# Energy Independence and Security Act of 2007/Title XII
## TITLE XII — SMALL BUSINESS ENERGY PROGRAMS
### Sec. 1201. Express Loans for Renewable Energy and Energy Efficiency.

    Section 7(a)(31) of the Small Business Administration (15 U.S.C. 636(a)(31)) is amended by adding at the end the following:
    ‘‘(F) EXPRESS LOANS FOR RENEWABLE ENERGY AND ENERGY EFFICIENCY.—
          ‘‘(i) DEFINITIONS.— In this subparagraph—
                ‘‘(I) the term `biomass'—
                      ‘‘(aa) means any organic material that is available on a renewable or recurring basis, including—
                            ‘‘(AA) agricultural crops;
                            ‘‘(BB) trees grown for energy production;
                            ‘‘(CC) wood waste and wood residues;
                            ‘‘(DD) plants (including aquatic plants and grasses);
                            ‘‘(EE) residues;
                            ‘‘(FF) fibers;
                            ‘‘(GG) animal wastes and other waste materials; and
                            ‘‘(HH) fats, oils, and greases (including recycled fats, oils, and greases); and
                      ‘‘(bb) does not include—
                            ‘‘(AA) paper that is commonly recycled; or
                            ‘‘(BB) unsegregated solid waste;
                ‘‘(II) the term `energy efficiency project' means the installation or upgrading of equipment that results in a significant reduction in energy usage; and
                ‘‘(III) the term `renewable energy system' means a system of energy derived from—
                      ‘‘(aa) a wind, solar, biomass (including biodiesel), or geothermal source; or
                      ‘‘(bb) hydrogen derived from biomass or water using an energy source described in item (aa).
          ‘‘(ii) LOANS.— The Administrator may make a loan under the Express Loan Program for the purpose of—
                ‘‘(I) purchasing a renewable energy system; or
                ‘‘(II) carrying out an energy efficiency project for a small business concern.’’.

### Sec. 1202. Pilot Program for Reduced 7(a) Fees for Purchase of Energy Efficient Technologies.

    Section 7(a) of the Small Business Act (15 U.S.C. 636(a)) is amended by adding at the end the following:
          ‘‘(32) LOANS FOR ENERGY EFFICIENT TECHNOLOGIES.—
                ‘‘(A) DEFINITIONS.— In this paragraph—
                      ‘‘(i) the term `cost' has the meaning given that term in section 502 of the Federal Credit Reform Act of 1990 (2 U.S.C. 661a);
                      ‘‘(ii) the term `covered energy efficiency loan' means a loan—
                            ‘‘(I) made under this subsection; and
                            ‘‘(II) the proceeds of which are used to purchase energy efficient designs, equipment, or fixtures, or to reduce the energy consumption of the borrower by 10 percent or more; and
                      ‘‘(iii) the term `pilot program' means the pilot program established under subparagraph (B)
                ‘‘(B) ESTABLISHMENT.— The Administrator shall establish and carry out a pilot program under which the Administrator shall reduce the fees for covered energy efficiency loans.
                ‘‘(C) DURATION.— The pilot program shall terminate at the end of the second full fiscal year after the date that the Administrator establishes the pilot program.
                ‘‘(D) MAXIMUM PARTICIPATION.— A covered energy efficiency loan shall include the maximum participation levels by the Administrator permitted for loans made under this subsection.
                ‘‘(E) FEES.—
                      ‘‘(i) IN GENERAL.— The fee on a covered energy efficiency loan shall be equal to 50 percent of the fee otherwise applicable to that loan under paragraph (18).
                      ‘‘(ii) WAIVER.— The Administrator may waive clause (i) for a fiscal year if—
                            ‘‘(I) for the fiscal year before that fiscal year, the annual rate of default of covered energy efficiency loans exceeds that of loans made under this subsection that are not covered energy efficiency loans;
                            ‘‘(II) the cost to the Administration of making loans under this subsection is greater than zero and such cost is directly attributable to the cost of making covered energy efficiency loans; and
                            ‘‘(III) no additional sources of revenue authority are available to reduce the cost of making loans under this subsection to zero.
                      ‘‘(iii) EFFECT OF WAIVER.— If the Administrator waives the reduction of fees under clause (ii), the Administrator—
                            ‘‘(I) shall not assess or collect fees in an amount greater than necessary to ensure that the cost of the program under this subsection is not greater than zero; and
                            ‘‘(II) shall reinstate the fee reductions under clause (i) when the conditions in clause (ii) no longer apply.
                      ‘‘(iv) NO INCREASE OF FEES.— The Administrator shall not increase the fees under paragraph (18) on loans made under this subsection that are not covered energy efficiency loans as a direct result of the pilot program.
                ‘‘(F) GAO REPORT.—
                      ‘‘(i) IN GENERAL.— Not later than 1 year after the date that the pilot program terminates, the Comptroller General of the United States shall submit to the Committee on Small Business of the House of Representatives and the Committee on Small Business and Entrepreneurship of the Senate a report on the pilot program.
                      ‘‘(ii) CONTENTS.— The report submitted under clause (i) shall include—
                            ‘‘(I) the number of covered energy efficiency loans for which fees were reduced under the pilot program;
                            ‘‘(II) a description of the energy efficiency savings with the pilot program;
                            ‘‘(III) a description of the impact of the pilot program on the program under this subsection;
                            ‘‘(IV) an evaluation of the efficacy and potential fraud and abuse of the pilot program; and
                            ‘‘(V) recommendations for improving the pilot program.’’.

### Sec. 1203. Small Business Energy Efficiency.

    (a) Definitions.—
       In this section—
          (1) the terms `Administration' and `Administrator' mean the Small Business Administration and the Administrator thereof, respectively;
          (2) the term `association' means the association of small business development centers established under section 21(a)(3)(A) of the Small Business Act (15 U.S.C. 648(a)(3)(A));
          (3) the term `disability' has the meaning given that term in section 3 of the Americans with Disabilities Act of 1990 (42 U.S.C. 12102);
          (4) the term `Efficiency Program' means the Small Business Energy Efficiency Program established under subsection (c)(1);
          (5) the term `electric utility' has the meaning given that term in section 3 of the Public Utility Regulatory Policies Act of 1978 (16 U.S.C. 2602);
          (6) the term `high performance green building' has the meaning given that term in section 401;
          (7) the term `on-bill financing' means a low interest or no interest financing agreement between a small business concern and an electric utility for the purchase or installation of equipment, under which the regularly scheduled payment of that small business concern to that electric utility is not reduced by the amount of the reduction in cost attributable to the new equipment and that amount is credited to the electric utility, until the cost of the purchase or installation is repaid;
          (8) the term `small business concern' has the same meaning as in section 3 of the Small Business Act (15 U.S.C. 632);
          (9) the term `small business development center' means a small business development center described in section 21 of the Small Business Act (15 U.S.C. 648);
          (10) the term `telecommuting' means the use of telecommunications to perform work functions under circumstances which reduce or eliminate the need to commute;
          (11) the term `Telecommuting Pilot Program' means the pilot program established under subsection (d)(1)(A); and
          (12) the term `veteran' has the meaning given that term in section 101 of title 38, United States Code.
    (b) Implementation of Small Business Energy Efficiency Program.—
          (1) IN GENERAL.—
             Not later than 90 days after the date of enactment of this Act, the Administrator shall promulgate final rules establishing the Government-wide program authorized under subsection (d) of section 337 of the Energy Policy and Conservation Act (42 U.S.C. 6307) that ensure compliance with that subsection by not later than 6 months after such date of enactment.
          (2) PROGRAM REQUIRED.—
             The Administrator shall develop and coordinate a Government-wide program, building on the Energy Star for Small Business program, to assist small business concerns in—
                (A) becoming more energy efficient;
                (B) understanding the cost savings from improved energy efficiency; and
                (C) identifying financing options for energy efficiency upgrades.
          (3) CONSULTATION AND COOPERATION.—
             The program required by paragraph (2) shall be developed and coordinated—
                (A) in consultation with the Secretary of Energy and the Administrator of the Environmental Protection Agency; and
                (B) in cooperation with any entities the Administrator considers appropriate, such as industry trade associations, industry members, and energy efficiency organizations.
          (4) AVAILABILITY OF INFORMATION.—
             The Administrator shall make available the information and materials developed under the program required by paragraph (2) to—
                (A) small business concerns, including smaller design, engineering, and construction firms; and
                (B) other Federal programs for energy efficiency, such as the Energy Star for Small Business program.
          (5) STRATEGY AND REPORT.—
                (A) STRATEGY REQUIRED.—
                   The Administrator shall develop a strategy to educate, encourage, and assist small business concerns in adopting energy efficient building fixtures and equipment.
                (B) REPORT.—
                   Not later than December 31, 2008, the Administrator shall submit to Congress a report containing a plan to implement the strategy developed under subparagraph (A).
    (c) Small Business Sustainability Initiative.—
          (1) AUTHORITY.—
             The Administrator shall establish a Small Business Energy Efficiency Program to provide energy efficiency assistance to small business concerns through small business development centers.
          (2) SMALL BUSINESS DEVELOPMENT CENTERS.—
                (A) IN GENERAL.—
                   In carrying out the Efficiency Program, the Administrator shall enter into agreements with small business development centers under which such centers shall—
                      (i) provide access to information and resources on energy efficiency practices, including on-bill financing options;
                      (ii) conduct training and educational activities;
                      (iii) offer confidential, free, one-on-one, in-depth energy audits to the owners and operators of small business concerns regarding energy efficiency practices;
                      (iv) give referrals to certified professionals and other providers of energy efficiency assistance who meet such standards for educational, technical, and professional competency as the Administrator shall establish;
                      (v) to the extent not inconsistent with controlling State public utility regulations, act as a facilitator between small business concerns, electric utilities, lenders, and the Administration to facilitate on-bill financing arrangements;
                      (vi) provide necessary support to small business concerns to—
                            (I) evaluate energy efficiency opportunities and opportunities to design or construct high performance green buildings;
                            (II) evaluate renewable energy sources, such as the use of solar and small wind to supplement power consumption;
                            (III) secure financing to achieve energy efficiency or to design or construct high performance green buildings; and
                            (IV) implement energy efficiency projects;
                      (vii) assist owners of small business concerns with the development and commercialization of clean technology products, goods, services, and processes that use renewable energy sources, dramatically reduce the use of natural resources, and cut or eliminate greenhouse gas emissions through—
                            (I) technology assessment;
                            (II) intellectual property;
                            (III) Small Business Innovation Research submissions under section 9 of the Small Business Act (15 U.S.C. 638);
                            (IV) strategic alliances;
                            (V) business model development; and
                            (VI) preparation for investors; and
                      (viii) help small business concerns improve environmental performance by shifting to less hazardous materials and reducing waste and emissions, including by providing assistance for small business concerns to adapt the materials they use, the processes they operate, and the products and services they produce.
                (B) REPORTS.—
                   Each small business development center participating in the Efficiency Program shall submit to the Administrator and the Administrator of the Environmental Protection Agency an annual report that includes—
                      (i) a summary of the energy efficiency assistance provided by that center under the Efficiency Program;
                      (ii) the number of small business concerns assisted by that center under the Efficiency Program;
                      (iii) statistics on the total amount of energy saved as a result of assistance provided by that center under the Efficiency Program; and
                      (iv) any additional information determined necessary by the Administrator, in consultation with the association.
                (C) REPORTS TO CONGRESS.—
                   Not later than 60 days after the date on which all reports under subparagraph (B) relating to a year are submitted, the Administrator shall submit to the Committee on Small Business and Entrepreneurship of the Senate and the Committee on Small Business of the House of Representatives a report summarizing the information regarding the Efficiency Program submitted by small business development centers participating in that program.
          (3) ELIGIBILITY.—
             A small business development center shall be eligible to participate in the Efficiency Program only if that center is certified under section 21(k)(2) of the Small Business Act (15 U.S.C. 648(k)(2)).
          (4) SELECTION OF PARTICIPATING STATE PROGRAMS.—
             From among small business development centers submitting applications to participate in the Efficiency Program, the Administrator—
                (A) shall, to the maximum extent practicable, select small business development centers in such a manner so as to promote a nationwide distribution of centers participating in the Efficiency Program; and
                (B) may not select more than 1 small business development center in a State to participate in the Efficiency Program.
          (5) MATCHING REQUIREMENT.—
             Subparagraphs (A) and (B) of section 21(a)(4) of the Small Business Act (15 U.S.C. 648(a)(4)) shall apply to assistance made available under the Efficiency Program.
          (6) GRANT AMOUNTS.—
             Each small business development center selected to participate in the Efficiency Program under paragraph (4) shall be eligible to receive a grant in an amount equal to—
                (A) not less than $100,000 in each fiscal year; and
                (B) not more than $300,000 in each fiscal year.
          (7) EVALUATION AND REPORT.—
             The Comptroller General of the United States shall—
                (A) not later than 30 months after the date of disbursement of the first grant under the Efficiency Program, initiate an evaluation of that program; and
                (B) not later than 6 months after the date of the initiation of the evaluation under subparagraph (A), submit to the Administrator, the Committee on Small Business and Entrepreneurship of the Senate, and the Committee on Small Business of the House of Representatives, a report containing—
                      (i) the results of the evaluation; and
                      (ii) any recommendations regarding whether the Efficiency Program, with or without modification, should be extended to include the participation of all small business development centers.
          (8) GUARANTEE.—
             To the extent not inconsistent with State law, the Administrator may guarantee the timely payment of a loan made to a small business concern through an on-bill financing agreement on such terms and conditions as the Administrator shall establish through a formal rulemaking, after providing notice and an opportunity for comment.
          (9) IMPLEMENTATION.—
             Subject to amounts approved in advance in appropriations Acts and separate from amounts approved to carry out section 21(a)(1) of the Small Business Act (15 U.S.C. 648(a)(1)), the Administrator may make grants or enter into cooperative agreements to carry out this subsection.
          (10) AUTHORIZATION OF APPROPRIATIONS.—
             There are authorized to be appropriated such sums as are necessary to make grants and enter into cooperative agreements to carry out this subsection.
          (11) TERMINATION.—
             The authority under this subsection shall terminate 4 years after the date of disbursement of the first grant under the Efficiency Program.
    (d) Small Business Telecommuting.—
          (1) PILOT PROGRAM.—
                (A) IN GENERAL.—
                   The Administrator shall conduct, in not more than 5 of the regions of the Administration, a pilot program to provide information regarding telecommuting to employers that are small business concerns and to encourage such employers to offer telecommuting options to employees.
                (B) SPECIAL OUTREACH TO INDIVIDUALS WITH DISABILITIES.—
                   In carrying out the Telecommuting Pilot Program, the Administrator shall make a concerted effort to provide information to—
                      (i) small business concerns owned by or employing individuals with disabilities, particularly veterans who are individuals with disabilities;
                      (ii) Federal, State, and local agencies having knowledge and expertise in assisting individuals with disabilities, including veterans who are individuals with disabilities; and
                      (iii) any group or organization, the primary purpose of which is to aid individuals with disabilities or veterans who are individuals with disabilities.
                (C) PERMISSIBLE ACTIVITIES.—
                   In carrying out the Telecommuting Pilot Program, the Administrator may—
                      (i) produce educational materials and conduct presentations designed to raise awareness in the small business community of the benefits and the ease of telecommuting;
                      (ii) conduct outreach—
                            (I) to small business concerns that are considering offering telecommuting options; and
                            (II) as provided in subparagraph (B); and
                      (iii) acquire telecommuting technologies and equipment to be used for demonstration purposes.
                (D) SELECTION OF REGIONS.—
                   In determining which regions will participate in the Telecommuting Pilot Program, the Administrator shall give priority consideration to regions in which Federal agencies and private-sector employers have demonstrated a strong regional commitment to telecommuting.
          (2) REPORT TO CONGRESS.—
             Not later than 2 years after the date on which funds are first appropriated to carry out this subsection, the Administrator shall transmit to the Committee on Small Business and Entrepreneurship of the Senate and the Committee on Small Business of the House of Representatives a report containing the results of an evaluation of the Telecommuting Pilot Program and any recommendations regarding whether the pilot program, with or without modification, should be extended to include the participation of all regions of the Administration.
          (3) TERMINATION.—
             The Telecommuting Pilot Program shall terminate 4 years after the date on which funds are first appropriated to carry out this subsection.
          (4) AUTHORIZATION OF APPROPRIATIONS.—
             There is authorized to be appropriated to the Administration $5,000,000 to carry out this subsection.
    (e) Encouraging Innovation in Energy Efficiency.—
       Section 9 of the Small Business Act (15 U.S.C. 638) is amended by adding at the end the following:
    ‘‘(z) Encouraging Innovation in Energy Efficiency.—
          ‘‘(1) FEDERAL AGENCY ENERGY-RELATED PRIORITY.— In carrying out its duties under this section relating to SBIR and STTR solicitations by Federal departments and agencies, the Administrator shall—
                ‘‘(A) ensure that such departments and agencies give high priority to small business concerns that participate in or conduct energy efficiency or renewable energy system research and development projects; and
                ‘‘(B) include in the annual report to Congress under subsection (b)(7) a determination of whether the priority described in subparagraph (A) is being carried out.
          ‘‘(2) CONSULTATION REQUIRED.— The Administrator shall consult with the heads of other Federal departments and agencies in determining whether priority has been given to small business concerns that participate in or conduct energy efficiency or renewable energy system research and development projects, as required by this subsection.
          ‘‘(3) GUIDELINES.— The Administrator shall, as soon as is practicable after the date of enactment of this subsection, issue guidelines and directives to assist Federal agencies in meeting the requirements of this subsection.
          ‘‘(4) DEFINITIONS.— In this subsection—
                ‘‘(A) the term `biomass'—
                      ‘‘(i) means any organic material that is available on a renewable or recurring basis, including—
                            ‘‘(I) agricultural crops;
                            ‘‘(II) trees grown for energy production;
                            ‘‘(III) wood waste and wood residues;
                            ‘‘(IV) plants (including aquatic plants and grasses);
                            ‘‘(V) residues;
                            ‘‘(VI) fibers;
                            ‘‘(VII) animal wastes and other waste materials; and
                            ‘‘(VIII) fats, oils, and greases (including recycled fats, oils, and greases); and
                      ‘‘(ii) does not include—
                            ‘‘(I) paper that is commonly recycled; or
                            ‘‘(II) unsegregated solid waste;
                ‘‘(B) the term `energy efficiency project' means the installation or upgrading of equipment that results in a significant reduction in energy usage; and
                ‘‘(C) the term `renewable energy system' means a system of energy derived from—
                      ‘‘(i) a wind, solar, biomass (including biodiesel), or geothermal source; or
                      ‘‘(ii) hydrogen derived from biomass or water using an energy source described in clause (i).’’.

### Sec. 1204. Larger 504 Loan Limits to Help Business Develop Energy Efficient Technologies and Purchases.

    (a) Eligibility for Energy Efficiency Projects.—
       Section 501(d)(3) of the Small Business Investment Act of 1958 (15 U.S.C. 695(d)(3)) is amended—
          (1) in subparagraph (G) by striking `or' at the end;
          (2) in subparagraph (H) by striking the period at the end and inserting a comma;
          (3) by inserting after subparagraph (H) the following:
                ‘‘(I) reduction of energy consumption by at least 10 percent,
                ‘‘(J) increased use of sustainable design, including designs that reduce the use of greenhouse gas emitting fossil fuels, or low-impact design to produce buildings that reduce the use of non-renewable resources and minimize environmental impact, or
                ‘‘(K) plant, equipment and process upgrades of renewable energy sources such as the small-scale production of energy for individual buildings or communities consumption, commonly known as micropower, or renewable fuels producers including biodiesel and ethanol producers.’’; and
          (4) by adding at the end the following: `In subparagraphs (J) and (K), terms have the meanings given those terms under the Leadership in Energy and Environmental Design (LEED) standard for green building certification, as determined by the Administrator.'.
    (b) Loans for Plant Projects Used for Energy-Efficient Purposes.—
       Section 502(2)(A) of the Small Business Investment Act of 1958 (15 U.S.C. 696(2)(A)) is amended—
          (1) in clause (ii) by striking `and' at the end;
          (2) in clause (iii) by striking the period at the end and inserting a semicolon; and
          (3) by adding at the end the following:
             ‘‘(iv) $4,000,000 for each project that reduces the borrower's energy consumption by at least 10 percent; and
             ‘‘(v) $4,000,000 for each project that generates renewable energy or renewable fuels, such as biodiesel or ethanol production.'.

### Sec. 1205. Energy Saving Debentures.

    (a) In General.—
       Section 303 of the Small Business Investment Act of 1958 (15 U.S.C. 683) is amended by adding at the end the following:
          ‘‘(k) Energy Saving Debentures- In addition to any other authority under this Act, a small business investment company licensed in the first fiscal year after the date of enactment of this subsection or any fiscal year thereafter may issue Energy Saving debentures.’’.
    (b) Definitions.—
       Section 103 of the Small Business Investment Act of 1958 (15 U.S.C. 662) is amended—
          (1) in paragraph (16), by striking `and' at the end;
          (2) in paragraph (17), by striking the period at the end and inserting a semicolon; and
          (3) by adding at the end the following:
          ‘‘(18) the term `Energy Saving debenture' means a deferred interest debenture that—
                ‘‘(A) is issued at a discount;
                ‘‘(B) has a 5-year maturity or a 10-year maturity;
                ‘‘(C) requires no interest payment or annual charge for the first 5 years;
                ‘‘(D) is restricted to Energy Saving qualified investments; and
                ‘‘(E) is issued at no cost (as defined in section 502 of the Credit Reform Act of 1990) with respect to purchasing and guaranteeing the debenture; and
          ‘‘(19) the term `Energy Saving qualified investment' means investment in a small business concern that is primarily engaged in researching, manufacturing, developing, or providing products, goods, or services that reduce the use or consumption of non-renewable energy resources.’’.

### Sec. 1206. Investments in Energy Saving Small Businesses.

    (a) Maximum Leverage.—
       Section 303(b)(2) of the Small Business Investment Act of 1958 (15 U.S.C. 303(b)(2)) is amended by adding at the end the following:
                ‘‘(D) INVESTMENTS IN ENERGY SAVING SMALL BUSINESSES.—
                      ‘‘(i) IN GENERAL.— Subject to clause (ii), in calculating the outstanding leverage of a company for purposes of subparagraph (A), the Administrator shall exclude the amount of the cost basis of any Energy Saving qualified investment in a smaller enterprise made in the first fiscal year after the date of enactment of this subparagraph or any fiscal year thereafter by a company licensed in the applicable fiscal year.
                      ‘‘(ii) LIMITATIONS.—
                            ‘‘(I) AMOUNT OF EXCLUSION.— The amount excluded under clause (i) for a company shall not exceed 33 percent of the private capital of that company.
                            ‘‘(II) MAXIMUM INVESTMENT.— A company shall not make an Energy Saving qualified investment in any one entity in an amount equal to more than 20 percent of the private capital of that company.
                            ‘‘(III) OTHER TERMS.— The exclusion of amounts under clause (i) shall be subject to such terms as the Administrator may impose to ensure that there is no cost (as that term is defined in section 502 of the Federal Credit Reform Act of 1990 (2 U.S.C. 661a)) with respect to purchasing or guaranteeing any debenture involved.’’.
    (b) Maximum Aggregate Amount of Leverage.—
       Section 303(b)(4) of the Small Business Investment Act of 1958 (15 U.S.C. 303(b)(4)) is amended by adding at the end the following:
                ‘‘(E) INVESTMENTS IN ENERGY SAVING SMALL BUSINESSES.—
                      ‘‘(i) IN GENERAL.— Subject to clause (ii), in calculating the aggregate outstanding leverage of a company for purposes of subparagraph (A), the Administrator shall exclude the amount of the cost basis of any Energy Saving qualified investment in a smaller enterprise made in the first fiscal year after the date of enactment of this subparagraph or any fiscal year thereafter by a company licensed in the applicable fiscal year.
                      ‘‘(ii) LIMITATIONS.—
                            ‘‘(I) AMOUNT OF EXCLUSION.— The amount excluded under clause (i) for a company shall not exceed 33 percent of the private capital of that company.
                            ‘‘(II) MAXIMUM INVESTMENT.— A company shall not make an Energy Saving qualified investment in any one entity in an amount equal to more than 20 percent of the private capital of that company.
                            ‘‘(III) OTHER TERMS.— The exclusion of amounts under clause (i) shall be subject to such terms as the Administrator may impose to ensure that there is no cost (as that term is defined in section 502 of the Federal Credit Reform Act of 1990 (2 U.S.C. 661a)) with respect to purchasing or guaranteeing any debenture involved.’’.

### Sec. 1207. Renewable Fuel Capital Investment Company.

    Title III of the Small Business Investment Act of 1958 (15 U.S.C. 681 et seq.) is amended by adding at the end the following:
‘‘PART C — RENEWABLE FUEL CAPITAL INVESTMENT PILOT PROGRAM
‘‘SEC. 381. DEFINITIONS.
    ‘‘In this part:
          ‘‘(1) OPERATIONAL ASSISTANCE.— The term ``operational assistance' means management, marketing, and other technical assistance that assists a small business concern with business development.
          ‘‘(2) PARTICIPATION AGREEMENT.— The term ``participation agreement' means an agreement, between the Administrator and a company granted final approval under section 384(e), that—
                ‘‘(A) details the operating plan and investment criteria of the company; and
                ‘‘(B) requires the company to make investments in smaller enterprises primarily engaged in researching, manufacturing, developing, producing, or bringing to market goods, products, or services that generate or support the production of renewable energy.
          ‘‘(3) RENEWABLE ENERGY.— The term ``renewable energy' means energy derived from resources that are regenerative or that cannot be depleted, including solar, wind, ethanol, and biodiesel fuels.
          ‘‘(4) RENEWABLE FUEL CAPITAL INVESTMENT COMPANY.— The term ``Renewable Fuel Capital Investment company' means a company—
                ‘‘(A) that—
                      ‘‘(i) has been granted final approval by the Administrator under section 384(e); and
                      ‘‘(ii) has entered into a participation agreement with the Administrator; or
                ‘‘(B) that has received conditional approval under section 384(c).
          ‘‘(5) STATE.— The term ``State' means each of the several States, the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, American Samoa, the Commonwealth of the Northern Mariana Islands, and any other commonwealth, territory, or possession of the United States.
          ‘‘(6) VENTURE CAPITAL.— The term ``venture capital' means capital in the form of equity capital investments, as that term is defined in section 303(g)(4).
‘‘SEC. 382. PURPOSES.
    ‘‘The purposes of the Renewable Fuel Capital Investment Program established under this part are—
          ‘‘(1) to promote the research, development, manufacture, production, and bringing to market of goods, products, or services that generate or support the production of renewable energy by encouraging venture capital investments in smaller enterprises primarily engaged such activities; and
          ‘‘(2) to establish a venture capital program, with the mission of addressing the unmet equity investment needs of smaller enterprises engaged in researching, developing, manufacturing, producing, and bringing to market goods, products, or services that generate or support the production of renewable energy, to be administered by the Administrator—
                ‘‘(A) to enter into participation agreements with Renewable Fuel Capital Investment companies;
                ‘‘(B) to guarantee debentures of Renewable Fuel Capital Investment companies to enable each such company to make venture capital investments in smaller enterprises engaged in the research, development, manufacture, production, and bringing to market of goods, products, or services that generate or support the production of renewable energy; and
                ‘‘(C) to make grants to Renewable Fuel Investment Capital companies, and to other entities, for the purpose of providing operational assistance to smaller enterprises financed, or expected to be financed, by such companies.
‘‘SEC. 383. ESTABLISHMENT.
    ‘‘The Administrator shall establish a Renewable Fuel Capital Investment Program, under which the Administrator may—
          ‘‘(1) enter into participation agreements for the purposes described in section 382; and
          ‘‘(2) guarantee the debentures issued by Renewable Fuel Capital Investment companies as provided in section 385.
‘‘SEC. 384. SELECTION OF RENEWABLE FUEL CAPITAL INVESTMENT COMPANIES.
    ‘‘(a) Eligibility.— A company is eligible to apply to be designated as a Renewable Fuel Capital Investment company if the company—
          ‘‘(1) is a newly formed for-profit entity or a newly formed for-profit subsidiary of an existing entity;
          ‘‘(2) has a management team with experience in alternative energy financing or relevant venture capital financing; and
          ‘‘(3) has a primary objective of investment in smaller enterprises that research, manufacture, develop, produce, or bring to market goods, products, or services that generate or support the production of renewable energy.
    ‘‘(b) Application.— A company desiring to be designated as a Renewable Fuel Capital Investment company shall submit an application to the Administrator that includes—
          ‘‘(1) a business plan describing how the company intends to make successful venture capital investments in smaller enterprises primarily engaged in the research, manufacture, development, production, or bringing to market of goods, products, or services that generate or support the production of renewable energy;
          ‘‘(2) information regarding the relevant venture capital qualifications and general reputation of the management of the company;
          ‘‘(3) a description of how the company intends to seek to address the unmet capital needs of the smaller enterprises served;
          ‘‘(4) a proposal describing how the company intends to use the grant funds provided under this part to provide operational assistance to smaller enterprises financed by the company, including information regarding whether the company has employees with appropriate professional licenses or will contract with another entity when the services of such an individual are necessary;
          ‘‘(5) with respect to binding commitments to be made to the company under this part, an estimate of the ratio of cash to in-kind contributions;
          ‘‘(6) a description of whether and to what extent the company meets the criteria under subsection (c)(2) and the objectives of the program established under this part;
          ‘‘(7) information regarding the management and financial strength of any parent firm, affiliated firm, or any other firm essential to the success of the business plan of the company; and
          ‘‘(8) such other information as the Administrator may require.
    ‘‘(c) Conditional Approval.—
          ‘‘(1) IN GENERAL.— From among companies submitting applications under subsection (b), the Administrator shall conditionally approve companies to operate as Renewable Fuel Capital Investment companies.
          ‘‘(2) SELECTION CRITERIA.— In conditionally approving companies under paragraph (1), the Administrator shall consider—
                ‘‘(A) the likelihood that the company will meet the goal of its business plan;
                ‘‘(B) the experience and background of the management team of the company;
                ‘‘(C) the need for venture capital investments in the geographic areas in which the company intends to invest;
                ‘‘(D) the extent to which the company will concentrate its activities on serving the geographic areas in which it intends to invest;
                ‘‘(E) the likelihood that the company will be able to satisfy the conditions under subsection (d);
                ‘‘(F) the extent to which the activities proposed by the company will expand economic opportunities in the geographic areas in which the company intends to invest;
                ‘‘(G) the strength of the proposal by the company to provide operational assistance under this part as the proposal relates to the ability of the company to meet applicable cash requirements and properly use in-kind contributions, including the use of resources for the services of licensed professionals, when necessary, whether provided by employees or contractors; and
                ‘‘(H) any other factor determined appropriate by the Administrator.
          ‘‘(3) NATIONWIDE DISTRIBUTION.— From among companies submitting applications under subsection (b), the Administrator shall consider the selection criteria under paragraph (2) and shall, to the maximum extent practicable, approve at least one company from each geographic region of the Administration.
    ‘‘(d) Requirements To Be Met for Final Approval.—
          ‘‘(1) IN GENERAL.— The Administrator shall grant each conditionally approved company 2 years to satisfy the requirements of this subsection.
          ‘‘(2) CAPITAL REQUIREMENT.— Each conditionally approved company shall raise not less than $3,000,000 of private capital or binding capital commitments from 1 or more investors (which shall not be departments or agencies of the Federal Government) who meet criteria established by the Administrator.
          ‘‘(3) NONADMINISTRATION RESOURCES FOR OPERATIONAL ASSISTANCE.—
                ‘‘(A) IN GENERAL.— In order to provide operational assistance to smaller enterprises expected to be financed by the company, each conditionally approved company shall have binding commitments (for contribution in cash or in-kind)—
                      ‘‘(i) from sources other than the Administration that meet criteria established by the Administrator; and
                      ‘‘(ii) payable or available over a multiyear period determined appropriate by the Administrator (not to exceed 10 years).
                ‘‘(B) EXCEPTION.— The Administrator may, in the discretion of the Administrator and based upon a showing of special circumstances and good cause, consider an applicant to have satisfied the requirements of subparagraph (A) if the applicant has—
                      ‘‘(i) a viable plan that reasonably projects the capacity of the applicant to raise the amount (in cash or in-kind) required under subparagraph (A); and
                      ‘‘(ii) binding commitments in an amount equal to not less than 20 percent of the total amount required under paragraph (A).
                ‘‘(C) LIMITATION.— The total amount of a in-kind contributions by a company shall be not more than 50 percent of the total contributions by a company.
    ‘‘(e) Final Approval; Designation.— The Administrator shall, with respect to each applicant conditionally approved under subsection (c)—
          ‘‘(1) grant final approval to the applicant to operate as a Renewable Fuel Capital Investment company under this part and designate the applicant as such a company, if the applicant—
                ‘‘(A) satisfies the requirements of subsection (d) on or before the expiration of the time period described in that subsection; and
                ‘‘(B) enters into a participation agreement with the Administrator; or
          ‘‘(2) if the applicant fails to satisfy the requirements of subsection (d) on or before the expiration of the time period described in paragraph (1) of that subsection, revoke the conditional approval granted under that subsection.
‘‘SEC. 385. DEBENTURES.
    ‘‘(a) In General.— The Administrator may guarantee the timely payment of principal and interest, as scheduled, on debentures issued by any Renewable Fuel Capital Investment company.
    ‘‘(b) Terms and Conditions.— The Administrator may make guarantees under this section on such terms and conditions as it determines appropriate, except that—
          ‘‘(1) the term of any debenture guaranteed under this section shall not exceed 15 years; and
          ‘‘(2) a debenture guaranteed under this section—
                ‘‘(A) shall carry no front-end or annual fees;
                ‘‘(B) shall be issued at a discount;
                ‘‘(C) shall require no interest payments during the 5-year period beginning on the date the debenture is issued;
                ‘‘(D) shall be prepayable without penalty after the end of the 1-year period beginning on the date the debenture is issued; and
                ‘‘(E) shall require semiannual interest payments after the period described in subparagraph (C).
    ‘‘(c) Full Faith and Credit of the United States.— The full faith and credit of the United States is pledged to pay all amounts that may be required to be paid under any guarantee under this part.
    ‘‘(d) Maximum Guarantee.—
          ‘‘(1) IN GENERAL.— Under this section, the Administrator may guarantee the debentures issued by a Renewable Fuel Capital Investment company only to the extent that the total face amount of outstanding guaranteed debentures of such company does not exceed 150 percent of the private capital of the company, as determined by the Administrator.
          ‘‘(2) TREATMENT OF CERTAIN FEDERAL FUNDS.— For the purposes of paragraph (1), private capital shall include capital that is considered to be Federal funds, if such capital is contributed by an investor other than a department or agency of the Federal Government.
‘‘SEC. 386. ISSUANCE AND GUARANTEE OF TRUST CERTIFICATES.
    ‘‘(a) Issuance.— The Administrator may issue trust certificates representing ownership of all or a fractional part of debentures issued by a Renewable Fuel Capital Investment company and guaranteed by the Administrator under this part, if such certificates are based on and backed by a trust or pool approved by the Administrator and composed solely of guaranteed debentures.
    ‘‘(b) Guarantee.—
          ‘‘(1) IN GENERAL.— The Administrator may, under such terms and conditions as it determines appropriate, guarantee the timely payment of the principal of and interest on trust certificates issued by the Administrator or its agents for purposes of this section.
          ‘‘(2) LIMITATION.— Each guarantee under this subsection shall be limited to the extent of principal and interest on the guaranteed debentures that compose the trust or pool.
          ‘‘(3) PREPAYMENT OR DEFAULT.— If a debenture in a trust or pool is prepaid, or in the event of default of such a debenture, the guarantee of timely payment of principal and interest on the trust certificates shall be reduced in proportion to the amount of principal and interest such prepaid debenture represents in the trust or pool. Interest on prepaid or defaulted debentures shall accrue and be guaranteed by the Administrator only through the date of payment of the guarantee. At any time during its term, a trust certificate may be called for redemption due to prepayment or default of all debentures.
    ‘‘(c) Full Faith and Credit of the United States.— The full faith and credit of the United States is pledged to pay all amounts that may be required to be paid under any guarantee of a trust certificate issued by the Administrator or its agents under this section.
    ‘‘(d) Fees.— The Administrator shall not collect a fee for any guarantee of a trust certificate under this section, but any agent of the Administrator may collect a fee approved by the Administrator for the functions described in subsection (f)(2).
    ‘‘(e) Subrogation and Ownership Rights.—
          ‘‘(1) SUBROGATION.— If the Administrator pays a claim under a guarantee issued under this section, it shall be subrogated fully to the rights satisfied by such payment.
          ‘‘(2) OWNERSHIP RIGHTS.— No Federal, State, or local law shall preclude or limit the exercise by the Administrator of its ownership rights in the debentures residing in a trust or pool against which trust certificates are issued under this section.
    ‘‘(f) Management and Administration.—
          ‘‘(1) REGISTRATION.— The Administrator may provide for a central registration of all trust certificates issued under this section.
          ‘‘(2) CONTRACTING OF FUNCTIONS.—
                ‘‘(A) IN GENERAL.— The Administrator may contract with an agent or agents to carry out on behalf of the Administrator the pooling and the central registration functions provided for in this section, including, not withstanding any other provision of law—
                      ‘‘(i) maintenance, on behalf of and under the direction of the Administrator, of such commercial bank accounts or investments in obligations of the United States as may be necessary to facilitate the creation of trusts or pools backed by debentures guaranteed under this part; and
                      ‘‘(ii) the issuance of trust certificates to facilitate the creation of such trusts or pools.
                ‘‘(B) FIDELITY BOND OR INSURANCE REQUIREMENT.— Any agent performing functions on behalf of the Administrator under this paragraph shall provide a fidelity bond or insurance in such amounts as the Administrator determines to be necessary to fully protect the interests of the United States.
          ‘‘(3) REGULATION OF BROKERS AND DEALERS.— The Administrator may regulate brokers and dealers in trust certificates issued under this section.
          ‘‘(4) ELECTRONIC REGISTRATION.— Nothing in this subsection may be construed to prohibit the use of a book-entry or other electronic form of registration for trust certificates issued under this section.
‘‘SEC. 387. FEES.
    ‘‘(a) In General.— Except as provided in section 386(d), the Administrator may charge such fees as it determines appropriate with respect to any guarantee or grant issued under this part, in an amount established annually by the Administrator, as necessary to reduce to zero the cost (as defined in section 502 of the Federal Credit Reform Act of 1990) to the Administration of purchasing and guaranteeing debentures under this part, which amounts shall be paid to and retained by the Administration.
    ‘‘(b) Offset.— The Administrator may, as provided by section 388, offset fees charged and collected under subsection (a).
‘‘SEC. 388. FEE CONTRIBUTION.
    ‘‘(a) In General.— To the extent that amounts are made available to the Administrator for the purpose of fee contributions, the Administrator shall contribute to fees paid by the Renewable Fuel Capital Investment companies under section 387.
    ‘‘(b) Annual Adjustment.— Each fee contribution under subsection (a) shall be effective for 1 fiscal year and shall be adjusted as necessary for each fiscal year thereafter to ensure that amounts under subsection (a) are fully used. The fee contribution for a fiscal year shall be based on the outstanding commitments made and the guarantees and grants that the Administrator projects will be made during that fiscal year, given the program level authorized by law for that fiscal year and any other factors that the Administrator determines appropriate.
‘‘SEC. 389. OPERATIONAL ASSISTANCE GRANTS.
    ‘‘(a) In General.—
          ‘‘(1) AUTHORITY.— The Administrator may make grants to Renewable Fuel Capital Investment companies to provide operational assistance to smaller enterprises financed, or expected to be financed, by such companies or other entities.
          ‘‘(2) TERMS.— A grant under this subsection shall be made over a multiyear period not to exceed 10 years, under such other terms as the Administrator may require.
          ‘‘(3) GRANT AMOUNT.— The amount of a grant made under this subsection to a Renewable Fuel Capital Investment company shall be equal to the lesser of—
                ‘‘(A) 10 percent of the resources (in cash or in-kind) raised by the company under section 384(d)(2); or
                ‘‘(B) $1,000,000.
          ‘‘(4) PRO RATA REDUCTIONS.— If the amount made available to carry out this section is insufficient for the Administrator to provide grants in the amounts provided for in paragraph (3), the Administrator shall make pro rata reductions in the amounts otherwise payable to each company and entity under such paragraph.
          ‘‘(5) GRANTS TO CONDITIONALLY APPROVED COMPANIES.—
                ‘‘(A) IN GENERAL.— Subject to subparagraphs (B) and (C), upon the request of a company conditionally approved under section 384(c), the Administrator shall make a grant to the company under this subsection.
                ‘‘(B) REPAYMENT BY COMPANIES NOT APPROVED.— If a company receives a grant under this paragraph and does not enter into a participation agreement for final approval, the company shall, subject to controlling Federal law, repay the amount of the grant to the Administrator.
                ‘‘(C) DEDUCTION OF GRANT TO APPROVED COMPANY.— If a company receives a grant under this paragraph and receives final approval under section 384(e), the Administrator shall deduct the amount of the grant from the total grant amount the company receives for operational assistance.
                ‘‘(D) AMOUNT OF GRANT.— No company may receive a grant of more than $100,000 under this paragraph.
    ‘‘(b) Supplemental Grants.—
          ‘‘(1) IN GENERAL.— The Administrator may make supplemental grants to Renewable Fuel Capital Investment companies and to other entities, as authorized by this part, under such terms as the Administrator may require, to provide additional operational assistance to smaller enterprises financed, or expected to be financed, by the companies.
          ‘‘(2) MATCHING REQUIREMENT.— The Administrator may require, as a condition of any supplemental grant made under this subsection, that the company or entity receiving the grant provide from resources (in a cash or in kind), other then those provided by the Administrator, a matching contribution equal to the amount of the supplemental grant.
    ‘‘(c) Limitation.— None of the assistance made available under this section may be used for any overhead or general and administrative expense of a Renewable Fuel Capital Investment company.
‘‘SEC. 390. BANK PARTICIPATION.
    ‘‘(a) In General.— Except as provided in subsection (b), any national bank, any member bank of the Federal Reserve System, and (to the extent permitted under applicable State law) any insured bank that is not a member of such system, may invest in any Renewable Fuel Capital Investment company, or in any entity established to invest solely in Renewable Fuel Capital Investment companies.
    ‘‘(b) Limitation.— No bank described in subsection (a) may make investments described in such subsection that are greater than 5 percent of the capital and surplus of the bank.
‘‘SEC. 391. FEDERAL FINANCING BANK.
    ‘‘Notwithstanding section 318, the Federal Financing Bank may acquire a debenture issued by a Renewable Fuel Capital Investment company under this part.
‘‘SEC. 392. REPORTING REQUIREMENT.
    ‘‘Each Renewable Fuel Capital Investment company that participates in the program established under this part shall provide to the Administrator such information as the Administrator may require, including—
          ‘‘(1) information related to the measurement criteria that the company proposed in its program application; and
          ‘‘(2) in each case in which the company makes, under this part, an investment in, or a loan or a grant to, a business that is not primarily engaged in the research, development, manufacture, or bringing to market or renewable energy sources, a report on the nature, origin, and revenues of the business in which investments are made.
‘‘SEC. 393. EXAMINATIONS.
    ‘‘(a) In General.— Each Renewable Fuel Capital Investment company that participates in the program established under this part shall be subject to examinations made at the direction of the Investment Division of the Administration in accordance with this section.
    ‘‘(b) Assistance of Private Sector Entities.— Examinations under this section may be conducted with the assistance of a private sector entity that has both the qualifications and the expertise necessary to conduct such examinations.
    ‘‘(c) Costs.—
          ‘‘(1) ASSESSMENT.—
                ‘‘(A) IN GENERAL.— The Administrator may assess the cost of examinations under this section, including compensation of the examiners, against the company examined.
                ‘‘(B) PAYMENT.— Any company against which the Administrator assesses costs under this paragraph shall pay such costs.
          ‘‘(2) DEPOSIT OF FUNDS.— Funds collected under this section shall be deposited in the account for salaries and expenses of the Administration.
‘‘SEC. 394. MISCELLANEOUS.
    ‘‘To the extent such procedures are not inconsistent with the requirements of this part, the Administrator may take such action as set forth in sections 309, 311, 312, and 314 and an officer, director, employee, agent, or other participant in the management or conduct of the affairs of a Renewable Fuel Capital Investment company shall be subject to the requirements of such sections.
‘‘SEC. 395. REMOVAL OR SUSPENSION OF DIRECTORS OR OFFICERS.
    ‘‘Using the procedures for removing or suspending a director or an officer of a licensee set forth in section 313 (to the extent such procedures are not inconsistent with the requirements of this part), the Administrator may remove or suspend any director or officer of any Renewable Fuel Capital Investment company.
‘‘SEC. 396. REGULATIONS.
    ‘‘The Administrator may issue such regulations as the Administrator determines necessary to carry out the provisions of this part in accordance with its purposes.
‘‘SEC. 397. AUTHORIZATIONS OF APPROPRIATIONS.
    ‘‘(a) In General.— Subject to the availability of appropriations, the Administrator is authorized to make $15,000,000 in operational assistance grants under section 389 for each of fiscal years 2008 and 2009.
    ‘‘(b) Funds Collected for Examinations.— Funds deposited under section 393(c)(2) are authorized to be appropriated only for the costs of examinations under section 393 and for the costs of other oversight activities with respect to the program established under this part.
‘‘SEC. 398. TERMINATION.
    ‘‘The program under this part shall terminate at the end of the second full fiscal year after the date that the Administrator establishes the program under this part.’’.

### Sec. 1208. Study and Report.

    The Administrator of the Small Business Administration shall conduct a study of the Renewable Fuel Capital Investment Program under part C of title III of the Small Business Investment Act of 1958, as added by this Act. Not later than 3 years after the date of enactment of this Act, the Administrator shall complete the study under this section and submit to Congress a report regarding the results of the study.