07-18-05) SPECIAL PN

RD Instruction 4280-B

Appendix A

Page 2

Section 1. Bioenergy

The technical requirements specified in this section apply to bioenergy
projects, which are, as defined in § 4280.103, renewable energy systems
that produce fuel, thermal energy, or electric power from a biomass
source, other than an anaerobic digester project.

\(a\) [Qualifications of key project service providers]{.underline}.
List all key project service providers. If one or more licensed
professionals are involved in the project, provide the credentials for
each professional.

\(b\) [Agreements, permits, and certifications]{.underline}.

\(1\) Identify all necessary agreements and permits required for the
project and the status and schedule for securing those agreements and
permits.

\(2\) For systems planning to interconnect with a utility, describe the
utility's system interconnection requirements, power purchase
arrangements, or licenses where required and the anticipated schedule
for meeting those requirements and obtaining those agreements. This is
required even if the system is installed on the customer side of the
utility meter. For systems planning to utilize a local net metering
program as their interconnection agreement, describe the applicable
local net metering program.

\(3\) Identify all environmental issues, including any compliance issues
associated with or expected as a result of the project on Form RD
1940-20, "Request for Environmental Information," and in compliance with
7 CFR part 1940, subpart G, of this title.

\(c\) [Resource assessment]{.underline}. Provide adequate and
appropriate evidence of the availability of the renewable resource
required for the system to operate as designed. Indicate the type,
quantity, quality, and seasonality of the biomass resource, including
harvest and storage, where applicable. Where applicable, indicate
shipping or receiving method and required infrastructure for shipping.
For proposed projects with an established resource, provide a summary of
the resource.

\(d\) [Design and engineering]{.underline}. Applicants must submit a
statement certifying that their project will be designed and engineered
so as to meet the intended purpose, will ensure public safety, and will
comply with applicable laws, regulations, agreements, permits, codes,
and standards. In addition, applicants must:

RD Instruction 4280-B

Appendix A

Page 3

\(1\) Provide authoritative evidence that the system will be designed
and engineered so as to meet its intended purpose;

\(2\) List possible suppliers and models of major pieces of equipment;

\(3\) Provide a description of the components, materials, or systems to
be installed. Include the location of the project;

\(4\) Provide a one-line diagram for the electrical interconnection.
Provide diagrams or schematics as required showing all major installed
structural, mechanical, and electrical components of the system;

\(5\) Describe the expected electric power, fuel production, or thermal
energy production of the proposed system as rated and as expected in
actual field conditions. For systems with a capacity of more than 20
tons per day of biomass, address performance on a monthly and annual
basis. For small projects such as a commercial biomass furnace or
pelletizer of up to 5 tons daily capacity, proven, commercially
available devices need not be addressed in detail. Describe the uses of
or the market for electricity, heat, or fuel produced by the system;

\(6\) Discuss the impact of reduced or interrupted biomass availability
on the system process; and

\(7\) Describe the project site and address issues such as proximity to
the load or the electrical grid, unique safety concerns, and whether
special circumstances exist.

\(e\) [Project development schedule]{.underline}. Provide a project
schedule in an appropriate level of detail that will demonstrate that
the project can be adequately managed and be able to identify impacts of
any delays on the project completion. The applicant must submit a
statement certifying that the project will be completed within 2 years
from the date of approval.

\(f\) [Project economic assessment]{.underline}. Provide an analysis of
the proposed project to demonstrate its financial performance, including
the calculation of simple payback. The analysis should include
applicable investment incentives, productivity incentives, loans and
grants, and expected energy offsets or sales on a monthly and annual
basis. In addition, provide other information necessary to assess the
project's cost effectiveness.

(07-18-05) SPECIAL PN

RD Instruction 4280-B

Appendix A

Page 4

\(g\) [Equipment procurement]{.underline}. Include a statement from the
applicant certifying that "open and free" competition will be used for
the procurement of project components in a manner consistent with the
requirements of 7 CFR part 3015 of this title.

\(h\) [Equipment installation]{.underline}. The project must be
installed in accordance with applicable local, State, and national
building and electrical codes and regulations. Include a statement from
the applicant certifying that equipment installation will be made in
accordance with all applicable safety and work rules. Upon successful
system installation and following established operation, the successful
applicant must deliver invoices and evidence of payment.

\(i\) [Operations and maintenance]{.underline}. Identify any unique
operations and maintenance requirements of the project necessary for the
system to operate as designed over the design life. State the design
life of the system.

\(1\) Provide information on all system warranties. A minimum 3-year
warranty for equipment and a 10-year warranty on design are expected.

\(2\) If the project has any unique operation and maintenance issues,
describe them.

\(j\) [Dismantling and disposal of project components]{.underline}.
Describe a plan for dismantling and disposing of project components and
associated wastes at the end of their useful lives.

RD Instruction 4280-B

Appendix A

Page 5

Section 2. Anaerobic Digester Projects

The technical requirements specified in this section apply to anaerobic
digester projects, which are, as defined in § 4280.103, renewable energy
systems that use animal waste and other organic substrates to produce
thermal or electrical energy via anaerobic digestion.

\(a\) [Qualifications of key project service providers]{.underline}.
List all key project service providers. If one or more licensed
professionals are involved in the project, provide the credentials for
each professional.

\(b\) [Agreements, permits, and certifications]{.underline}.

\(1\) Identify all necessary agreements and permits required for the
project and the status and schedule for securing those agreements and
permits.

\(2\) For systems planning to interconnect with a utility, describe the
utility's system interconnection requirements, power purchase
arrangements, or licenses where required and the anticipated schedule
for meeting those requirements and obtaining those agreements. This is
required even if the system is installed on the customer side of the
utility meter. For systems planning to utilize a local net metering
program as their interconnection agreement, describe the applicable
local net metering program.

\(3\) Identify all environmental issues, including any compliance issues
associated with or expected as a result of the project on Form RD
1940-20, "Request for Environmental Information," and in compliance with
7 CFR part 1940, subpart G, of this title.

\(c\) [Resource assessment]{.underline}. Provide adequate and
appropriate data to demonstrate the amount of digestible substrate
resource available. Indicate the source of the data and assumptions.
Indicate the substrates used as digester inputs, including animal
wastes, food-processing wastes, or other organic wastes in terms of
type, quantity, seasonality, and frequency of collection. Describe any
special handling of feedstock that may be necessary. Describe the
process for determining the feedstock resource. Show the digestion
conversion factors and calculations used to estimate biogas production
and heat or power production.

(07-18-05) SPECIAL PN

RD Instruction 4280-B

Appendix A

Page 6

\(d\) [Design and engineering]{.underline}. Applicants must submit a
statement certifying that their project will be designed and engineered
so as to meet the intended purpose, will ensure public safety, and will
comply with applicable laws, regulations, agreements, permits, codes,
and standards. In addition, applicants must:

\(1\) Provide authoritative evidence that the system will be designed
and engineered so as to meet its intended purpose;

\(2\) List possible suppliers and models of major pieces of equipment;

\(3\) Provide a description of the components, materials, or systems to
be installed. Include the location of the project;

\(4\) Provide a one-line diagram for the electrical interconnection.
Provide diagrams or schematics as required showing all major installed
structural, mechanical, and electrical components of the system;

\(5\) Describe the expected electric power, fuel production, or thermal
energy production of the proposed system as rated and as expected in
actual field conditions. Describe the uses of or the market for
electricity, heat, or fuel produced by the system; and

\(6\) Describe the project site and address issues such as proximity to
the load or the electrical grid, unique safety concerns, and whether
special circumstances exist.

\(e\) [Project development schedule]{.underline}. Provide a project
schedule in an appropriate level of detail that will demonstrate the
project can be adequately managed and be able to identify impacts of any
delays on the project completion. The applicant must submit a statement
certifying that the project will be completed within 2 years from the
date of approval.

\(f\) [Project economic assessment]{.underline}. Provide an analysis of
the proposed project to demonstrate its financial performance, including
the calculation of simple payback. The analysis should include
applicable investment incentives, productivity incentives, loans and
grants, and expected energy offsets or sales on a monthly and annual
basis. In addition, provide other information necessary to assess the
project's cost effectiveness.

\(g\) [Equipment procurement]{.underline}. Include a statement from the
applicant certifying "open and free" competition will be used for the
procurement of project components in a manner consistent with the
requirements of 7 CFR part 3015 of this title.

RD Instruction 4280-B

Appendix A

Page 7

\(h\) [Equipment installation]{.underline}. The project must be
installed in accordance with applicable local, State, and national
building and electrical codes and regulations. Include a statement from
the applicant certifying that equipment installation will be made in
accordance with all applicable safety and work rules. Upon successful
system installation and following established operation, the successful
applicant must deliver invoices and evidence of payment.

\(i\) [Operations and maintenance]{.underline}. Identify any unique
operations and maintenance requirements of the project necessary for the
system to operate as designed over the design life. State the design
life of the system.

\(1\) Provide information on all system warranties. A minimum 3-year
warranty for equipment and a 10-year warranty on design are expected.

\(2\) If the project has any unique operation and maintenance issues,
describe them.

\(j\) [Dismantling and disposal of project components]{.underline}.
Describe a plan for dismantling and disposing of project components and
associated wastes at the end of their useful lives.

(07-18-05) SPECIAL PN

RD Instruction 4280-B

Appendix A

Page 8

Section 3. Geothermal, Electric Generation

The technical requirements specified in this section apply to electric
generation geothermal projects, which are, as defined in § 4280.103,
systems that use geothermal energy to produce high pressure steam for
electric power production.

\(a\) [Qualifications of key project service providers]{.underline}.
List all key project service providers. If one or more licensed
professionals are involved in the project, provide the credential for
each professional.

\(b\) [Agreements, permits, and certifications]{.underline}.

\(1\) Identify all necessary agreements and permits required for the
project and the status and schedule for securing those agreements and
permits, including any permits or agreements required for well
construction and for disposal or re-injection of cooled geothermal
waters and the schedule for securing those agreements and permits.

\(2\) For systems planning to interconnect with a utility, describe the
utility's system interconnection requirements, power purchase
arrangements, or licenses where required and the anticipated schedule
for meeting those requirements and obtaining those agreements. This is
required even if the system is installed on the customer side of the
utility meter. For systems planning to utilize a local net metering
program as their interconnection agreement, describe the applicable
local net metering program.

\(3\) Identify all environmental issues, including any compliance issues
associated with or expected as a result of the project on Form RD
1940-20, "Request for Environmental Information," and in compliance with
7 CFR part 1940, subpart G, of this title.

\(c\) [Resource assessment]{.underline}. Provide adequate and
appropriate evidence of the availability of the renewable resource
required for the system to operate as designed. Indicate the quality of
the geothermal resource, including temperature, flow, and sustainability
and what conversion system is to be installed. Describe any special
handling of cooled geothermal waters that may be necessary. Describe the
process for determining the geothermal resource, including measurement
setup for the collection of the geothermal resource data. For proposed
projects with an established resource, provide a summary of the resource
and the specifications of the measurement setup.

\(d\) [Design and engineering]{.underline}. Applicants must submit a
statement certifying that their project will be designed and engineered
so as to meet the intended purpose, will ensure public safety, and will
comply with applicable laws, regulations, agreements, permits, codes,
and standards. In addition, applicants must:

RD Instruction 4280-B

Appendix A

Page 9

\(1\) Provide authoritative evidence that the system will be designed
and engineered so as to meet its intended purpose;

\(2\) List possible suppliers and models of major pieces of equipment;

\(3\) Provide a description of the components, materials, or systems to
be installed. Include the location of the project;

\(4\) Provide a one-line diagram for the electrical interconnection.
Provide diagrams or schematics as required showing all major installed
structural, mechanical, and electrical components of the system;

\(5\) Describe the expected electric power, fuel production, or thermal
energy production of the proposed system as rated and as expected in
actual field conditions. Describe the uses of or the market for
electricity, heat, or fuel produced by the system; and

\(6\) Describe the project site and address issues such as proximity to
the load or the electrical grid, unique safety concerns, and whether
special circumstances exist.

\(e\) [Project development schedule]{.underline}. Provide a project
schedule in an appropriate level of detail that will demonstrate that
the project can be adequately managed and be able to identify impacts of
any delays on the project completion. The applicant must submit a
statement certifying that the project will be completed within 2 years
from the date of approval.

\(f\) [Project economic assessment]{.underline}. Provide an analysis of
the proposed project to demonstrate its financial performance, including
the calculation of simple payback. The analysis should include
applicable investment incentives, productivity incentives, loans and
grants, and expected energy offsets or sales on a monthly and annual
basis. In addition, provide other information necessary to assess the
project's cost effectiveness.

\(g\) [Equipment procurement]{.underline}. Include a statement from the
applicant certifying that "open and free" competition will be used for
the procurement of project components in a manner consistent with the
requirements of 7 CFR part 3015 of this title.

(07-18-05) SPECIAL PN

RD Instruction 4280-B

Appendix A

Page 10

\(h\) [Equipment installation]{.underline}. The project must be
installed in accordance with applicable local, State, and national
building and electrical codes and regulations. Include a statement from
the applicant certifying that equipment installation will be made in
accordance with all applicable safety and work rules. Upon successful
system installation and following established operation, the successful
applicant must deliver invoices and evidence of payment.

\(i\) [Operations and maintenance]{.underline}. Identify any unique
operations and maintenance requirements of the project necessary for the
system to operate as designed over the design life. State the design
life of the system.

\(1\) Provide information on all system warranties. A minimum 3-year
warranty for equipment and a 10-year warranty on design are expected.

\(2\) If the project has any unique operation and maintenance issues,
describe them.

\(j\) [Dismantling and disposal of project components]{.underline}.
Describe a plan for dismantling and disposing of project components and
associated wastes at the end of their useful lives.

RD Instruction 4280-B

Appendix A

Page 11

Section 4. Geothermal, Direct Use

The technical requirements specified in this section apply to direct use
geothermal projects, which are, as defined in § 4280.103, systems that
use thermal energy directly from a geothermal source.

\(a\) [Qualifications of key project service providers]{.underline}.
List all key project service providers. If one or more licensed
professionals are involved in the project, provide the credentials for
each professional.

\(b\) [Agreements, permits, and certifications]{.underline}.

\(1\) Identify all necessary agreements and permits required for the
project and the status and schedule for securing those agreements and
permits, including any permits or agreements required for well
construction and for disposal or re-injection of cooled geothermal
waters and the schedule for securing those agreements and permits.

\(2\) Identify all environmental issues, including any compliance issues
associated with or expected as a result of the project on Form RD
1940-20, "Request for Environmental Information," and in compliance with
7 CFR part 1940, subpart G, of this title.

\(c\) [Resource assessment]{.underline}. Provide adequate and
appropriate evidence of the availability of the renewable resource
required for the system to operate as designed. Indicate the quality of
the geothermal resource, including temperature, flow, and sustainability
and what direct use system is to be installed. Describe any special
handling of cooled geothermal waters that may be necessary. Describe the
process for determining the geothermal resource, including measurement
setup for the collection of the geothermal resource data. For proposed
projects with an established resource, provide a summary of the resource
and the specifications of the measurement setup.

#### 

#### (d) [Design and engineering]{.underline}. Applicants must submit a statement certifying that their project will be designed and engineered so as to meet the intended purpose, will ensure public safety, and will comply with applicable laws, regulations, agreements, permits, codes, and standards. In addition, applicants must:

(07-18-05) SPECIAL PN

RD Instruction 4280-B

Appendix A

Page 12

\(1\) Provide authoritative evidence that the system will be designed
and engineered so as to meet its intended purpose;

\(2\) List possible suppliers and models of major pieces of equipment;

\(3\) Provide a description of the components, materials, or systems to
be installed. Include the location of the project;

\(4\) Provide one-line diagram for the electrical interconnection.
Provide diagrams or schematics as required showing all major installed
structural, mechanical, and electrical components of the system;

\(5\) Describe the expected thermal energy production of the proposed
system as rated and as expected in actual field conditions. Describe the
uses of, or the market for, heat produced by the system; and

\(6\) Describe the project site and address issues such as proximity to
the load, unique safety concerns, and whether special circumstances
exist.

\(e\) [Project development schedule]{.underline}. Provide a project
schedule in an appropriate level of detail that will demonstrate the
project can be adequately managed and be able to identify impacts of any
delays on the project completion. The applicant must submit a statement
certifying that the project will be completed within 2 years from the
date of approval.

\(f\) [Project economic assessment]{.underline}. Provide an analysis of
the proposed project to demonstrate its financial performance, including
the calculation of simple payback. The analysis should include
applicable investment incentives, productivity incentives, loans and
grants, and expected energy offsets or sales on a monthly and annual
basis. In addition, provide other information necessary to assess the
project's cost effectiveness.

\(g\) [Equipment procurement]{.underline}. Include a statement from the
applicant certifying that "open and free" competition will be used for
the procurement of project components in a manner consistent with the
requirements of 7 CFR part 3015 of this title.

RD Instruction 4280-B

Appendix A

Page 13

\(h\) [Equipment installation]{.underline}. The project must be
installed in accordance with applicable local, State, and national
building and electrical codes and regulations. Include a statement from
the applicant certifying that equipment installation will be made in
accordance with all applicable safety and work rules. Upon successful
system installation and following established operation, the successful
applicant must deliver invoices and evidence of payment.

\(i\) [Operations and maintenance]{.underline}. Identify any unique
operations and maintenance requirements of the project necessary for the
system to operate as designed over the design life. State the design
life of the system.

\(1\) Provide information on all system warranties. A minimum 3-year
warranty for equipment and a 10-year warranty on design are expected.

\(2\) If the project has any unique operation and maintenance issues,
describe them.

\(j\) [Dismantling and disposal of project components]{.underline}.
Describe a plan for dismantling and disposing of project components and
associated wastes at the end of their useful lives.

(07-18-05) SPECIAL PN

RD Instruction 4280-B

Appendix A

Page 14

Section 5. Hydrogen

The technical requirements specified in this section apply to hydrogen
projects, which are, as defined in § 4280.103, renewable energy systems
that produce hydrogen, or a renewable energy system that uses mechanical
or electric power or thermal energy from a renewable resource using
hydrogen as an energy transport medium.

\(a\) [Qualifications of key project service providers]{.underline}.
List all key project service providers. If one or more licensed
professionals are involved in the project, provide the credentials for
each professional.

\(b\) [Agreements, permits, and certifications]{.underline}.

\(1\) Identify all necessary agreements and permits required for the
project and the status and schedule for securing those agreements and
permits.

\(2\) For systems planning to interconnect with a utility, describe the
utility's system interconnection requirements, power purchase
arrangements, or licenses where required and the anticipated schedule
for meeting those requirements and obtaining those agreements. This is
required even if the system is installed on the customer side of the
utility meter. For systems planning to utilize a local net metering
program as their interconnection agreement, describe the applicable
local net metering program.

\(3\) Identify all environmental issues, including any compliance issues
associated with or expected as a result of the project on Form RD
1940-20, "Request for Environmental Information," and in compliance with
7 CFR part 1940, subpart G, of this title.

\(c\) [Resource assessment]{.underline}. Provide adequate and
appropriate data to demonstrate the type, quantity, quality, and
seasonality of the local renewable resource that will be used to produce
the hydrogen.

#### 

#### (d) [Design and engineering]{.underline}. Applicants must submit a statement certifying that their project will be designed and engineered so as to meet the intended purpose, will ensure public safety, and will comply with applicable laws, regulations, agreements, permits, codes, and standards. In addition, applicants must:

\(1\) Provide authoritative evidence that the system will be designed
and engineered so as to meet its intended purpose;

\(2\) List possible suppliers and models of major pieces of equipment;

RD Instruction 4280-B

Appendix A

Page 15

\(3\) Provide a description of the components, materials, or systems to
be installed. Include the location of the project;

\(4\) Provide a one-line diagram for the electrical interconnection.
Provide diagrams or schematics as required showing all major installed
structural, mechanical, and electrical components of the system; and

\(5\) Describe the project site and address issues such as proximity to
the load or the electrical grid, unique safety concerns, and whether
special circumstances exist.

\(e\) [Project development schedule]{.underline}. Provide a project
schedule in an appropriate level of detail that will demonstrate the
project can be adequately managed and be able to identify impacts of any
delays on the project completion. The applicant must submit a statement
certifying that the project will be completed within 2 years from the
date of approval.

\(f\) [Project economic assessment]{.underline}. Provide an analysis of
the proposed project to demonstrate its financial performance, including
the calculation of simple payback. The analysis should include
applicable investment incentives, productivity incentives, loans and
grants, and expected energy offsets or sales on a monthly and annual
basis. In addition, provide other information necessary to assess the
project's cost effectiveness.

\(g\) [Equipment procurement]{.underline}. Include a statement from the
applicant certifying that "open and free" competition will be used for
the procurement of project components in a manner consistent with the
requirements of 7 CFR part 3015 of this title.

\(h\) [Equipment installation]{.underline}. The project must be
installed in accordance with applicable local, State, and national
building and electrical codes and regulations. Include a statement from
the applicant certifying that equipment installation will be made in
accordance with all applicable safety and work rules. Upon successful
system installation and following established operation, the successful
applicant must deliver invoices and evidence of payment.

\(i\) [Operations and maintenance]{.underline}. Identify any unique
operations and maintenance requirements of the project necessary for the
system to operate as designed over the design life. State the design
life of the system.

(07-18-05) SPECIAL PN

RD Instruction 4280-B

Appendix A

Page 16

\(1\) Provide information on all system warranties. A minimum 3-year
warranty for equipment and a 10-year warranty on design are expected.

\(2\) If the project has any unique operation and maintenance issues,
describe them.

\(j\) [Dismantling and disposal of project components]{.underline}.
Describe a plan for dismantling and disposing of project components and
associated wastes at the end of their useful lives.

RD Instruction 4280-B

Appendix A

Page 17

Section 6. Solar, Small

The technical requirements specified in this section apply to small
solar electric projects and small solar thermal projects, as defined in
§ 4280.103.

Small solar electric projects are those for which the rated power of the
system is 10kW or smaller. Small solar electric projects are either
stand-alone (off grid) or interconnected to the grid at less than 600
volts (on grid).

Small solar thermal projects are those for which the rated storage
volume of the system is 240 gallons or smaller, or which have a
collector area of 1,000 square feet or less.

\(a\) [Qualifications of key project service providers]{.underline}.
List all key project service providers. If one or more licensed
professionals are involved in the project, provide the credentials for
each professional.

\(b\) [Agreements, permits, and certifications]{.underline}.

\(1\) Identify all necessary agreements and permits required for the
project and the status and schedule for securing those agreements and
permits.

\(2\) For systems planning to interconnect with a utility, describe the
utility's system interconnection requirements, power purchase
arrangements, or licenses where required and the anticipated schedule
for meeting those requirements and obtaining those agreements. This is
required even if the system is installed on the customer side of the
utility meter. For systems planning to utilize a local net metering
program as their interconnection agreement, describe the applicable
local net metering program.

\(3\) Identify all environmental issues, including any compliance issues
associated with or expected as a result of the project on Form RD\
1940-20, "Request for Environmental Information," and in compliance with
7 CFR part 1940, subpart G, of this title.

\(c\) [Resource assessment]{.underline}. Provide adequate and
appropriate data to demonstrate the amount of solar resource available.
Indicate the source of the solar data and assumptions.

#### 

#### 

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RD Instruction 4280-B

Appendix A

Page 18

#### (d) [Design and engineering]{.underline}. Applicants must submit a statement certifying that their project will be designed and engineered so as to meet the intended purpose, will ensure public safety, and will comply with applicable laws, regulations, agreements, permits, codes, and standards. In addition, applicants must: 

\(1\) Provide authoritative evidence that the system will be designed
and engineered so as to meet its intended purpose;

\(2\) List possible suppliers and models of major pieces of equipment;

\(3\) Provide a description of the components, materials, or systems to
be installed. Include the location of the project;

\(4\) Provide a one-line diagram for the electrical interconnection.
Provide diagrams or schematics as required showing all major installed
structural, mechanical, and electrical components of the system; and

\(5\) Describe the project site and address issues such as solar access,
orientation, proximity to the load or the electrical grid, unique safety
concerns, and whether special circumstances exist.

\(e\) [Project development schedule]{.underline}. Provide a project
schedule in an appropriate level of detail that will demonstrate that
the project can be adequately managed and be able to identify impacts of
any delays on the project completion. The applicant must submit a
statement certifying that the project will be completed within 2 years
from the date of approval.

\(f\) [Project economic assessment]{.underline}. Provide an analysis of
the proposed project to demonstrate its financial performance, including
the calculation of simple payback. The analysis should include
applicable investment incentives, productivity incentives, loans and
grants, and expected energy offsets or sales on a monthly and annual
basis. In addition, provide other information necessary to assess the
project's cost effectiveness.

\(g\) [Equipment procurement]{.underline}. Include a statement from the
applicant certifying that "open and free" competition will be used for
the procurement of project components in a manner consistent with the
requirements of 7 CFR part 3015 of this title.

RD Instruction 4280-B

Appendix A

Page 19

\(h\) [Equipment installation]{.underline}. The project must be
installed in accordance with applicable local, State, and national
building and electrical codes and regulations. Include a statement from
the applicant certifying that equipment installation will be made in
accordance with all applicable safety and work rules. Upon successful
system installation and following established operation, the successful
applicant must deliver invoices and evidence of payment.

\(i\) [Operations and maintenance]{.underline}. Identify any unique
operations and maintenance requirements of the project necessary for the
system to operate as designed over the design life. State the design
life of the system.

\(1\) Provide information on all system warranties. A minimum 3-year
warranty for equipment and a 10-year warranty on design are expected.

\(2\) If the project has any unique operation and maintenance issues,
describe them.

\(j\) [Dismantling and disposal of project components]{.underline}.
Describe a plan for dismantling and disposing of project components and
associated wastes at the end of their useful lives.

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RD Instruction 4280-B

Appendix A

Page 20

Section 7. Solar, Large

The technical requirements specified in this section apply to large
solar electric projects and large solar thermal projects, as defined in
§ 4280.103.

Large solar electric systems are those for which the rated power of the
system is larger than 10kW. Large solar electric systems are either
stand-alone (off grid) or interconnected to the grid (on grid).

Large solar thermal systems are those for which the rated storage volume
of the system is greater than 240 gallons or that have a collector area
of more than 1,000 square feet.

\(a\) [Qualifications of key project service providers]{.underline}.
List all key project service providers. If one or more licensed
professionals are involved in the project, provide the credential for
each professional.

\(b\) [Agreements, permits, and certifications]{.underline}.

\(1\) Identify all necessary agreements and permits required for the
project and the status and schedule for securing those agreements and
permits.

\(2\) For systems planning to interconnect with a utility, describe the
utility's system interconnection requirements, power purchase
arrangements, or licenses where required and the anticipated schedule
for meeting those requirements and obtaining those agreements. This is
required even if the system is installed on the customer side of the
utility meter. For systems planning to utilize a local net metering
program as their interconnection agreement, describe the applicable
local net metering program.

\(3\) Identify all environmental issues, including any compliance issues
associated with or expected as a result of the project on Form RD
1940-20, "Request for Environmental Information," and in compliance with
7 CFR part 1940, subpart G, of this title.

\(c\) [Resource assessment]{.underline}. Provide adequate and
appropriate data to demonstrate the amount of solar resource available.
Indicate the source of the solar data and assumptions.

#### 

RD Instruction 4280-B

Appendix A

Page 21

#### (d) [Design and engineering]{.underline}. Applicants must submit a statement certifying that their project will be designed and engineered so as to meet the intended purpose, will ensure public safety, and will comply with applicable laws, regulations, agreements, permits, codes, and standards. In addition, applicants must:

\(1\) Provide authoritative evidence that the system will be designed
and engineered so as to meet its intended purpose;

\(2\) List possible suppliers and models of major pieces of equipment;

\(3\) Provide a description of the components, materials, or systems to
be installed. Include the location of the project;

\(4\) Provide a one-line diagram for the electrical interconnection.
Provide diagrams or schematics as required showing all major installed
structural, mechanical, and electrical components of the system; and

\(5\) Describe the project site and address issues such as solar access,
orientation, proximity to the load or the electrical grid, unique safety
concerns, and whether special circumstances exist.

\(e\) [Project development schedule]{.underline}. Provide a project
schedule in an appropriate level of detail that will demonstrate the
project can be adequately managed and be able to identify impacts of any
delays on the project completion. The applicant must submit a statement
certifying that the project will be completed within 2 years from the
date of approval.

\(f\) [Project economic assessment]{.underline}. Provide an analysis of
the proposed project to demonstrate its financial performance, including
the calculation of simple payback. The analysis should include
applicable investment incentives, productivity incentives, loans and
grants, and expected energy offsets or sales on a monthly and annual
basis. In addition, provide other information necessary to assess the
project's cost effectiveness.

\(g\) [Equipment procurement]{.underline}. Include a statement from the
applicant certifying that "open and free" competition will be used for
the procurement of project components in a manner consistent with the
requirements of 7 CFR part 3015 of this title.

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RD Instruction 4280-B

Appendix A

Page 22

\(h\) [Equipment installation]{.underline}. The project must be
installed in accordance with applicable local, State, and national
building and electrical codes and regulations. Include a statement from
the applicant certifying that equipment installation will be made in
accordance with all applicable safety and work rules. Upon successful
system installation and following established operation, the successful
applicant must deliver invoices and evidence of payment.

\(i\) [Operations and maintenance]{.underline}. Identify any unique
operations and maintenance requirements of the project necessary for the
system to operate as designed over the design life. State the design
life of the system.

\(1\) Provide information on all system warranties. A minimum 3-year
warranty for equipment and a 10-year warranty on design are expected.

\(2\) If the project has any unique operation and maintenance issues,
describe them.

\(j\) [Dismantling and disposal of project components]{.underline}.
Describe a plan for dismantling and disposing of project components and
associated wastes at the end of their useful lives.

RD Instruction 4280-B

Appendix A

Page 23

Section 8. Wind, Small

The technical requirements specified in this section apply to small wind
systems, which are, as defined in § 4280.103, wind energy systems for
which the rated power of the wind turbine is 100kW or smaller and with a
generator hub height of 120 feet or less. Small wind systems are either
stand-alone or connected to the local electrical system at less than 600
volts.

\(a\) [Qualifications of key project service providers]{.underline}.
List all key project service providers. If one or more licensed
professionals are involved in the project, provide the credentials for
each professional.

\(b\) [Agreements, permits, and certifications]{.underline}.

\(1\) Identify all necessary agreements and permits required for the
project and the status and schedule for securing those agreements and
permits.

\(2\) For systems planning to interconnect with a utility, describe the
utility's system interconnection requirements, power purchase
arrangements, or licenses where required and the anticipated schedule
for meeting those requirements and obtaining those agreements. This is
required even if the system is installed on the customer side of the
utility meter. For systems planning to utilize a local net metering
program as their interconnection agreement, describe the applicable
local net metering program.

\(3\) Identify all environmental issues, including any compliance issues
associated with or expected as a result of the project on Form RD
1940-20, "Request for Environmental Information," and in compliance with
7 CFR part 1940, subpart G, of this title.

\(c\) [Resource assessment]{.underline}. Provide adequate and
appropriate data to demonstrate the amount of local wind resource where
the small wind turbine is to be installed. Indicate the source of the
wind data and assumptions.

#### 

#### (d) [Design and engineering]{.underline}. Applicants must certify that their project will be designed and engineered so as to meet the intended purpose, will ensure public safety, and will comply with applicable laws, regulations, agreements, permits, codes, and standards. In addition, applicants must:

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RD Instruction 4280-B

Appendix A

Page 24

\(1\) Provide authoritative evidence that the system will be designed
and engineered so as to meet its intended purpose;

\(2\) List possible suppliers and models of major pieces of equipment;

\(3\) Provide a description of the components, materials, or systems to
be installed. Include the location of the project;

\(4\) Provide a one-line diagram for the electrical interconnection.
Provide diagrams or schematics as required showing all major installed
structural, mechanical, and electrical components of the system; and

\(5\) Describe the project site and address issues such as proximity to
the load or the electrical grid, unique safety concerns, and whether
special circumstances exist.

\(e\) [Project development schedule]{.underline}. Provide a project
schedule in an appropriate level of detail that will demonstrate the
project can be adequately managed and be able to identify impacts of any
delays on the project completion. The applicant must submit a statement
certifying that the project will be completed within 2 years from the
date of approval.

\(f\) [Project economic assessment]{.underline}. Provide an analysis of
the proposed project to demonstrate its financial performance, including
the calculation of simple payback. The analysis should include
applicable investment incentives, productivity incentives, loans and
grants, and expected energy offsets or sales on a monthly and annual
basis. In addition, provide other information necessary to assess the
project's cost effectiveness.

\(g\) [Equipment procurement]{.underline}. Include a statement from the
applicant certifying that "open and free" competition will be used for
the procurement of project components in a manner consistent with the
requirements of 7 CFR part 3015 of this title.

\(h\) [Equipment installation]{.underline}. The project must be
installed in accordance with applicable local, State, and national
building and electrical codes and regulations. Include a statement from
the applicant certifying that equipment installation will be made in
accordance with all applicable safety and work rules. Upon successful
system installation and following established operation, the successful
applicant must deliver invoices and evidence of payment.

RD Instruction 4280-B

Appendix A

Page 25

\(i\) [Operations and maintenance]{.underline}. Identify any unique
operations and maintenance requirements of the project necessary for the
system to operate as designed over the design life. State the design
life of the system.

\(1\) Provide information on all system warranties. A minimum 3-year
warranty for equipment and a 10-year warranty on design are expected.

\(2\) If the project has any unique operation and maintenance issues,
describe them.

\(j\) [Dismantling and disposal of project components]{.underline}.
Describe a plan for dismantling and disposing of project components and
associated wastes at the end of their useful lives.

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RD Instruction 4280-B

Appendix A

Page 26

Section 9. Wind, Large.

The technical requirements specified in this section apply to large wind
systems, which are, as defined in § 4280.103, wind energy projects for
which the rated power of the individual wind turbine(s) is larger than
100kW.

\(a\) [Qualifications of key project service providers]{.underline}.
List all key project service providers. If one or more licensed
professionals are involved in the project, provide the credentials for
each professional.

\(b\) [Agreements, permits, and certifications]{.underline}.

\(1\) Identify all necessary agreements and permits required for the
project and the status and schedule for securing those agreements and
permits.

\(2\) For systems planning to interconnect with a utility, describe the
utility's system interconnection requirements, power purchase
arrangements, or licenses where required and the anticipated schedule
for meeting those requirements and obtaining those agreements. This is
required even if the system is installed on the customer side of the
utility meter. For systems planning to utilize a local net metering
program as their interconnection agreement, describe the applicable
local net metering program.

\(3\) Identify all environmental issues, including any compliance issues
associated with or expected as a result of the project on Form RD
1940-20, "Request for Environmental Information," and in compliance with
7 CFR part 1940, subpart G, of this title.

\(c\) [Resource assessment]{.underline}. Provide adequate and
appropriate data to demonstrate the amount of local wind resource where
the large wind turbine is to be installed. Indicate the source of the
wind data and assumptions. Projects greater than 500kW must obtain wind
data from the proposed project site. For such projects, describe the
proposed measurement setup for the collection of the wind resource data.
For proposed projects with an established wind resource, provide a
summary of the wind resource and the specifications of the measurement
setup. Large wind systems larger than 500kW in size will typically
require at least 1 year of on-site monitoring. If less than 1 year of
data is used, the qualified meteorological consultant must provide a
detailed analysis of correlation between the site data and a nearby
long-term measurement site.

RD Instruction 4280-B

Appendix A

Page 27

#### 

\(d\) [Design and engineering]{.underline}. Applicants must submit a
statement certifying that their project will be designed and engineered
so as to meet the intended purpose, will ensure public safety, and will
comply with applicable laws, regulations, agreements, permits, codes,
and standards. In addition, applicants must:

\(1\) Provide authoritative evidence that the system will be designed
and engineered so as to meet its intended purpose;

\(2\) List possible suppliers and models of major pieces of equipment;

\(3\) Provide a description of the components, materials, or systems to
be installed. Include the location of the project;

\(4\) Provide one-line diagram for the electrical interconnection.
Provide diagrams or schematics as required showing all major installed
structural, mechanical, and electrical components of the system; and

\(5\) Describe the project site and address issues such as proximity to
the load or the electrical grid, unique safety concerns, and whether
special circumstances exist.

\(e\) [Project development schedule]{.underline}. Provide a project
schedule in an appropriate level of detail that will demonstrate the
project can be adequately managed and be able to identify impacts of any
delays on the project completion. The applicant must submit a statement
certifying that the project will be completed within 3 years from the
date of approval.

\(f\) [Project economic assessment]{.underline}. Provide an analysis of
the proposed project to demonstrate its financial performance, including
the calculation of simple payback. The analysis should include
applicable investment incentives, productivity incentives, loans and
grants, and expected energy offsets or sales on a monthly and annual
basis. In addition, provide other information necessary to assess the
project's cost effectiveness.

\(g\) [Equipment procurement]{.underline}. Include a statement from the
applicant certifying that "open and free" competition will be used for
the procurement of project components in a manner consistent with the
requirements of 7 CFR part 3015 of this title.

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RD Instruction 4280-B

Appendix A

Page 28

\(h\) [Equipment installation]{.underline}. The project must be
installed in accordance with applicable local, State, and national
building and electrical codes and regulations. Include a statement from
the applicant certifying that equipment installation will be made in
accordance with all applicable safety and work rules. Upon successful
system installation and following established operation, the successful
applicant must deliver invoices and evidence of payment.

\(i\) [Operations and maintenance]{.underline}. Identify any unique
operations and maintenance requirements of the project necessary for the
system to operate as designed over the design life. State the design
life of the system.

\(1\) Provide information on all system warranties. A minimum 3-year
warranty for equipment and a 10-year warranty on design are expected.

\(2\) If the project has any unique operation and maintenance issues,
describe them.

\(j\) [Dismantling and disposal of project components]{.underline}.
Describe a plan for dismantling and disposing of project components and
associated wastes at the end of their useful lives.

RD Instruction 4280-B

Appendix A

Page 29

Section 10. Energy Efficiency Improvements

#### 

#### The technical requirements specified in this section apply to energy efficiency improvement projects, which are, as defined in § 4280.103, improvements to a facility, building, or process that reduces energy consumption. 

\(a\) [Qualifications of key project service providers]{.underline}.
List all key project service providers. If one or more licensed
professionals are involved in the project, provide the credentials for
each professional. For projects with total eligible project costs
greater than \$50,000, also discuss the qualifications of the energy
auditor, including any relevant certifications by recognized
organizations or bodies.

\(b\) [Agreements, permits, and certifications]{.underline}.

\(1\) The applicant must certify that they will comply with all
necessary agreements and permits required for the project. Indicate the
status and schedule for securing those agreements and permits.

\(2\) Identify all environmental issues, including any compliance issues
associated with or expected as a result of the project on Form RD
1940-20, "Request for Environmental Information," and in compliance with
7 CFR part 1940, subpart G, of this title.

\(c\) [Energy assessment]{.underline}.

\(1\) For all energy efficiency improvement projects, provide adequate
and appropriate evidence of energy savings expected when the system is
operated as designed.

\(2\) For energy efficiency improvement projects with total eligible
project costs greater than \$50,000, an energy audit must be conducted.
An energy audit is a written report by an independent, qualified party
that documents current energy usage, recommended potential improvements
and their costs, energy savings from these improvements, dollars saved
per year, and simple payback period in years (total costs divided by
annual dollars of energy savings). The methodology of the energy audit
must meet professional and industry standards. The energy audit must
cover the following:

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RD Instruction 4280-B

Appendix A

Page 30

\(i\) [Situation report]{.underline}. Provide a narrative description of
the facility or process, its energy system(s) and usage, and activity
profile. Also include price per unit of energy (electricity, natural
gas, propane, fuel oil, renewable energy, etc.,) paid by the customer on
the date of the audit. Any energy conversion should be based on use
rather than source.

\(ii\) [Potential improvements]{.underline}. List specific information
on all potential energy-saving opportunities and their costs.

\(iii\) [Technical analysis]{.underline}. Discuss the interactions among
the potential improvements and other energy systems.

\(A\) Estimate the annual energy and energy costs savings expected from
each improvement identified in the potential project.

\(B\) Calculate all direct and attendant indirect costs of each
improvement.

\(C\) Rank potential improvement measures by cost-effectiveness.

\(iv\) [Potential improvement description]{.underline}. Provide a
narrative summary of the potential improvement and its ability to
provide needed benefits, including a discussion of nonenergy benefits
such as project reliability and durability.

\(A\) Provide preliminary specifications for critical components.

\(B\) Provide preliminary drawings of project layout, including any
related structural changes.

\(C\) Document baseline data compared to projected consumption, together
with any explanatory notes. When appropriate, show before-and-after data
in terms of consumption per unit of production, time or area. Include at
least 1 year\'s bills for those energy sources/fuel types affected by
this project. Also submit utility rate schedules, if appropriate.

\(D\) Identify significant changes in future related operations and
maintenance costs.

\(E\) Describe explicitly how outcomes will be measured.

RD Instruction 4280-B

Appendix A

Page 31

\(d\) [Design and engineering]{.underline}. The applicant must submit a
statement certifying that their project will be designed and engineered
so as to meet the intended purpose, will ensure public safety, and will
comply with applicable laws, regulations, agreements, permits, codes,
and standards.

\(1\) Identify possible suppliers and models of major pieces of
equipment.

\(2\) Describe the components, materials, or systems to be installed.
Include the location of the project.

#### 

#### (e) [Project development schedule]{.underline}. Provide a project schedule in an appropriate level of detail that will demonstrate the project can be adequately managed. The applicant must submit a statement certifying that the project will be completed within 2 years from the date of approval. 

#### 

#### (f) [Project economic assessment]{.underline}. For projects with total eligible project costs greater than \$50,000, provide an analysis of the proposed project to demonstrate its financial performance, including the calculation of simple payback. The analysis should include applicable investment incentives, productivity incentives, loans and grants, and expected energy offsets or sales on a monthly and annual basis. In addition, provide other information necessary to assess the project's cost effectiveness. 

#### 

#### (g) [Equipment procurement]{.underline}. Include a statement from the applicant certifying that "open and free" competition will be used for the procurement of project components in a manner consistent with the requirements of 7 CFR part 3015 of this title. 

#### 

#### (h) [Equipment installation]{.underline}. The project must be installed in accordance with applicable local, State, and national building and electrical codes and regulations. Include a statement from the applicant certifying that equipment installation will be made in accordance with all applicable safety and work rules. Upon successful system installation and following established operation, the successful applicant must deliver invoices and evidence of payment. 

\(i\) [Operations and maintenance]{.underline}. Identify any unique
operations and maintenance requirements of the project necessary for the
improvement(s) to perform as designed over the design life. State the
design life of the improvement(s). Provide information regarding
component warranties.

\(j\) [Dismantling and disposal of project components]{.underline}.
Describe a plan for dismantling and proper disposal of the project
components and associated wastes at the end of their useful lives.

oOo

(07-18-05) SPECIAL PN

RD Instruction 4280-B

Appendix B

Page 1

TECHNICAL REPORTS FOR PROJECTS WITH

TOTAL ELIGIBLE PROJECT COSTS GREATER THAN \$200,000

The Technical Report for projects with total eligible project costs
greater than \$200,000 (and for any other project that must submit a
Technical Report under this appendix) must demonstrate that the project
design, procurement, installation, startup, operation, and maintenance
of the renewable energy system or energy efficiency improvement will
operate or perform as specified over its design life in a reliable and a
cost-effective manner. The Technical Report must also identify all
necessary project agreements, demonstrate that those agreements will be
in place, and that necessary project equipment and services are
available over the design life.

All technical information provided must follow the format specified in
Sections 1 through 10 of this appendix. Supporting information may be
submitted in other formats. Design drawings and process flowcharts are
encouraged as exhibits. A discussion of each topic is not necessary if
the topic is not applicable to the specific project. Questions
identified in the Agency's technical review of the project must be
answered to the Agency's satisfaction before the application will be
approved. The applicant must submit the original technical report plus
one copy to the Rural Development State Office. Renewable energy
projects with total eligible project costs greater than \$400,000 and
for energy efficiency improvement projects with total eligible project
costs greater than \$200,000 require the services of a licensed
professional engineer (PE) or team of PEs. Depending on the level of
engineering required for the specific project or if necessary to ensure
public safety, the services of a licensed PE or a team of licensed PEs
may be required for smaller projects.

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RD Instruction 4280-B

Appendix B

Page 2

Section 1. Bioenergy

The technical requirements specified in this section apply to bioenergy
projects, which are, as defined in § 4280.103, renewable energy systems
that produce fuel, thermal energy, or electric power from a biomass
source, other than an anaerobic digester project.

\(a\) [Qualifications of project team]{.underline}. The bioenergy
project team will vary according to the complexity and scale of the
project. For engineered systems, the project team should consist of a
system designer, a project manager, an equipment supplier, a project
engineer, a construction contractor or system installer, and a system
operator and maintainer. One individual or entity may serve more than
one role. The project team must have demonstrated expertise in similar
bioenergy systems development, engineering, installation, and
maintenance. Authoritative evidence that project team service providers
have the necessary professional credentials or relevant experience to
perform the required services must be provided. Authoritative evidence
that vendors of proprietary components can provide necessary equipment
and spare parts for the system to operate over its design life must also
be provided. The application must:

\(1\) Discuss the proposed project delivery method. Such methods include
a design, bid, build where a separate engineering firm may design the
project and prepare a request for bids and the successful bidder
constructs the project at the applicant's risk, and a design/build
method, often referred to as turnkey, where the applicant establishes
the specifications for the project and secures the services of a
developer who will design and build the project at the developer's risk;

\(2\) Discuss the bioenergy system equipment manufacturers of major
components being considered in terms of the length of time in business
and the number of units installed at the capacity and scale being
considered;

\(3\) Discuss the project manager, equipment supplier, system designer,
project engineer, and construction contractor qualifications for
engineering, designing, and installing bioenergy systems, including any
relevant certifications by recognized organizations. Provide a list of
the same or similar projects designed, installed, or supplied and
currently operating with references, if available; and

\(4\) Describe the system operator's qualifications and experience for
servicing, operating, and maintaining bioenergy renewable energy
equipment or projects. Provide a list of the same or similar projects
designed, installed, or supplied and currently operating with
references, if available.

RD Instruction 4280-B

Appendix B

Page 3

\(b\) [Agreements, permits, and certifications]{.underline}. Identify
all necessary agreements and permits required for the project and the
status and schedule for securing those agreements and permits, including
the items specified in paragraphs (b)(1) through (8).

\(1\) Identify zoning and code issues, and required permits and the
anticipated schedule for meeting those requirements and securing those
permits.

\(2\) Identify licenses where required and the schedule for obtaining
those licenses.

\(3\) Identify land use agreements required for the project and the
anticipated schedule for securing the agreements and the term of those
agreements.

\(4\) Identify any permits or agreements required for solid, liquid, and
gaseous emissions or effluents and the schedule for securing those
permits and agreements.

\(5\) Identify available component warranties for the specific project
location and size.

\(6\) For systems planning to interconnect with a utility, describe the
utility's system interconnection requirements, power purchase
arrangements, or licenses where required and the anticipated schedule
for meeting those requirements and obtaining those agreements. This is
required even if the system is installed on the customer side of the
utility meter. For systems planning to utilize a local net metering
program as their interconnection agreement, describe the applicable
local net metering program.

\(7\) Identify all environmental issues, including environmental
compliance issues, associated with the project on Form RD 1940-20,
"Request for Environmental Information," and in compliance with 7 CFR
part 1940, subpart G, of this title.

\(8\) Submit a statement certifying that the project will be installed
in accordance with applicable local, State, and national codes and
regulations.

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RD Instruction 4280-B

Appendix B

Page 4

\(c\) [Resource assessment]{.underline}. Provide adequate and
appropriate data to demonstrate the amount of renewable resource
available. Indicate the type, quantity, quality, and seasonality of the
biomass resource, including harvest and storage, where applicable. Where
applicable, also indicate shipping or receiving method and required
infrastructure for shipping. For proposed projects with an established
resource, provide a summary of the resource.

\(d\) [Design and engineering]{.underline}. Provide authoritative
evidence that the system will be designed and engineered so as to meet
its intended purpose, will ensure public safety, and will comply with
applicable laws, regulations, agreements, permits, codes, and standards.
Projects shall be engineered by a qualified party. Systems must be
engineered as a complete, integrated system with matched components. The
engineering must be comprehensive, including site selection, system and
component selections, and system monitoring equipment. Systems must be
constructed by a qualified party.

\(1\) Provide a concise but complete description of the bioenergy
project, including location of the project, resource characteristics,
system specifications, electric power system interconnection, and
monitoring equipment. Identify possible vendors and models of major
system components. Describe the expected electric power, fuel
production, or thermal energy production of the proposed system as rated
and as expected in actual field conditions. For systems with a capacity
of more than 20 tons per day of biomass, address performance on a
monthly and annual basis. For small projects such as a commercial
biomass furnace or pelletizer of up to 5 tons daily capacity, proven,
commercially available devices need not be addressed in detail. Describe
the uses of or the market for electricity, heat, or fuel produced by the
system. Discuss the impact of reduced or interrupted biomass
availability on the system process.

\(2\) Describe the project site and address issues such as site access,
foundations, backup equipment when applicable, and environmental
concerns with emphasis on land use, air quality, water quality, soil
degradation, habitat fragmentation, land use, visibility, odor, noise,
construction, and installation issues. Identify any unique construction
and installation issues.

\(e\) [Project development schedule]{.underline}. Identify each
significant task, its beginning and end, and its relationship to the
time needed to initiate and carry the project through startup and
shakedown. Provide a detailed description of the project timeline,
including resource assessment, system and site design, permits and
agreements, equipment procurement, and system installation from
excavation through startup and shakedown.

RD Instruction 4280-B

Appendix B

Page 5

\(f\) [Project economic assessment]{.underline}. Provide a study that
describes the costs and revenues of the proposed project to demonstrate
the financial performance of the project, including the calculation of
simple payback. Provide a detailed analysis and description of project
costs, including project management, resource assessment, project
design, project permitting, land agreements, equipment, site
preparation, system installation, startup and shakedown, warranties,
insurance, financing, professional services, and operations and
maintenance costs. Provide a detailed analysis and description of annual
project revenues and expenses. Provide a detailed description of
applicable investment incentives, productivity incentives, loans, and
grants. In addition, provide other information necessary to assess the
project's cost effectiveness.

\(g\) [Equipment procurement]{.underline}. Demonstrate that equipment
required by the system is available and can be procured and delivered
within the proposed project development schedule. Bioenergy systems may
be constructed of components manufactured in more than one location.
Provide a description of any unique equipment procurement issues such as
scheduling and timing of component manufacture and delivery, ordering,
warranties, shipping, receiving, and on-site storage or inventory.
Identify all the major equipment that is proprietary and justify how
this unique equipment is needed to meet the requirements of the proposed
design. Include a statement from the applicant certifying that "open and
free" competition will be used for the procurement of project components
in a manner consistent with the requirements of 7 CFR part 3015 of this
title.

\(h\) [Equipment installation]{.underline}. Fully describe the
management of and plan for site development and system installation,
provide details regarding the scheduling of major installation equipment
needed for project construction, and provide a description of the
startup and shakedown specifications and process and the conditions
required for startup and shakedown for each equipment item individually
and for the system as a whole. Include a statement from the applicant
certifying that equipment installation will be made in accordance with
all applicable safety and work rules.

\(i\) [Operations and maintenance]{.underline}. Identify the operations
and maintenance requirements of the system necessary for the system to
operate as designed over the design life. In addition:

(07-18-05) SPECIAL PN

RD Instruction 4280-B

Appendix B

Page 6

\(1\) Provide information regarding available system and component
warranties and availability of spare parts;

\(2\) Describe the routine operations and maintenance requirements of
the proposed system, including maintenance schedule for the mechanical,
piping, and electrical systems and system monitoring and control
requirements. Provide information that supports expected design life of
the system and timing of major component replacement or rebuilds.
Discuss the costs and labor associated with the operation and
maintenance of the system, and plans for in-sourcing or out-sourcing.
Describe opportunities for technology transfer for long-term project
operations and maintenance by a local entity or owner/operator; and

\(3\) For systems having a biomass input capacity exceeding 10 tons of
biomass per day, provide and discuss the risk management plan for
handling large, potential failures of major components.

\(j\) [Dismantling and disposal of project components]{.underline}.
Describe a plan for dismantling and disposing of project components and
associated wastes at the end of their useful lives. Describe the budget
for and any unique concerns associated with the dismantling and disposal
of project components and their wastes.

RD Instruction 4280-B

Appendix B

Page 7

Section 2. Anaerobic Digester Projects

The technical requirements specified in this section apply to anaerobic
digester projects, which are, as defined in § 4280.103, renewable energy
systems that use animal waste and other organic substrates to produce
thermal or electrical energy via anaerobic digestion.

\(a\) [Qualifications of project team]{.underline}. The anaerobic
digester project team should consist of a system designer, a project
manager, an equipment supplier, a project engineer, a construction
contractor, and a system operator or maintainer. One individual or
entity may serve more than one role. The project team must have
demonstrated commercial-scale expertise in anaerobic digester systems
development, engineering, installation, and maintenance as related to
the organic materials and operating mode of the system. Authoritative
evidence that project team service providers have the necessary
professional credentials or relevant experience to perform the required
services must be provided. Authoritative evidence that vendors of
proprietary components can provide necessary equipment and spare parts
for the system to operate over its design life must also be provided.
The application must:

\(1\) Discuss the proposed project delivery method. Such methods include
a design, bid, build where a separate engineering firm may design the
project and prepare a request for bids and the successful bidder
constructs the project at the applicant's risk, and a design/build
method, often referred to as turnkey, where the applicant establishes
the specifications for the project and secures the services of a
developer who will design and build the project at the developer's risk;

\(2\) Discuss the anaerobic digester system equipment manufacturers of
major components being considered in terms of the length of time in
business and the number of units installed at the capacity and scale
being considered;

\(3\) Discuss the project manager, equipment supplier, system designer,
project engineer, and construction contractor qualifications for
engineering, designing, and installing anaerobic digester systems,
including any relevant certifications by recognized organizations.
Provide a list of the same or similar projects designed, installed, or
supplied and currently operating consistent with the substrate material
with references, if available; and

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RD Instruction 4280-B

Appendix B

Page 8

\(4\) For regional or centralized digester plants, describe the system
operator's qualifications and experience for servicing, operating, and
maintaining similar projects. Farm scale systems may not require
operator experience as the developer is typically required to provide
operational training during system startup and shakedown. Provide a list
of the same or similar projects designed, installed, or supplied and
currently operating consistent with the substrate material with
references, if available.

\(b\) [Agreements, permits, and certifications]{.underline}. Identify
all necessary agreements and permits required for the project and the
status and schedule for securing those agreements and permits, including
the items specified in paragraphs (b)(1) through (8).

\(1\) Identify zoning and code issues, and required permits and the
anticipated schedule for meeting those requirements and securing those
permits.

\(2\) Identify licenses where required and the schedule for obtaining
those licenses.

\(3\) For regional or centralized digester plants, identify feedstock
access agreements required for the project and the anticipated schedule
for securing those agreements and the term of those agreements.

\(4\) Identify any permits or agreements required for transport and
ultimate waste disposal and the schedule for securing those agreements
and permits.

\(5\) Identify available component warranties for the specific project
location and size.

\(6\) For systems planning to interconnect with a utility, describe the
utility's system interconnection requirements, power purchase
arrangements, or licenses where required and the anticipated schedule
for meeting those requirements and obtaining those agreements. This is
required even if the system is installed on the customer side of the
utility meter. For systems planning to utilize a local net metering
program as their interconnection agreement, describe the applicable
local net metering program.

RD Instruction 4280-B

Appendix B

Page 9

\(7\) Identify all environmental issues, including environmental
compliance issues, associated with the project on Form RD 1940-20,
"Request for Environmental Information," and in compliance with 7 CFR
part 1940, subpart G, of this title.

\(8\) Submit a statement certifying that the project will be installed
in accordance with applicable local, State, and national codes and
regulations.

\(c\) [Resource assessment]{.underline}. Provide adequate and
appropriate data to demonstrate the amount of renewable resource
available. Indicate the substrates used as digester inputs, including
animal wastes, food processing wastes, or other organic wastes in terms
of type, quantity, seasonality, and frequency of collection. Describe
any special handling of feedstock that may be necessary. Describe the
process for determining the feedstock resource. Provide either tabular
values or laboratory analysis of representative samples that include
biodegradability studies to produce gas production estimates for the
project on daily, monthly, and seasonal basis.

\(d\) [Design and engineering]{.underline}. Provide authoritative
evidence that the system will be designed and engineered so as to meet
its intended purpose, will ensure public safety, and will comply with
applicable laws, regulations, agreements, permits, codes, and standards.
Projects shall be engineered by a qualified party. Systems must be
engineered as a complete, integrated system with matched components. The
engineering must be comprehensive, including site selection, digester
component selection, gas handling component selection, and gas use
component selection. Systems must be constructed by a qualified party.

\(1\) Provide a concise but complete description of the anaerobic
digester project, including location of the project, farm description,
feedstock characteristics, a step-by-step flowchart of unit operations,
electric power system interconnection equipment, and any required
monitoring equipment. Identify possible vendors and models of major
system components. Provide the expected system energy production, heat
balances, and material balances as part of the unit operations
flowchart.

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RD Instruction 4280-B

Appendix B

Page 10

\(2\) Describe the project site and address issues such as site access,
foundations, backup equipment when applicable, and environmental
concerns with emphasis on land use, air quality, water quality, soil
degradation, habitat degradation, land use, visibility, odor, noise,
construction, and installation issues. Identify any unique construction
and installation issues.

\(e\) [Project development schedule]{.underline}. Identify each
significant task, its beginning and end, and its relationship to the
time needed to initiate and carry the project through startup and
shakedown. Provide a detailed description of the project timeline,
including feedstock assessment, system and site designs, permits and
agreements, equipment procurement, system installation from excavation
through startup and shakedown, and operator training.

\(f\) [Project economic assessment]{.underline}. Provide a study that
describes the costs and revenues of the proposed project to demonstrate
the financial performance of the project, including the calculation of
simple payback. Provide a detailed analysis and description of project
costs, including project management, feedstock assessment, project
design, project permitting, land agreements, equipment, site
preparation, system installation, startup and shakedown, warranties,
insurance, financing, professional services, training and operations,
and maintenance costs of both the digester and the gas use systems.
Provide a detailed analysis and description of annual project revenues
and expenses. Provide a detailed description of applicable investment
incentives, productivity incentives, loans, and grants. In addition,
provide other information necessary to assess the project's cost
effectiveness.

\(g\) [Equipment procurement]{.underline}. Demonstrate that equipment
required by the system is available and can be procured and delivered
within the proposed project development schedule. Anaerobic digester
systems may be constructed of components manufactured in more than one
location. Provide a description of any unique equipment procurement
issues such as scheduling and timing of component manufacture and
delivery, ordering, warranties, shipping, receiving, and on-site storage
or inventory. Identify all the major equipment that is proprietary and
justify how this unique equipment is needed to meet the requirements of
the proposed design. Include a statement from the applicant certifying
that "open and free" competition will be used for the procurement of
project components in a manner consistent with the requirements of 7 CFR
part 3015 of this title.

RD Instruction 4280-B

Appendix B

Page 11

\(h\) [Equipment installation]{.underline}. Describe fully the
management of and plan for site development and system installation,
provide details regarding the scheduling of major installation equipment
needed for project construction, and provide a description of the
startup and shakedown specifications and process and the conditions
required for startup and shakedown for each equipment item individually
and for the system as a whole. Include a statement from the applicant
certifying that equipment installation will be made in accordance with
all applicable safety and work rules.

\(i\) [Operations and maintenance]{.underline}. Identify the operations
and maintenance requirements of the system necessary for the system to
operate as designed over the design life. The application must:

\(1\) Ensure that systems must have at least a 3-year warranty for
equipment and a 10-year warranty on design. Provide information
regarding system warranties and availability of spare parts;

\(2\) Describe the routine operations and maintenance requirements of
the proposed project, including maintenance for the digester, the gas
handling equipment, and the gas use systems. Describe any maintenance
requirements for system monitoring and control equipment;

\(3\) Provide information that supports the expected design life of the
system and the timing of major component replacement or rebuilds;

\(4\) Provide and discuss the risk management plan for handling large,
potential failures of major components. Include in the discussion, costs
and labor associated with the operation and maintenance of the system,
and plans for in-sourcing or out-sourcing; and

\(5\) Describe opportunities for technology transfer for long-term
project operations and maintenance by a local entity or owner/operator.

\(j\) [Dismantling and disposal of project components]{.underline}.
Describe a plan for dismantling and disposing of project components and
associated wastes at the end of their useful lives. Describe the budget
for and any unique concerns associated with the dismantling and disposal
of project components and their wastes.

(07-18-05) SPECIAL PN

RD Instruction 4280-B

Appendix B

Page 12

Section 3. Geothermal, Electric Generation

The technical requirements specified in this section apply to electric
generation geothermal projects, which are, as defined in § 4280.103,
systems that use geothermal energy to produce high pressure steam for
electric power production.

\(a\) [Qualifications of project team]{.underline}. The electric
generating geothermal plant project team should consist of a system
designer, a project manager, an equipment supplier, a project engineer,
a construction contractor, and a system operator and maintainer. One
individual or entity may serve more than one role. The project team must
have demonstrated expertise in geothermal electric generation systems
development, engineering, installation, and maintenance. Authoritative
evidence that project team service providers have the necessary
professional credentials or relevant experience to perform the required
services must be provided. Authoritative evidence that vendors of
proprietary components can provide necessary equipment and spare parts
for the system to operate over its design life must also be provided.
The application must:

\(1\) Discuss the proposed project delivery method. Such methods include
a design, bid, build where a separate engineering firm may design the
project and prepare a request for bids and the successful bidder
constructs the project at the applicant's risk, and a design/build
method, often referred to as turnkey, where the applicant establishes
the specifications for the project and secures the services of a
developer who will design and build the project at the developer's risk;

\(2\) Discuss the geothermal plant equipment manufacturers of major
components being considered in terms of the length of time in business
and the number of units installed at the capacity and scale being
considered;

\(3\) Discuss the project manager, equipment supplier, system designer,
project engineer, and construction contractor qualifications for
engineering, designing, and installing geothermal electric generation
systems, including any relevant certifications by recognized
organizations. Provide a list of the same or similar projects designed,
installed, or supplied and currently operating with references, if
available; and

\(4\) Describe the system operator's qualifications and experience for
servicing, operating, and maintaining electric generating geothermal
projects. Provide a list of the same or similar projects designed,
installed, or supplied and currently operating with references, if
available.

RD Instruction 4280-B

Appendix B

Page 13

\(b\) [Agreements, permits, and certifications]{.underline}. Identify
all necessary agreements and permits required for the project and the
status and schedule for securing those agreements and permits, including
the items specified in paragraphs (b)(1) through (7).

\(1\) Identify zoning and code issues and required permits and the
anticipated schedule for meeting those requirements and securing those
permits.

\(2\) Identify any permits or agreements required for well construction
and for disposal or re-injection of cooled geothermal waters and the
schedule for securing those agreements and permits.

\(3\) Identify land use or access to the resource agreements required
for the project and the anticipated schedule for securing the agreements
and the term of those agreements.

\(4\) Identify available component warranties for the specific project
location and size.

\(5\) For systems planning to interconnect with a utility, describe the
utility's system interconnection requirements, power purchase
arrangements, or licenses where required and the anticipated schedule
for meeting those requirements and obtaining those agreements.

\(6\) Identify all environmental issues, including environmental
compliance issues, associated with the project on Form RD 1940-20,
"Request for Environmental Information," and in compliance with 7 CFR
part 1940, subpart G, of this title.

\(7\) Submit a statement certifying that the project will be installed
in accordance with applicable local, State, and national codes and
regulations.

\(c\) [Resource assessment]{.underline}. Provide adequate and
appropriate data to demonstrate the amount of renewable resource
available. Indicate the quality of the geothermal resource, including
temperature, flow, and sustainability and what conversion system is to
be installed. Describe any special handling of cooled geothermal waters
that may be necessary. Describe the process for determining the
geothermal resource, including measurement setup for the collection of
the geothermal resource data. For proposed projects with an established
resource, provide a summary of the resource and the specifications of
the measurement setup.

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RD Instruction 4280-B

Appendix B

Page 14

\(d\) [Design and engineering]{.underline}. Provide authoritative
evidence that the system will be designed and engineered so as to meet
its intended purpose, will ensure public safety, and will comply with
applicable laws, regulations, agreements, permits, codes, and standards.
Projects shall be engineered by a qualified party. Systems must be
engineered as a complete, integrated system with matched components. The
engineering must be comprehensive, including site selection, system and
component selection, conversion system component and selection, design
of the local collection grid, interconnection equipment selection, and
system monitoring equipment. Systems must be constructed by a qualified
party.

\(1\) Provide a concise but complete description of the geothermal
project, including location of the project, resource characteristics,
thermal system specifications, electric power system interconnection
equipment and project monitoring equipment. Identify possible vendors
and models of major system components. Provide the expected system
energy production on a monthly and annual basis.

\(2\) Describe the project site and address issues such as site access,
proximity to the electrical grid, environmental concerns with emphasis
on land use, air quality, water quality, habitat fragmentation,
visibility, noise, construction, and installation issues. Identify any
unique construction and installation issues.

\(e\) [Project development schedule]{.underline}. Identify each
significant task, its beginning and end, and its relationship to the
time needed to initiate and carry the project through startup and
shakedown. Provide a detailed description of the project timeline,
including resource assessment, system and site design, permits and
agreements, equipment procurement, and system installation from
excavation through startup and shakedown.

\(f\) [Project economic assessment]{.underline}. Provide a study that
describes the costs and revenues of the proposed project to demonstrate
the financial performance of the project, including the calculation of
simple payback. Provide a detailed analysis and description of project
costs, including project management, resource assessment, project
design, project permitting, land agreements, equipment, site
preparation, system installation, startup and shakedown, warranties,
insurance, financing, professional services, and operations and
maintenance costs. Provide a detailed analysis and description of annual
project revenues, including electricity sales, production tax credits,
revenues from green tags, and any other production incentive programs
throughout the life of the project. Provide a detailed description of
applicable investment incentives, productivity incentives, loans, and
grants. In addition, provide other information necessary to assess the
project's cost effectiveness.

RD Instruction 4280-B

Appendix B

Page 15

\(g\) [Equipment procurement]{.underline}. Demonstrate that equipment
required by the system is available and can be procured and delivered
within the proposed project development schedule. Geothermal systems may
be constructed of components manufactured in more than one location.
Provide a description of any unique equipment procurement issues such as
scheduling and timing of component manufacture and delivery, ordering,
warranties, shipping, receiving, and on-site storage or inventory.
Identify all the major equipment that is proprietary and justify how
this unique equipment is needed to meet the requirements of the proposed
design. Include a statement from the applicant certifying that "open and
free" competition will be used for the procurement of project components
in a manner consistent with the requirements of 7 CFR part 3015 of this
title.

\(h\) [Equipment installation]{.underline}. Describe fully the
management of and plan for site development and system installation,
provide details regarding the scheduling of major installation equipment
needed for project construction, and provide a description of the
startup and shakedown specifications and process and the conditions
required for startup or shakedown for each equipment item individually
and for the system as a whole. Include a statement from the applicant
certifying that equipment installation will be made in accordance with
all applicable safety and work rules.

\(i\) [Operations and maintenance]{.underline}. Identify the operations
and maintenance requirements of the system necessary for the system to
operate as designed over the design life. The application must:

\(1\) Ensure that systems must have at least a 3-year warranty for
equipment. Provide information regarding turbine warranties and
availability of spare parts;

\(2\) Describe the routine operations and maintenance requirements of
the proposed project, including maintenance for the mechanical and
electrical systems and system monitoring and control requirements;

\(3\) Provide information that supports expected design life of the
system and timing of major component replacement or rebuilds;

\(4\) Provide and discuss the risk management plan for handling large,
potential failures of major components such as the turbine. Include in
the discussion, costs and labor associated with the operation and
maintenance of the system, and plans for in-sourcing or out-sourcing;
and

(07-18-05) SPECIAL PN

RD Instruction 4280-B

Appendix B

Page 16

\(5\) Describe opportunities for technology transfer for long-term
project operations and maintenance by a local entity or owner/operator.

\(j\) [Dismantling and disposal of project components]{.underline}.
Describe a plan for dismantling and disposing of project components and
associated wastes at the end of their useful lives. Describe the budget
for and any unique concerns associated with the dismantling and disposal
of project components and their wastes.

RD Instruction 4280-B

Appendix B

Page 17

Section 4. Geothermal, Direct Use

The technical requirements specified in this section apply to direct use
geothermal projects, which are, as defined in § 4280.103, systems that
use thermal energy directly from a geothermal source.

\(a\) [Qualifications of project team]{.underline}. The geothermal
project team should consist of a system designer, a project manager, an
equipment supplier, a project engineer, a construction contractor, and a
system operator and maintainer. One individual or entity may serve more
than one role. The project team must have demonstrated expertise in
geothermal heating systems development, engineering, installation, and
maintenance. Authoritative evidence that project team service providers
have the necessary professional credentials or relevant experience to
perform the required services must be provided. Authoritative evidence
that vendors of proprietary components can provide necessary equipment
and spare parts for the system to operate over its design life must also
be provided. The application must:

\(1\) Discuss the proposed project delivery method. Such methods include
a design, bid, build where a separate engineering firm may design the
project and prepare a request for bids and the successful bidder
constructs the project at the applicant's risk, and a design/build
method, often referred to as turnkey, where the applicant establishes
the specifications for the project and secures the services of a
developer who will design and build the project at the developer's risk;

\(2\) Discuss the geothermal system equipment manufacturers of major
components being considered in terms of the length of time in business
and the number of units installed at the capacity and scale being
considered;

\(3\) Discuss the project manager, equipment supplier, system designer,
project engineer, and construction contractor qualifications for
engineering, designing, and installing direct use geothermal systems,
including any relevant certifications by recognized organizations.
Provide a list of the same or similar projects designed, installed, or
supplied and currently operating with references, if available; and

\(4\) Describe system operator's qualifications and experience for
servicing, operating, and maintaining direct use generating geothermal
projects. Provide a list of the same or similar projects designed,
installed, or supplied and currently operating with references, if
available.

(07-18-05) SPECIAL PN

RD Instruction 4280-B

Appendix B

Page 18

\(b\) [Agreements, permits, and certifications]{.underline}. Identify
all necessary agreements and permits required for the project and the
status and schedule for securing those agreements and permits, including
the items specified in paragraphs (b)(1) through (7).

\(1\) Identify zoning and code issues, and required permits and the
anticipated schedule for meeting those requirements and securing those
permits.

\(2\) Identify licenses where required and the schedule for obtaining
those licenses.

\(3\) Identify land use or access to the resource agreements required
for the project and the anticipated schedule for securing the agreements
and the term of those agreements.

\(4\) Identify any permits or agreements required for well construction
and for disposal or re-injection of cooled geothermal waters and the
anticipated schedule for securing those permits and agreements.

\(5\) Identify available component warranties for the specific project
location and size.

\(6\) Identify all environmental issues, including environmental
compliance issues, associated with the project on Form RD 1940-20,
"Request for Environmental Information," and in compliance with 7 CFR
part 1940, subpart G, of this title.

\(7\) Submit a statement certifying that the project will be installed
in accordance with applicable local, State, and national codes and
regulations.

\(c\) [Resource assessment]{.underline}. Provide adequate and
appropriate data to demonstrate the amount of renewable resource
available. Indicate the quality of the geothermal resource, including
temperature, flow, and sustainability and what direct use system is to
be installed. Describe any special handling of cooled geothermal waters
that may be necessary. Describe the process for determining the
geothermal resource, including measurement setup for the collection of
the geothermal resource data. For proposed projects with an established
resource, provide a summary of the resource and the specifications of
the measurement setup.

RD Instruction 4280-B

Appendix B

Page 19

\(d\) [Design and engineering]{.underline}. Provide authoritative
evidence that the system will be designed and engineered so as to meet
its intended purpose, will ensure public safety, and will comply with
applicable laws, regulations, agreements, permits, codes, and standards.
Projects shall be engineered by a qualified party. Systems must be
engineered as a complete, integrated system with matched components. The
engineering must be comprehensive, including site selection, system and
component selection, thermal system component selection, and system
monitoring equipment. Systems must be constructed by a qualified party.

\(1\) Provide a concise but complete description of the geothermal
project, including location of the project, resource characteristics,
thermal system specifications, and monitoring equipment. Identify
possible vendors and models of major system components. Provide the
expected system energy production on a monthly and annual basis.

\(2\) Describe the project site and address issues such as site access,
thermal backup equipment, environmental concerns with emphasis on land
use, air quality, water quality, habitat fragmentation, visibility,
noise, construction, and installation issues. Identify any unique
construction and installation issues.

\(e\) [Project development schedule]{.underline}. Identify each
significant task, its beginning and end, and its relationship to the
time needed to initiate and carry the project through startup and
shakedown. Provide a detailed description of the project timeline,
including resource assessment, system and site design, permits and
agreements, equipment procurement, and system installation from
excavation through startup and shakedown.

\(f\) [Project economic assessment]{.underline}. Provide a study that
describes the costs and revenues of the proposed project to demonstrate
the financial performance of the project, including the calculation of
simple payback. Provide a detailed analysis and description of project
costs, including project management, resource assessment, project
design, project permitting, land agreements, equipment, site
preparation, system installation, startup and shakedown, warranties,
insurance, financing, professional services, and operations and
maintenance costs. Provide a detailed analysis and description of annual
project revenues and expenses. Provide a detailed description of
applicable investment incentives, productivity incentives, loans, and
grants. In addition, provide other information necessary to assess the
project's cost effectiveness.

RD Instruction 4280-B

Appendix B

Page 20

\(g\) [Equipment procurement]{.underline}. Demonstrate that equipment
required by the system is available and can be procured and delivered
within the proposed project development schedule. Geothermal systems may
be constructed of components manufactured in more than one location.
Provide a description of any unique equipment procurement issues such as
scheduling and timing of component manufacture and delivery, ordering,
warranties, shipping, receiving, and on-site storage or inventory.
Identify all the major equipment that is proprietary and justify how
this unique equipment is needed to meet the requirements of the proposed
design. Include a statement from the applicant certifying that "open and
free" competition will be used for the procurement of project components
in a manner consistent with the requirements of 7 CFR part 3015 of this
title.

\(h\) [Equipment installation]{.underline}. Describe fully the
management of and plan for site development and system installation,
provide details regarding the scheduling of major installation equipment
needed for project construction, and provide a description of the
startup and shakedown specifications and process and the conditions
required for startup and shakedown for each equipment item individually
and for the system as a whole. Include a statement from the applicant
certifying that equipment installation will be made in accordance with
all applicable safety and work rules.

\(i\) [Operations and maintenance]{.underline}. Identify the operations
and maintenance requirements of the system necessary for the system to
operate as designed over the design life. The application must:

\(1\) Ensure that systems must have at least a 3-year warranty for
equipment. Provide information regarding system warranties and
availability of spare parts;

\(2\) Describe the routine operations and maintenance requirements of
the proposed project, including maintenance for the mechanical and
electrical systems and system monitoring and control requirements;

\(3\) Provide information that supports expected design life of the
system and timing of major component replacement or rebuilds;

\(4\) Provide and discuss the risk management plan for handling large,
potential failures of major components. Include in the discussion, costs
and labor associated with the operation and maintenance of the system,
and plans for in-sourcing or out-sourcing; and

RD Instruction 4280-B

Appendix B

Page 21

\(5\) Describe opportunities for technology transfer for long-term
project operations and maintenance by a local entity or owner/operator.

\(j\) [Dismantling and disposal of project components]{.underline}.
Describe a plan for dismantling and disposing of project components and
associated wastes at the end of their useful lives. Describe the budget
for and any unique concerns associated with the dismantling and disposal
of project components and their wastes.

(07-18-05) SPECIAL PN

RD Instruction 4280-B

Appendix B

Page 22

Section 5. Hydrogen Projects

The technical requirements specified in this section apply to hydrogen
projects, which are, as defined in § 4280.103, renewable energy systems
that produce hydrogen or, a renewable energy system that uses mechanical
or electric power or thermal energy from a renewable resource using
hydrogen as an energy transport medium.

\(a\) [Qualifications of project team]{.underline}. The hydrogen project
team will vary according to the complexity and scale of the project. For
engineered systems, the project team should consist of a system
designer, a project manager, an equipment supplier, a project engineer,
a construction contractor or system installer, and a system operator and
maintainer. One individual or entity may serve more than one role. The
project team must have demonstrated expertise in similar hydrogen
systems development, engineering, installation, and maintenance.
Authoritative evidence that project team service providers have the
necessary professional credentials or relevant experience to perform the
required services must be provided. Authoritative evidence that vendors
of proprietary components can provide necessary equipment and spare
parts for the system to operate over its design life must also be
provided. The application must:

\(1\) Discuss the proposed project delivery method. Such methods include
a design, bid, build where a separate engineering firm may design the
project and prepare a request for bids and the successful bidder
constructs the project at the applicant's risk, and a design/build
method, often referred to as turnkey, where the applicant establishes
the specifications for the project and secures the services of a
developer who will design and build the project at the developer's risk;

\(2\) Discuss the hydrogen system equipment manufacturers of major
components for the hydrogen system being considered in terms of the
length of time in the business and the number of units installed at the
capacity and scale being considered;

\(3\) Discuss the project manager, equipment supplier, system designer,
project engineer, and construction contractor qualifications for
engineering, designing, and installing hydrogen systems, including any
relevant certifications by recognized organizations. Provide a list of
the same or similar projects designed, installed, or supplied and
currently operating with references, if available; and

\(4\) Describe the system operator's qualifications and experience for
servicing, operating, and maintaining hydrogen system equipment or
projects. Provide a list of the same or similar projects designed,
installed, or supplied and currently operating with references, if
available.

RD Instruction 4280-B

Appendix B

Page 23

\(b\) [Agreements, permits, and certifications]{.underline}. Identify
all necessary agreements and permits required for the project and the
status and schedule for securing those agreements and permits, including
the items specified in paragraphs (b)(1) through (8).

\(1\) Identify zoning and building code issues, and required permits and
the anticipated schedule for meeting those requirements and securing
those permits.

\(2\) Identify licenses where required and the schedule for obtaining
those licenses.

\(3\) Identify land use agreements required for the project and the
anticipated schedule for securing the agreements and the term of those
agreements.

\(4\) Identify any permits or agreements required for solid, liquid, and
gaseous emissions or effluents and the anticipated schedule for securing
those permits and agreements.

\(5\) Identify available component warranties for the specific project
location and size.

\(6\) For systems planning to interconnect with a utility, describe the
utility's system interconnection requirements, power purchase
arrangements, or licenses where required and the anticipated schedule
for meeting those requirements and obtaining those agreements. This is
required even if the system is installed on the customer side of the
utility meter. For systems planning to utilize a local net metering
program as their interconnection agreement, describe the applicable
local net metering program.

\(7\) Identify all environmental issues, including environmental
compliance issues, associated with the project on Form RD 1940-20,
"Request for Environmental Information," and in compliance with 7 CFR
part 1940, subpart G, of this title.

\(8\) Submit a statement certifying that the project will be installed
in accordance with applicable local, State, and national codes and
regulations.

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RD Instruction 4280-B

Appendix B

Page 24

\(c\) [Resource assessment]{.underline}. Provide adequate and
appropriate data to demonstrate the amount of renewable resource
available. Indicate the type, quantity, quality, and seasonality of the
biomass resource. For solar, wind, or geothermal sources of energy used
to generate hydrogen, indicate the local renewable resource where the
hydrogen system is to be installed. Local resource maps may be used as
an acceptable preliminary source of renewable resource data. For
proposed projects with an established renewable resource, provide a
summary of the resource.

\(d\) [Design and engineering]{.underline}. Provide authoritative
evidence that the system will be designed and engineered so as to meet
its intended purpose, will ensure public safety, and will comply with
applicable laws, regulations, agreements, permits, codes, and standards.
Projects shall be engineered by a qualified party. Systems must be
engineered as a complete, integrated system with matched components. The
engineering must be comprehensive, including site selection, system and
component selection, and system monitoring equipment. Systems must be
constructed by a qualified party.

\(1\) Provide a concise but complete description of the hydrogen
project, including location of the project, resource characteristics,
system specifications, electric power system interconnection equipment,
and monitoring equipment. Identify possible vendors and models of major
system components. Describe the expected electric power, fuel
production, or thermal energy production of the proposed system. Address
performance on a monthly and annual basis. Describe the uses of or the
market for electricity, heat, or fuel produced by the system. Discuss
the impact of reduced or interrupted resource availability on the system
process.

\(2\) Describe the project site and address issues such as site access,
foundations, backup equipment when applicable, and any environmental and
safety concerns with emphasis on land use, air quality, water quality,
and safety hazards. Identify any unique construction and installation
issues.

\(e\) [Project development schedule]{.underline}. Identify each
significant task, its beginning and end, and its relationship to the
time needed to initiate and carry the project through startup and
shakedown. Provide a detailed description of the project timeline,
including resource assessment, system and site design, permits and
agreements, equipment procurement, and system installation from
excavation through startup and shakedown.

RD Instruction 4280-B

Appendix B

Page 25

\(f\) [Project economic assessment]{.underline}. Provide a study that
describes the costs and revenues of the proposed project to demonstrate
the financial performance of the project, including the calculation of
simple payback. Provide a detailed analysis and description of project
costs, including project management, resource assessment, project design
and engineering, project permitting, land agreements, equipment, site
preparation, system installation, startup and shakedown, warranties,
insurance, financing, professional services, and operations and
maintenance costs. Provide a detailed analysis and description of annual
project revenues and expenses. Provide a detailed description of
applicable investment incentives, productivity incentives, loans, and
grants. In addition, provide other information necessary to assess the
project's cost effectiveness.

\(g\) [Equipment procurement]{.underline}. Demonstrate that equipment
required by the system is available and can be procured and delivered
within the proposed project development schedule. Hydrogen systems may
be constructed of components manufactured in more than one location.
Provide a description of any unique equipment procurement issues, such
as scheduling and timing of component manufacture and delivery,
ordering, warranties, shipping, and receiving, and on-site storage or
inventory. Identify all the major equipment that is proprietary and
justify how this unique equipment is needed to meet the requirements of
the proposed design. Include a statement from the applicant certifying
that "open and free" competition will be used for the procurement of
project components in a manner consistent with the requirements of 7 CFR
part 3015 of this title.

\(h\) [Equipment installation]{.underline}. Describe fully the
management of and plan for site development and system installation,
provide details regarding the scheduling of major installation equipment
needed for project construction, and provide a description of the
startup and shakedown specifications and process and the conditions
required for startup and shakedown for each equipment item individually
and for the system as a whole. Include a statement from the applicant
certifying that equipment installation will be made in accordance with
all applicable safety and work rules.

\(i\) [Operations and maintenance]{.underline}. Identify the operations
and maintenance requirements of the system necessary for the system to
operate as designed over the design life. The application must:

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RD Instruction 4280-B

Appendix B

Page 26

\(1\) Provide information regarding system warranties and availability
of spare parts;

\(2\) Describe the routine operations and maintenance requirements of
the proposed project, including maintenance of the reformer,
electrolyzer, or fuel cell as appropriate, and other mechanical, piping,
and electrical systems and system monitoring and control requirements;

\(3\) Provide information that supports expected design life of the
system and timing of major component replacement or rebuilds;

\(4\) Provide and discuss the risk management plan for handling large,
potential failures of major components. Include in the discussion, costs
and labor associated with the operation and maintenance of the system,
and plans for in-sourcing or out-sourcing; and

\(5\) Describe opportunities for technology transfer for long-term
project operations and maintenance by a local entity or owner/operator.

\(j\) [Dismantling and disposal of project components]{.underline}.
Describe a plan for dismantling and disposing of project components and
associated wastes at the end of their useful lives. Describe the budget
for and any unique concerns associated with the dismantling and disposal
of project components and their wastes.

RD Instruction 4280-B

Appendix B

Page 27

Section 6. Solar, Small

The technical requirements specified in this section apply to small
solar electric projects and small solar thermal projects, as defined in
§ 4280.103.

Small solar electric projects are those for which the rated power of the
system is 10kW or smaller. Small solar electric projects are either
stand-alone (off grid) or interconnected to the grid at less than 600
volts (on grid).

Small solar thermal projects are those for which the rated storage
volume of the system is 240 gallons or smaller, or which have a
collector area of 1,000 square feet or less.

\(a\) [Qualifications of project team]{.underline}. The small solar
project team should consist of a system designer, a project manager or
general contractor, an equipment supplier of major components, a system
installer, a system maintainer, and, in some cases, the owner of the
application or load served by the system. One individual or entity may
serve more than one role. Authoritative evidence that project team
service providers have the necessary professional credentials or
relevant experience to perform the required services must be provided.
Authoritative evidence that vendors of proprietary components can
provide necessary equipment and spare parts for the system to operate
over its design life must also be provided. The application must:

\(1\) Discuss the qualifications of the suppliers of major components
being considered;

\(2\) Describe the knowledge, skills, and abilities needed to service,
operate, and maintain the system for the proposed application; and

\(3\) Discuss the project manager, system designer, and system installer
qualifications for engineering, designing, and installing small solar
systems, including any relevant certifications by recognized
organizations. Provide a list of the same or similar systems designed or
installed by the design and installation team and currently operating
with references, if available.

\(b\) [Agreements, permits, and certifications]{.underline}. Identify
all necessary agreements and permits required for the project and the
status and schedule for securing those agreements and permits, including
the items specified in paragraphs (b)(1) through (5).

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RD Instruction 4280-B

Appendix B

Page 28

\(1\) Identify zoning, building, and electrical code issues, and
required permits and the anticipated schedule for meeting those
requirements and securing those permits.

\(2\) Identify available component warranties for the specific project
location and size.

\(3\) For systems planning to interconnect with a utility, describe the
utility's system interconnection requirements, power purchase
arrangements, or licenses where required and the anticipated schedule
for meeting those requirements and obtaining those agreements. This is
required even if the system is installed on the customer side of the
utility meter. For systems planning to utilize a local net metering
program as their interconnection agreement, describe the applicable
local net metering program.

\(4\) Identify all environmental issues, including environmental
compliance issues, associated with the project on Form RD 1940-20,
"Request for Environmental Information," and in compliance with 7 CFR
part 1940, subpart G, of this title.

\(5\) Submit a statement certifying that the project will be installed
in accordance with applicable local, State, and national codes and
regulations.

\(c\) [Resource assessment]{.underline}. Provide adequate and
appropriate data to demonstrate the amount of renewable resource
available. Indicate the source of the solar data and assumptions.

\(d\) [Design and engineering]{.underline}. Provide authoritative
evidence that the system will be designed and engineered so as to meet
its intended purpose, will ensure public safety, and will comply with
applicable laws, regulations, agreements, permits, codes, and standards.
For small solar electric systems, the engineering must be comprehensive,
including solar collector design and selection, support structure design
and selection, power conditioning design and selection, surface or
submersible water pumps and energy storage requirements as applicable,
and selection of cabling, disconnects and interconnection equipment. For
small solar thermal systems, the engineering must be comprehensive,
including solar collector design and selection, support structure design
and selection, pump and piping design and selection, and energy storage
design and selection.

\(1\) Provide a concise but complete description of the small solar
system, including location of the project and proposed equipment
specifications. Identify possible vendors and models of major system
components. Provide the expected system energy production based on
available solar resource data on a monthly (when possible) and annual
basis and how the energy produced by the system will be used.

RD Instruction 4280-B

Appendix B

Page 29

\(2\) Describe the project site and address issues such as solar access,
orientation, proximity to the load or the electrical grid, environmental
concerns such as water quality and land use, unique safety concerns such
as hazardous materials handling, construction, and installation issues,
and whether special circumstances exist.

\(e\) [Project development schedule]{.underline}. Identify each
significant task, its beginning and end, and its relationship to the
time needed to initiate and carry the project through startup and
shakedown. Provide a detailed description of the project timeline,
including system and site design, permits and agreements, equipment
procurement, and system installation from excavation through startup and
shakedown.

\(f\) [Project economic assessment]{.underline}. Provide a study that
describes the costs and revenues of the proposed project to demonstrate
the financial performance of the project, including the calculation of
simple payback. Provide a detailed analysis and description of project
costs, including design, permitting, equipment, site preparation, system
installation, system startup and shakedown, warranties, insurance,
financing, professional services, and operations and maintenance costs.
Provide a detailed description of applicable investment incentives,
productivity incentives, loans, and grants. Provide a detailed
description of historic or expected energy use and expected energy
offsets or sales on a monthly and annual basis. In addition, provide
other information necessary to assess the project's cost effectiveness.

\(g\) [Equipment procurement]{.underline}. Demonstrate that equipment
required by the system is available and can be procured and delivered
within the proposed project development schedule. Small solar systems
may be constructed of components manufactured in more than one location.
Provide a description of any unique equipment procurement issues such as
scheduling and timing of component manufacture and delivery, ordering,
warranties, shipping, receiving, and on-site storage or inventory.
Provide a detailed description of equipment certification. Identify all
the major equipment that is proprietary and justify how this unique
equipment is needed to meet the requirements of the proposed design.
Include a statement from the applicant certifying that "open and free"
competition will be used for the procurement of project components in a
manner consistent with the requirements of 7 CFR part 3015 of this
title.

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RD Instruction 4280-B

Appendix B

Page 30

\(h\) [Equipment installation]{.underline}. Describe fully the
management of and plan for site development and system installation,
provide details regarding the scheduling of major installation equipment
needed for project construction, and provide a description of the
startup and shakedown specifications and process and the conditions
required for startup and shakedown for each equipment item individually
and for the system as a whole. Include a statement from the applicant
certifying that equipment installation will be made in accordance with
all applicable safety and work rules.

\(i\) [Operations and maintenance]{.underline}. Identify the operations
and maintenance requirements of the system necessary for the system to
operate as designed over the design life. The application must:

\(1\) Ensure that systems must have at least a 5-year warranty for
equipment. Provide information regarding system warranty and
availability of spare parts;

\(2\) Describe the routine operations and maintenance requirements of
the proposed system, including maintenance schedules for the mechanical
and electrical and software systems;

\(3\) For owner maintained portions of the system, describe any unique
knowledge, skills, or abilities needed for service operations or
maintenance; and

\(4\) Provide information regarding expected system design life and
timing of major component replacement or rebuilds. Include in the
discussion, costs and labor associated with the operation and
maintenance of the system, and plans for in-sourcing or out-sourcing.

\(j\) [Dismantling and disposal of project components]{.underline}.
Describe a plan for dismantling and disposing of project components and
associated wastes at the end of their useful lives. Describe the budget
for and any unique concerns associated with the dismantling and disposal
of project components and their wastes. Describe any environmental
compliance requirements such as proper disposal or recycling procedures
to reduce potential impact from any hazardous chemicals.

RD Instruction 4280-B

Appendix B

Page 31

Section 7. Solar, Large

The technical requirements specified in this section apply to large
solar electric projects and large solar thermal projects, as defined in
§ 4280.103.

Large solar electric systems are those for which the rated power of the
system is larger than 10kW. Large solar electric systems are either
stand-alone (off grid) or interconnected to the grid (on grid).

Large solar thermal systems are those for which the rated storage volume
of the system is greater than 240 gallons or that have a collector area
of more than 1,000 square feet.

\(a\) [Qualifications of project team]{.underline}. The large solar
project team should consist of an equipment supplier of major
components, a project manager, general contractor, system engineer,
system installer, and system maintainer. One individual or entity may
serve more than one role. Authoritative evidence that project team
service providers have the necessary professional credentials or
relevant experience to perform the required services must be provided.
Authoritative evidence that vendors of proprietary components can
provide necessary equipment and spare parts for the system to operate
over its design life must also be provided. The application must:

\(1\) Discuss the proposed project delivery method. Such methods include
a design, bid, build where a separate engineering firm may design the
project and prepare a request for bids and the successful bidder
constructs the project at the applicant's risk, and a design/build
method, often referred to as turnkey, where the applicant establishes
the specifications for the project and secures the services of a
developer who will design and build the project at the developer's risk;

\(2\) Discuss the qualifications of the suppliers of major components
being considered;

\(3\) Discuss the project manager, general contractor, system engineer,
and system installer qualifications for engineering, designing, and
installing large solar systems, including any relevant certifications by
recognized organizations. Provide a list of the same or similar systems
designed or installed by the design, engineering, and installation team
and currently operating with references, if available; and

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RD Instruction 4280-B

Appendix B

Page 32

\(4\) Describe the system operator's qualifications and experience for
servicing, operating, and maintaining the system for the proposed
application. Provide a list of the same or similar systems designed or
installed by the design, engineering, and installation team and
currently operating with references, if available.

\(b\) [Agreements, permits, and certifications]{.underline}. Identify
all necessary agreements and permits required for the project and the
status and schedule for securing those agreements and permits, including
the items specified in paragraphs (b)(1) through (5).

\(1\) Identify zoning, building, and electrical code issues, and
required permits and the anticipated schedule for meeting those
requirements and securing those permits.

\(2\) Identify available component warranties for the specific project
location and size.

\(3\) For systems planning to interconnect with a utility, describe the
utility's system interconnection requirements, power purchase
arrangements, or licenses where required and the anticipated schedule
for meeting those requirements and obtaining those agreements. This is
required even if the system is installed on the customer side of the
utility meter. For systems planning to utilize a local net metering
program as their interconnection agreement, describe the applicable
local net metering program.

\(4\) Identify all environmental issues, including environmental
compliance issues, associated with the project on Form RD 1940-20,
"Request for Environmental Information," and in compliance with 7 CFR
part 1940, subpart G, of this title.

\(5\) Submit a statement certifying that the project will be installed
in accordance with applicable local, State, and national codes and
regulations.

\(c\) [Resource assessment]{.underline}. Provide adequate and
appropriate data to demonstrate the amount of renewable resource
available. Indicate the source of the solar data and assumptions.

\(d\) [Design and engineering]{.underline}. Provide authoritative
evidence that the system will be designed and engineered so as to meet
its intended purpose, will ensure public safety, and will comply with
applicable laws, regulations, agreements, permits, codes, and standards.

RD Instruction 4280-B

Appendix B

Page 33

\(1\) For large solar electric systems, the engineering must be
comprehensive, including solar collector design and selection, support
structure design and selection, power conditioning design and selection,
surface or submersible water pumps and energy storage requirements as
applicable, and selection of cabling, disconnects, and interconnection
equipment. A complete set of engineering drawings, stamped by a
professional engineer, must be provided.

\(2\) For large solar thermal systems, the engineering must be
comprehensive, including solar collector design and selection, support
structure design and selection, pump and piping design and selection,
and energy storage design and selection. Provide a complete set of
engineering drawings stamped by a professional engineer.

\(3\) For either type of system, provide a concise but complete
description of the large solar system, including location of the project
and proposed equipment and system specifications. Identify possible
vendors and models of major system components. Provide the expected
system energy production based on available solar resource data on a
monthly (when possible) and annual basis and how the energy produced by
the system will be used.

\(4\) For either type of system, provide a description of the project
site and address issues such as solar access, orientation, proximity to
the load or the electrical grid, environmental concerns such as land
use, water quality, habitat fragmentation, and aesthetics, unique safety
concerns, construction, and installation issues, and whether special
circumstances exist.

\(e\) [Project development schedule]{.underline}. Identify each
significant task, its beginning and end, and its relationship to the
time needed to initiate and carry the project through startup and
shakedown. Provide a detailed description of the project timeline,
including system and site design, permits and agreements, equipment
procurement, and system installation from excavation through startup and
shakedown.

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RD Instruction 4280-B

Appendix B

Page 34

\(f\) [Project economic assessment]{.underline}. Provide a study that
describes the costs and revenues of the proposed project to demonstrate
the financial performance of the project, including the calculation of
simple payback. Provide a detailed analysis and description of project
costs, including design and engineering, permitting, equipment, site
preparation, system installation, system startup and shakedown,
warranties, insurance, financing, professional services, and operations
and maintenance costs. Provide a detailed description of applicable
investment incentives, productivity incentives, loans, and grants.
Provide a detailed description of historic or expected energy use and
expected energy offsets or sales on a monthly and annual basis. In
addition, provide other information necessary to assess the project's
cost effectiveness.

\(g\) [Equipment procurement]{.underline}. Demonstrate that equipment
required by the system is available and can be procured and delivered
within the proposed project development schedule. Large solar systems
may be constructed of components manufactured in more than one location.
Provide a description of any unique equipment procurement issues such as
scheduling and timing of component manufacture and delivery, ordering,
warranties, shipping, receiving, and on-site storage or inventory.
Provide a detailed description of equipment certification. Identify all
the major equipment that is proprietary and justify how this unique
equipment is needed to meet the requirements of the proposed design.
Include a statement from the applicant certifying that "open and free"
competition will be used for the procurement of project components in a
manner consistent with the requirements of 7 CFR part 3015 of this
title.

\(h\) [Equipment installation]{.underline}. Describe fully the
management of and plan for site development and system installation,
provide details regarding the scheduling of major installation
equipment, including cranes and other devices needed for project
construction, and provide a description of the startup and shakedown
specifications and process and the conditions required for startup and
shakedown for each equipment item individually and for the system as a
whole. Include a statement from the applicant certifying that equipment
installation will be made in accordance with all applicable safety and
work rules.

\(i\) [Operations and maintenance]{.underline}. Identify the operations
and maintenance requirements of the system necessary for the system to
operate as designed over the design life. The application must:

\(1\) Ensure that systems must have at least a 5-year warranty for
equipment. Provide information regarding system warranty and
availability of spare parts;

RD Instruction 4280-B

Appendix B

Page 35

\(2\) Describe the routine operations and maintenance requirements of
the proposed system, including maintenance schedules for the mechanical,
electrical, and software systems;

\(3\) For owner maintained portions of the system, describe any unique
knowledge, skills, or abilities needed for service operations or
maintenance; and

\(4\) Provide information regarding expected system design life and
timing of major component replacement or rebuilds. Include in the
discussion, costs and labor associated with the operation and
maintenance of the system, and plans for in-sourcing or out-sourcing.

\(j\) [Dismantling and disposal of project components]{.underline}.
Describe a plan for dismantling and disposing of project components and
associated wastes at the end of their useful lives. Describe the budget
for and any unique concerns associated with the dismantling and disposal
of project components and their wastes. Describe any environmental
compliance requirements such as proper disposal or recycling procedures
to reduce any potential impact from hazardous chemicals.

(07-18-05) SPECIAL PN

RD Instruction 4280-B

Appendix B

Page 36

Section 8. Wind, Small

The technical requirements specified in this section apply to small wind
systems, which are, as defined in § 4280.103, wind energy systems for
which the rated power of the wind turbine is 100kW or smaller and with a
generator hub height of 120 ft or less. Small wind systems are either
stand-alone or connected to the local electrical system at less than 600
volts.

\(a\) [Qualifications of project team]{.underline}. The small wind
project team should consist of a system designer, a project manager or
general contractor, an equipment supplier of major components, a system
installer, a system maintainer, and, in some cases, the owner of the
application or load served by the system. One individual or entity may
serve more than one role. Authoritative evidence that project team
service providers have the necessary professional credentials or
relevant experience to perform the required services must be provided.
Authoritative evidence that vendors of proprietary components can
provide necessary equipment and spare parts for the system to operate
over its design life must also be provided. The application must:

\(1\) Discuss the small wind turbine manufacturers and other equipment
suppliers of major components being considered in terms of their length
of time in business and the number of units installed at the capacity
and scale being considered;

\(2\) Describe the knowledge, skills, and abilities needed to service,
operate, and maintain the system for the proposed application; and

\(3\) Discuss the project manager, system designer, and system installer
qualifications for engineering, designing, and installing small wind
systems, including any relevant certifications by recognized
organizations. Provide a list of the same or similar systems designed,
installed, or supplied and currently operating with references, if
available.

\(b\) [Agreements, permits, and certifications]{.underline}. Identify
all necessary agreements and permits required for the project and the
status and schedule for securing those agreements and permits, including
the items specified in paragraphs (b)(1) through (5).

\(1\) Identify zoning, building, and electrical code issues, and
required permits and the anticipated schedule for meeting those
requirements and securing those permits.

(07-18-05) SPECIAL PN

RD Instruction 4280-B

Appendix B

Page 37

\(2\) Identify available component warranties for the specific project
location and size.

\(3\) For systems planning to interconnect with a utility, describe the
utility's system interconnection requirements, power purchase
arrangements, or licenses, where required, and the anticipated schedule
for meeting those requirements and obtaining those agreements. This is
required even if the system is installed on the customer side of the
utility meter. For systems planning to utilize a local net metering
program as their interconnection agreement, describe the applicable
local net metering program.

\(4\) Identify all environmental issues, including environmental
compliance issues, associated with the project on Form RD 1940-20,
"Request for Environmental Information," and in compliance with 7 CFR
part 1940, subpart G, of this title.

\(5\) Submit a statement certifying that the project will be installed
in accordance with applicable local, State, and national codes and
regulations.

\(c\) [Resource assessment]{.underline}. Provide adequate and
appropriate data to demonstrate the amount of renewable resource
available. Indicate the source of the wind data and the conditions of
the wind monitoring when collected at the site or assumptions made when
applying nearby wind data to the site.

\(d\) [Design and engineering]{.underline}. Provide authoritative
evidence that the system will be designed and engineered so as to meet
its intended purpose, will ensure public safety, and will comply with
applicable laws, regulations, agreements, permits, codes, and standards.
Small wind systems must be engineered by either the wind turbine
manufacturer or other qualified party. Systems must be offered as a
complete, integrated system with matched components. The engineering
must be comprehensive, including turbine design and selection, tower
design and selection, specification of guy wire anchors and tower
foundation, inverter/controller design and selection, energy storage
requirements as applicable, and selection of cabling, disconnects, and
interconnection equipment, as well as the engineering data needed to
match the wind system output to the application load, if applicable.

(07-18-05) SPECIAL PN

RD Instruction 4280-B

Appendix B

Page 38

\(1\) Provide a concise but complete description of the small wind
system, including location of the project, proposed turbine
specifications, tower height and type of tower, type of energy storage
and location of storage if applicable, proposed inverter manufacturer
and model, electric power system interconnection equipment, and
application load and load interconnection equipment as applicable.
Identify possible vendors and models of major system components. Provide
the expected system energy production based on available wind resource
data on a monthly (when possible) and annual basis and how the energy
produced by the system will be used.

\(2\) Describe the project site and address issues such as access to the
wind resource, proximity to the electrical grid or application load,
environmental concerns with emphasis on historic properties, visibility,
noise, bird and bat populations, and wildlife habitat destruction and/or
fragmentation, construction, and installation issues and whether special
circumstances such as proximity to airports exist. Provide a 360-degree
panoramic photograph of the proposed site, including indication of
prevailing winds when possible.

\(e\) [Project development schedule]{.underline}. Identify each
significant task, its beginning and end, and its relationship to the
time needed to initiate and carry the project through startup and
shakedown. Provide a detailed description of the project timeline,
including system and site design, permits and agreements, equipment
procurement, and system installation from excavation through startup and
shakedown.

\(f\) [Project economic assessment]{.underline}. Provide a study that
describes the costs and revenues of the proposed project to demonstrate
the financial performance of the project, including the calculation of
simple payback. Provide a detailed analysis and description of project
costs, including design, permitting, equipment, site preparation, system
installation, system startup and shakedown, warranties, insurance,
financing, professional services, and operations and maintenance costs.
Provide a detailed description of applicable investment incentives,
productivity incentives, loans, and grants. Provide a detailed
description of historic or expected energy use and expected energy
offsets or sales on a monthly and annual basis. In addition, provide
other information necessary to assess the project's cost effectiveness.

RD Instruction 4280-B

Appendix B

Page 39

\(g\) [Equipment procurement]{.underline}. Demonstrate that equipment
required by the system is available and can be procured and delivered
within the proposed project development schedule. Small wind systems may
be constructed of components manufactured in more than one location.
Provide a description of any unique equipment procurement issues such as
scheduling and timing of component manufacture and delivery, ordering,
warranties, shipping, receiving, and on-site storage or inventory.
Provide a detailed description of equipment certification. Identify all
the major equipment that is proprietary and justify how this unique
equipment is needed to meet the requirements of the proposed design.
Include a statement from the applicant certifying that "open and free"
competition will be used for the procurement of project components in a
manner consistent with the requirements of 7 CFR part 3015 of this
title.

\(h\) [Equipment installation]{.underline}. Describe fully the
management of and plan for site development and system installation,
provide details regarding the scheduling of major installation
equipment, including cranes and other devices needed for project
construction, and provide a description of the startup and shakedown
specifications and process and the conditions required for startup and
shakedown for each equipment item individually and for the system as a
whole. Include a statement from the applicant certifying that equipment
installation will be made in accordance with all applicable safety and
work rules.

\(i\) [Operations and maintenance]{.underline}. Identify the operations
and maintenance requirements of the system necessary for the system to
operate as designed over the design life. The application must:

\(1\) Ensure that systems must have at least a 5-year warranty for
equipment and a commitment from the supplier to have spare parts
available. Provide information regarding system warranty and
availability of spare parts;

\(2\) Describe the routine operations and maintenance requirements of
the proposed system, including maintenance schedules for the mechanical,
electrical, and software systems;

\(3\) Provide historical or engineering information that supports
expected design life of the system and timing of major component
replacement or rebuilds. Include in the discussion, costs and labor
associated with the operation and maintenance of the system, and plans
for in-sourcing or out-sourcing; and

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RD Instruction 4280-B

Appendix B

Page 40

\(4\) For owner maintained portions of the system, describe any unique
knowledge, skills, or abilities needed for service operations or
maintenance.

\(j\) [Dismantling and disposal of project components]{.underline}.
Describe a plan for dismantling and disposing of project components and
associated wastes at the end of their useful lives. Describe the budget
for and any unique concerns associated with the dismantling and disposal
of project components and their wastes.

RD Instruction 4280-B

Appendix B

Page 41

Section 9. Wind, Large

The technical requirements specified in this section apply to wind
energy systems, which are, as defined in § 4280.103, wind energy
projects for which the rated power of the individual wind turbine(s) is
larger than 100kW.

\(a\) [Qualifications of project team]{.underline}. The large wind
project team should consist of a project manager, a meteorologist, an
equipment supplier, a project engineer, a primary or general contractor,
construction contractor, and a system operator and maintainer and, in
some cases, the owner of the application or load served by the system.
One individual or entity may serve more than one role. Authoritative
evidence that project team service providers have the necessary
professional credentials or relevant experience to perform the required
services must be provided. Authoritative evidence that vendors of
proprietary components can provide necessary equipment and spare parts
for the system to operate over its design life must also be provided.
The application must:

\(1\) Discuss the proposed project delivery method. Such methods include
a design, bid, build where a separate engineering firm may design the
project and prepare a request for bids and the successful bidder
constructs the project at the applicant's risk, and a design/build
method, often referred to as turnkey, where the applicant establishes
the specifications for the project and secures the services of a
developer who will design and build the project at the developers risk;

\(2\) Discuss the large wind turbine manufacturers and other equipment
suppliers of major components being considered in terms of the length of
time in business and the number of units installed at the capacity and
scale being considered;

\(3\) Discuss the project manager, equipment supplier, project engineer,
and construction contractor qualifications for engineering, designing,
and installing large wind systems, including any relevant certifications
by recognized organizations. Provide a list of the same or similar
projects designed, installed, or supplied and currently operating with
references, if available;

\(4\) Discuss the qualifications of the meteorologist, including
references; and

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RD Instruction 4280-B

Appendix B

Page 42

\(5\) Describe system operator's qualifications and experience for
servicing, operating, and maintaining the system for the proposed
application. Provide a list of the same or similar projects designed,
installed, or supplied and currently operating with references, if
available.

\(b\) [Agreements, permits, and certifications]{.underline}. Identify
all necessary agreements and permits required for the project and the
status and schedule for securing those agreements and permits, including
the items specified in paragraphs (b)(1) through (6).

\(1\) Identify zoning, building, and electrical code issues, and
required permits and the anticipated schedule for meeting those
requirements and securing those permits.

\(2\) Identify land use agreements required for the project and the
anticipated schedule for securing the agreements and the term of those
agreements.

\(3\) Identify available component warranties for the specific project
location and size.

\(4\) For systems planning to interconnect with a utility, describe the
utility's system interconnection requirements, power purchase
arrangements, or licenses where required and the anticipated schedule
for meeting those requirements and obtaining those agreements.

\(5\) Identify all environmental issues, including environmental
compliance issues, associated with the project on Form RD 1940-20,
"Request for Environmental Information," and in compliance with 7 CFR
part 1940, subpart G, of this title.

\(6\) Submit a statement certifying that the project will be installed
in accordance with applicable local, State, and national codes and
regulations.

\(c\) [Resource assessment]{.underline}. Provide adequate and
appropriate data to demonstrate the amount of renewable resource
available. Projects greater than 500kW must obtain wind data from the
proposed project site. For such projects, describe the proposed
measurement setup for the collection of the wind resource data. For
proposed projects with an established wind resource, provide a summary
of the wind resource and the specifications of the measurement setup.
Large wind systems larger than 500kW in size will typically require at
least 1 year of on-site monitoring. If less than 1 year of data is used,
the qualified meteorological consultant must provide a detailed analysis
of the correlation between the site data and a nearby, long-term
measurement site.

RD Instruction 4280-B

Appendix B

Page 43

\(d\) [Design and engineering]{.underline}. Provide authoritative
evidence that the system will be designed and engineered so as to meet
its intended purpose, will ensure public safety, and will comply with
applicable laws, regulations, agreements, permits, codes, and standards.
Large wind systems must be engineered by a qualified party. Systems must
be engineered as complete, integrated systems with matched components.
The engineering must be comprehensive, including site selection, turbine
selection, tower selection, tower foundation, design of the local
collection grid, interconnection equipment selection, and system
monitoring equipment. For stand-alone, non-grid applications,
engineering information must be provided that demonstrates appropriate
matching of wind turbine and load.

\(1\) Provide a concise, but complete, description of the large wind
project, including location of the project, proposed turbine
specifications, tower height and type of tower, the collection grid,
interconnection equipment, and monitoring equipment. Identify possible
vendors and models of major system components. Provide the expected
system energy production based on available wind resource data on a
monthly and annual basis. For wind projects larger than 500kW in size,
provide the expected system energy production over the life of the
project, including a discussion on inter-annual variation using a
comparison of the on-site monitoring data with long-term meteorological
data from a nearby monitored site.

\(2\) Describe the project site and address issues such as site access,
proximity to the electrical grid or application load, environmental
concerns with emphasis on historic properties, visibility, noise, bird
and bat populations, and wildlife habitat destruction and/or
fragmentation, construction, and installation issues and whether special
circumstances such as proximity to airports exist.

\(e\) [Project development schedule]{.underline}. Identify each
significant task, its beginning and end, and its relationship to the
time needed to initiate and carry the project through startup and
shakedown. Provide a detailed description of the project timeline,
including resource assessment, system and site design, permits and
agreements, equipment procurement, and system installation from
excavation through startup and shakedown.

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RD Instruction 4280-B

Appendix B

Page 44

\(f\) [Project economic assessment]{.underline}. Provide a study that
describes the costs and revenues of the proposed project to demonstrate
the financial performance of the proposed project. Provide a detailed
analysis and description of project costs, including project management,
resource assessment, project design, project permitting, land
agreements, equipment, site preparation, system installation, startup
and shakedown, warranties, insurance, financing, professional services,
and operations and maintenance costs. Provide a detailed description of
applicable investment incentives, productivity incentives, loans, and
grants. Provide a detailed analysis and description of annual project
revenues, including electricity sales, production tax credits, revenues
from green tags, and any other production incentive programs throughout
the life of the project. Provide a description of planned contingency
fees or reserve funds to be used for unexpected large component
replacement or repairs and for low productivity periods. In addition,
provide other information necessary to assess the project's cost
effectiveness.

\(g\) [Equipment procurement]{.underline}. Demonstrate that equipment
required by the system is available and can be procured and delivered
within the proposed project development schedule. Large wind turbines
may be constructed of components manufactured in more than one location.
Provide a description of any unique equipment procurement issues such as
scheduling and timing of component manufacture and delivery, ordering,
warranties, shipping, receiving, and on-site storage or inventory.
Provide a detailed description of equipment certification. Identify all
the major equipment that is proprietary and justify how this unique
equipment is needed to meet the requirements of the proposed design.
Include a statement from the applicant certifying that "open and free"
competition will be used for the procurement of project components in a
manner consistent with the requirements of 7 CFR part 3015 of this
title.

\(h\) [Equipment installation]{.underline}. Describe fully the
management of and plan for site development and system installation,
provide details regarding the scheduling of major installation
equipment, including cranes or other devices, needed for project
construction, and provide a description of the startup and shakedown
specifications and process and the conditions required for startup and
shakedown for each equipment item individually and for the system as a
whole. Include a statement from the applicant certifying that equipment
installation will be made in accordance with all applicable safety and
work rules.

\(i\) [Operations and maintenance]{.underline}. Identify the operations
and maintenance requirements of the system necessary for the system to
operate as designed over the design life. The application must:

RD Instruction 4280-B

Appendix B

Page 45

\(1\) Ensure that systems must have at least a 3-year warranty for
equipment. Provide information regarding turbine warranties and
availability of spare parts;

\(2\) Describe the routine operations and maintenance requirements of
the proposed project, including maintenance schedules for the mechanical
and electrical systems and system monitoring and control requirements;

\(3\) Provide information that supports expected design life of the
system and timing of major component replacement or rebuilds;

\(4\) Provide and discuss the risk management plan for handling large,
potential failures of major components such as the turbine gearbox or
rotor. Include in the discussion, costs and labor associated with the
operation and maintenance of the system, and plans for in-sourcing or
out-sourcing;

\(5\) Describe opportunities for technology transfer for long-term
project operations and maintenance by a local entity or owner/operator;
and

\(6\) For owner maintained portions of the system, describe any unique
knowledge, skills, or abilities needed for service operations or
maintenance.

\(j\) [Dismantling and disposal of project components]{.underline}.
Describe a plan for dismantling and disposing of project components and
associated wastes at the end of their useful lives. Describe the budget
for and any unique concerns associated with the dismantling and disposal
of project components and their wastes.

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RD Instruction 4280-B

Appendix B

Page 46

Section 10. Energy Efficiency Improvements

The technical requirements specified in this section apply to projects
that involve energy efficiency improvements, which are, as defined in
§ 4280.103, improvements to a facility, building, or process that
reduces energy consumption. The system engineering for such projects
must be performed by a qualified party or certified Professional
Engineer.

\(a\) [Qualifications of project team]{.underline}. The energy
efficiency project team is expected to consist of an energy auditor or
other service provider, a project manager, an equipment supplier of
major components, a project engineer, and a construction contractor or
system installer. One individual or entity may serve more than one role.
Authoritative evidence that project team service providers have the
necessary professional credentials or relevant experience to perform the
required services must be provided. Authoritative evidence that vendors
of proprietary components can provide necessary equipment and spare
parts for the system to operate over its design life must also be
provided. The application must:

\(1\) Discuss the qualifications of the various project team members,
including any relevant certifications by recognized organizations;

\(2\) Describe qualifications or experience of the team as related to
installation, service, operation and maintenance of the project;

\(3\) Provide a list of the same or similarly engineered projects
designed, installed, or supplied by the team or by team members and
currently operating. Provide references if available; and

\(4\) Discuss the manufacturers of major energy efficiency equipment
being considered, including length of time in business.

\(b\) [Agreements, permits, and certifications]{.underline}. Identify
all necessary agreements and permits required for the energy efficiency
improvement(s) and the status and anticipated schedule for securing
those agreements and permits, including the items specified in
paragraphs (b)(1) through (4). The applicant must also submit a
statement certifying that the applicant will comply with all necessary
agreements and permits for the energy efficiency improvement(s).

\(1\) Identify building code, electrical code, and zoning issues and
required permits, and the anticipated schedule for meeting those
requirements and securing those permits.

\(2\) Identify available component warranties for the specific project
location and size.

RD Instruction 4280-B

Appendix B

Page 47

\(3\) Identify all environmental issues, including environmental
compliance issues, associated with the project on Form RD 1940-20,
"Request for Environmental Information," and in compliance with 7 CFR
part 1940, subpart G, of this title.

\(4\) Submit a statement certifying that the project will be installed
in accordance with applicable local, State, and national codes and
regulations.

\(c\) [Energy assessment]{.underline}. Provide adequate and appropriate
evidence of energy savings expected when the system is operated as
designed.

\(1\) Provide information on baseline energy usage (preferably including
energy bills for at least 1 year), expected energy savings based on
manufacturers specifications or other estimates, estimated dollars saved
per year, and payback period in years (total investment cost equal to
cumulative total dollars of energy savings). Calculation of energy
savings should follow accepted methodology and practices. System
interactions should be considered and discussed.

\(2\) For energy efficiency improvement projects with total eligible
project costs greater than \$50,000, an energy audit is required. An
energy audit is a written report by an independent, qualified party that
documents current energy usage, recommended potential improvements and
their costs, energy savings from these improvements, dollars saved per
year, and simple payback period in years (total costs divided by annual
dollars of energy savings). The methodology of the energy audit must
meet professional and industry standards. The energy audit must cover
the following:

\(i\) [Situation report]{.underline}. Provide a narrative description of
the facility or process, its energy system(s) and usage, and activity
profile. Also include price per unit of energy (electricity, natural
gas, propane, fuel oil, renewable energy, etc.,) paid by the customer on
the date of the audit. Any energy conversion should be based on use
rather than source.

\(ii\) [Potential improvements]{.underline}. List specific information
on all potential energy-saving opportunities and their costs.

\(iii\) [Technical analysis]{.underline}. Give consideration to the
interactions among the potential improvements and other energy systems:

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RD Instruction 4280-B

Appendix B

Page 48

\(A\) Estimate the annual energy and energy costs savings expected from
each improvement identified in the potential project;

\(B\) Calculate all direct and attendant indirect costs of each
improvement; and

\(C\) Rank potential improvements measures by cost-effectiveness.

\(iv\) [Potential improvement description]{.underline}. Provide a
narrative summary of the potential improvement and its ability to
provide needed benefits, including a discussion of nonenergy benefits
such as project reliability and durability.

\(A\) Provide preliminary specifications for critical components.

\(B\) Provide preliminary drawings of project layout, including any
related structural changes.

\(C\) Document baseline data compared to projected consumption, together
with any explanatory notes. When appropriate, show before-and-after data
in terms of consumption per unit of production, time or area. Include at
least 1 year\'s bills for those energy sources/fuel types affected by
this project. Also submit utility rate schedules, if appropriate.

\(D\) Identify significant changes in future related operations and
maintenance costs.

\(E\) Describe explicitly how outcomes will be measured.

\(3\) For energy efficiency improvement projects with total eligible
project costs equal to or less than \$50,000, an energy assessment or
energy audit is required. If an energy assessment is performed, provide
adequate and appropriate evidence of energy savings expected when the
system is operated as designed. If an energy audit is performed, it must
follow the requirements specified in paragraph (c)(2).

\(d\) [Design and engineering]{.underline}. Provide authoritative
evidence that the energy efficiency improvement(s) will be designed and
engineered so as to meet its intended purpose, will ensure public
safety, and will comply with applicable laws, regulations, agreements,
permits, codes, and standards.

\(1\) Energy efficiency improvement projects in excess of \$50,000 must
be engineered by a qualified party. Systems must be engineered as a
complete, integrated system with matched components.

RD Instruction 4280-B

Appendix B

Page 49

\(2\) For all energy efficiency improvement projects, identify and
itemize major energy efficiency improvements, including associated
project costs. Specifically delineate which costs of the project are
directly associated with energy efficiency improvements. Describe the
components, materials or systems to be installed and how they improve
the energy efficiency of the process or facility being modified. Discuss
passive improvements that reduce energy loads, such as improving the
thermal efficiency of a storage facility, and active improvements that
directly reduce energy consumption, such as replacing existing energy
consuming equipment with high efficiency equipment, as separate topics.
Discuss any anticipated synergy between active and passive improvements
or other energy systems. Include in the discussion any change in on-site
effluents, pollutants, or other by-products.

\(3\) Identify possible suppliers and models of major pieces of
equipment.

\(e\) [Project development schedule]{.underline}. Identify each
significant task, its beginning and end, and its relationship to the
time needed to initiate and carry the project through startup and
shakedown. Provide a detailed description of the project timeline,
including energy audit (if applicable), system and site design, permits
and agreements, equipment procurement, and system installation from site
preparation through startup and shakedown.

#### 

#### (f) [Project economic assessment]{.underline}. For projects whose total eligible costs are greater than \$50,000, provide an analysis of the proposed project to demonstrate its financial performance, including the calculation of simple payback. The analysis should include applicable investment incentives, productivity incentives, loans and grants, and expected energy offsets or sales on a monthly and annual basis. In addition, provide other information necessary to assess the project's cost effectiveness. 

(07-18-05) SPECIAL PN

RD Instruction 4280-B

Appendix B

Page 50

\(g\) [Equipment procurement]{.underline}. Demonstrate that equipment
required for the energy efficiency improvement(s) is available and can
be procured and delivered within the proposed project development
schedule. Energy efficiency improvements may be constructed of
components manufactured in more than one location. Provide a description
of any unique equipment procurement issues such as scheduling and timing
of component manufacture and delivery, ordering, warranties, shipping,
receiving, and on-site storage or inventory. Provide a detailed
description of equipment certification. Identify all the major equipment
that is proprietary and justify how this unique equipment is needed to
meet the requirements of the proposed design. Include a statement from
the applicant certifying that "open and free" competition will be used
for the procurement of project components in a manner consistent with
the requirements of 7 CFR part 3015 of this title.

\(h\) [Equipment installation]{.underline}. Describe fully the
management of and plan for installation of the energy efficiency
improvement(s), identify specific issues associated with installation,
provide details regarding the scheduling of major installation equipment
needed for project discussion, and provide a description of the startup
and shakedown specifications and process and the conditions required for
startup and shakedown for each equipment item individually and for the
system as a whole. Include in this discussion any unique concerns, such
as the effects of energy efficiency improvements on system power
quality. Include a statement from the applicant certifying that
equipment installation will be made in accordance with all applicable
safety and work rules.

\(i\) [Operations and maintenance]{.underline}. Identify the operations
and maintenance requirements of the energy efficiency improvement(s)
necessary for the energy efficiency improvement(s) to perform as
designed over the design life. The application must:

\(1\) Provide information regarding component warranties and the
availability of spare parts;

\(2\) Describe the routine operation and maintenance requirements of the
proposed project, including maintenance schedules for the mechanical and
electrical systems and system monitoring and control requirements;

\(3\) Provide information that supports expected design life of the
improvement(s) and timing of major component replacement or rebuilds;

RD Instruction 4280-B

Appendix B

Page 51

\(4\) Provide and discuss the risk management plan for handling large,
potential failures of major components. Include in the discussion, costs
and labor associated with the operation and maintenance of the
improvement(s), and plans for in-sourcing or out-sourcing; and

\(5\) For owner maintained portions of the improvement(s), describe any
unique knowledge, skills, or abilities needed for service operations or
maintenance.

\(j\) [Dismantling and disposal of project components]{.underline}.
Describe a plan for dismantling and disposing of project components and
associated wastes at the end of their useful lives. Describe the budget
for and any unique concerns associated with the dismantling and disposal
of project components and their wastes.

oOo

(07-18-05) SPECIAL PN

*RD Instruction 4280-B*

*Appendix C*

*Page 1*

***Renewable Energy and Energy Efficiency Improvement Program***

***Evaluation Criteria Scoring Guideline***

*Per 4280-B Regulation*

***Name of
Applicant:\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_***

***Type of
Technology:\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_***

***Funding
Request:\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_***

***Final Total Score (sum of Categories 1-10):***

*List the maximum points the applicant is eligible for under each of the
following ten categories, sum the individual scores, and place the total
in the above box under "Final Total Score."*

***(1) Quantity of Energy Replaced, Produced, or Saved***

*Points may only be awarded for one category (A, B, or C).*

*(A) Energy replacement*

*If the proposed renewable energy system is intended primarily for self
use by the agricultural producer or rural small business, and will
provide energy replacement of:*

  ------------------------------------------------------------ ----------
  *Greater than 0 but equal to or less than 25%, award 5       *Points*
  points.*                                                     

  *Greater than 25%, but equal to or less than 50%, award 10   
  points.*                                                     

  *Greater than 50%, award 15 points.*                         

  *Determine energy replacement by dividing the estimated      
  quantity of renewable energy to be generated over a 12-month 
  period by the estimated quantity of energy consumed over the 
  same 12-month period during the previous year by the         
  applicable energy application. The estimated quantities of   
  energy must be converted to British thermal units (BTU's),   
  Watts, or similar energy equivalents to facilitate scoring.  
  If the estimated energy produced equals more than 150% of    
  the energy requirements of the applicable process(es), score 
  the project as an energy generation project.*                
  ------------------------------------------------------------ ----------

*Attach the documentation to substantiate this score for this category.*

*You have identified this documentation via tab #\_\_\_\_\_\_\_.*

*Your explanation of points awarded to be entered into the tracking
system.*

***Or***

*(B) Energy Savings (include additional 5 points if applicable)*

*(1) If the estimated energy expected to be saved by the installation of
the energy efficiency improvements will be from:*

  -------------------------------------------------------------- ----------
  *20% up to but not including 30%, award 5 points.*             *Points*

  *30% up to but not including 35%, award 10 points.*            

  *35% or greater, award 15 points.*                             

  *Energy savings will be determined by the projections in an    
  energy assessment or audit.*                                   
  -------------------------------------------------------------- ----------

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*RD Instruction 4280-B*

*Appendix C*

*Page 2*

*(2) Additional points.*

  -------------------------------------------------------------- ----------
  *If the project has total eligible project costs of \$50,000   *Points*
  or less AND opts to obtain a professional energy audit,        
  **award an additional 5 points**.*                             

  -------------------------------------------------------------- ----------

*Attach the documentation to substantiate this score for this category.*

*You have identified this documentation via tab #\_\_\_\_\_\_\_.*

*Your explanation of points awarded to be entered into the tracking
system.*

***Or***

*(C) Energy generation*

  -------------------------------------------------------------- ----------
  *If the proposed renewable energy system is intended primarily *Points*
  for production of energy for sale, award 10 points.*           

  -------------------------------------------------------------- ----------

*Attach the documentation to substantiate this score for this category.*

*You have identified this documentation via tab #\_\_\_\_\_\_\_.*

*Your explanation of points awarded to be entered into the tracking
system.*

***(2) Environmental benefits***

  -------------------------------------------------------------- ----------
  *If the purpose of the proposed system contributes to the      *Points*
  environmental goals and objectives of other Federal, State, or 
  local programs, award 10 points.*                              

  *Award points only if the applicant provides documentation     
  from an appropriate authority supporting this claim.*          
  -------------------------------------------------------------- ----------

*Attach the documentation to substantiate this score for this category.*

*You have identified this documentation via tab #\_\_\_\_\_\_\_.*

*Your explanation of points awarded to be entered into the tracking
system.*

***(3) Commercial availability***

  --------------------------------------------------------------- ----------
  *If the proposed system or improvement is currently             *Points*
  commercially available and replicable, award 5 points.*         

  *If the proposed system or improvement is commercially          
  available and replicable and is also provided with a 5-year or  
  longer warranty providing the purchaser protection against      
  system degradation or breakdown or component breakdown, award   
  10 points.*                                                     
  --------------------------------------------------------------- ----------

*Attach the documentation to substantiate this score for this category.*

*You have identified this documentation via tab #\_\_\_\_\_\_\_.*

*Your explanation of points awarded to be entered into the tracking
system.*

***(4) Technical Merit --** [Score each paragraph (A) through (J) within
this category according to the following rules.]{.underline} The
contents of the Technical report will substantiate the score for
technical merit. The total possible points for Technical Merit is 35.*

*RD Instruction 4280-B*

*Appendix C*

*Page 3*

***Scoring Rules for Technical Merit***

  -------------------------------------------------- --------------------
  ***If the description in the subparagraph ...***   ***Award***

  *Has no significant weaknesses and exceeds the     ***100%** of the
  requirements of the subparagraph,*                 total possible
                                                     score.*

  *Has one or more significant strengths, and meets  ***80%** of the
  the requirements of the subparagraph,*             total possible
                                                     score.*

  *Meets the basic requirements of the subparagraph, ***60%** of the
  but also has several weaknesses,*                  total possible
                                                     score.*

  *Is lacking in one or more critical aspects, key   ***40%** of the
  issues have not been addressed, but the            total possible
  description demonstrates some merit or strengths,* score.*

  *Has serious deficiencies, internal                ***20%** of the
  inconsistencies, or is missing information,*       total possible
                                                     score.*

  *Has no merit in this area,*                       ***0%** of the total
                                                     possible score.*
  -------------------------------------------------- --------------------

***Technical Merit Scoresheet***

  --------------------------------------------- ------------ ------------ ------------
  ***The 10 subparagraphs which are the basis   ***Maximum   ***% of      ***Score
  for evaluation.***                            possible     score        Awarded***
                                                score***     awarded***   

  *(A) **Qualifications of the project team.**  *10*                      
  The applicant has described the project team                            
  service providers, their professional                                   
  credentials, and relevant experience. The                               
  description supports that the project team                              
  service, equipment, and installation                                    
  providers have the necessary professional                               
  credentials, licenses, certifications, or                               
  relevant experience to develop the proposed                             
  project.*                                                               

  *(B) **Agreements and Permits**. The          *5*                       
  applicant has described the necessary                                   
  agreements and permits required for the                                 
  project and the schedule for securing those                             
  agreements and permits.*                                                

  *(C) **Energy or Resource Assessment.** The   *10*                      
  applicant has described the quality and                                 
  availability of a suitable renewable resource                           
  or an assessment of expected energy savings                             
  for the proposed system.*                                               
  --------------------------------------------- ------------ ------------ ------------

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*RD Instruction 4280-B*

*Appendix C*

*Page 4*

***Technical Merit Scoresheet (concluded)***

  --------------------------------------------- ------------ ------------ ------------
  ***The 10 subparagraphs which are the basis   ***Maximum   ***% of      ***Score
  for evaluation.***                            possible     score        Awarded***
                                                score***     awarded***   

  *(D) **Design and Engineering**. The          *30*                      
  applicant has described the design,                                     
  engineering, and testing needed for the                                 
  proposed project. The description supports                              
  that the system will be designed, engineered,                           
  and tested so as to meet its intended                                   
  purpose, ensure public safety, and comply                               
  with applicable laws, regulations,                                      
  agreements, permits, codes, and standards.*                             

  *(E) **Project Development Schedule.** The    *5*                       
  applicant has described the development                                 
  method, including the key project development                           
  activities and the proposed schedule for each                           
  activity. The description identifies each                               
  significant task, its beginning and end, and                            
  its relationship to the time needed to                                  
  initiate and carry the project through to                               
  successful completion. The description                                  
  addresses grantee or borrower project                                   
  development cashflow requirements.*                                     

  *(F) **Project Economic Assessment.** The     *20*                      
  applicant has described the financial                                   
  performance of the proposed project,                                    
  including the calculation of simple payback.                            
  The description addresses project costs and                             
  revenues, such as applicable investment and                             
  production incentives, and other information                            
  to allow the assessment of the project's cost                           
  effectiveness.*                                                         

  *(G) **Equipment Procurement.** The applicant *5*                       
  has described the availability of the                                   
  equipment required by the system. The                                   
  description supports that the required                                  
  equipment is available, and can be procured                             
  and delivered within the proposed project                               
  development schedule.*                                                  

  *(H) **Equipment Installation.** The          *5*                       
  applicant has described the plan for site                               
  development and system installation.*                                   

  *(I) **Operations and Maintenance.** The      *5*                       
  applicant has described the operations and                              
  maintenance requirements of the system                                  
  necessary for the system to operate as                                  
  designed over the design life.*                                         
  --------------------------------------------- ------------ ------------ ------------

*RD Instruction 4280-B*

*Appendix C*

*Page 5*

+---------------------------------------------+--------+-------+-------+
| ***The 10 subparagraphs which are the basis | ***M   | ***%  | ***   |
| for evaluation.***                          | aximum | of    | Score |
|                                             | po     | score | Award |
|                                             | ssible | award | ed*** |
|                                             | sc     | ed*** |       |
|                                             | ore*** |       |       |
+---------------------------------------------+--------+-------+-------+
| *(J) **Dismantling and disposal of project  | *5*    |       |       |
| components.** The applicant has described   |        |       |       |
| the requirements for dismantling and        |        |       |       |
| disposing of project components at the end  |        |       |       |
| of their useful lives and associated        |        |       |       |
| wastes.*                                    |        |       |       |
+---------------------------------------------+--------+-------+-------+
| *Total Possible Score*                      | *100*  | *     |       |
|                                             |        | Total |       |
|                                             |        | Score |       |
|                                             |        | Awa   |       |
|                                             |        | rded* |       |
+---------------------------------------------+--------+-------+-------+
|                                             |        |       |       |
+---------------------------------------------+--------+-------+-------+
| *[Total Score Awarded]{.underline}          |        | ***P  |       |
| [\_\_\_\_]{.underline} = \_\_\_ % X 35      |        | oints |       |
| total possible =*                           |        | award |       |
|                                             |        | ed*** |       |
| *Total Possible Score 100 points*           |        |       |       |
+---------------------------------------------+--------+-------+-------+

*Attach the documentation to substantiate this score for this category.*

*You have identified this documentation via tab #\_\_\_\_\_\_\_.*

*Your explanation of points awarded to be entered into the tracking
system.*

***(5) Readiness (Grants only)***

*If the applicant has written commitments, prior to the Agency receiving
the complete application, from the source(s) confirming commitment of:*

  -------------------------------------------------------------- ----------
  *50% up to, but not including, 75% of the matching funds,      *Points*
  award 5 points.*                                               

  *75% up to, but not including, 100% of the matching funds,     
  award 10 points.*                                              

  *100% of the matching funds, award 15 points.*                 
  -------------------------------------------------------------- ----------

*Attach the documentation to substantiate this score for this category.*

*You have identified this documentation via tab #\_\_\_\_\_\_\_.*

*Your explanation of points awarded to be entered into the tracking
system.*

***(6) Small Agricultural Producer/Very Small Rural Business***

*If the applicant is an agricultural producer producing agricultural
products with a gross market value of:*

  -------------------------------------------------------------- --------
  *less than \$600,000 in the preceding year, award 5 points.*   

  *less than \$200,000 in the preceding year, **OR** is a Very   
  Small Rural Business as defined in 4280.103 (a business with   
  less than 15 employees and less than \$1 million in annual     
  receipts), award 10 points.*                                   
  -------------------------------------------------------------- --------

*Attach the documentation to substantiate this score for this category.*

*You have identified this documentation via tab #\_\_\_\_\_\_\_.*

*Your explanation of points awarded to be entered into the tracking
system.*

(07-18-05) SPECIAL PN

*RD Instruction 4280-B*

*Appendix C*

*Page 6*

***(7) Simplified application***

  -------------------------------------------------------------- ----------
  *If an applicant is eligible for and uses the simplified       *Points*
  application process or if the project has total eligible       
  project costs of \$200,000 or less, award 5 points.*           

  -------------------------------------------------------------- ----------

*Attach the documentation to substantiate this score for this category.*

*You have identified this documentation via tab #\_\_\_\_\_\_\_.*

*Your explanation of points awarded to be entered into the tracking
system.*

\(8\) Previous grantees and borrowers

  -------------------------------------------------------------- ----------
  *If the applicant has not been awarded a grant or loan under   *Points*
  this program within the 2 previous Federal fiscal years, award 
  5 points.*                                                     

  -------------------------------------------------------------- ----------

*Attach the documentation to substantiate this score for this category.*

*You have identified this documentation via tab #\_\_\_\_\_\_\_.*

*Your explanation of points awarded to be entered into the tracking
system.*

***(9) Return on investment***

*If the proposed project will return the cost of investment in*

  -------------------------------------------------------------- ----------
  *Less than 4 years, award 10 points.*                          *Points*

  *4 years up to but not including 8 years, award 4 points.*     

  *8 years up to 11 years, award 2 point.*                       
  -------------------------------------------------------------- ----------

*Attach the documentation to substantiate this score for this category.*

*You have identified this documentation via tab #\_\_\_\_\_\_\_.*

*Your explanation of points awarded to be entered into the tracking
system.*

\(10\) Loan Rate (Guaranteed Loans only; 4280.129 (e)):

+--------------------------------------------------------------+-------+
| *If the rate of the loan is below the Prime Rate (as         | *Po   |
| published in the Wall Street Journal) plus 1.5 percent,      | ints* |
| award 5 points;*                                             |       |
|                                                              |       |
| ***OR***                                                     |       |
+--------------------------------------------------------------+-------+
| *If the rate of the loan below the Prime Rate (as published  |       |
| in the Wall Street Journal) plus 1 percent, award 10         |       |
| points.*                                                     |       |
+--------------------------------------------------------------+-------+

*Attach the documentation to substantiate this score for this category.*

*You have identified this documentation via tab #\_\_\_\_\_\_\_.*

*Your explanation of points awarded to be entered into the tracking
system.*

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