[Federal Register Volume 76, Number 72 (Thursday, April 14, 2011)]
[Rules and Regulations]
[Pages 21110-21167]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-8460]



[[Page 21109]]

Vol. 76

Thursday,

No. 72

April 14, 2011

Part II





Department of Agriculture





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Rural Business-Cooperative Service



Rural Utilities Service



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7 CFR Part 4280



Rural Energy for America Program; Final Rule

Federal Register / Vol. 76 , No. 72 / Thursday, April 14, 2011 / 
Rules and Regulations

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DEPARTMENT OF AGRICULTURE

Rural Business-Cooperative Service

Rural Utilities Service

7 CFR Part 4280

RIN 0575-AA76


Rural Energy for America Program

AGENCY: Rural Business-Cooperative Service and Rural Utilities Service, 
USDA.

ACTION: Interim rule with request for comments.

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SUMMARY: The Rural Business-Cooperative Service (Agency) is 
establishing an interim rule for the Rural Energy for America Program 
(REAP), which is authorized under the Food, Conservation, and Energy 
Act of 2008. This interim rule modifies the existing grant and 
guaranteed loan program for renewable energy systems and energy 
efficiency improvements. In addition, it adds a grant program for 
feasibility studies for renewable energy systems and a grant program 
for energy audits and renewable energy development assistance, as 
provided in the Food, Conservation, and Energy Act of 2008.

DATES: This interim rule is effective April 14, 2011. Written comments 
on this interim rule must be received on or before June 13, 2011.

ADDRESSES: You may submit comments on this interim rule by any of the 
following methods:
    <bullet> Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
    <bullet> Mail: Submit written comments via the U.S. Postal Service 
to the Branch Chief, Regulations and Paperwork Management Branch, U.S. 
Department of Agriculture, STOP 0742, 1400 Independence Avenue, SW., 
Washington, DC 20250-0742.
    <bullet> Hand Delivery/Courier: Submit written comments via Federal 
Express Mail or other courier service requiring a street address to the 
Branch Chief, Regulations and Paperwork Management Branch, U.S. 
Department of Agriculture, 300 7th Street, SW., 7th Floor, Washington, 
DC 20024.
    All written comments will be available for public inspection during 
regular work hours at the 300 7th Street, SW., 7th Floor address listed 
above.

FOR FURTHER INFORMATION CONTACT: Diane Berger, Energy Branch, U.S. 
Department of Agriculture, 1400 Independence Avenue, SW., Stop 3225, 
Washington, DC 20250-3201; telephone (202) 260-1508. E-mail: 
<a href="/cdn-cgi/l/email-protection#1f7b767e717a317d7a6d787a6d5f687b7c316a6c7b7e31787069"><span class="__cf_email__" data-cfemail="66020f0708034804031401031426110205481315020748010910">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION: 

Executive Order 12866

    This interim rule has been reviewed under Executive Order (EO) 
12866 and has been determined to be significant by the Office of 
Management and Budget. The EO defines a ``significant regulatory 
action'' as one that is likely to result in a rule that may: (1) Have 
an annual effect on the economy of $100 million or more or adversely 
affect, in a material way, the economy, a sector of the economy, 
productivity, competition, jobs, the environment, public health or 
safety, or State, local, or tribal governments or communities; (2) 
Create a serious inconsistency or otherwise interfere with an action 
taken or planned by another agency; (3) Materially alter the budgetary 
impact of entitlements, grants, user fees, or loan programs or the 
rights and obligations of recipients thereof; or (4) Raise novel legal 
or policy issues arising out of legal mandates, the President's 
priorities, or the principles set forth in this EO.
    The Agency conducted a benefit-cost analysis to fulfill the 
requirements of EO 12866. In this analysis, the Agency identifies 
potential benefits and costs of REAP to lenders, borrowers, and the 
Agency. The analysis contains quantitative estimates of the burden to 
the public and the Federal government and qualitative descriptions of 
the expected economic, environmental, and energy impacts associated 
with REAP.

Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public 
Law 104-4, establishes requirements for Federal agencies to assess the 
effects of their regulatory actions on State, local, and tribal 
governments and the private sector. Under section 202 of the UMRA, 
Rural Development generally must prepare a written statement, including 
a cost-benefit analysis, for proposed and final rules with ``Federal 
mandates'' that may result in expenditures to State, local, or tribal 
governments, in the aggregate, or to the private sector of $100 million 
or more in any one year. When such a statement is needed for a rule, 
section 205 of the UMRA generally requires Rural Development to 
identify and consider a reasonable number of regulatory alternatives 
and adopt the least costly, more cost-effective, or least burdensome 
alternative that achieves the objectives of the rule.
    This interim rule contains no Federal mandates (under the 
regulatory provisions of Title II of the UMRA) for State, local, and 
tribal governments or the private sector. Thus, this rule is not 
subject to the requirements of sections 202 and 205 of the UMRA.

Environmental Impact Statement

    Under this program, the Agency conducts a National Environmental 
Policy Act of 1969 (NEPA), 42 U.S.C. 4321 et seq., review for each 
application received. To date, no significant environmental impacts 
have been reported, and Findings of No Significant Impact (FONSI) have 
been issued for each approved application. Taken collectively, the 
applications show no potential for significant adverse cumulative 
effects.
    This document has been reviewed in accordance with 7 CFR part 1940, 
subpart G, ``Environmental Program.'' Rural Development has determined 
that this action does not constitute a major Federal action 
significantly affecting the quality of the human environment, and in 
accordance with NEPA, an Environmental Impact Statement is not 
required. Grant and guaranteed loan applications will be reviewed 
individually to determine compliance with NEPA.

Executive Order 12988, Civil Justice Reform

    This interim rule has been reviewed under EO 12988, Civil Justice 
Reform. In accordance with this rule: (1) All State and local laws and 
regulations that are in conflict with this rule will be preempted; (2) 
no retroactive effect will be given to this rule; and (3) 
administrative proceedings in accordance with the regulations of the 
Department of Agriculture's National Appeals Division (7 CFR part 11) 
must be exhausted before bringing suit in court challenging action 
taken under this rule unless those regulations specifically allow 
bringing suit at an earlier time.

Executive Order 13132, Federalism

    It has been determined, under EO 13132, that this interim rule does 
not have sufficient federalism implications to warrant the preparation 
of a Federalism Assessment. The provisions contained in the rule will 
not have a substantial direct effect on States or their political 
subdivisions or on the distribution of power and responsibilities among 
the various government levels.

Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601-612) (RFA) generally 
requires an agency to prepare a regulatory flexibility analysis of any 
rule

[[Page 21111]]

subject to notice and comment rulemaking requirements under the 
Administrative Procedure Act or any other statute unless the agency 
certifies that the rule will not have an economically significant 
impact on a substantial number of small entities. Small entities 
include small businesses, small organizations, and small governmental 
jurisdictions.
    In compliance with the RFA, Rural Development has determined that 
this action, while mostly affecting small entities, will not have a 
significant economic impact on a substantial number of these small 
entities. Rural Development made this determination based on the fact 
that this regulation only impacts those who choose to participate in 
the program. Small entity applicants will not be affected to a greater 
extent than large entity applicants.

Executive Order 13211, Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use

    The regulatory impact analysis conducted for this interim rule 
meets the requirements for EO 13211, which states that an agency 
undertaking regulatory actions related to energy supply, distribution, 
or use is to prepare a Statement of Energy Effects. This analysis finds 
that this interim rule will not have any adverse impacts on energy 
supply, distribution, or use.

Executive Order 12372, Intergovernmental Review of Federal Programs

    This program is not subject to the provisions of EO 12372, which 
require intergovernmental consultation with State and local officials.

Executive Order 13175, Consultation and Coordination With Indian Tribal 
Governments

    United States Department of Agriculture (USDA) will undertake, 
within 6 months after this rule becomes effective, a series of 
regulation Tribal consultation sessions to gain input by elected Tribal 
officials or their designees concerning the impact of this rule on 
Tribal governments, communities, and individuals. These sessions will 
establish a baseline of consultation for future actions, should any be 
necessary, regarding this rule. Reports from these sessions for 
consultation will be made part of the USDA annual reporting on Tribal 
Consultation and Collaboration. USDA will respond in a timely and 
meaningful manner to all Tribal government requests for consultation 
concerning this rule and will provide additional venues, such as 
webinars and teleconferences, to periodically host collaborative 
conversations with Tribal leaders and their representatives concerning 
ways to improve this rule in Indian country.
    The policies contained in this rule will not have Tribal 
implications that preempt Tribal law.

Programs Affected

    The Rural Energy for America Program is listed in the Catalog of 
Federal Domestic Assistance under Number 10.868.

Paperwork Reduction Act

    The information collection requirements contained in this interim 
rule have been approved by the Office of Management and Budget (OMB) 
under three separate information collections. The information 
collection requirements associated with renewable energy system and 
energy efficiency improvement grants and guaranteed loans, as covered 
in this Interim Rule, has been approved by OMB under OMB Control Number 
0570-0050. The information collection requirements associated with 
energy audit and renewable energy development assistance grants and 
with renewable energy feasibility study grants have been approved by 
OMB under OMB Control Number 0570-0059 and OMB Control Number 0570-
0061, respectively.
    The collection of information is vital for Rural Development to 
make wise decisions regarding the eligibility of projects and borrowers 
in order to ensure compliance with the regulations and that the funds 
obtained from the Government are used appropriately (e.g., used for the 
purposes for which the guaranteed loans were awarded). The type of 
information required depends on the type of financial assistance being 
sought.

E-Government Act Compliance

    Rural Development is committed to complying with the E-Government 
Act, to promote the use of the Internet and other information 
technologies to provide increased opportunities for citizen access to 
Government information and services, and for other purposes.

I. Background

    Rural Development administers a multitude of Federal programs for 
the benefit of rural America, ranging from housing and community 
facilities to infrastructure and business development. Its mission is 
to increase economic opportunity and improve the quality of life in 
rural communities by providing the leadership, infrastructure, venture 
capital, and technical support that enables rural communities to 
prosper. To achieve its mission, Rural Development provides financial 
support (including direct loans, grants, and loan guarantees) and 
technical assistance to help enhance the quality of life and provide 
the foundation for economic development in rural areas.
    In response to the Farm Security and Rural Investment Act of 2002 
(FSRIA), which established the Renewable Energy Systems and Energy 
Efficiency Improvements Program under Title IX, Section 9006, the 
Agency promulgated a rule (70 FR 41264, July 18, 2005) establishing the 
RES and EEI program (7 CFR part 4280, subpart B) for making grants, 
loan guarantees, and direct loans to farmers and ranchers (agricultural 
producers) or rural small businesses to purchase renewable energy 
systems and make energy efficiency improvements. Renewable energy 
sources eligible for funding included bioenergy, anaerobic digesters, 
electric geothermal, direct geothermal, solar, hydrogen, and wind.
    Section 9001 of the Food, Conservation, and Energy Act of 2008 
(2008 Farm Bill) amended Title IX of the FSRIA. Under the 2008 Farm 
Bill and Section 9007 of the amended FSRIA, the Agency is authorized to 
continue providing to agricultural producers and rural small businesses 
loan guarantees and grants for the development and construction of RES 
and EEI projects. In addition to the current set of renewable energy 
projects eligible for funding, the 2008 Farm Bill expands the program 
to include two new renewable energy technologies: hydroelectric and 
ocean energy. Further, the 2008 Farm Bill authorizes the Agency to 
provide grants specifically for energy audits, renewable energy 
development assistance, and RES feasibility studies. This newly 
expanded program is referred to as REAP, which continues the Agency's 
assistance to the adoption of both renewable energy systems and energy 
efficiency improvements through Federal government loan guarantees and 
grants.
    REAP has been operating since 2005 under 7 CFR part 4280, subpart 
B, and, since the 2008 Farm Bill, through a series of Federal Register 
notices implementing the provisions in the 2008 Farm Bill for RES 
feasibility studies, energy audits, and renewable energy development 
assistance. For the RES feasibility studies, these notices were 
published on May 26, 2009 (74 FR 24769) and August 6, 2010 (75 FR 
47525). For energy audits and renewable energy development assistance, 
these notices were published on March 11,

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2009 (74 FR 10533) and May 27, 2010 (75 FR 29706).
    This regulation establishes a consolidated REAP program by 
including each part of the program in a single subpart. Up to now, only 
the RES and EEI grant and guaranteed loan program requirements have 
been implemented under 7 CFR part 4280, subpart B and, for requirements 
established by the 2008 Farm Bill, through Federal Register notices. 
The requirements for RES feasibility study grants and for energy audit 
and renewable energy development assistance grants have been 
implemented through a series of Federal Register notices. It is, and 
has been, the Agency's intent to consolidate each of these programs 
into one REAP program.
    Given the history of the implementation of this program, as 
described above, it is important to immediately implement a regulation 
in an effort to signal full implementation of REAP. Since 2002, the 
Agency, through its operation of the program, has developed experience 
regarding how this authority can be used to address renewable energy 
and energy efficiency issues facing agricultural producers and rural 
small businesses. The interim rule responds to these lessons learned. 
In addition, in determining to publish this regulation as an interim 
rule, the Agency is balancing the interests of not forestalling the 
implementation and administration of the program while it develops 
program regulations versus its desire to obtain public comment. For 
these reasons, the Agency chose to publish this as an interim rule as 
opposed to publishing it as a proposed rule with a separate notice of 
funding availability for the Fiscal Year 2011 funding cycle as it has 
done in previous fiscal years. By publishing an interim rule, the 
Agency is able to obtain public comment regarding the operation of the 
program for Fiscal Year 2011. The Agency believes that this approach is 
in the best interest of the public.
    Following the publication of this interim rule, the Agency will 
propose and promulgate a subsequent rule for REAP to replace this 
interim rule.
    Interim rule. USDA Rural Development is issuing this regulation as 
an interim rule, effective April 14, 2011. All provisions of this 
regulation are adopted on an interim final basis, are subject to a 60-
day comment period, and will remain in effect until the Agency adopts 
the final rule.

II. Development of the Interim Rule for REAP

    As noted above, this interim rule establishes a consolidated REAP 
program by including each part of the program in a single subpart. The 
provisions in the interim rule are based on the following:
    1. The existing program found at 7 CFR part 4280, subpart B, for 
renewable energy systems and energy efficiency improvements as modified 
by the 2008 Farm Bill and the Fiscal Year 2010 notice.
    2. The Fiscal Year 2010 notices that implement the 2008 Farm Bill 
provisions for RES feasibility studies, energy audits, and renewable 
energy development assistance.
    3. The inclusion of flexible fuel pumps that dispense blended 
liquid transportation fuel as an important new component of the Federal 
government's strategy for encouraging the use of renewable fuels. 
Section 9007(a)(2) authorizes the Agency to fund parts of renewable 
energy systems as well as renewable energy systems in whole. The Agency 
has determined that a flexible fuel pump is a uniquely critical aspect 
of a biofuel renewable energy system defined as the conversion of the 
biomass through the dispensing of the biofuel to a vehicle.
    The policy rationale for the Agency to include flexible fuel pumps 
in REAP is to address a barrier that the Agency has determined impedes 
the broader use of biofuels as a liquid transportation fuel in the 
United States. For example, one major aspect of this barrier derives 
from two scenarios. The first is one of an insufficient availability of 
higher ethanol-blend fuels in the market place that discourages 
Americans from purchasing flexible fuel vehicles that can burn such 
higher ethanol-blend fuels and does not provide a sufficient level of 
higher ethanol-blend fuel to supply the existing flexible fuel vehicle 
fleet to fully take advantage of the fleet's ability to consume 
additional biofuel. The second is one of an insufficient number of 
flexible fuel vehicles on the road to encourage fuel station owners to 
expend the capital necessary to install flexible fuel pumps in response 
to market forces. By allowing REAP to provide financing through grants 
and loan guarantees to encourage the installation of flexible fuel 
pumps in rural areas, the Agency believes it can help overcome this 
barrier. The Agency acknowledges that there are other similar biofuel 
examples, including barriers to biodiesel.
    The Agency recognizes that REAP is designed to address a variety of 
renewable energy and energy efficiency goals. With the inclusion of 
flexible fuel pumps for REAP funding, the Agency will ensure that it 
will not ignore the other important goals and purposes of the program.
    4. The removal of citizenship requirements which the Agency has 
determined is in the best interest of furthering the Administration's 
goal of increasing the use of renewable energy systems and energy 
efficiency improvements to include applicants who are not U.S. 
citizens, provided the proposed project is located in a State and the 
applicant has a place of business located in a State. In addition, this 
change is consistent with recent litigation.
    5. The modification of the rural area requirement for projects 
proposed by agricultural producers to allow such projects to be located 
in non-rural areas. The Agency determined to remove the rural area 
requirement as it applies to agricultural producers under REAP for 
several reasons. First, the Agency wanted REAP to be consistent with 
the Biorefinery Assistance Program, the Repowering Assistance Program, 
and the Advanced Biofuel Payment Program. The three programs do not 
include a rural area requirement in their respective interim rules 
published in February 2011. Second, the Agency has determined that 
there are a number of agricultural producers that operate in non-rural 
areas that can benefit from REAP. Such agricultural producers may 
include commercial nurseries and truck farms (the growing of one or 
more crops on a scale necessary for shipment to distant markets) that 
are located near urban areas.
    6. The addition of a new paragraph to clarify how the Agency 
addresses changes in equipment for energy efficiency improvements for 
determining eligible project costs.
    7. The replacement of ``return on investment'' with ``simple 
payback.'' Using the term ``return on investment'' was creating 
confusion because the calculations used for this scoring criterion are 
not typically understood as return on investment. Therefore, we are 
clarifying the calculations and using the phrase ``simple payback'' 
because that is what we are calculating.
    8. The correction of several inconsistencies in the previous 
implementation of 7 CFR part 4280, subpart B and in the Fiscal Year 
2010 notices implementing REAP.
    By taking into consideration each of the above factors, the Agency 
has developed an interim rule for REAP.

The Rural Energy for America Program

    The following paragraphs discuss the interim rule in terms of 
changes from the current program as it relates to:
    <bullet> General Provisions;

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    <bullet> RES and EEI grants;
    <bullet> RES and EEI guaranteed loans;
    <bullet> RES feasibility study grants;
    <bullet> EA and REDA grants; and
    <bullet> Appendices.
    The changes discussed are how the interim rule varies from the 
existing RES and EEI program in 7 CFR part 4280, subpart B, and the 
Fiscal Year 2010 Federal Register notice for the RES and EEI program, 
and from the implementation of RES feasibility study grants and EA and 
REDA grants as found in their respective Fiscal Year 2010 notices.
1. General Provisions
    The organization of this section follows the first six sections of 
the current regulation at 7 CFR part 4280, subpart B, with changes as 
discussed below. The interim rule includes several new sections to the 
general provisions, the contents of which mostly consolidate existing 
provisions from the Fiscal Year 2010 Notices that are applicable to 
each of the programs within REAP. Lastly, the applicant eligibility and 
project eligibility sections of the existing rule have been relocated 
to the RES and EEI grants section of the rule and modified as needed.
Purpose (Sec.  4280.101)
    The primary revision to this section is adding reference to 
provision of grants for conducting RES feasibility studies and for 
energy audits and renewable energy development assistance. These 
provisions are being added as a result of the 2008 Farm Bill. In 
addition, reference to a direct loan program has been removed because 
direct loans are no longer authorized under the 2008 Farm Bill. Lastly, 
the Agency also removed current 7 CFR 4280.101(b), which the Agency has 
determined is unnecessary for the rule. Additional conforming changes 
were made in subsequent sections, but are not necessarily identified 
below.
Organization of Subpart (Sec.  4280.102)
    This section is basically the same as existing 7 CFR 4280.102, in 
that it identifies the organization of the rule. The primary 
differences are editorial in nature, simplifying the discussion, 
expanding the section to cover FS, EA, and REDA grants and identifying 
more clearly the rule's organization.
Definitions (Sec.  4280.103)
    This section was revised by adding, revising, and deleting a number 
of terms. The major revisions were the addition of definitions from the 
Fiscal Year 2010 notices for the RES/EEI, FS, EA, and REDA grants. The 
following present the changes made.
Added Terms
    <bullet> Administrator. This term was added for clarity.
    <bullet> Blended liquid transportation fuel. This term was added to 
implement the revision to allow retail pumps that combine and dispense 
a blended liquid transportation fuel to be eligible for grant funding.
    <bullet> Departmental regulations. This term was added and is now 
referenced in the rule.
    <bullet> Flexible fuel pump. This term was added because the Agency 
will allow flexible fuel pumps as an eligible RES project. The term 
refers to a retail pump that combines and dispenses a blended liquid 
transportation fuel or that dispenses a blended liquid transportation 
fuel with a percentage volume of renewable fuel in excess of the 
Federal or State requirements, whichever is higher.
    <bullet> Hydroelectric energy, hydropower, ocean energy and small 
hydropower. These terms were added in response to the 2008 Farm Bill 
provisions that authorize these qualifying sources of renewable energy. 
The Agency is limiting the size of eligible hydropower projects to 
those that have a rated power of 30 megawatts or less. The Conference 
Managers Report to the 2008 Farm Bill specifically mentions allowing 
small hydroelectric systems to be eligible under the program. Per 
consultation with the U.S. Department of Energy, the Agency is defining 
small hydropower systems as having a rated power of 30 megawatts or 
less, which includes hydropower projects commonly referred to as 
``micro-hydro'' and ``mini-hydro.'' Thus, if the hydropower system has 
a rated power of more than 30 megawatts, it would not be eligible for 
this program.
    <bullet> Institution of higher education, instrumentality, and 
public power entity. These terms were added because they are three of 
the eligible entities for energy audit and renewable energy development 
assistance grants.
    <bullet> Rated power. This term was added to clarify the 
definitions in which it is used.
    <bullet> Renewable biomass. This term was added as a result of the 
2008 Farm Bill.
    <bullet> Renewable energy development assistance, renewable energy 
site assessment, and renewable energy technical assistance. These terms 
were added to implement the Energy Audit and Renewable Energy 
Development Assistance grants.
    <bullet> Rural Energy for America Grant Agreement. This term was 
added for clarity.
    <bullet> Simple payback. This term was added to implement the 
scoring criterion for simple payback. It includes the method to be used 
to calculate simple payback.
Deleted Terms
    <bullet> Biomass. This term has been replaced, under the 2008 Farm 
Bill, with ``renewable biomass.''
    <bullet> Demonstrated financial need. This term was deleted because 
it is no longer part of the program as found in the 2008 Farm Bill.
    <bullet> In-kind contribution, loan-to-value, and parity. These 
terms were deleted because they are not used in the rule.
Revised Terms
    <bullet> Agency. This term was updated to refer to the Rural Energy 
for America Program rather than the 9006 program.
    <bullet> Anaerobic digester project. This term was revised in order 
to allow facilities producing natural gas in a compressed gaseous or 
liquid state to qualify as an anaerobic digester project.
    <bullet> Biogas. This term was revised to refer to ``renewable 
biomass'' rather than to ``biomass.''
    <bullet> Matching funds. This term was revised to remove reference 
to direct loans.
    <bullet> Post-application. This term was clarified.
    <bullet> Power purchase agreement. This term was revised by 
replacing ``arrangement'' with ``agreement.''
    <bullet> Renewable energy. This term was revised to conform to 
changes in the 2008 Farm Bill, including adding reference to ocean and 
hydroelectric energy as renewable energy sources and replacing 
``biomass'' with ``renewable biomass.''
    <bullet> Rural or rural area. This term was revised to conform to 
changes provided in the 2008 Farm Bill.
    <bullet> Small business. In order for the Agency to clarify the 
application of the requirement that entities must operate independent 
of governmental control to certain Tribal enterprises, this term was 
revised to allow such enterprises to remain eligible if they are 
operated in a manner consistent to the Department of the Interior's 
regulation governing the establishment of Section 17 Corporations. This 
clarification is necessary to enable this program to be effectively 
administered in Indian Country.
    <bullet> State. This term was clarified by adding ``of the United 
States.''
Exception Authority (Sec.  4280.104)
    This section was updated to reflect the latest language the Agency 
uses, as reflected in the recent Agency energy

[[Page 21114]]

title interim rules. First, the exercise of this exception authority 
must be in the Federal government's interest. Under the current rule, 
this reads in the USDA's interest. Second, the exercise of this 
exception authority must be concurred to by the Secretary of 
Agriculture.
Appeals (Sec.  4280.105)
    This section was revised by removing reference to direct loans to 
conform to the 2008 Farm Bill and deleting the last sentence of the 
section because it is inappropriate.
Conflict of Interest (Sec.  4280.106)
    This section was revised by removing reference to direct loans to 
conform to the 2008 Farm Bill and adding a provision specifically 
prohibiting members of, or delegates to, Congress from receiving any 
grant or portion thereof or from receiving any benefit that might arise 
therefrom and specifically addressing assistance to Agency employees 
and their relatives and associates. The Agency added this provision to 
provide greater transparency and accountability in government.
USDA Departmental Regulations (Sec.  4280.107)
    This section was added to clearly identify the incorporation by 
reference of the Departmental Regulations.
Laws That Contain Other Compliance Requirements (Sec.  4280.108)
    This section was relocated under the ``General'' heading of the 
rule because it applies to each REAP program, with minor exceptions. 
Two of the changes made were to remove reference to direct loans in the 
paragraph on civil rights compliance because direct loans are not part 
of the program and to add a paragraph specific to guaranteed loans 
concerning the Americans with Disabilities Act.
Ineligible Applicants, Borrowers, and Owners (Sec.  4280.109)
    With minor wording changes to make it applicable to both grants and 
guaranteed loans, this section replaces existing 7 CFR 4280.107(a)(4).
General Applicant and Application Provisions (Sec.  4280.110)
    With minor wording changes, this new section gathers into one place 
three general requirements affecting each REAP program concerning:
    <bullet> Complete applications;
    <bullet> Application withdrawal; and
    <bullet> Satisfactory progress.
Notifications (Sec.  4280.111)
    This new section gathers into one place general requirements 
affecting each REAP program regarding notification of applicants and 
lenders, as applicable, if applicants and their projects are eligible, 
if their application is determined to be ineligible, and if their 
application receives an award.
2. Renewable Energy System and Energy Efficiency Improvement Grant 
Program
Applicant Eligibility (Sec.  4280.112)
    This section has been reduced to just identifying the type of 
applicant eligible (i.e., agricultural producer or rural small 
business, which is unchanged from the current rule) because the other 
provisions have been either deleted or moved, as discussed below.
    The citizenship requirements currently found in 7 CFR 
4280.107(a)(2) and (3) have been removed (and, in their place, the rule 
requires the project to be located in a State as defined in the rule). 
The Agency removed this requirement because, after reviewing public 
comments that it sought and received on a March 12, 2010, Notice of 
Contract for Proposal (NOCP) for payments to advanced biofuels 
producers, the Agency has determined that it is in the best interests 
of furthering the Administration's goal of increasing the use of 
renewable energy systems and energy efficiency improvements to include 
applicants who are not U.S. citizens, provided the proposed project is 
located in a State and the applicant has a place of business located in 
a State. In addition, this change is consistent with recent litigation.
    The provisions in existing 7 CFR 4280.107(a)(4) and in 7 CFR 
4280.107(b), as noted earlier, have been relocated to Sec. Sec.  
4280.109 and 4280.110(c), respectively.
    The demonstrated financial need provisions in existing 7 CFR 
4280.107(a)(5) have been removed to conform the rule to the 2008 Farm 
Bill.
Project Eligibility (Sec.  4280.113)
    Numerous changes have been made to this section for determining 
whether a project is eligible to receive an RES or EEI grant under this 
subpart.
    First. The Agency clarified that energy efficiency improvements to 
existing renewable energy systems are eligible energy efficiency 
improvement projects.
    Second. Projects must be located in a State, as defined in the 
rule, as discussed above under applicant eligibility.
    Third. The applicant must have a place of business located in a 
State, also as discussed above under applicant eligibility.
    Fourth. The Agency is allowing projects for facilities located in 
non-rural areas to be eligible if the project is being proposed by an 
agricultural producer.
    This conforms the rule to other programs that serve agricultural 
producers (e.g., those provided by the Natural Resource Conservation 
Service and Farm Service Agency), which do not have a rural area 
requirement for agricultural producers. Further, the authorizing 
statute (the 2008 Farm Bill) does not restrict eligibility of 
agricultural producers to rural areas as it does with rural small 
businesses, where the language specifically uses the term ``rural'' in 
referring to small businesses. The Agency does not expect the inclusion 
of projects for facilities located in non-rural areas proposed by 
agricultural producers to affect a large number of agricultural 
producers because most agricultural producers' facilities are located 
within rural areas.
    However, in allowing projects by agricultural producers for 
facilities in non-rural areas to be eligible, the Agency is also 
requiring that the application for such facilities be only for 
renewable energy systems or energy efficiency improvements on integral 
components of or that are directly related to the facility, such as 
vertically integrated operations, and are part of and co-located with 
the agricultural production operation. For example, if an agricultural 
producer grows vegetables in a greenhouse located in a non-rural area 
and sells those vegetables at a co-located retail operation, where both 
the greenhouse and the retail operation are owned by the applicant, the 
application may consider both the greenhouse and the retail operation. 
However, if the retail operation is not co-located with the greenhouse, 
in this example, the application may consider only the greenhouse and 
not the retail operation.
    Fifth. If the project is for a hydropower project, only those 
hydropower projects with a rated power of 30 megawatts or less are 
eligible.
    Sixth. The project must have demonstrated technical feasibility.
    Seventh. The Agency revised the provision associated with 
residential costs to clarify the current regulation and how residential 
purposes relate to the eligibility of projects under REAP. The Agency 
notes that this provision, found in Sec.  4280.113(k), does not 
preclude an applicant from applying for funding for the installation of 
a second meter or providing certification in the application that any 
excess power generated by the renewable energy

[[Page 21115]]

system will be sold to the grid and will not be used by the applicant 
for residential purposes.
Qualification for Simplified Applications (Sec.  4280.114)
    The provisions of this section were modified by removing the 
certification by the applicant of demonstrated financial need.
RES and EEI Grant Funding (Sec.  4280.115)
    Several changes were made to this section as described below.
    <bullet> The prohibition on third-party, in-kind contributions was 
removed because it conflicts with the Agency's Departmental 
Regulations.
    <bullet> The Agency added a provision specifically addressing 
energy efficiency improvements as eligible project costs (see Sec.  
4280.115(c)(10)). In the current rule, eligible energy efficiency 
improvement costs were included in the paragraph addressing 
construction of new EEI projects (see 7 CFR 4280.110(c)(9)). This is 
somewhat confusing. The new provision clearly states that energy 
efficiency improvements as eligible project costs are limited to only 
improvements identified in the energy assessment or energy audit. This 
is similar to the current text found in 7 CFR 4280.110(c)(9). The new 
paragraph also covers explicitly how the Agency will address the 
replacement of equipment identified in the energy audit as an eligible 
project cost. To illustrate this, an example is provided in the rule.
    <bullet> The provisions associated with determining the amount of a 
RES or EEI grant were updated to reflect the 2008 Farm Bill (see Sec.  
4280.115(g)(4) through (g)(6)), which resulted in two substantive 
changes. The first is adding consideration of the expected energy 
efficiency of the renewable energy system. The second is deleting 
consideration of the extent to which the renewable energy system will 
be replicable.
    <bullet> Unless otherwise agreed to by the Agency, any renewable 
energy system or energy efficiency improvement grant agreement under 
this subpart will terminate 2 years from the date the Agency signs the 
agreement.
Application and Documentation (Sec.  4280.116)
    The primary change to this section was to include a new paragraph 
(a) that addresses general application requirements covering one 
funding type applications, environmental information, foreign 
technology, and commercial application demonstration of pre-commercial 
technology.
    With regard to application content, the two primary changes made 
were to remove the requirement to include intergovernmental 
consultation comments (such consultation is not required for this 
program) and the requirement to certify to and provide sufficient 
information or documentation for determination of demonstrated 
financial need.
Evaluation of RES and EEI Grant Applications (Sec.  4280.117)
    Several changes were made to this section as described below.
    First. The paragraphs concerning ineligible applications and 
incomplete applications were relocated to the General section of the 
rule.
    Second. Scoring for flexible fuel pumps was added to the first 
scoring criterion (see Sec.  4280.117(c)(1)(iv)).
    Third. The return on investment criterion was replaced with a 
simple payback criterion to more accurately reflect the actual scoring 
the Agency performs.
    Fourth. A new scoring criterion was added that allows State 
Directors and the Administrator to award up to 10 priority points if 
the application is for an under-represented technology, is for flexible 
fuel pumps, or would help achieve geographic diversity.
Insurance Requirements (Sec.  4280.118)
    No changes were made to this set of provisions.
Construction Planning and Performing Development (Sec.  4280.119)
    One change was made to this set of provisions in Sec.  
4280.119(f)(3) where the Agency revised the text associated with an 
outdated American Institute of Architects form (i.e., Form A191).
RES and EEI Grantee Requirements (Sec.  4280.120)
    Three primary changes were made to this section as described below.
    First. The requirement that grants must also abide by ``any other 
applicable Federal statutes or regulations'' was added.
    Second. A statement that the failure to follow the requirements 
contained in the grant agreement, the subpart, and other applicable 
Federal statutes and regulations may result in termination of the grant 
and adoption of other available remedies was added.
    Third. The requirement for the applicant to provide, where 
applicable, a copy of the executed power purchase agreement was added.
Servicing Grants (Sec.  4280.121)
    The two changes to this section are:
    <bullet> Adding reference to the Departmental Regulations when 
servicing RES and EEI grants; and
    <bullet> Adding provisions for when a grantee seeks to change a 
contractor or vendor.
3. Renewable Energy System and Energy Efficiency Improvement Guaranteed 
Loans
Borrower and Project Eligibility (Sec. Sec.  4280.122 and 4280.123)
    Changes made to these sections reflect the same changes made to 
applicant and project eligibility for RES and EEI grants, as discussed 
above.
Guaranteed Loan Funding (Sec.  4280.124)
    Several changes were made to this section:
    <bullet> The maximum amount of the loan that will be made available 
to an eligible project was increased from 50 to 75 percent of total 
eligible project costs;
    <bullet> Both the maximum amount of a guaranteed loan and the total 
amount of loans guaranteed by the Agency under this program to any one 
borrower were increased from $10 million to $25 million;
    <bullet> A 60 percent guarantee was added for loans greater than 
$10 million; and
    <bullet> Revised the criteria associated with determining the 
amount of a loan awarded in the same manner as described earlier for 
RES and EEI grants.
Application and Documentation (Sec.  4280.128)
    As was done for grant application and documentation, the 
requirement to include intergovernmental consultation comments was 
removed (such consultation is not required for this program).
Evaluation of RES and EEI Guaranteed Loan Applications (Sec.  4280.129)
    As was done for RES and EEI grants, the requirements associated 
with ineligible applications and incomplete applications were relocated 
under the ``General'' heading of the rule. A minor edit was made to 
paragraph (a) and cross-references were updated. No other changes were 
made to this section.
Conditions Precedent to Issuance of Loan Note Guarantee (Sec.  
4280.146)
    The one substantive change to this section was the addition of the 
requirement for the lender to provide, where applicable, a copy of the 
executed power purchase agreement.
Laws That Contain Other Compliance Requirements (Sec.  4280.151)
    This section is now ``Reserved,'' and the provisions regarding laws 
that

[[Page 21116]]

contain other compliance requirements have been incorporated into a 
similar section in the General Provisions portion of the interim rule.
Other Sections
    Other than minor edits and updating cross references where 
applicable, no changes were made to the following guaranteed loan 
sections:
    <bullet> Interest rates (Sec.  4280.125).
    <bullet> Terms of loan (Sec.  4280.126).
    <bullet> Guarantee/annual renewal fee percentage (Sec.  4280.127).
    <bullet> Eligible lenders (Sec.  4280.130).
    <bullet> Lender's functions and responsibilities (Sec.  4280.131).
    <bullet> Access to records (Sec.  4280.132).
    <bullet> Conditions of guarantee (Sec.  4280.133).
    <bullet> Sale or assignment of guaranteed loan (Sec.  4280.134).
    <bullet> Participation (Sec.  4280.135).
    <bullet> Minimum retention (Sec.  4280.136).
    <bullet> Repurchase from holder (Sec.  4280.137).
    <bullet> Replacement of document (Sec.  4280.138).
    <bullet> Credit quality (Sec.  4280.139).
    <bullet> Financial statements (Sec.  4280.140).
    <bullet> Appraisals (Sec.  4280.141).
    <bullet> Personal and corporate guarantees (Sec.  4280.142).
    <bullet> Loan approval and obligation of funds (Sec.  4280.143).
    <bullet> Transfer of lenders (Sec.  4280.144).
    <bullet> Changes in borrower (Sec.  4280.145).
    <bullet> Issuance of the guarantee (Sec.  4280.147).
    <bullet> Refusal to execute Loan Note Guarantee (Sec.  4280.148).
    <bullet> Requirements after project construction (Sec.  4280.149).
    <bullet> Insurance requirements (Sec.  4280.150).
    <bullet> Servicing guaranteed loans (Sec.  4280.152).
    <bullet> Substitution of lender (Sec.  4280.153).
    <bullet> Default by borrower (Sec.  4280.154).
    <bullet> Protective advances (Sec.  4280.155).
    <bullet> Liquidation (Sec.  4280.156).
    <bullet> Determination of loss and payment (Sec.  4280.157).
    <bullet> Future recovery (Sec.  4280.158).
    <bullet> Bankruptcy (Sec.  4280.159).
    <bullet> Termination of guarantee (Sec.  4280.160).
4. Combined Funding
    Other than updating cross-references, the only other change to this 
section was deleting the third-party, in-kind contribution prohibition 
as was done for RES and EEI grants.
5. Renewable Energy System Feasibility Study Grants
    The provisions contained in the Fiscal Year 2010 notice for RES 
feasibility study grants that were specific to RES feasibility study 
grants are organized in the interim rule as shown in the following 
table. Other provisions in the Fiscal Year 2010 notice for RES 
feasibility study grants that are applicable to the other REAP programs 
are incorporated into the General provisions section of the interim 
rule.

------------------------------------------------------------------------
                                                               Section
                        Section name                            number
------------------------------------------------------------------------
Applicant eligibility......................................     4280.170
Project eligibility........................................     4280.171
Application eligibility provisions.........................     4280.172
Grant funding for feasibility studies......................     4280.173
Feasibility study grant applications--content..............     4280.176
Evaluation of feasibility study grant applications.........     4280.177
Scoring feasibility study grant applications...............     4280.178
Selecting feasibility study grant applications for award...     4280.179
Actions prior to grant closing.............................     4280.180
Awarding and administering feasibility study grants........     4280.181
Servicing feasibility study grants.........................     4280.182
------------------------------------------------------------------------

    With a limited number of exceptions, the provisions found in the 
Fiscal Year 2010 notice for RES feasibility study grants have been 
incorporated into the interim rule. These exceptions are presented 
below.
    Project eligibility (Sec.  4280.171). Three conforming changes were 
made to the requirements for project eligibility.
    First. The project for which the RES feasibility study is to be 
performed must be located in a State. This is a conforming change 
necessitated by removing the citizenship requirement (which was 
incorporated by reference in the Fiscal Year 2010 Notice).
    Second. The applicant must have a place of business in a State. 
This is also a conforming change necessitated by removing the 
citizenship requirement (which was incorporated by reference in the 
Fiscal Year 2010 notice).
    Third. A RES feasibility study may be performed for a proposed RES 
project for a facility that is located in a non-rural area if the 
applicant is an agricultural producer. If the agricultural producer's 
facility is in a non-rural area, then the feasibility study can be for 
a renewable energy system on integral components of or directly related 
to the facility, such as vertically integrated operations, and are part 
of and co-located with the agriculture production operation. For 
example, if an agricultural producer grows vegetables in a greenhouse 
located in a non-rural area and sells those vegetables at a co-located 
retail operation, where both the greenhouse and the retail operation 
are owned by the applicant, the feasibility study may consider both the 
greenhouse and the retail operation. If the retail operation is not co-
located with the greenhouse, in this example, the feasibility study 
could only consider the greenhouse and not the retail operation. Under 
the Fiscal Year 2010 notice, all projects were required to be in a 
rural area.
    Forms and certifications (Sec.  4280.176). Two additional forms are 
identified for submittal with the application--Forms SF-424A and SF-
424B. These forms are applicable for non-construction projects.
    The certification that the renewable energy system is located in a 
rural area is limited to rural small businesses, because, under the 
interim rule, the rural area location requirement does not apply to 
projects from agricultural producers.
    Evaluation of feasibility study grant applications (Sec.  
4280.177). The sentence referring to the Agency continuing to process 
an application if the application contains certification that the 
applicant has neither sought nor received any other Federal or State 
assistance for a RES feasibility study on the subject facility was not 
included in the interim rule, because there are other reasons why the 
Agency may not continue processing an application.
    Scoring feasibility study grant applications (Sec.  4280.178). 
Reference to ``Other Federal or State assistance for only the RES 
feasibility study would make the request ineligible'' under the scoring 
criterion for commitment of funds was not included in the interim rule 
because it is incorrect.
    Awarding and administering feasibility study grants (Sec.  
4280.181). The interim rule clarifies when which forms are to be 
submitted.
    Servicing (Sec.  4280.182). The sentence ``All non-confidential 
information resulting from the Grantee's activities shall be made 
available to the general public on an equal basis'' is not included in 
the interim rule because it is not appropriate.
    Intergovernmental review comments. This provision was not included 
in the interim rule because it is not applicable to this program.
    Exception Authority. The exception authority provision in the 
Fiscal Year 2010 notice is replaced in the interim rule with a 
different exception authority provision that is a more recent provision 
and that is applicable across the entire subpart.
    Appeals. The appeals provision in the Fiscal Year 2010 notice is 
replaced in the interim rule with a different appeals

[[Page 21117]]

provision that is applicable across the entire subpart.
6. Energy Audit and Renewable Energy Development Assistance Grants
    As was done for RES feasibility study grants, the provisions 
contained in the Fiscal Year 2010 notice for EA and REDA grants that 
are specific to EA and REDA grants are organized in the interim rule as 
shown in the following table. Other provisions in the Fiscal Year 2010 
notice for EA and REDA grants that are applicable to the other REAP 
programs are incorporated into the General provisions section of the 
interim rule.

------------------------------------------------------------------------
                                                               Section
                        Section name                            number
------------------------------------------------------------------------
Applicant eligibility......................................     4280.186
Project eligibility........................................     4280.187
Grant funding for energy audit and renewable energy             4280.188
 development assistance....................................
EA/REDA grant applications--content........................     4280.190
Evaluation of energy audit and renewable energy development     4280.191
 assistance grant applications.............................
Scoring energy audit and renewable energy development           4280.192
 assistance grant applications.............................
Selecting energy audit and renewable energy development         4280.193
 assistance grant applications for award...................
Actions prior to grant closing.............................     4280.194
Awarding and administering energy audit and renewable           4280.195
 energy development assistance grants......................
Servicing energy audit and renewable energy development         4280.196
 assistance grants.........................................
------------------------------------------------------------------------

    With a limited number of exceptions, the provisions found in the 
Fiscal Year 2010 notice for EA and REDA grants have been incorporated 
into the interim rule. These exceptions are presented below.
    Applicant eligibility (Sec.  4280.186). The citizenship requirement 
found in the Fiscal Year 2010 notice is not included in the interim 
rule.
    Project eligibility (Sec.  4280.187). In response to the removal of 
the citizenship requirement, the interim rule requires that the energy 
audit or renewable energy development assistance must be provided to a 
recipient in a State and the applicant must have a place of business in 
a State.
    Another change is that the rural area requirement in the interim 
rule is not applicable to agricultural producers (as it was in the 
Fiscal Year 2010 notice). Instead, a facility owned by an agricultural 
producer for which an energy audit is being conducted or that is 
receiving renewable energy development assistance may be located in 
either a rural area or non-rural area. If the agricultural producer's 
facility is in a non-rural area, then the energy audit or renewable 
energy development assistance can be for a renewable energy system or 
energy efficiency improvement on integral components of or that are 
directly related to the facility, such as vertically integrated 
operations, and are part of and co-located with the agriculture 
production operation.
    Grant funding for energy audit and renewable energy development 
assistance (Sec.  4280.188). Under the provisions for eligible project 
costs, the interim rule does not include ``pay for assistance to any 
private business enterprise which does not meet the requirements of 
paragraph III.A(2) of this Notice'' because the referenced paragraph in 
the Fiscal Year 2010 notice refers to meeting the citizenship 
requirement, which has been not been included in the interim rule, thus 
making this provision not applicable to the interim rule.
    Application contents (Sec.  4280.190). The requirement to submit 
intergovernmental review comments was not included in the interim rule 
because intergovernmental review is not required for this program. In 
addition, the Agency removed the phrasing ``(in addition to the 
required 25 percent contribution from the agricultural producer or 
rural small business for the cost of an energy audit)'' from the title 
of the ``leveraging and commitment of other sources of funding'' 
scoring criterion because the Agency determined that it was confusing.
    Scoring energy audit and renewable energy development assistance 
grant applications (Sec.  4280.192). The interim rule replaces 
``existing rural service area'' with ``existing service area.''
    Selecting energy audit and renewable energy development grant 
assistance applications for award (Sec.  4280.193). The interim rule 
does not include the Fiscal Year 2010 provision concerning objections 
raised by State or local governments during the intergovernmental 
review process, because the intergovernmental review process is not 
applicable to this program. Thus, this provision is not appropriate.
    Awarding and administering energy audit and renewable energy 
development assistance grants (Sec.  4280.195). The text concerning 
forms was revised to clarify which forms are to be submitted to the 
Agency and to remove reference to the grant being considered closed on 
the obligation date, because that is incorrect and is not needed in the 
rule.
    Servicing (Sec.  4280.196). In the requirements for performance 
reports, the phrase ``final semiannual performance report'' was revised 
to ``final performance report'' for clarity. In addition, the Agency 
recast the paragraph on the use of remaining funds to use the same 
phrasing as found in the deobligation provisions for RES feasibility 
study grants.
    Intergovernmental review comments. This provision was not included 
in the interim rule because it is not applicable to this program.
    Exception Authority. The exception authority provision in the 
Fiscal Year 2010 notice is replaced in the interim rule with a 
different exception authority provision that is a more recent provision 
and that is applicable across the entire subpart.
    Appeals. The appeals provision in the Fiscal Year 2010 notice is 
replaced in the interim rule with a different appeals provision that is 
applicable across the entire subpart.

III. Request for Comments

    The Agency is interested in receiving comments on all aspects of 
the interim rule. An area in which the Agency is seeking specific 
comments is identified below. All comments should be submitted as 
indicated in the ADDRESSES section of this preamble.
    Demonstrated financial need. The Agency is seeking comment on 
whether to require demonstrated financial need for applicants seeking 
grants and, if so, what should the requirements be for such 
demonstration (i.e., how would an applicant demonstrate financial 
need). Please be specific and provide rationale to support your 
position.

List of Subjects in 7 CFR Part 4280

    Loan programs--Business and industry, Economic development, Energy, 
Energy audits, Energy efficiency improvements, Feasibility studies, 
Grant programs, Guaranteed loan programs, Renewable energy development 
assistance, Renewable energy systems, and Rural areas.
    For the reasons set forth in the preamble, Chapter XLII of title 7 
of the Code of Federal Regulations is amended as follows:

CHAPTER XLII--RURAL BUSINESS-COOPERATIVE SERVICE AND RURAL UTILITIES 
SERVICE, DEPARTMENT OF AGRICULTURE

PART 4280--LOANS AND GRANTS

0
1. The authority citation for part 4280 is revised to read as follows:


[[Page 21118]]


    Authority: 5 U.S.C. 301; 7 U.S.C. 940c; 7 U.S.C. 8107.

0
2. Subpart B of part 4280 is revised to read as follows:
Subpart B--Rural Energy for America Program General
Sec.
4280.101 Purpose.
4280.102 Organization of subpart.
4280.103 Definitions.
4280.104 Exception authority.
4280.105 Appeals.
4280.106 Conflict of interest.
4280.107 USDA Departmental Regulations.
4280.108 Laws that contain other compliance requirements.
4280.109 Ineligible applicants, borrowers, and owners.
4280.110 General applicant and application provisions.
4280.111 Notifications.

Renewable Energy System and Energy Efficiency Improvement Grants

4280.112 Applicant eligibility.
4280.113 Project eligibility.
4280.114 Qualification for simplified applications.
4280.115 RES and EEI grant funding.
4280.116 Application and documentation.
4280.117 Evaluation of RES and EEI grant applications.
4280.118 Insurance requirements.
4280.119 Construction planning and performing development.
4280.120 RES and EEI grantee requirements.
4280.121 Servicing grants.

Renewable Energy System and Energy Efficiency Improvement Guaranteed 
Loans

4280.122 Borrower eligibility.
4280.123 Project eligibility.
4280.124 Guaranteed loan funding.
4280.125 Interest rates.
4280.126 Terms of loan.
4280.127 Guarantee/annual renewal fee percentages.
4280.128 Application and documentation.
4280.129 Evaluation of RES and EEI guaranteed loan applications.
4280.130 Eligible lenders.
4280.131 Lender's functions and responsibilities.
4280.132 Access to records.
4280.133 Conditions of guarantee.
4280.134 Sale or assignment of guaranteed loan.
4280.135 Participation.
4280.136 Minimum retention.
4280.137 Repurchase from holder.
4280.138 Replacement of document.
4280.139 Credit quality.
4280.140 Financial statements.
4280.141 Appraisals.
4280.142 Personal and corporate guarantees.
4280.143 Loan approval and obligation of funds.
4280.144 Transfer of lenders.
4280.145 Changes in borrower.
4280.146 Conditions precedent to issuance of Loan Note Guarantee.
4280.147 Issuance of the guarantee.
4280.148 Refusal to execute Loan Note Guarantee.
4280.149 Requirements after project construction.
4280.150 Insurance requirements.
4280.151 [Reserved]
4280.152 Servicing guaranteed loans.
4280.153 Substitution of lender.
4280.154 Default by borrower.
4280.155 Protective advances.
4280.156 Liquidation.
4280.157 Determination of loss and payment.
4280.158 Future recovery.
4280.159 Bankruptcy.
4280.160 Termination of guarantee.
4280.161-4280.164 [Reserved]

Combined Funding for Renewable Energy Systems and Energy Efficiency 
Improvements

4280.165 Combined funding for renewable energy systems and energy 
efficiency improvements.
4280.166-4280.169 [Reserved]

Renewable Energy System Feasibility Study Grants

4280.170 Applicant eligibility.
4280.171 Project eligibility.
4280.172 Application eligibility provisions.
4280.173 Grant funding for feasibility studies.
4280.174-4280.175 [Reserved]
4280.176 Feasibility study grant applications--Content.
4280.177 Evaluation of feasibility study grant applications.
4280.178 Scoring feasibility study grant applications.
4280.179 Selecting feasibility study grant applications for award.
4280.180 Actions prior to grant closing.
4280.181 Awarding and administering feasibility study grants.
4280.182 Servicing feasibility study grants.
4280.183-4280.185 [Reserved]

Energy Audit and Renewable Energy Development Assistance Grants

4280.186 Applicant eligibility.
4280.187 Project eligibility.
4280.188 Grant funding for energy audit and renewable energy 
development assistance.
4280.189 [Reserved]
4280.190 EA/REDA grant applications--Content.
4280.191 Evaluation of energy audit and renewable energy development 
assistance grant applications.
4280.192 Scoring energy audit and renewable energy development 
assistance grant applications.
4280.193 Selecting energy audit and renewable energy development 
assistance grant applications for award.
4280.194 Actions prior to grant closing.
4280.195 Awarding and administering energy audit and renewable 
energy development assistance grants.
4280.196 Servicing energy audit and renewable energy development 
assistance grants.
4280.197-4280.199 [Reserved]
4280.200 OMB control numbers.
Appendix A to Subpart B of Part 4280--Technical Reports for Projects 
with Total Eligible Project Costs of $200,000 or Less
Appendix B to Subpart B of Part 4280--Technical Reports for Projects 
with Total Eligible Project Costs of Greater than $200,000
Appendix C to Subpart B of Part 4280--Technical Report for 
Hydropower Projects
Appendix D to Subpart B of Part 4280--Technical Report for Flexible 
Fuel Pumps
Appendix E to Subpart B of Part 4280--Feasibility Study Content

Subpart B--Rural Energy for America Program

General


Sec.  4280.101  Purpose.

    This subpart contains the procedures and requirements for providing 
the following financial assistance under the Rural Energy for America 
Program:
    (a) Grants or guaranteed loans, or a combination grant and 
guaranteed loan, for the purpose of purchasing and installing renewable 
energy systems and energy efficiency improvements in rural areas;
    (b) Grants for conducting renewable energy system feasibility 
studies; and
    (c) Grants to assist agricultural producers and rural small 
businesses by conducting energy audits and providing recommendations 
and information on renewable energy development assistance and 
improving energy efficiency.


Sec.  4280.102  Organization of subpart.

    (a) Sections 4280.103 through 4280.111 discuss definitions, 
exception authority, appeals, conflict of interest, USDA Departmental 
regulations, other applicable laws, ineligible applicants, borrowers, 
and owners, general applicant and application provisions, and 
notifications, which are applicable to all of the funding programs 
under this subpart.
    (b) Sections 4280.112 through 4280.121 discuss the requirements 
specific to renewable energy system and energy efficiency improvement 
grants. Sections 4280.112 and 4280.113 discuss, respectively, applicant 
and project eligibility. Section 4280.114 discusses the circumstances 
under which an applicant may qualify to submit a simplified application 
for a grant. Sections 4280.115 through 4280.118 address grant funding, 
grant application content and required documentation, the evaluation 
process, and insurance requirements. Sections 4280.119 through 4280.121 
address project planning, development, and completion, grantee 
requirements, and grant servicing.
    (c) Sections 4280.122 through 4280.160 discuss the requirements

[[Page 21119]]

specific to renewable energy system and energy efficiency improvement 
guaranteed loans. Sections 4280.122 through 4280.127 discuss 
eligibility 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.
    (d) Section 4280.165 presents the process by which the Agency will 
make combined loan guarantee and grant funding available for renewable 
energy system and energy efficiency improvement projects.
    (e) Sections 4280.170 through 4280.182 presents the process by 
which the Agency will make renewable energy system feasibility study 
grant funding available. These sections cover applicant, project, and 
application eligibility; grant funding; application content, 
evaluation, scoring, and selection for award; and grant award, 
administration, and servicing.
    (f) Sections 4280.186 through 4280.196 present the process by which 
the Agency will make energy audit and renewable energy development 
assistance grant funding available. These sections cover applicant and 
project eligibility; grant funding; application content, evaluation, 
scoring, and selection for award; and grant award, administration, and 
servicing.
    (g) Appendices A through D of this subpart cover technical report 
requirements. Appendix A applies to projects with total eligible 
project costs of $200,000 or less; Appendix B applies projects with 
total eligible project costs greater than $200,000; Appendix C applies 
to hydropower projects; and Appendix D applies to flexible fuel pumps. 
Appendix E identifies the contents of the feasibility study that will 
be required to be submitted to the Agency if funding is provided under 
Sec. Sec.  4280.170 through 4280.182.


Sec.  4280.103  Definitions.

    Terms used in this subpart are defined in either Sec.  4279.2 of 
this chapter or in this section. If a term is defined in both Sec.  
4279.2 and this section, it will have, for purposes of this subpart 
only, the meaning given in this section.
    Administrator. The Administrator of the Rural Business-Cooperative 
Service within the Rural Development Mission Area of the U.S. 
Department of Agriculture.
    Agency. The Rural Business-Cooperative Service or successor Agency 
assigned by the Secretary of Agriculture to administer the Rural Energy 
for America 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. 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. A renewable energy system that uses 
animal waste and other organic substrates, via anaerobic digestion, to 
produce biomethane that is used to produce thermal or electrical energy 
or converted to a compressed gaseous or liquid state.
    Annual receipts. The total income or gross income (sole 
proprietorship) plus cost of goods sold.
    Applicant. The agricultural producer or rural small business that 
is seeking a grant, guaranteed loan, or a combination of a grant and 
loan, under this subpart.
    Assignment Guarantee Agreement (Form RD 4279-6) or successor form. 
A signed agreement between the Agency, the lender, and the holder 
containing the terms and conditions of an assignment of a guaranteed 
portion of a loan.
    Bioenergy project. A renewable energy system that produces fuel, 
thermal energy, or electric power from a biomass source, other than an 
anaerobic digester project.
    Biogas. Renewable biomass converted to gaseous fuels.
    Blended liquid transportation fuel. A fuel used for transportation 
that:
    (1) Is composed of one or more fuel types, at least one of which 
must meet the Renewable Fuel Standard, and
    (2) Results in a blended fuel that exceeds the highest requirement 
for the percentage volume for a renewable fuel.
    Borrower. Any party or parties liable for a guaranteed loan made 
under this subpart except guarantors.
    Capacity. The maximum load that an apparatus or heating unit is 
able to meet on a sustained basis as rated by the manufacturer.
    Commercially available. 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. 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.
    Default. 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.
    Departmental regulations. The regulations of the Department of 
Agriculture's Office of Chief Financial Officer (or successor office) 
as codified in 2 CFR part 417 and 7 CFR parts 3000 through 3099, 
including, but not necessarily limited to, 7 CFR parts 3015 through 
3019, 7 CFR part 3021, and 7 CFR part 3052.
    Design/build method. 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. The total project costs that are eligible 
to be paid with program funds.
    Energy assessment. 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. An individual or entity that conducts an energy 
assessment.
    Energy audit. An audit conducted by a certified energy manager or 
professional engineer that focuses on potential capital-intensive 
projects and involves detailed gathering of field data

[[Page 21120]]

and engineering analysis. The audit will provide detailed project costs 
and savings information with a high level of confidence sufficient for 
major capital investment decisions.
    Energy auditor. An individual or entity that conducts an energy 
audit.
    Energy efficiency improvement (EEI). Improvements to a facility, 
building, or process that reduce energy consumption, or reduce energy 
consumed per square foot.
    Existing business. A business that has completed at least one full 
business cycle.
    Fair market value of equity in real property. Fair market value of 
real property, as established by an appraisal, less the outstanding 
balance of any mortgages, liens, or encumbrances.
    Feasibility study. An analysis of the economic, market, technical, 
financial, and management feasibility of a proposed project or 
business.
    Financial feasibility. The ability of a project or business to 
achieve the income, credit, and cash flows 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.
    Flexible fuel pump. A retail pump that combines and dispenses a 
blended liquid transportation fuel or dispenses a blended liquid 
transportation fuel. If a flexible fuel pump dispenses more than one 
blend of liquid transportation fuel, at least one of the blends must 
meet the definition of blended liquid transportation fuel found in this 
section.
    Geothermal, direct use. A system that uses thermal energy directly 
from a geothermal source.
    Geothermal, electric generation. A system that uses geothermal 
energy to produce high pressure steam for electric power production.
    Holder. 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.
    Hydroelectric energy. Energy created from various hydroelectric 
sources including, but not limited to, diverted run-of-river water, in-
stream run-of-river water, and in-conduit water.
    Hydrogen project. 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.
    Hydropower. Energy created by hydroelectric or ocean energy.
    Institution of higher education. As defined in 20 U.S.C. 1002(a).
    Instrumentality. An organization recognized, established, and 
controlled by a State, tribal, or local government, for a public 
purpose or to carry out special purposes.
    Interconnection agreement. 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. 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. 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. 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. A wind energy project for which the rated power 
of the individual wind turbine(s) is larger than 100kW.
    Lender. 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. Agreement 
between the Agency and the lender setting forth the lender's loan 
responsibilities.
    Loan Note Guarantee (Form RD 4279-5) or successor form. Instrument 
issued and executed by the Agency containing the terms and conditions 
of the guarantee.
    Matching funds. The funds needed to pay for the portion of the 
eligible project costs not funded or guaranteed by the Agency through a 
grant or guaranteed loan under this program. Unless authorized by 
statute, other Federal grant funds cannot be used to meet a matching 
funds requirement.
    Necessary capital improvement. A capital improvement required to 
keep an existing system in compliance with regulations or to maintain 
technical or operational feasibility.
    Ocean energy. Energy created by use of various types of moving 
water including, but not limited to, tidal, wave, current, and thermal 
changes.
    Participation. 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. 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. The period of time after the Agency has received 
a complete application, which contains all parts necessary for the 
Agency to determine applicant and project eligibility, to score the 
application, and to conduct the technical evaluation.
    Power purchase agreement. The terms and conditions governing the 
sale and transportation of electricity produced by the grantee or 
borrower to another party.
    Pre-commercial technology. 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. Evidence of debt. A note that a borrower signs 
promising to pay a specific amount of money at a stated time or on 
demand.
    Public power entity. Is defined using the definition of state 
utility as defined in section 217(A)(4) of the Federal Power Act (16 
U.S.C. 824q(a)(4)). As of this writing, the definition ``means a State 
or any political subdivision of a State, or any agency, authority, or 
instrumentality of any one or more of the foregoing, or a corporation 
that is wholly owned, directly or indirectly, by any one or more of the 
foregoing, competent to carry on the business of developing, 
transmitting, utilizing, or distributing power.''
    Qualified consultant. An entity possessing the knowledge, 
expertise, and experience to perform a specific task.
    Qualified party. An independent third party entity possessing the 
knowledge, expertise, and experience to perform in an efficient, 
effective, and authoritative manner the specific task required.
    Rated power. The maximum amount of energy that can be created at 
any given time.
    Renewable biomass.
    (1) Materials, pre-commercial thinnings, or invasive species from 
National Forest System land and public lands (as defined in section 103 
of the

[[Page 21121]]

Federal Land Policy and Management Act of 1976 (43 U.S.C. 1702)) that:
    (i) Are byproducts of preventive treatments that are removed to 
reduce hazardous fuels; to reduce or contain disease or insect 
infestation; or to restore ecosystem health;
    (ii) Would not otherwise be used for higher-value products; and
    (iii) Are harvested in accordance with applicable law and land 
management plans and the requirements for old-growth maintenance, 
restoration, and management direction of paragraphs (e)(2), (e)(3), and 
(e)(4) and large-tree retention of subsection (f) of section 102 of the 
Healthy Forests Restoration Act of 2003 (16 U.S.C. 6512); or
    (2) Any organic matter that is available on a renewable or 
recurring basis from non-Federal land or land belonging to an Indian or 
Indian tribe that is held in trust by the United States or subject to a 
restriction against alienation imposed by the United States, including:
    (i) Renewable plant material, including feed grains; other 
agricultural commodities; other plants and trees; and algae; and
    (ii) Waste material, including crop residue; other vegetative waste 
material (including wood waste and wood residues); animal waste and 
byproducts (including fats, oils, greases, and manure); and food waste 
and yard waste.
    Renewable energy. Energy derived from:
    (1) A wind, solar, renewable biomass, ocean (including tidal, wave, 
current, and thermal), geothermal or hydroelectric source; or
    (2) Hydrogen derived from renewable biomass or water using wind, 
solar, ocean (including tidal, wave, current, and thermal), geothermal 
or hydroelectric energy sources.
    Renewable Energy Development Assistance. Assistance provided by 
eligible grantees to agricultural producers and rural small businesses 
to become more energy efficient and to use renewable energy 
technologies and resources. The renewable energy development assistance 
may consist of renewable energy site assessment and/or renewable energy 
technical assistance.
    Renewable energy site assessment. A report provided to an 
agricultural producer or rural small business providing recommendations 
and information regarding the use of renewable energy technologies in 
its operation. The report shall be prepared by a qualified consultant 
and evaluate a specific site or geographic area for potential use of 
one or more renewable energy technologies. Typically, the report will 
evaluate a potential renewable energy project with an estimated total 
cost of construction of less than $200,000. The evaluation shall be 
based on existing data, which may include data regarding existing and/
or proposed structures, commercially available technologies, feed-
stocks, and other renewable energy resources. The report will consider 
factors such as the site and the potential uses of renewable energy 
technology at the site. The report will not include information about 
any residential dwelling(s).
    Renewable energy system (RES). A system that produces or produces 
and delivers usable energy from a renewable energy source, or is a 
flexible fuel pump.
    Renewable energy technical assistance. Assistance provided to 
agricultural producers and rural small businesses on how to use 
renewable energy technologies and resources in their operations.
    Rural or rural area. Any area of a State not in a city or town that 
has a population of more than 50,000 inhabitants, according to the 
latest decennial census of the United States, or in the urbanized area 
contiguous and adjacent to a city or town that has a population of more 
than 50,000 inhabitants, and any area that has been determined to be 
``rural in character'' by the Under Secretary for Rural Development, or 
as otherwise identified in this definition.
    (1) An area that is attached to the urbanized area of a city or 
town with more than 50,000 inhabitants by a contiguous area of 
urbanized census blocks that is not more than 2 census blocks wide. 
Applicants from such an area should work with their Rural Development 
State Office to request a determination of whether their project is 
located in a rural area under this provision.
    (2) For the purposes of this definition, cities and towns are 
incorporated population centers with definite boundaries, local self 
government, and legal powers set forth in a charter granted by the 
State.
    (3) For the Commonwealth of Puerto Rico, the island is considered 
rural and eligible for Business Programs assistance, except for the San 
Juan Census Designated Place (CDP) and any other CDP with greater than 
50,000 inhabitants. CDPs with greater than 50,000 inhabitants, other 
than the San Juan CDP, may be determined to be eligible if they are 
``not urban in character.''
    (4) For the State of Hawaii, all areas within the State are 
considered rural and eligible for Business Programs assistance, except 
for the Honolulu CDP within the County of Honolulu.
    (5) For the purpose of defining a rural area in the Republic of 
Palau, the Federated States of Micronesia, and the Republic of the 
Marshall Islands, the Agency shall determine what constitutes rural and 
rural area based on available population data.
    (6) The determination that an area is ``rural in character'' will 
be made by the Under Secretary of Rural Development. The process to 
request a determination under this provision is outlined in paragraph 
(6)(ii) of this definition.
    (i) The determination that an area is ``rural in character'' under 
this definition will apply to areas that are within:
    (A) An urbanized area that has two points on its boundary that are 
at least 40 miles apart, which is not contiguous or adjacent to a city 
or town that has a population of greater than 150,000 inhabitants or 
the urbanized area of such a city or town; or
    (B) An urbanized area contiguous and adjacent to a city or town of 
greater than 50,000 inhabitants that is within one-quarter mile of a 
rural area.
    (ii) Units of local government may petition the Under Secretary of 
Rural Development for a ``rural in character'' designation by 
submitting a petition to both the appropriate Rural Development State 
Director and the Administrator on behalf of the Under Secretary. The 
petition shall document how the area meets the requirements of 
paragraph (6)(i)(A) or (B) of this definition and discuss why the 
petitioner believes the area is ``rural in character,'' including, but 
not limited to, the area's population density, demographics, and 
topography and how the local economy is tied to a rural economic base. 
Upon receiving a petition, the Under Secretary will consult with the 
applicable Governor or leader in a similar position and request 
comments to be submitted within 5 business days, unless such comments 
were submitted with the petition. The Under Secretary will release to 
the public a notice of a petition filed by a unit of local government 
not later than 30 days after receipt of the petition by way of 
publication in a local newspaper and posting on the Agency's Web site, 
and the Under Secretary will make a determination not less than 15 
days, but no more than 60 days, after the release of the notice. Upon a 
negative determination, the Under Secretary will provide to the 
petitioner an opportunity to appeal a determination to the Under 
Secretary, and the petitioner will have 10 business days to appeal the 
determination and provide further information for consideration.

[[Page 21122]]

    Rural Energy for America Program Grant Agreement (Form RD 4280-2) 
or successor form. An agreement between the Agency and the grantee 
setting forth the provisions under which the grant will be 
administered.
    Simple payback. The estimated simple payback of a project funded 
under this subpart as calculated using paragraph (1), (2), or (3), as 
applicable, of this definition.
    (1) For energy generation projects, simple payback is calculated as 
follows:
    (i) Simple payback = (Total Project Costs (including REAP Grant))/
(Average Net Income + Interest Expense + Depreciation Expense (for the 
project))
    (ii) Average net income:
    (A) Is based on all energy related revenue streams which include 
monetary benefits from Production Tax Credit (PTC), Renewable Energy 
Credit, Carbon Credits, revenue from byproducts produced by the energy 
system, fair market value of byproducts produced by and used in the 
project or related enterprises, and other incentives that can be 
annualized.
    (B) Is based on income remaining after all project obligations are 
paid (operating and maintenance), except interest and depreciation as 
noted above.
    (C) Is based on the Agency's review and acceptance of the project's 
typical year income (which is after the project is operating and 
stabilized) projections at the time of application submittal.
    (D) Does not allow Investment Tax Credits, State tax incentives, or 
other one-time construction and investment related benefits that cannot 
be annualized to be included as income or reduce total eligible project 
costs.
    (2) For energy replacement and energy efficiency improvement 
projects, simple payback is calculated as follows:
    (i) Simple payback = (Total Project Costs (including REAP Grant))/
Dollar Value of Energy Generated or Saved (as applicable)
    (ii) Dollar value of energy generated or saved incorporates the 
following:
    (A) All energy related revenue streams, which include monetary 
benefits from PTC, Renewable Energy Credit, Carbon Credits, revenue 
from byproducts produced by the energy system, and other monetary 
incentives that can be annualized.
    (B) Energy saved or replaced shall be calculated on the quantity of 
energy saved or replaced (e.g., BTU) and converted to a monetary value 
using a constant value or price of energy as determined under paragraph 
(2)(ii)(B)(3) of this definition.
    (1) The actual total quantity of energy used (BTU) in the original 
building and equipment in the 12 months prior to the RES or EEI project 
application.
    (2) Projected energy usage after the RES or EEI project shall be 
the projected total quantity of energy used (BTU) on an annual basis 
for the same size or capacity as the original building or equipment. 
For energy efficiency improvement to equipment, if the new piece of 
equipment has a different capacity than the piece of equipment being 
replaced, the projected total quantity of energy used for the new piece 
of equipment shall be adjusted based on the ratio of the capacity of 
the replaced piece of equipment to the capacity of the new piece of 
equipment.
    (3) Value or price of energy shall be the actual average price paid 
over the last year and used as a constant for all calculations of the 
value of energy.
    (C) Does not allow energy efficiency improvements to monetize 
benefits other than the dollar amount of the energy savings the 
agricultural producer or rural small business realizes as a result of 
the improvement.
    (D) Does not allow Investment Tax Credits, State tax incentives, or 
other one-time construction and investment related benefits that cannot 
be annualized to be included as income or reduce total project costs.
    (3) For flexible fuel pumps, the calculation for simple payback is 
as follows:
    (i) Simple payback = (Total Project Costs (including REAP Grant))/
(Increase in Net Income + Interest Expense + Depreciation Expense (for 
the project))
    (ii) Increase in income:
    (A) Is based on all flexible fuel pump related net income (the 
projected increase in annual net income resulting by the installation 
of the project), which includes monetary benefits from Tax Credits and 
other credits or incentives that can be annualized.
    (B) Is based on income remaining after all project obligations are 
paid (operating and maintenance), except interest and depreciation as 
noted above.
    (C) Is based on the Agency's review and acceptance of the project's 
typical year income (which is after the project is operating and 
stabilized) projections at the time of application submittal.
    (D) Does not allow State tax incentives or other one-time 
construction and investment related benefits that cannot be annualized 
to be included as income or reduce total eligible project costs.
    Simplified application. An application that conforms to the 
criteria and procedures specified in Sec.  4280.114.
    Small business. 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 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 except for Tribal business 
entities formed as Section 17 Corporations as determined by the 
Secretary of the Interior or other Tribal business entities that have 
similar structures and relationships with their Tribal governments as 
determined by the Agency. The Agency shall determine the small business 
status of such a Tribal entity without regard to the resources of the 
Tribal government. With the exception of the entities described above, 
all other non-profit entities are excluded.
    Small hydropower. A hydropower project for which the rated power of 
the system is 30 megawatts or less.
    Small solar, electric. 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. 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. 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. 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 cash flow statement data and commonly used 
ratios. The spreadsheets enable a reviewer to easily scan the data, 
spot trends, and make comparisons.
    State. Any of the 50 states of the United States, the Commonwealth 
of Puerto Rico, the District of Columbia,

[[Page 21123]]

the U.S. Virgin Islands, 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 costs. The sum of all costs associated with a 
completed project.
    Used equipment. Any equipment that has been used in any previous 
application and is provided in an ``as is'' condition.
    Very small business. A business with fewer than 15 employees and 
less than $1 million in annual receipts.


Sec.  4280.104  Exception authority.

    The Administrator may, with the concurrence of the Secretary of 
Agriculture, make an exception, on a case-by-case basis, 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 Federal government's interest.


Sec.  4280.105  Appeals.

    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 application may be appealed by the applicant 
only. Appeals will be handled in accordance with 7 CFR part 11 of this 
title.


Sec.  4280.106  Conflict of interest.

    (a) 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 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.
    (b) No member of or delegate to Congress shall receive any share or 
part of this grant or any benefit that may arise there from; but this 
provision shall not be construed to bar as a contractor under the grant 
a publicly held corporation whose ownership might include a member of 
Congress.


Sec.  4280.107  USDA Departmental Regulations.

    All projects funded under this subpart are subject to the 
provisions of the Departmental regulations (7 CFR subtitle A), as 
applicable.


Sec.  4280.108  Laws that contain other compliance requirements.

    (a) Equal employment opportunity. 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 or the lender and borrower, as applicable, is 
responsible for ensuring that the contractor complies with these 
requirements.
    (b) Equal opportunity and nondiscrimination. The Agency will ensure 
that equal opportunity and nondiscrimination requirements are met in 
accordance with the Equal Credit Opportunity Act and 7 CFR part 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); the fact that all or 
part of the applicant's income derives from any public assistance 
program; or the fact that the applicant has in good faith exercised any 
right under the Consumer Credit Protection Act. Lenders will comply 
with the requirements of the Equal Credit Opportunity Act (see 12 CFR 
part 202). Such compliance will be accomplished prior to loan closing.
    (c) Civil rights compliance. 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, Sec.  1901.204 of this 
title. Grants will require one subsequent compliance review after the 
last disbursement of grant funds has been made, and the facility has 
been in full operation for 90 days.
    (d) Americans with Disabilities Act (ADA). Guaranteed loans that 
involve the construction of or addition to facilities that accommodate 
the public and commercial facilities, as defined by the ADA, must 
comply with the ADA. The lender and borrower are responsible for 
compliance.
    (e) Environmental analysis. 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.
    (f) Executive Order 12898. 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, whichever occurs first.
    (g) Discrimination complaints. The regulations contained in 7 CFR 
part 1901, subpart E of this title apply to this program, with the 
exception of guaranteed loans. Any person or any specific class of 
person, believing they have been subjected to discrimination may file a 
complaint within 180 days of an alleged act of discrimination or from 
the time discrimination is known, or should have been known, with the 
USDA Director, Office of Adjudication, Room 3326-W, Whitten Building, 
1400 Independence Avenue, SW., Washington, DC 20250-9410.

[[Page 21124]]

Sec.  4280.109  Ineligible applicants, borrowers, and owners.

    Applicants, borrowers, and owners will be ineligible to receive 
funds under this subpart as discussed in paragraphs (a) and (b) of this 
section.
    (a) If an applicant, borrower, 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 or guaranteed loan until the judgment is 
paid in full or otherwise satisfied or the delinquency is resolved.
    (b) If an applicant or borrower is debarred from receiving Federal 
assistance, the applicant is not eligible to receive a grant or 
guaranteed loan under this subpart.


Sec.  4280.110  General applicant and application provisions.

    (a) Complete applications. Applicants must submit complete 
applications in order to be considered. If an application is 
incomplete, the Agency will identify those parts of the application 
that are incomplete and provide a written explanation to the applicant 
for possible future resubmission. Upon receipt of a complete 
application by the appropriate Agency office and by the applicable 
application deadline, the Agency will complete its evaluation.
    (b) Application withdrawal. During the period between the 
submission of an application and the execution of loan and/or grant 
award documents, the applicant must notify the Agency, in writing, if 
the project is no longer viable or the applicant no longer is 
requesting financial assistance for the project. When the applicant so 
notifies the Agency, the selection will be rescinded or the application 
withdrawn.
    (c) Satisfactory progress. An applicant that has received one or 
more grants and/or guaranteed loans under this program must make 
satisfactory progress, as determined by the Agency, toward completion 
of any previously funded projects before the applicant will be 
considered for subsequent funding under this subpart.


Sec.  4280.111  Notifications.

    (a) Eligibility. If an applicant is determined by the Agency to be 
eligible for participation, the Agency will notify the applicant or 
lender, as applicable, in writing. If the applicant or the project is 
ineligible, the Agency will inform the applicant or lender, as 
applicable, in writing of the decision, reasons therefore, and any 
appeal rights. No further evaluation of the application will occur.
    (b) Ineligible applications. If an application is determined to be 
ineligible at any time, 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) Award. Each applicant will be notified of the Agency's decision 
on their application.

Renewable Energy System and Energy Efficiency Improvement Grants


Sec.  4280.112  Applicant eligibility.

    To receive a RES or EEI grant under this subpart, an applicant must 
be an agricultural producer or rural small business, as defined in 
Sec.  4280.103.


Sec.  4280.113  Project eligibility.

    For a renewable energy system or energy efficiency improvement 
project to be eligible to receive a RES or EEI grant under this 
subpart, the proposed project must meet each of the criteria, as 
applicable, in paragraphs (a) through (j), as applicable, of this 
section, and is subject to the limitations specified in paragraph (k) 
of this section.
    (a) The project must be for the purchase of a renewable energy 
system or to make energy efficiency improvements. Energy efficiency 
improvements to existing renewable energy systems are eligible energy 
efficiency improvement projects.
    (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 Sec.  4280.117(b).
    (d) The facility for which the project is being proposed must be 
located in a rural area, as defined in Sec.  4280.103, in a State if 
the type of applicant is a rural small business, or in a rural or non-
rural area in a State if the type of applicant is an agricultural 
producer. If the agricultural producer's facility is in a non-rural 
area, then the application can only be for renewable energy systems or 
energy efficiency improvements on integral components of or that are 
directly related to the facility, such as vertically integrated 
operations, and are part of and co-located with the agriculture 
production operation.
    (e) The applicant must have a place of business in a State.
    (f) 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.
    (g) Sites must be controlled by the agricultural producer or rural 
small business for the financing term of any associated Federal loans 
or loan guarantees.
    (h) 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.
    (i) For the purposes of this subpart, only hydropower projects with 
a rated power of 30 megawatts or less are eligible. The Agency refers 
to these hydropower sources as ``small hydropower,'' which includes 
hydropower projects commonly referred to as ``micro-hydropower'' and 
``mini-hydropower.''
    (j) The project has demonstrated technical feasibility.
    (k) No renewable energy system or energy efficiency improvement, or 
portion thereof, can be used for any residential purpose, including any 
residential portion of a farm, ranch, agricultural facility, or rural 
small business. However, an applicant may apply for funding for the 
installation of a second meter or provide certification in the 
application that any excess power generated by the renewable energy 
system will be sold to the grid and will not be used by the applicant 
for residential purposes.


Sec.  4280.114  Qualification for simplified applications.

    When applying for a RES or EEI 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 (a)(8) of this section must be met.
    (a) Simplified application criteria.
    (1) The applicant must be eligible in accordance with Sec.  
4280.112.
    (2) The project must be eligible in accordance with Sec.  4280.113.
    (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 Sec.  4280.119. 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 2 
years after

[[Page 21125]]

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.
    (1) Application documents. Application documents shall be submitted 
in accordance with Sec.  4280.116 or, if applying for a combined grant 
and loan, also in accordance with Sec.  4280.165(c).
    (2) Project development. Section 4280.119 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 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.
    (3) Project completion. 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.
    (4) Insurance. Section 4280.118 applies, except business 
interruption insurance is not required.


Sec.  4280.115  RES and EEI grant funding.

    (a) The amount of grant funds that will be made available to an 
eligible RES or EEI 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 for 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 
cannot be used to meet the matching fund requirement.
    (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 Sec.  4280.112.
    (c) Eligible project costs are only those costs associated with the 
items identified in paragraphs (c)(1) through (c)(10) 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 assessment or audit, will provide more energy 
savings than improving an existing facility. Only costs identified in 
the energy assessment or audit for energy efficiency improvements are 
allowed.
    (10) Energy efficiency improvements are limited to only 
improvements identified in the energy assessment or audit. Equipment 
identified by the assessment or audit to be replaced shall be replaced 
with equipment similar in capacity. If the energy efficiency 
improvement has a greater capacity than the existing equipment, the 
Agency will pro-rate the energy efficiency improvement's total eligible 
project costs based on the capacity of the existing equipment. A 
calculation shall be performed by dividing the capacity of the existing 
equipment by the capacity of the proposed equipment to determine the 
percentage of the energy efficiency improvement's eligible project 
costs that the Agency will use in determining the maximum grant 
assistance under this subpart (see example).
    Example. A business plans to build a new production line with a 
capacity of 625 units per hour to replace an existing production line 
that produces 500 units per hour. The total project costs of the new 
production line is $20,000, of which $15,000 would otherwise qualify as 
eligible project costs. However, because the new production line has a 
greater production capacity than the existing line (625 units per hour 
versus 500 units per hour), only a portion of the $15,000 of otherwise 
eligible project costs would be used in determining total eligible 
project cost and the maximum grant assistance available. In this 
example, because the original capacity (500 units per hour) is 80 
percent of the new capacity (625 units per hour), only 80 percent of 
the $15,000 of otherwise eligible project costs associated with the new 
production line (i.e., $12,000) will be considered as total eligible 
project cost to be financed under this subpart. The maximum grant award 
in this example would be $3,000, which is equal to $12,000 x 25 
percent.
    (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 RES or EEI 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 quantity of energy savings expected to be derived from the 
activity, as demonstrated by an energy audit;
    (5) The estimated period of time for the energy savings generated 
by the activity to equal the cost of the activity; and
    (6) The expected energy efficiency of the renewable energy system.

[[Page 21126]]

    (h) Time limit. Unless otherwise agreed to by the Agency, any 
renewable energy system or energy efficiency improvement grant 
agreement under this subpart will terminate 2 years from the date the 
Agency signs the agreement.


Sec.  4280.116  Application and documentation.

    The requirements in this section apply to RES and EEI grant 
applications under this subpart.
    (a) General. To ensure that projects are accurately scored by the 
Agency, applicants are requested to number each evaluation criteria and 
include, in that section, its corresponding supporting documentation 
and calculations according to Sec.  4280.117.
    (1) One funding type applications. Only one type of funding 
application (grant-only, guaranteed loan-only, or guaranteed loan/grant 
combination) for each project can be submitted under this subpart per 
Federal fiscal year.
    (2) Environmental information. Each application must include all 
environmental review documents with supporting documentation in 
accordance with 7 CFR part 1940, subpart G.
    (3) Foreign technology. As stated in Sec.  4280.113(b), projects 
must be for a pre-commercial or commercially available technology. The 
Agency's position is that if the system is currently commercially 
available only outside the United States (U.S.), then applicants must 
provide authoritative evidence of the foreign operating history, 
performance, and reliability in order to address the proven operating 
history identified in the definition. ``Commercial'' applicants must 
provide evidence that professional service providers, trades, large 
construction equipment providers and labor are readily available 
domestically and familiar with installation procedures and practices, 
and spare parts and service are readily available in the U.S. to 
properly maintain and operate the system. All warranties must be valid 
in the U.S.
    (4) Commercial application demonstration of pre-commercial 
technologies. In accordance with the definition of ``pre-commercial'' 
technology found in Sec.  4280.103, technical and economic potential 
for commercial application must be demonstrated to the Agency. In order 
to demonstrate the system has emerged through research and development 
as well as the demonstration process, applicants must provide 
authoritative evidence of the operating history, performance, and 
reliability past completion of start-up, shake-down, and commissioning. 
Typically, and in line with financial and operating performance 
evaluation protocol, the documented operating history, which may be 
established domestically or outside the U.S., should provide 
performance data for a minimum of 12 months. The time period will 
address the economic and technical performance potential of the pre-
commercial technology, as defined in Sec.  4280.103. Lastly, in 
accordance with demonstrating the potential for commercial application, 
applicants must provide evidence that professional service providers, 
trades, large construction equipment providers, and labor are readily 
available domestically and sufficiently familiar with installation 
procedures and practices, and spare parts and service are available in 
the U.S. to properly maintain and operate the system. Any warranties 
have to be valid in the U.S.
    (b) Grant application content. Applications and documentation for 
projects using the simplified application process, as described in 
Sec.  4280.114, 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 (b)(3) and (b)(5) through 
(b)(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 (b)(8) of this section.
    (1) Forms, certifications, and organizational documents. Each 
application must contain the items identified in paragraphs (b)(1)(i) 
through (b)(1)(iv) in this section.
    (i) Project specific forms.
    (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.''
    (ii) Forms and certifications.
    (A) AD-1049, ``Certification Regarding Drug-Free Workplace 
Requirements (Grants) Alternative I--For Grantees Other than 
Individuals.''
    (B) Form AD-1048, ``Certification Regarding Debarment, Suspension, 
Ineligibility and Voluntary Exclusion--Lower Tier 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) Applicants and borrowers must provide a certification 
indicating whether or not there is a known relationship or association 
with an Agency employee.
    (iii) Organizational documents. Except for sole proprietors, each 
applicant must submit, with the application, a copy of the legal 
organizational documents.
    (iv) The applicant's Dun and Bradstreet Data Universal Numbering 
System (DUNS) number (except for individuals).
    (2) Table of Contents. 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. Provide a concise summary of the project 
proposal and applicant information, project purpose and need, and 
project goals that includes the following:
    (i) Title. Provide a descriptive title of the project (identified 
on SF 424).
    (ii) Applicant eligibility. Describe how each of the applicable 
criteria identified in Sec. Sec.  4280.109 and 4280.112 is met.
    (iii) Project eligibility. Describe how each of the criteria in 
Sec.  4280.113(a) through (j), as applicable, 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 Sec.  
4280.113(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. Describe the applicant's total farm/
ranch/business operation and the relationship

[[Page 21127]]

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 gross income or size determination. 
Provide financial information to allow the Agency to determine the 
agricultural producer's percent of gross income derived from 
agricultural operations or the rural small business' size, as 
applicable. All information submitted under this paragraph must be 
substantiated by authoritative records.
    (A) Rural small businesses. 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. 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. 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.
    (iii) Pro forma financial statements. 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 cash flow and 
income statements for 3 years supported by a list of assumptions 
showing the basis for the projections.
    (5) Matching funds. 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 Sec.  4280.117(c). 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 System 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. Simplified applications, which are 
submitted for renewable energy system 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 (b)(7)(i)(C) 
of this section.
    (A) The Technical Report must be prepared in accordance with 
Appendix A, C, or D, as applicable, of this subpart. If a renewable 
energy system project does not fit one of the technologies identified 
in Appendices A, C, and D, 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. Full applications, which must be submitted 
for applications for renewable energy system projects or energy 
efficiency improvement projects with total eligible project costs 
greater than $200,000, must include a Technical Report prepared in 
accordance with Appendix B, C, or D, as applicable, of this subpart and 
with paragraphs (b)(7)(ii)(A) through (b)(7)(ii)(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.
    (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 system 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

[[Page 21128]]

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, C, or D, as 
applicable, of this subpart. Any Technical Report not prepared in the 
following format and in accordance with Appendix B, C, or D, where 
applicable, will be penalized under scoring for technical merit.
    (G) All Technical Reports shall follow the outline presented below 
and shall contain the information described in paragraphs 
(b)(7)(ii)(G)(1) through (b)(7)(ii)(G)(10) of this section and Appendix 
B, C, or D, as applicable, of this subpart if the technology is 
identified in Appendix B, C, or D 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 Appendices B, C, and D, 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) Qualifications of the project team. 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) Agreements and permits. 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 agreements 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) Energy or resource assessment. 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.
    (4) Design and engineering. 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) Project development. 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 cash flow requirements. Details 
for equipment procurement and installation shall be addressed in 
paragraphs (b)(7)(ii)(G) (7) and (b)(7)(ii)(G)(8) of this section.
    (6) Project economic assessment. 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) Equipment procurement. 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.
    (8) Equipment installation. 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) Operations and maintenance. 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) Dismantling and disposal of project components. 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. 
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 conform to the 
requirements of an acceptable feasibility study as specified in 
Appendix E of this subpart.


Sec.  4280.117  Evaluation of RES and EEI grant applications.

    (a) General review. The Agency will evaluate each RES and EEI 
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) Technical merit. 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.
    (c) Evaluation criteria. Agency personnel will score each 
application based on the evaluation criteria specified in paragraphs 
(c)(1) through (c)(10) of this section.
    (1) Quantity of energy replaced, produced, or saved, and flexible 
fuel pumps. Points may only be awarded for

[[Page 21129]]

energy replacement, energy savings, or energy generation, or for 
flexible fuel pumps. Points will not be awarded for more than one 
category.
    (i) 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 
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. 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. If the proposed renewable energy system is 
intended primarily for production of energy for sale, 10 points will be 
awarded.
    (iv) Flexible fuel pump(s). (A) If the proposed project is for one 
or more flexible fuel pumps, points will be awarded based on the 
overall percentage of proposed flexible fuel pumps to the applicant's 
total retail pump inventory at the facility. The percentage of proposed 
flexible fuel pumps shall be calculated using the following equation.


Equation: FFP% = (FFPx/TP) x 100

where: FFP% = Proposed flexible fuel pump(s), percentage.

FFPx = Number of proposed flexible fuel pumps to be installed at 
applicant's facility.
TP = Number of proposed pumps to be installed plus the number of 
pumps installed and operating at the facility.

    (B) If the proposed flexible fuel pump percentage calculated is 5 
percent or below, 5 points will be awarded; above 5 percent and up to, 
but not including, 10 percent, 10 points will be awarded; or 10 percent 
and above, 15 points will be awarded.
    (2) Environmental benefits. 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.
    (3) Commercial availability. 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. The Technical Merit of each project will 
be determined using the procedures specified in paragraphs (c)(4)(i) 
and (c)(4)(ii) of this section. The procedures specified in paragraph 
(c)(4)(i) will be used to score paragraphs (c)(4)(i)(A) through 
(c)(4)(i)(J) of this section. The final score awarded will be 
calculated using the procedures described in paragraph (c)(4)(ii) of 
this section.
    (i) Technical merit. 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.
    (A) Qualifications of the project team (maximum score of 10 
points). 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). 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). 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). 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). 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 cash flow 
requirements.
    (F) Project economic assessment (maximum score of 20 points). 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). The 
applicant has described the availability of the equipment required by 
the system. The description supports that

[[Page 21130]]

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). The 
applicant has described the plan for site development and system 
installation.
    (I) Operation and maintenance (maximum score of 5 points). 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). 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. To determine the actual 
points awarded a project for Technical Merit, the following procedure 
will be used: The score awarded for paragraphs (c)(4)(i)(A) through 
(c)(4)(i)(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.
    (5) Readiness. 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. 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 Sec.  4280.103, 10 points will be awarded.
    (7) Simplified application/low cost projects. 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. 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) Simple payback. A maximum of 15 points will be awarded for 
either renewable energy systems or energy efficiency improvements; 
points will not be awarded for more than one category. In either case, 
points will be awarded based on the simple payback of the project.
    (i) Renewable energy systems, including flexible fuel pumps. If the 
simple payback of the proposed project is:
    (A) Less than 10 years, 15 points will be awarded;
    (B) 10 years up to but not including 15 years, 10 points will be 
awarded;
    (C) 15 years up to and including 20 years, 5 points will be 
awarded; or
    (D) Longer than 20 years, no points will be awarded.
    (ii) Energy efficiency improvements. If the simple payback of the 
proposed project is:
    (A) Less than 4 years, 15 points will be awarded;
    (B) 4 years up to but not including 8 years, 10 points will be 
awarded;
    (C) 8 years up to and including 12 years, 5 points will be awarded; 
or
    (D) Longer than 12 years, no points will be awarded.
    (10) State Director and Administrator priorities and points. A 
State Director, for its State allocation under this subpart, or the 
Administrator, for making awards from the National Office reserve, may 
award up to 10 points to an application if the application is for an 
under-represented technology or for flexible fuel pumps or if selecting 
the application would help achieve geographic diversity. In no case 
shall an application receive more than 10 points under this criterion.


Sec.  4280.118  Insurance requirements.

    Agency approved insurance coverage must be maintained for the life 
of the RES or EEI 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.


Sec.  4280.119  Construction planning and performing development.

    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.
    (a) Technical services. 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. Facilities funded by the Agency will meet the 
requirements of Sec.  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. 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 Sec.  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 Sec.  4280.115(c) of this subpart for 
further details on eligible project costs.
    (d) Equipment purchases. 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, B, C, and D of this subpart. Payment shall be certified by copies of 
the Manufacturer's paid invoices and warranty documents.
    (e) Simple contract method. The simple contract method may be used 
for small projects with a contract not greater than $200,000. In 
smaller

[[Page 21131]]

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 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.
    (1) Contracting requirements threshold. 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. 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. 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) and in 
Appendices C and D, paragraph (i)(1).
    (4) Surety. Surety per 7 CFR part 1780, subpart C, Sec.  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. Section 1901.205 of 7 CFR part 1901, subpart 
E 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.
    (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.
    (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. 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. 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. 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. The applicant will request Agency 
concurrence by providing the Agency at least the information specified 
in paragraphs (f)(1)(i) through (f)(1)(viii) of this section.
    (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

[[Page 21132]]

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. 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.
    (3) Forms used. American Institute of Architects (AIA) contract 
forms between the owner and design-builder that are approved by the 
Agency 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. 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 Sec.  
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) and Appendices 
C and D, paragraph (i);
    (viii) Contract review and concurrence in accordance with Sec.  
1780.61(b) of this title;
    (ix) Owner's contractual responsibility in accordance with Sec.  
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 
part 1780, subpart C, Sec.  1780.75 of this title.
    (5) Obtaining bids and selecting a contractor. The applicant may 
select a contractor based on competitive sealed bids, competitive 
negotiation, or noncompetitive negotiation as described in Sec.  
1780.72(b), (c), or (d) of this title.
    (g) Contract method. 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. Procurement method shall comply with the 
requirements of Sec. Sec.  1780.72, 1780.75, and 1780.76 of this title.
    (2) Forms used. The AIA Form A101, ``Standard Form of Agreement 
Between Owner and 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. Contracts will have a listing of 
attachments and shall meet the requirements of Sec.  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;
    (iv) The amount, method, and frequency of payment;
    (v) Surety provisions that meet the requirements of Sec.  
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) and with 
Appendices C and D, paragraph (i);
    (viii) Contract review and concurrence in accordance with Sec.  
1780.61(b) of this title;
    (ix) Owner's contractual responsibility in accordance with Sec.  
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 Sec.  
1780.75 of this title.
    (4) Obtaining bids and selecting a contractor. The applicant may 
select a contractor based on competitive sealed bids, competitive 
negotiation, or noncompetitive negotiation as described in Sec.  
1780.72(b), (c), or (d) of this title.
    (5) Contract award. Applicants awarding contracts must comply with 
Sec.  1780.70(h) of this title.
    (6) Contracts awarded prior to applications. Applicants awarding 
contracts prior to filing an application must comply with Sec.  1780.74 
of this title.
    (7) Contract administration. Contract administration must comply 
with Sec.  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.


Sec.  4280.120  RES and EEI grantee requirements.

    (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 Form RD 1942-46, ``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 applicant must complete, sign, and return the Form RD 4280-
2. The

[[Page 21133]]

grantee must abide by all requirements contained in Form RD 4280-2, 
this subpart, and any other applicable Federal statutes or regulations. 
Failure to follow these requirements may result in termination of the 
grant and adoption of other available remedies.
    (c) Where applicable, the grantee shall provide to the Agency a 
copy of the executed power purchase agreement within 12 months from the 
date that the grant agreement is executed, unless otherwise approved by 
the Agency.


Sec.  4280.121  Servicing grants.

    (a) General. RES and EEI grants will be serviced in accordance with 
the Departmental Regulations, 7 CFR part 1951, subparts E and O of this 
title, and Form RD 4280-2.
    (b) Change of contractor or vendor. After an award has been made, 
the recipient of the award can request to change a contractor or vendor 
if the technical merit score for the project remains the same or is 
higher. Prior to changing a contractor or vendor, the recipient must 
submit to the Agency a written request providing information that 
allows the Agency to re-score the project's technical merit. If the 
Agency determines that the project achieves the same or higher 
technical merit score, the recipient may make the change. No additional 
funding will be available from the Agency if costs for the project have 
increased. If the Agency determines that the project does not achieve 
the same or higher technical merit score, the change will not be 
approved.

Renewable Energy System and Energy Efficiency Improvement Guaranteed 
Loans


Sec.  4280.122  Borrower eligibility.

    To receive a RES or EEI guaranteed loan under this subpart, a 
borrower must meet the criteria specified in Sec. Sec.  4280.109 and 
4280.112.


Sec.  4280.123  Project eligibility.

    For a RES or EEI project to be eligible to receive a guaranteed 
loan under this subpart, the project must meet each of the criteria, as 
applicable, specified in Sec.  4280.113(a) through (j). In addition, 
guaranteed loan funds may be used for necessary capital improvements to 
an existing renewable energy system.


Sec.  4280.124  Guaranteed loan funding.

    (a) The amount of the loan that will be made available to an 
eligible project under this subpart will not exceed 75 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 $25 million.
    (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; 70 percent for loans greater than $5 million up to and 
including $10 million; and 60 percent for loans greater than $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 $25 million.
    (e) Eligible project costs are only those costs associated with the 
items identified in paragraphs (e)(1) through (e)(12) 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 assessment or audit, will provide more energy 
savings than improving an existing facility. Only costs identified in 
the energy assessment or audit for energy efficiency improvements are 
allowed.
    (10) Energy efficiency improvements are limited to only 
improvements identified in the energy assessment or audit. Equipment 
identified by the audit to be replaced shall be replaced with equipment 
similar in capacity. If the energy efficiency improvement has a greater 
capacity than the existing equipment, the Agency will pro-rate the 
energy efficiency improvement's total eligible project costs based on 
the capacity of the existing equipment. A calculation shall be 
performed by dividing the capacity of the existing equipment by the 
capacity of the proposed equipment to determine the percentage of the 
energy efficiency improvement's eligible project costs that the Agency 
will use in determining the maximum guaranteed loan assistance under 
this subpart (see example).
    Example. A business plans to build a new production line with a 
capacity of 625 units per hour to replace an existing production line 
that produces 500 units per hour. The total project costs of the new 
production line is $20,000, of which $15,000 would otherwise qualify as 
eligible project costs. However, because the new production line has a 
greater production capacity than the existing line (625 units per hour 
versus 500 units per hour), only a portion of the $15,000 otherwise 
eligible project costs would be used in determining total eligible 
project cost and the maximum guaranteed loan assistance available. In 
this example, because the original capacity (500 units per hour) is 80 
percent of the new capacity (625 units per hour), only 80 percent of 
the $15,000 of otherwise eligible project costs associated with the new 
production line (i.e., $12,000) will be considered as total eligible 
project cost to be financed under this subpart. The maximum guaranteed 
loan award in this example would be $9,000, which is equal to $12,000 x 
75 percent.
    (11) Working capital.
    (12) 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 quantity of energy savings expected to be derived from the 
activity, as demonstrated by an energy audit;
    (5) The estimated period of time it would take for the energy 
savings generated by the activity to equal the cost of the activity; 
and
    (6) The expected energy efficiency of the renewable energy system.


Sec.  4280.125  Interest rates.

    (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

[[Page 21134]]

similar circumstances in the ordinary course of business. The interest 
rate charged is subject to Agency review and approval.
    (b) Comply with Sec.  4279.125(a), (b), and (d) of this chapter.


Sec.  4280.126  Terms of loan.

    (a) The repayment term for a loan for:
    (1) Real estate must not exceed 30 years;
    (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 Sec.  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.


Sec.  4280.127  Guarantee/annual renewal fee percentages.

    (a) Fee ceilings. 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 annually in the 
Federal Register.
    (b) Guarantee fee. 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.
    (c) Annual renewal fee. 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 publication. The annual renewal fee may not be 
passed on to the borrower.


Sec.  4280.128  Application and documentation.

    The requirements in this section apply to guaranteed loan 
applications for RES and EEI projects under this subpart.
    (a) General. Applications must be submitted in accordance with the 
requirements specified in Sec.  4280.116(a).
    (b) Application content for guaranteed loans greater than $600,000. 
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 (b)(2) of this section.
    (1) Guaranteed loan application content.
    (i) Table of contents. 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. Provide a concise summary of the proposed 
project and applicant information, project purpose and need, and 
project goals, including the following:
    (A) Title. Provide a descriptive title of the project.
    (B) Borrower eligibility. Describe how each of the criteria 
identified in Sec. Sec.  4280.109 and 4280.112 is met.
    (C) Project eligibility. Describe how each of the criteria, as 
applicable, in Sec.  4280.113(a) through (j) 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 Sec.  4280.113(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 the application. 
Additional project description information will be needed later in the 
application.
    (D) Operation description. 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 
Sec.  4280.116(b)(3)(iv).
    (iii) Financial information for gross income or size determination. 
Provide financial information to allow the Agency to determine the 
agricultural producer's percent of gross income derived from 
agricultural operations or the rural small business' size, as 
applicable, as specified in Sec.  4280.116(b)(3)(v).
    (iv) Matching funds. Submit a spreadsheet identifying sources, 
amounts, and status of matching funds as specified in Sec.  
4280.116(b)(5).
    (v) Self-evaluation score. Self-score the project using the 
evaluation criteria in Sec.  4280.117(c) as specified in Sec.  
4280.116(b)(6).
    (vi) Renewable energy and energy efficiency technical report. For 
both renewable energy system projects and energy efficiency improvement 
projects, submit a Technical Report in accordance with applicable 
provisions of Appendix B, C, or D, as applicable, of this subpart and 
as specified in Sec.  4280.116(b)(7)(ii). For loan requests in excess 
of $600,000, the services of a licensed PE or a team of licensed PE's 
is required. If none of the Technical Reports in Appendices B, C, and D 
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 Sec.  4280.116(b)(7)(ii)(A) through (G).
    (vii) Business-level feasibility study for renewable energy 
systems. 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 conform to the requirements of an acceptable feasibility study as 
specified in Appendix E of this subpart.
    (2) Lender forms, certifications, and agreements. Each application 
submitted under paragraph (b)(1) of this section must contain 
applicable items described in paragraphs (b)(2)(i) through (b)(2)(xi) 
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 Sec.  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.

[[Page 21135]]

    (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) Financial statements as specified in Sec.  4280.116(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.
    (viii) Business-level feasibility study.
    (ix) Lender's complete comprehensive written analysis in accordance 
with Sec.  4280.139.
    (x) 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.
    (xi) 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;
    (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. 
Applications and documentation for guaranteed loans $600,000 or less 
must comply with paragraphs (c)(1) and (c)(2) of this section.
    (1) Application Contents. 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 Sec.  4280.116(b)(2) through (8), except as 
specified in paragraphs (c)(1)(i) through (c)(1)(iii) of this section.
    (i) Section 4280.116(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.
    (A) For renewable energy system projects and energy efficiency 
improvement 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, C, or D, as 
applicable, of this subpart. If a renewable energy project does not fit 
one of the technologies identified in Appendices A, C, and D, the 
applicant must submit a Technical Report that conforms to the overall 
outline and subjects specified in Sec.  4280.116(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, C, or D, as applicable, of this subpart and as specified in 
Sec.  4280.116(b)(7)(ii)(G)(1) through (10), as applicable.
    (iii) Business-level feasibility study for renewable energy 
systems. 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 conform to the requirements of an acceptable feasibility study as 
specified in Appendix E of this subpart. 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. 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), (b)(2)(vii), 
(b)(2)(viii), (b)(2)(ix), and (b)(2)(xi) of this section. The lender 
must have the documentation contained in paragraphs (b)(2)(iii), 
(b)(2)(iv), (b)(2)(v), (b)(2)(vi), and (b)(2)(x) available in its files 
for the Agency's review.


Sec.  4280.129  Evaluation of RES and EEI guaranteed loan applications.

    (a) General review. The Agency will evaluate each application and 
make a determination as to whether 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.
    (b) Technical merit determination. 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.
    (c) Evaluation criteria. The Agency will score each application 
based on the evaluation criteria specified in Sec.  4280.117(c) (except 
for the criteria specified in Sec.  4280.117(c)(5)) and in paragraphs 
(c)(1) and (c)(2) of this section. Points will be awarded for either 
paragraph (c)(1) or (c)(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.


Sec.  4280.130  Eligible lenders.

    Eligible lenders are those identified in Sec.  4279.29 of this 
chapter, excluding

[[Page 21136]]

mortgage companies that are part of a bank-holding company.


Sec.  4280.131  Lender's functions and responsibilities.

    (a) General. Lenders are responsible for implementing the 
guaranteed loan program under this subpart. All lenders requesting or 
obtaining a loan guarantee must comply with Sec.  4279.30(a)(1)(i) 
through (ix) of this chapter.
    (b) Credit evaluation. The lender's credit evaluation must comply 
with Sec.  4279.30(b) of this chapter.
    (c) Environmental information. Lenders must ensure that borrowers 
furnish all environmental information required under 7 CFR part 1940, 
subpart G, and must comply with Sec.  4279.30(c) of this chapter.
    (d) Construction planning and performing development. The lender 
must comply with Sec.  4279.156(a) and (b) of this chapter, except 
under Sec.  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. The loan closing must be in compliance with Sec.  
4279.30(d) of this chapter.


Sec.  4280.132  Access to records.

    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.


Sec.  4280.133  Conditions of guarantee.

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


Sec.  4280.134  Sale or assignment of guaranteed loan.

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


Sec.  4280.135  Participation.

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


Sec.  4280.136  Minimum retention.

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


Sec.  4280.137  Repurchase from holder.

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


Sec.  4280.138  Replacement of document.

    Documents must be replaced in accordance with Sec.  4279.84 of this 
chapter, except, in Sec.  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.


Sec.  4280.139  Credit quality.

    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, cash flow, collateral, history, management, and the 
current status of the industry for which credit is to be extended.
    (a) Cash flow. All efforts will be made to structure debt so that 
the business has adequate debt coverage and the ability to accommodate 
expansion.
    (b) Collateral. 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 7 CFR part 4279, 
subpart B of this title.
    (c) Industry. 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.
    (d) Equity. 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 (d)(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. 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.


Sec.  4280.140  Financial statements.

    (a) The financial information required in Sec.  4280.116(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.


Sec.  4280.141  Appraisals.

    (a) Conduct of appraisals. All appraisals must be in accordance 
with Sec.  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. Specialized appraisers will be required 
to complete appraisals in accordance with paragraphs (a)(1) and (a)(2) 
of this section. The Agency may approve a waiver of this requirement 
only if a specialized appraiser does not exist in a

[[Page 21137]]

specific industry or hiring one would cause an undue financial burden 
to the borrower.


Sec.  4280.142  Personal and corporate guarantees.

    (a) All personal and corporate guarantees must be in accordance 
with Sec.  4279.149(a) of this chapter.
    (b) Except for passive investors, unconditional personal and 
corporate guarantees for those owners with a beneficial interest at 
least 20 percent of the borrower will be required where legally 
permissible.


Sec.  4280.143  Loan approval and obligation of funds.

    The lender and applicant must comply with Sec.  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.


Sec.  4280.144  Transfer of lenders.

    All transfers of lenders must be in accordance with Sec.  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.


Sec.  4280.145  Changes in borrower.

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


Sec.  4280.146  Conditions precedent to issuance of Loan Note 
Guarantee.

    (a) The Loan Note Guarantee will not be issued until the lender 
certifies to the conditions identified in paragraphs Sec.  4279.181(a) 
through (o) of this chapter and paragraphs (b) and (c) 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.
    (c) Where applicable, the lender shall provide to the Agency a copy 
of the executed power purchase agreement.


Sec.  4280.147  Issuance of the guarantee.

    (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 Sec.  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;
    (3) Copies of legal loan documents; and
    (4) Disbursement plan, if working capital is a purpose of the 
project.


Sec.  4280.148  Refusal to execute Loan Note Guarantee.

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


Sec.  4280.149  Requirements after project construction.

    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. 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 (a)(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.
    (b) Energy efficiency improvement projects. 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.


Sec.  4280.150  Insurance requirements.

    Each borrower must obtain the insurance required in Sec.  4280.118. 
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.


Sec.  4280.151  [Reserved]


Sec.  4280.152  Servicing guaranteed loans.

    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. Comply with Sec.  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. Comply with Sec.  4287.112 of this 
chapter, except that under Sec.  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 Sec.  4280.125.
    (c) Release of collateral.
    (1) Collateral may only be released in accordance with Sec.  
4287.113(a) and (b) of this chapter and paragraph (c)(2) of this 
section.
    (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. All subordinations of the 
lender's lien position must comply with Sec.  4287.123 of this chapter.

[[Page 21138]]

    (e) Alterations of loan instruments. All alterations of loan 
instruments must comply with Sec.  4287.124 of this chapter.
    (f) Loan transfer and assumption. All loan transfers and 
assumptions must comply with Sec.  4287.134(c), (d), (f), (g), and (i) 
through (k) of this chapter in addition to the following:
    (1) Documentation of request. All transfers and assumptions must be 
approved in writing by the Agency and must be to eligible applicants in 
accordance with Sec.  4280.122. 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. 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 Sec.  4280.126. 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. Loans to provide additional funds in 
connection with a transfer and assumption must be considered as a new 
loan application under Sec.  4280.128.
    (4) Loss resulting from transfer. 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 Guarantee 
Report of Loss,'' 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 Sec.  
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.


Sec.  4280.153  Substitution of lender.

    (a) All substitutions of lenders must comply with Sec.  
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 Sec.  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.


Sec.  4280.154  Default by borrower.

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


Sec.  4280.155  Protective advances.

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


Sec.  4280.156  Liquidation.

    All liquidations must comply with Sec.  4287.157 of this chapter, 
except as follows:
    (a) Under Sec.  4287.157(d)(13) of this chapter, whenever $200,000 
is used substitute $100,000; and
    (b) Under Sec.  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.''


Sec.  4280.157  Determination of loss and payment.

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


Sec.  4280.158  Future recovery.

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


Sec.  4280.159  Bankruptcy.

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


Sec.  4280.160  Termination of guarantee.

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


Sec. Sec.  4280.161-4280.164  [Reserved]

Combined Funding for Renewable Energy Systems and Energy Efficiency 
Improvements


Sec.  4280.165  Combined funding for renewable energy systems and 
energy efficiency improvements.

    The requirements for a RES or EEI project for which an applicant is 
seeking a combined grant and guaranteed loan are defined as follows:
    (a) Eligibility. Applicants must meet the applicant eligibility 
requirements specified in Sec. Sec.  4280.109 and 4280.112 and the 
borrower eligibility requirements specified in Sec.  4280.122. Projects 
must meet the project eligibility requirements specified in Sec. Sec.  
4280.113 and 4280.123. Applicants may submit simplified applications if 
the project meets the requirements specified in Sec.  4280.114.
    (b) Funding. Funding provided under this section is subject to the 
limits described in paragraphs (b)(1) through (b)(3) of this section.
    (1) The amount of any combined grant and guaranteed loan must not 
exceed 75 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 Sec. Sec.  
4280.115(c) and 4280.124(e). The applicant must provide the remaining 
total funds needed to complete the project.
    (2) The minimum combined funding request allowed is $5,000, with 
the grant portion of the funding request being at least $1,500.
    (3) Applicants whose combination applications are approved for 
funding must utilize both the loan guarantee and the grant. The Agency 
reserves the right to reduce the total loan guarantee and grant award 
as appropriate.
    (c) Application and documentation. 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 Sec. Sec.  4280.116 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. The Agency will evaluate each application according 
to applicable procedures specified in Sec. Sec.  4280.117 and 4280.129.
    (e) Interest rate and terms of loan. 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 Sec. Sec.  4280.125 and 
4280.126 for guaranteed loans.
    (f) Other provisions. 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) through 
(f)(3) of this section.

[[Page 21139]]

    (1) All other provisions of Sec. Sec.  4280.101 through 4280.111 
apply to the combined funding request.
    (2) All other provisions of Sec. Sec.  4280.112 through 4280.121 
apply to the grant portion of the combined funding request.
    (3) All other provisions of Sec. Sec.  4280.122 through 4280.160 
apply to the guaranteed loan portion of the combined funding request.


Sec. Sec.  4280.166-4280.169  [Reserved]

Renewable Energy System Feasibility Study Grants


Sec.  4280.170  Applicant eligibility.

    To be eligible for a renewable energy system feasibility study 
grant under this subpart, the applicant must be an agricultural 
producer or a rural small business, as defined in Sec.  4280.103, and 
must be the prospective owner of the renewable energy system for which 
the feasibility study grant is sought.


Sec.  4280.171  Project eligibility.

    Only renewable energy system projects that meet the requirements 
specified in this section are eligible for feasibility study grants 
under this subpart. The project for which the feasibility study grant 
is sought shall:
    (a) Be for the purchase, installation, expansion, or other energy-
related improvement of a renewable energy system located in a State, as 
defined in Sec.  4280.103;
    (b) Be for a facility located in a rural area if the applicant is a 
rural small business, or in a rural or non-rural area if the applicant 
is an agricultural producer. If the agricultural producer's facility is 
in a non-rural area, then the feasibility study can only be for a 
renewable energy system on integral components of or directly related 
to the facility, such as vertically integrated operations, and are part 
of and co-located with the agriculture production operation;
    (c) Be for technology that is pre-commercial or commercially 
available, and that is replicable;
    (d) Not have had a feasibility study already completed for it with 
Federal and/or State assistance; and
    (e) The applicant has a place of business in a State.


Sec.  4280.172  Application eligibility provisions.

    (a) Applications for industry-level feasibility studies, also known 
as feasibility study templates or guides, are not eligible because the 
assistance is not provided to a specific project.
    (b) Applications must be from the prospective owner(s) of the 
renewable energy system for which the feasibility study grant is 
sought. Applications from other entities (e.g., entities that would be 
conducting the feasibility study and are not the prospective owners) 
will not be accepted.
    (c) Applications can be submitted for a modification to an existing 
renewable energy system (e.g., for the expansion portion of an existing 
wind farm).
    (d) Applications cannot be submitted in a Fiscal Year for an RES 
project if an RES application for the same renewable energy system is 
submitted in that same Fiscal Year and vice versa.


Sec.  4280.173  Grant funding for feasibility studies.

    (a) Maximum grant amount. The maximum amount of grant funds that 
will be made available for an eligible feasibility study project under 
this subpart to any one recipient will not exceed $50,000 or 25 percent 
of the total eligible project cost of the study, whichever is less. 
Eligible project costs are specified in paragraph (b) of this section.
    (b) Eligible project costs. Only post-application costs will be 
considered eligible. Eligible project costs for renewable energy system 
feasibility studies shall be specific to the completion of the 
feasibility study (refer to Appendix E of this subpart for information 
on the content of a feasibility study) including, but not limited to, 
the items listed in paragraphs (b)(1) through (b)(3) of this section.
    (1) Resource assessment;
    (2) Transmission study; and
    (3) Environmental study.
    (c) Ineligible project costs. Ineligible project costs for 
renewable energy system feasibility studies include, but are not 
limited to:
    (1) Costs associated with selection of engineering, architectural, 
or environmental services;
    (2) Designing, bidding, or contract development for the proposed 
facility;
    (3) Permitting and other licensing costs required to construct the 
facility; and
    (4) Any goods or services provided by a person or entity who has a 
conflict of interest as provided in Sec.  4280.106.
    (d) Time limit. The grantee will have 2 years from the date of the 
grant agreement to provide the Agency with a complete and acceptable 
feasibility study and to request disbursement of the funds. If the 
grantee does not submit to the Agency a complete and acceptable 
feasibility study within this 2 year period, the grant is subject to 
termination by and reimbursement to the Agency according to 
Departmental regulations.


Sec. Sec.  4280.174-4280.175  [Reserved]


Sec.  4280.176  Feasibility study grant applications--content.

    Applications for feasibility study grants must include a Table of 
Contents with clear pagination and chapter identification and shall 
contain the information specified in paragraphs (a) and (b) of this 
section and shall be presented in the same order.
    (a) Forms, documents, and certifications. The application shall 
contain the forms and documents specified in paragraphs (a)(1) through 
(a)(11) of this section.
    (1) Form SF-424.
    (2) Form SF-424A, ``Budget Information--Non-Construction Programs'' 
(as applicable).
    (3) Form SF-424B, ``Assurances--Non-Construction Programs'' (as 
applicable).
    (4) Form SF-424C (as applicable).
    (5) Form SF-424D (as applicable).
    (6) Form RD 1940-20 (as applicable).
    (7) Except for sole proprietors, a copy of legal organizational 
documents.
    (8) A proposed work plan, which includes:
    (i) A brief description of the proposed system the feasibility 
study will evaluate;
    (ii) A description of the feasibility study to be conducted. The 
contents of an acceptable feasibility study are identified in Appendix 
E of this subpart. Applicants shall require those conducting the 
feasibility study to consider and document within the feasibility study 
the important environmental factors within the planning area and the 
potential environmental impacts of the project for which the 
feasibility study is being conducted, as well as the alternatives 
considered;
    (iii) The timeframe for completion of the feasibility study;
    (iv) The experience of the company/individual completing the 
feasibility study, including the number of similar projects the 
company/individual has performed, the number of years the company has 
been performing a similar service, and corresponding resumes; and
    (v) The source and amount of other project funds needs to be 
clearly identified. Agency approved written documentation/confirmation 
from any third party committing a specific amount of such funds is 
required. Documentation includes such items as bank statements, lender 
commitment letters, and so forth;
    (9) A certification that the applicant has not received any other 
Federal or State assistance for a feasibility study for the subject 
renewable energy system.

[[Page 21140]]

    (10) If the applicant is a rural small business, certification that 
the feasibility study grant will be for a renewable energy system 
project that is located in a rural area.
    (11) The applicant's Dun and Bradstreet Data Universal Numbering 
System (DUNS) number (except for individuals).
    (b) Financial information for gross income or size determination. 
The application shall contain sufficient financial information to allow 
the Agency to determine the agricultural producer's percentage of gross 
income derived from agricultural operations or the rural small 
business' size, as applicable. All information submitted under this 
paragraph (b) must be substantiated by authoritative records:
    (1) If the applicant is a rural small business, provide sufficient 
information to determine its total annual receipts and number of 
employees and the same information for 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 the Small Business Administration; and
    (2) If the applicant is an agricultural producer, provide the gross 
market value of the agricultural products, gross agricultural income, 
and gross nonfarm income of the applicant for the calendar year 
preceding the year in which the application is submitted.


Sec.  4280.177  Evaluation of feasibility study grant applications.

    (a) Agency evaluation. Feasibility study applications submitted 
under this subpart will be evaluated by the Agency for eligibility, 
completeness, and scoring.
    (b) General review. The Agency will evaluate each application and 
make a determination as to whether the applicant is eligible, the 
proposed grant is for an eligible feasibility study, and the proposed 
grant complies with all applicable statutes and regulations.
    (1) Applicant eligibility. The Agency will first determine whether 
the entity is eligible to compete for a feasibility study grant. 
Applications for applicants determined by the Agency not to be eligible 
will not be processed further. The Agency will determine applicant 
eligibility based on the criteria specified in Sec.  4280.170.
    (2) Proposal eligibility. After determining applicant eligibility, 
the Agency will review the application to determine if the proposal is 
eligible. Applications determined by the Agency not to be eligible will 
not be processed further. The Agency will determine whether the 
application contains certification by the applicant that the applicant 
has not received any other Federal or State assistance for a 
feasibility study on the subject facility. If the application does not 
contain such certification, it is an ineligible application and the 
Agency will stop processing the application.


Sec.  4280.178  Scoring feasibility study grant applications.

    Agency personnel will score each feasibility study application 
based on the evaluation criteria specified in paragraphs (a) through 
(f) of this section, with a maximum score of 100 points possible.
    (a) Energy replacement or generation. The project can be for either 
replacement or generation, but not both. A maximum of 25 points can be 
awarded under this section.
    (1) Energy replacement. 25 points will be awarded if proposed 
project will offset any portion of the applicant's energy needs.
    (2) Energy generation. 15 points will be awarded if the proposed 
renewable energy system is intended primarily for production of energy 
for sale.
    (b) Commitment of funds for the feasibility study. Appropriate 
documentation must verify commitment of funds. A maximum of 10 points 
can be awarded under this section.
    (1) 10 points--100 percent of matching funds.
    (2) 7.5 points--75 percent up to, but not including 100 percent of 
matching funds.
    (3) 5 points--50 percent up to, but not including 75 percent of 
matching funds.
    (4) 0 points--less than 50 percent of matching funds.
    (c) Designation as a Small agricultural producer/very small 
business. An applicant will be considered either an agricultural 
producer or rural small business. No applicant will be considered as 
both. Points will only be awarded under either paragraph (c)(1) or 
(c)(2) of this section. A maximum of 20 points can be awarded under 
this section.
    (1) For an Agricultural Producer:
    (i) 10 points will be awarded if the applicant is an agricultural 
producer producing agricultural products with a gross market value of 
less than $600,000 in the preceding year, or
    (ii) 20 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.
    (2) For a Rural Small Business, 20 points will be awarded if the 
applicant is a very small business, as defined in Sec.  4280.103.
    (d) Experience and qualifications of the entity identified to 
perform the feasibility study. A maximum of 15 points can be awarded 
under this section.
    (1) 15 points will be awarded if the entity has 5 or more years 
experience in the field of study for the technology being proposed.
    (2) 7.5 points will be awarded if the entity has 2 or more years, 
but less than 5 years, experience in the field of study for the 
technology field being proposed.
    (3) 0 points will be awarded if the entity has less than 2 years 
experience in the field of study for the technology field being 
proposed.
    (e) Size of feasibility study grant request. A maximum of 20 points 
can be awarded under this section. If the feasibility study request is:
    (1) $10,000 or less, 20 points will be awarded.
    (2) Greater than $10,000 up to and including $25,000, 10 points 
will be awarded.
    (3) Greater than $25,000, 0 points will be awarded.
    (f) Resources to implement project. Considering the technology 
being proposed, the applicant may qualify for other local or State 
programs to assist in the construction or operation of the facility. 
These programs will benefit the applicant and/or proposed project 
during or after the facility is constructed and operational. Points can 
be awarded for both types of assistance, for a maximum of 10 points.
    (1) If the applicant has identified local programs, 5 points will 
be awarded.
    (2) If the applicant has identified State programs, 5 points will 
be awarded.


Sec.  4280.179  Selecting feasibility study grant applications for 
award.

    The Agency will use the following process to determine which 
feasibility study grants receive funding under this subpart.
    (a) Ranking of applications. All scored applications will be ranked 
by the Agency as soon after the application deadline as possible. All 
applications that are ranked will be considered for selection for 
funding.
    (b) Selection of applications for funding. Using the ranking 
created under paragraph (a) of this section, the Agency will consider 
the score an application has received compared to the scores of other 
ranked applications, with higher scoring applications receiving first 
consideration for funding.
    (c) Funding selected applications. As applications are funded, if 
insufficient funds remain to fund the next highest

[[Page 21141]]

scoring application, the Agency may elect to fund a lower scoring 
application. Before this occurs, the Agency will provide the applicant 
of the higher scoring application the opportunity to reduce the amount 
of its grant request to the amount of funds available. If the applicant 
agrees to lower its grant request, it must certify that the purposes of 
the project can be met, and the Agency must determine the project is 
financially feasible at the lower amount.
    (d) Disposition of ranked applications not funded. Based on the 
availability of funding, a ranked application may not be funded in the 
fiscal year in which it was submitted. Such ranked applications will 
not be carried forward into Fiscal Year 2012 and the Agency will notify 
the applicant in writing.


Sec.  4280.180  Actions prior to grant closing.

    (a) Environmental. If construction is a component of the study, the 
appropriate level of environmental assessment must be completed prior 
to the obligation of funds. All feasibility study grants made under 
this subpart are subject to the requirements of 7 CFR part 1940, 
subpart G. When construction is not a component of the study, 
feasibility studies are considered planning assistance, which are 
categorically excluded from the environmental review process by Sec.  
1940.310 of this title.
    (b) Evidence of other funds. Applicants expecting funds from other 
sources for use in completing projects being partially financed with 
Agency funds shall present evidence of the commitment of these funds 
from such other sources prior to disbursement of grant funds.


Sec.  4280.181  Awarding and administering feasibility study grants.

    Renewable energy system feasibility study grants will be awarded 
and administered in accordance with Departmental regulations and 
paragraphs (a) through (e) of this section.
    (a) Letter of conditions. The Agency will notify the approved 
applicant in writing, setting out the conditions under which the grant 
will be made. The notice will include those matters necessary to ensure 
that the proposed grant is completed in accordance with the terms of 
the scope of work and budget, that grant funds are expended for the 
feasibility study, and that the applicable requirements prescribed in 
the relevant Departmental regulations are complied with. The Letter of 
Conditions will be sent to the applicant.
    (b) Applicant's intent to meet conditions. Upon reviewing the 
conditions and requirements in the Letter of Conditions, the applicant 
must complete, sign and return a Form RD 1942-46, ``Letter of Intent to 
Meet Conditions,'' to the Agency; or if certain conditions cannot be 
met, the applicant may propose alternate conditions to the Agency. The 
Agency must concur with any changes proposed to the Letter of 
Conditions by the applicant before the application will be further 
processed.
    (c) Forms and certifications. The forms specified in paragraphs 
(c)(1) through (c)(6) of this section will be attached to the letter of 
conditions referenced in paragraph (a) of this section. The forms 
specified in paragraphs (c)(1) through (c)(5) of this section and all 
of the certifications must be submitted prior to grant approval. The 
form specified in paragraph (c)(6), which is to be completed by the 
contractor (if any), does not need to be returned to the Agency, but 
must be kept on file.
    (1) Form AD-1047.
    (2) Form AD-1049.
    (3) Either Form SF-LLL or Exhibit A-1 of RD Instruction 1940-Q.
    (4) Form RD 400-1.
    (5) Form RD 400-4.
    (6) Form AD-1048.
    (d) Grant approval. The applicant will be sent a copy of the 
executed Form RD 1940-1, the approved scope of work, and Form RD 4280-
2. Form RD 1940-1 must be signed by the applicant.
    (e) Grant agreement. Prior to grant disbursement, but after grant 
obligation, the applicant must complete, sign, and return Form RD 4280-
2. The grantee must abide by all requirements contained in Form RD 
4280-2, this subpart, and any other applicable Federal statutes or 
regulations. Failure to follow these requirements may result in 
termination of the grant and adoption of other available remedies.


Sec.  4280.182  Servicing feasibility study grants.

    Feasibility study grants will be serviced in accordance with 
Departmental regulations; 7 CFR part 1951, subparts E and O; and 
paragraphs (a) through (n) of this section.
    (a) Inspections. Grantees will permit periodic inspection of the 
project records and operations by a representative of the Agency.
    (b) Programmatic changes. The grantee shall obtain prior Agency 
approval for any change to the scope or objectives of the approved 
project. Failure to obtain prior approval of changes to the scope of 
work or budget may result in suspension, termination, and recovery of 
grant funds.
    (c) Changes in project cost or scope. If there is a significant 
reduction in project cost or changes in project scope, the applicant's 
funding needs, eligibility, and scoring, as applicable, will be 
reassessed. Decreases in Agency funds will be based on revised project 
costs and other selection factors; however, other factors, including 
Agency regulations and Notices used at the time of grant approval, will 
remain the same. Obligated grant funds not needed to complete the 
project will be de-obligated.
    (d) Transfer of obligations. Subject to Agency approval, an 
obligation of funds established for a grantee may be transferred to a 
different (substituted) grantee provided:
    (1) The substituted grantee
    (i) Is eligible;
    (ii) Has a close and genuine relationship with the original 
grantee; and
    (iii) Has the authority to receive the assistance approved for the 
original grantee; and
    (2) The type of renewable energy technology and the scope of the 
project for which the Agency funds will be used remain unchanged.
    (e) Financial management system and records. Grantees are required 
to maintain a financial management system and records in accordance 
with Departmental regulations.
    (f) Fund disbursement. Grant funds will be expended on a pro rata 
basis with matching funds.
    (1) Requests for reimbursement may be submitted monthly or more 
frequently if authorized to do so by the Agency. Ordinarily, payment 
will be made within 30 days after receipt of a proper request for 
reimbursement.
    (2) The Grantee shall not request reimbursement for the Federal 
share of amounts withheld from contractors to ensure satisfactory 
completion of work until after it makes those payments.
    (3) Payment shall be made by electronic funds transfer.
    (4) Standard Form 270, ``Request for Advance or Reimbursement,'' or 
other format prescribed by the Agency shall be used to request grant 
reimbursements.
    (5) For renewable energy system feasibility studies, grant funds 
will be disbursed in accordance with the above through 90 percent of 
grant disbursement. The final 10 percent of grant funds will be held by 
the Agency until a feasibility study acceptable to the Agency has been 
submitted.
    (g) Deobligation of grant funds. Funds remaining after all costs 
incident to the project have been paid or provided for are subject to 
deobligation.

[[Page 21142]]

    (h) Monitoring of project. Grantees are responsible for ensuring 
that all activities are performed within the approved scope of work and 
that funds are only used for approved purposes. Grantees shall 
constantly monitor performance to ensure that time schedules are being 
met, projected work by time periods is being accomplished, financial 
resources are being appropriately expended by contractors (if 
applicable), and any other performance objectives identified in the 
scope of work are being achieved. The Agency will monitor grantees to 
ensure that activities are performed in accordance with the Agency-
approved scope of work and to ensure that funds are expended for 
approved purposes. The Agency's monitoring of grantees neither relieves 
the grantee of its responsibilities to ensure that activities are 
performed within the scope of work approved by the Agency and that 
funds are expended for approved purposes only nor provides recourse or 
a defense to the grantee should the grantee conduct unapproved 
activities, engage in unethical conduct, engage in activities that are 
or give the appearance of a conflict of interest, or expend funds for 
unapproved purposes.
    (i) Federal financial reports. A SF-425, ``Federal Financial 
Report,'' and a project performance report will be required of all 
grantees on a semiannual basis. The grantee will complete the project 
within the total sums available to it, including the grant, in 
accordance with the scope of work and any necessary modifications 
thereof prepared by the grantee and approved by the Agency. The final 
federal financial report must be submitted to the Agency within 90 days 
after the feasibility study has been completed.
    (j) Performance reports. Grantees must submit to the Agency, in 
writing, semiannual performance reports and a final performance report. 
Grantees are to submit an original of each report to the Agency.
    (1) Semiannual performance reports. Each semiannual performance 
report shall describe current progress and identify any problems, 
delays, or adverse conditions, if any, which have affected or will 
affect attainment of overall project objectives or prevent meeting time 
frame for completion of the feasibility study within 2 years. This 
disclosure shall be accompanied by a statement of the action taken or 
planned to resolve the situation.
    (2) Final performance report. A final performance report, which 
will serve as the last semiannual performance report, will be required 
within 90 days after the feasibility study has been completed. The 
final performance report shall summarize any problems, delays, or 
adverse conditions, if any, which have affected the project objectives 
or prevented meeting time frames for completion of the feasibility 
study. The final performance report should indicate if the grantee 
intends to proceed with the construction of the project.
    (k) Final deliverables. Upon completion of the feasibility study, 
the grantee shall submit the following to the Agency:
    (1) The project feasibility study; and
    (2) SF-270.
    (l) Renewable energy feasibility studies. Beginning the first full 
year after the feasibility study has been completed, grantees shall 
report annually for 2 years on the following:
    (1) Is the renewable energy system project for which the 
feasibility study was conducted underway? If ``yes,'' describe how far 
along the renewable energy system project is (e.g., financing has been 
secured, site has been secured, construction contracts are in place, 
project is completed).
    (2) Is the renewable energy system project complete? If so, what is 
the actual amount of energy being produced?
    (m) Other reports. For clarification purposes, the Agency may 
request any additional project and/or performance data for the project 
for which grant funds have been received.
    (n) Grant close-out and related activities. Grant close-out and 
related activities shall be performed in accordance with the 
Departmental Regulations. In addition, failure to submit satisfactory 
reports on time under the provisions of paragraphs (i) through (m) of 
this section may result in the suspension or termination of a grant. 
The provisions of this section apply to grants and sub-grants.


Sec. Sec.  4280.183-4280.185  [Reserved]

Energy Audit and Renewable Energy Development Assistance Grants


Sec.  4280.186  Applicant eligibility.

    To be eligible for an energy audit grant or a renewable energy 
development assistance grant under this subpart, the applicant must 
meet each of the criteria, as applicable, specified in paragraphs (a) 
through (c) of this section. The Agency will determine an applicant's 
eligibility.
    (a) Type of applicant. The applicant must be one of the following:
    (1) A unit of State, tribal, or local government;
    (2) A land-grant college or university, or other institution of 
higher education;
    (3) A rural electric cooperative;
    (4) A public power entity; or
    (5) An instrumentality of a State, tribal, or local government.
    (b) Capacity to perform. The applicant must have sufficient 
capacity to perform the energy audit or renewable energy development 
assistance activities proposed in the application to ensure success. 
The Agency will make this assessment based on the information provided 
in the application.
    (c) Legal authority and responsibility. Each applicant must have, 
or obtain, the legal authority necessary to carry out the purpose of 
the grant.


Sec.  4280.187  Project eligibility.

    To be eligible for an energy audit or a renewable energy 
development assistance grant, the grant funds for a project must be 
used by the grant recipient to assist agricultural producers or rural 
small businesses located in a State in one or both of the purposes 
specified in paragraphs (a) and (b) of this section, and shall also 
comply with paragraphs (c) through (e), and, if applicable, paragraph 
(f) of this section.
    (a) Grant funds may be used to conduct and promote energy audits 
that meet the requirements of the energy audit as defined in this 
subpart. Energy audits must cover the following:
    (1) Situation report. Provide a narrative description of the 
facility or process being audited; its energy system(s) and usage; its 
activity profile; and the 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 data should be 
based on use and source.
    (2) Potential improvements. List specific information regarding all 
potential energy-saving opportunities and the associated cost.
    (3) Technical analysis. Discuss the interactions of the potential 
improvements with existing energy systems.
    (i) Estimate the annual energy and energy costs savings expected 
from each improvement identified for the potential project.
    (ii) Estimate all direct and attendant indirect costs of each 
improvement.
    (iii) Rank potential improvement measures by cost-effectiveness.
    (4) Potential improvement description. Provide a narrative summary 
of the potential improvement and its ability to provide needed 
benefits, including a discussion of non-energy benefits such as project 
reliability and durability.
    (i) Provide preliminary specifications for critical components.

[[Page 21143]]

    (ii) Provide preliminary drawings of project layout, including any 
related structural changes.
    (iii) Document baseline data compared to projected consumption, 
together with any explanatory notes. Provide the actual total quantity 
of energy used (BTU) in the original building and/or equipment in the 
12 months prior to the EEI project and the projected energy usage after 
the EEI project shall be the projected total quantity of energy used 
(BTU) on an annual basis for the same size or capacity as the original 
building or equipment. For energy efficiency improvement to equipment, 
if the new piece of equipment has a different capacity than the piece 
of equipment being replaced, the projected total quantity of energy 
used for the new piece of equipment shall be adjusted based on the 
ratio of the capacity of the replaced piece of equipment to the 
capacity of the new piece of equipment. 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.
    (iv) Identify significant changes in future related operations and 
maintenance costs.
    (v) Describe explicitly how outcomes will be measured annually.
    (b) Grant funds may be used to conduct and promote renewable energy 
development assistance by providing to agricultural producers and rural 
small businesses recommendations and information on how to improve the 
energy efficiency of their operations and to use renewable energy 
technologies and resources in their operations.
    (c) Energy audit and renewable energy development assistance can be 
provided only to a facility located in a rural area unless the owner of 
such facility is an agricultural producer. If the facility is owned by 
an agricultural producer, the facility for which such services are 
being provided may be located in either a rural or non-rural area. If 
the agricultural producer's facility is in a non-rural area, then the 
energy audit or renewable energy development assistance can only be for 
a renewable energy system or energy efficiency improvement on integral 
components of or directly related to the facility, such as vertically 
integrated operations, and are part of and co-located with the 
agriculture production operation.
    (d) The energy audit or renewable energy development assistance 
must be provided to a recipient in a State.
    (e) The applicant must have a place of business in a State.
    (f) For the purposes of this subpart, only small hydropower 
projects are eligible for energy audits and renewable energy 
development assistance. Per consultation with the U.S. Department of 
Energy, the Agency is defining small hydropower as having a rated power 
of 30 megawatts or less, which includes hydropower projects commonly 
referred to as ``micro-hydropower'' and ``mini-hydropower.''


Sec.  4280.188  Grant funding for energy audit and renewable energy 
development assistance.

    (a) Maximum grant amount. The maximum aggregate amount of energy 
audit and renewable energy development assistance grants awarded to any 
one recipient under this subpart cannot exceed $100,000. Grant funds 
awarded for energy audit and renewable energy development assistance 
projects may be used only to pay eligible project costs, as described 
in paragraph (b) of this section. Grant funds awarded for energy audits 
and renewable energy development assistance projects are prohibited 
from being used to pay costs associated with the items listed in 
paragraph (c) of this section.
    (b) Eligible project costs. Eligible project costs for energy 
audits and renewable energy development assistance are those post-
application expenses directly related to conducting and promoting 
energy audits and renewable energy development assistance, which 
include but are not limited to:
    (1) Salaries directly or indirectly related to the project;
    (2) Travel expenses directly related to conducting energy audits or 
renewable energy development assistance;
    (3) Office supplies (e.g., paper, pens, file folders); and
    (4) Administrative expenses, up to a maximum of 5 percent of the 
grant, which include but are not limited to:
    (i) Utilities;
    (ii) Office space;
    (iii) Operation expenses of office and other project-related 
equipment (e.g., computers, cameras, printers, copiers, scanners); and
    (iv) Expenses for outreach and marketing of the energy audit and 
renewable energy development assistance activities, including 
associated travel expenses.
    (c) Ineligible project purposes. Grant funds may not be used to:
    (1) Pay for any construction-related activities;
    (2) Purchase equipment;
    (3) Pay any costs of preparing the application package for funding 
under this subpart;
    (4) Pay any costs of the project incurred prior to the application 
date of the grant made under this subpart;
    (5) Fund political or lobbying activities; and
    (6) Pay any judgment or debt owed to the United States.
    (d) Energy audits. A recipient of a grant under this subpart that 
conducts an energy audit shall require that, as a condition of the 
energy audit, the agricultural producer or rural small business pay at 
least 25 percent of the cost of the energy audit. Further, the amount 
paid by the agricultural producer or rural small business will be 
retained by the recipient as a contribution towards the cost of the 
energy audit.
    (e) Time limit. Unless otherwise agreed to by the Agency, any 
energy audit or renewable energy development assistance grant agreement 
under this subpart will terminate 2 years from the date the Agency 
signs the agreement.


Sec.  4280.189  [Reserved]


Sec.  4280.190  EA/REDA grant applications--content.

    Applications must contain the elements specified in paragraphs (a) 
through (g) of this section.
    (a) Form SF-424.
    (b) Form SF-424A.
    (c) Form SF-424B.
    (d) If applicable, a copy of the applicant's organizational 
documents showing the applicant's legal existence and authority to 
perform the activities under the grant.
    (e) A proposed scope of work, including a description of the 
proposed project, details of the proposed activities to be accomplished 
and timeframes for completion of each task, the number of months 
duration of the project, and the estimated time it will take from grant 
approval to beginning of project implementation. A written narrative to 
be used as the scope of work which includes, at a minimum, the 
following items:
    (1) An Executive Summary;
    (2) The plan and schedule for implementation;
    (3) The anticipated number of agricultural producers and/or rural 
small businesses to be served;
    (4) An itemized budget--compute total cost per rural small business 
or agricultural producer served--matching funds should be clearly 
identified as cash;
    (5) The geographic scope of the proposed project;

[[Page 21144]]

    (6) Applicant's experience as follows:
    (i) If applying for a renewable energy development assistance 
grant, the applicant's experience in completing similar renewable 
energy development assistance activities, including the number of 
similar projects the applicant has performed and the number of years 
the applicant has been performing a similar service.
    (ii) If applying for an energy audit grant, the number of energy 
audits and assessments the applicant has completed and the number of 
years the applicant has been performing those services;
    (iii) For all applicants, the amount of experience in administering 
energy audit, renewable energy development assistance, or similar 
activities using State or Federal support.
    (7) Applicant's resources, including personnel, finances, and 
technology, to complete what is proposed. If an application is for 
projects located in multiple states, resources must be sufficient to 
complete all projects;
    (8) Leveraging and commitment of other sources of funding being 
brought to the project. Leveraged funds should be clearly identified as 
cash and by source. Written documentation/confirmation from the party 
committing a specific amount of leveraged funds is required;
    (9) Outreach activities/marketing efforts specific to conducting 
energy audit and renewable energy development assistance including:
    (i) Project title;
    (ii) Goals of the project;
    (iii) Identified need;
    (iv) Target audience;
    (v) Timeline and type of activities/action plan; and
    (vi) Marketing strategies.
    (10) Method and rationale used to select the areas and businesses 
that will receive the service.
    (11) Brief description of how the work will be performed, including 
whether organizational staff, consultants, or contractors will be used.
    (f) The most recent financial audit (not more than 18 months old) 
of the applicant, or subdivision thereof, that will be performing the 
proposed work. If such an audit is not available, the latest financial 
information that shows the financial capacity of the applicant, or 
subdivision thereof, to perform the proposed work. Such information may 
include, but is not limited to, the most recent year-end balance sheet, 
income statement, and other appropriate data that identify the 
applicant's resources.
    (g) The applicant's Dun and Bradstreet Data Universal Numbering 
System (DUNS) number.


Sec.  4280.191  Evaluation of energy audit and renewable energy 
development assistance grant applications.

    Upon receipt of an application, the Agency will conduct a review to 
determine if the applicant and project are eligible. The Agency will 
notify the applicant in writing of the Agency's findings. If the Agency 
has determined that either the applicant or project is ineligible, it 
will include in the notification the reason(s) for its 
determination(s).


Sec.  4280.192  Scoring energy audit and renewable energy development 
assistance grant applications.

    Agency personnel will score each application using the criteria 
specified in paragraphs (a) through (h) of this section, with a maximum 
score of 100 points possible.
    (a) Project proposal (maximum score of 10 points). The applicant 
will be scored based on its in-house ability to conduct audits versus 
using third party auditing organizations as illustrated in the 
application.
    (1) If the applicant proposes to use at least 51 percent of the 
awarded funding to employ internal, qualified auditors and/or renewable 
energy specialists for program implementation, up to 10 points will be 
awarded as follows:
    (i) If the percentage is between 51 percent and 75 percent 
(inclusive), 5 points will be awarded.
    (ii) If the percentage is more than 75 percent, 10 points will be 
awarded.
    (2) If the applicant proposes to use less than 51 percent of the 
awarded funding to employ internal, qualified auditors and/or renewable 
energy specialists for program implementation, zero points will be 
awarded.
    (b) Use of Grant Funds for Administrative Expenses (maximum score 
of 10 points). Grantees selected to participate may use up to 5 percent 
of their award for administrative expenses.
    (1) If the applicant proposes to use none of the grant funds for 
Administrative Expenses, 10 points will be awarded.
    (2) If the applicant proposes to use a portion (up to 5 percent) of 
the grant funds for Administrative Expenses, zero points will be 
awarded.
    (c) Applicant's organizational experience in completing proposed 
activity (maximum score of 15 points). The applicant will be scored on 
the experience of the organization in meeting the benchmarks below. 
This means that an organization must have been in business and provided 
services as noted in the scoring requirements. An organization's 
experience must be documented with references and resumes. Points will 
be awarded as follows:
    (1) More than 3 years of experience, 15 points will be awarded.
    (2) At least 2 years and up to and including 3 years of experience, 
10 points will be awarded.
    (3) At least 1 year but less than 2 years of experience, 5 points 
will be awarded.
    (4) Less than 1 year of experience, zero points will be awarded.
    (d) Geographic scope of project in relation to identified need 
(maximum score of 10 points).
    (1) If the applicant's proposed or existing service area is State-
wide or includes all or parts of multiple states, and the marketing and 
outreach plan has identified needs throughout that service area, 10 
points will be awarded.
    (2) If the applicant's proposed or existing service area consists 
of multiple counties in a single State and the marketing and outreach 
plan has identified needs throughout that service area, 7.5 points will 
be awarded.
    (3) If the applicant's service area consists of a single county or 
municipality and the marketing and outreach plan has identified needs 
throughout that service area, 5 points will be awarded.
    (e) Number of agricultural producers/rural small businesses to be 
served (maximum score of 15 points).
    (1) If the applicant plans to provide audits to ultimate recipients 
with average audit costs of $1,000 or less, 15 points will be awarded.
    (2) If the applicant plans to provide audits to ultimate recipients 
with average audit costs over $1,000 but less than $1,500, 10 points 
will be awarded.
    (3) If the applicant plans to provide audits to ultimate recipients 
with average audit costs of at least $1,500 but less than $2,000, 5 
points will be awarded.
    (f) Potential of project to produce energy savings and its 
attending environmental benefits (maximum score of 25 points). 
Applicants can be awarded points under both paragraphs (f)(1) and 
(f)(2) of this section.
    (1) If the applicant has an existing program that can demonstrate 
the achievement of energy savings with the agricultural producers and/
or rural small businesses it has served, 13 points will be awarded.
    (2) If the applicant provides evidence that it has received awards 
in recognition of its renewable energy, energy savings, or energy-based 
technical assistance, up to 12 points will be awarded based on number 
of awards and rigorousness of the competition for each award.
    (g) Marketing and outreach plan (maximum score of 10 points). If 
the

[[Page 21145]]

applicant includes in the application a marketing and outreach plan and 
provides a satisfactory discussion of each of the following criteria, 
two points for each of the following will be awarded:
    (1) The goals of the project;
    (2) Identified need;
    (3) Target beneficiaries;
    (4) Timeline and action plan; and
    (5) Marketing strategies and supporting data for strategies.
    (h) Level and commitment of other funds for the project (maximum 
score of 5 points).
    (1) If the applicant proposes to leverage grant funding with 50 
percent or more in non-State and non-Federal government matching funds 
for the subject grant, and has a written commitment for those funds, 5 
points will be awarded.
    (2) If the applicant proposes to leverage grant funding with less 
than 50 percent but more than 20 percent in non-State and non-Federal 
government matching funds for the subject grant, and has a written 
commitment for those funds, 2 points will be awarded.
    (3) If the applicant proposes 20 percent or less in non-State and 
non-Federal government matching funds, zero points will be awarded.


Sec.  4280.193  Selecting energy audit and renewable energy development 
assistance grant applications for award.

    Applications will be scored by the State Offices and submitted to 
the National Office for review. To ensure the equitable geographic 
distribution of funds, the two highest scoring applications from each 
State, based on the scoring criteria established under Sec.  4280.192 
will be submitted to the National Office to compete for funding.
    (a) Ranking of applications. All applications submitted to the 
National Office will be ranked. All applications that are ranked will 
be considered for selection for funding.
    (b) Selection of applications for funding. Using the ranking 
created under paragraph (a) of this section, the Agency will consider 
the score an application has received compared to the scores of other 
ranked applications, with higher scoring applications receiving first 
consideration for funding.
    (c) Funding selected applications. As applications are funded, if 
insufficient funds remain to fund the next highest scoring application, 
the Agency may elect to fund a lower scoring application. Before this 
occurs, the Agency will provide the applicant of the higher scoring 
application the opportunity to reduce the amount of its grant request 
to the amount of funds available. If the applicant agrees to lower its 
grant request, it must certify that the purposes of the project can be 
met, and the Administrator must determine the project is financially 
feasible at the lower amount.
    (d) Disposition of ranked applications not funded. Based on the 
availability of funding, a ranked application submitted under this 
subpart may not be funded. Such ranked applications will not be carried 
forward into Fiscal Year 2012 and the Agency will notify the applicant 
in writing.


Sec.  4280.194  Actions prior to grant closing.

    Applicants expecting funds from other sources for use in completing 
projects being partially financed with Agency funds must have these 
funds from other such sources prior to grant closing. Agency funds will 
not be expended in advance of funds committed to the project from other 
sources without prior Agency approval.


Sec.  4280.195  Awarding and administering energy audit and renewable 
energy development assistance grants.

    Energy audit and renewable energy development assistance grants 
under this subpart will be awarded and administered in accordance with 
Departmental regulations and with paragraphs (a) through (e) of this 
section.
    (a) Letter of conditions. The Agency will notify the approved 
applicant in writing, setting out the conditions under which the grant 
will be made. The notice will include those matters necessary to ensure 
that the proposed grant is completed in accordance with the terms of 
the scope of work and budget, that grant funds are expended for 
authorized purposes, and that the applicable requirements prescribed in 
the relevant Departmental regulations are complied with. The Letter of 
Conditions will be sent to the applicant.
    (b) Applicant's intent to meet conditions. Upon reviewing the 
conditions and requirements in the letter of conditions, the applicant 
must complete, sign, and return Form RD 1942-46 to the Agency; or if 
certain conditions cannot be met, the applicant may propose alternate 
conditions to the Agency. The Agency must concur with any changes 
proposed to the Letter of Conditions by the applicant before the 
application will be further processed.
    (c) Forms. The forms specified in paragraphs (c)(1) through (c)(6) 
of this section will be attached to the letter of conditions referenced 
in paragraph (a) of this section. The forms specified in paragraphs 
(c)(1) through (c)(5) of this section must be submitted prior to grant 
approval. The form specified in paragraph (c)(6), which is to be 
completed by the contractor (if any), does not need to be returned to 
the Agency, but must be kept on file.
    (1) Form RD 1942-46.
    (2) Form AD-1047.
    (3) Form AD-1049.
    (4) Either Form SF-LLL or Exhibit A-1 of RD Instruction 1940-Q.
    (5) Form RD 400-4.
    (6) Form AD-1048.
    (d) Grant approval. The applicant will be sent a copy of the 
executed Form RD 1940-1, the approved scope of work, and Form RD 4280-
2. Form RD 1940-1 must be signed by the applicant.
    (e) Grant agreement. Prior to grant approval, the applicant must 
complete, sign, and return Form RD 4280-2. The grantee must abide by 
all requirements contained in Form RD 4280-2, this subpart, and any 
other applicable Federal statutes or regulations. Failure to follow 
these requirements may result in termination of the grant and adoption 
of other available remedies.


Sec.  4280.196  Servicing energy audit and renewable energy development 
assistance grants.

    Energy audit and renewable energy development assistance grants 
will be serviced in accordance the requirements specified in 
Departmental regulations, 7 CFR part 1951, subparts E and O, and 
paragraphs (a) through (n) of this section.
    (a) Inspections. Grantees will permit periodic inspection of the 
project operations by a representative of the Agency.
    (b) Programmatic changes. The grantee shall obtain prior Agency 
approval for any change to the scope or objectives of the approved 
project. Failure to obtain prior approval of changes to the scope of 
work or budget may result in suspension, termination, and recovery of 
grant funds.
    (c) Changes in project cost or scope. If there is a significant 
reduction in project cost or changes in project scope, the applicant's 
funding needs, eligibility, and scoring, as applicable, will be 
reassessed. Decreases in Agency funds will be based on revised project 
costs and other selection factors; however, other factors, including 
Agency regulations used at the time of grant approval, will remain the 
same. Obligated grant funds not needed to complete the project will be 
de-obligated.
    (d) Transfer of obligations. The grantee may request a transfer of 
obligation to a different (substitute) grantee. Subject to Agency 
approval, an obligation of funds established for a

[[Page 21146]]

grantee may be transferred to a substitute grantee provided:
    (1) The substituted grantee
    (i) Is eligible;
    (ii) Has a close and genuine relationship with the original 
grantee; and
    (iii) Has the authority to receive the assistance approved for the 
original grantee; and
    (2) The need, purpose(s), and scope of the project for which the 
Agency funds will be used remain substantially unchanged.
    (e) Financial management system and records.
    (1) The grantee will provide for Financial Management Systems that 
will include:
    (i) Accurate, current, and complete disclosure of the financial 
result of each grant.
    (ii) Records that identify adequately the source and application of 
funds for grant-supporting activities, together with documentation to 
support the records. Those records shall contain information pertaining 
to grant awards and authorizations, obligations, unobligated balances, 
assets, liabilities, outlays, and income.
    (iii) Effective control over and accountability for all funds. 
Grantee shall adequately safeguard all such assets and shall ensure 
that funds are used solely for authorized purposes.
    (2) The grantee will retain financial records, supporting 
documents, statistical records, and all other records pertinent to the 
grant for a period of at least 3 years after completion of grant 
activities except that the records shall be retained beyond the 3-year 
period if audit findings have not been resolved or if directed by the 
United States. Microfilm copies may be substituted in lieu of original 
records. The Agency and the Comptroller General of the United States, 
or any of their duly authorized representatives, shall have access to 
any books, documents, papers, and records of the grantee which are 
pertinent to the specific grant for the purpose of making audit, 
examination, excerpts, and transcripts.
    (f) Audit requirements. Grantees must provide an annual audit in 
accordance with 7 CFR part 3052.
    (g) Fund disbursement. The Agency will determine, based on the 
applicable Departmental regulations, whether disbursement of a grant 
will be by advance or reimbursement. A SF-270 must be completed by the 
grantee and submitted to the Agency no more often than monthly to 
request either advance or reimbursement of funds. Upon receipt of a 
properly completed SF-270, the funds will be requested through the 
field office terminal system. Ordinarily, payment will be made within 
30 days after receipt of a proper request for advance or reimbursement.
    (h) Deobligation of grant funds. Funds remaining after all costs 
incident to the project have been paid or provided for are subject to 
deobligation.
    (i) Monitoring of project. Grantees are responsible for ensuring 
that all activities are performed within the approved scope of work and 
that funds are only used for approved purposes. Grantees shall 
constantly monitor performance to ensure that time schedules are being 
met, projected work by time periods is being accomplished, financial 
resources are appropriately expended by contractors (if applicable), 
and any other performance objectives identified in the scope of work 
are being achieved. The Agency will monitor grantees to ensure that 
activities are performed in accordance with the Agency-approved scope 
of work and to ensure that funds are expended for approved purposes. 
The Agency's monitoring of grantees neither relieves the grantee of its 
responsibilities to ensure that activities are performed within the 
scope of work approved by the Agency and that funds are expended for 
approved purposes only nor provides recourse or a defense to the 
grantee should the grantee conduct unapproved activities, engage in 
unethical conduct, engage in activities that are or give the appearance 
of a conflict of interest, or expend funds for unapproved purposes.
    (j) Federal financial reports. A SF-425 and a project performance 
report will be required of all grantees on a semiannual basis. The 
grantee will complete the project within the total sums available to 
it, including the grant, in accordance with the scope of work and any 
necessary modifications thereof prepared by grantee and approved by the 
Agency.
    (k) Performance reports. Grantees must submit to the Agency, in 
writing, semiannual performance reports and a final performance report. 
Grantees are to submit an original of each report to the Agency.
    (1) Semiannual performance reports. Project performance reports 
shall include, but not be limited to, the following:
    (i) A comparison of actual accomplishments to the objectives 
established for that period (e.g., the number of audits performed, 
number of recipients of renewable energy development assistance);
    (ii) A list of recipients, each recipient's location, and each 
recipient's NAICS code;
    (iii) Problems, delays, or adverse conditions, if any, that have in 
the past or will in the future affect attainment of overall project 
objectives, prevent meeting time schedules or objectives, or preclude 
the attainment of particular project work elements during established 
time periods. This disclosure shall be accompanied by a statement of 
the action taken or planned to resolve the situation;
    (iv) Percentage of financial resources expended on contractors; and
    (v) Objectives and timetable established for the next reporting 
period.
    (2) Final performance report. A final performance report will be 
required with the final Federal financial report within 90 days after 
project completion. In addition to the information required under 
paragraph (k)(1) of this section, the final performance report must 
contain the information specified in paragraphs (k)(2)(i) and 
(k)(2)(ii), as applicable, of this section.
    (i) For energy audit projects, the final performance report must 
provide complete information regarding:
    (A) The number of audits conducted,
    (B) A list of recipients (agricultural producers and rural small 
businesses) with each recipient's North American Industry 
Classification System code,
    (C) The location of each recipient,
    (D) The cost of each audit,
    (E) The expected energy saved for each audit conducted if the audit 
is implemented, and
    (F) The percentage of financial resources expended on contractors.
    (ii) For renewable energy development assistance projects, the 
final performance report must provide complete information regarding:
    (A) A list of recipients with each recipient's North American 
Industry Classification System code,
    (B) The location of each recipient,
    (C) The expected renewable energy that would be generated if the 
projects were implemented, and
    (D) The percentage of financial resources expended on contractors.
    (l) Final status report. One year after submittal of the final 
performance report, the grantee will provide the Agency a final status 
report on the number of projects that are proceeding with one or all of 
the grantee's recommendations, including the amount of energy saved and 
the amount of renewable energy generated, as applicable.
    (m) Other reports. The Agency may request any additional project 
and/or performance data for the project for which grant funds have been 
received.
    (n) Grant close-out and related activities. In addition to the

[[Page 21147]]

requirements specified in the Departmental regulations, failure to 
submit satisfactory reports on time under the provisions of paragraphs 
(i) through (m) of this section may result in the suspension or 
termination of a grant. The provisions of this section apply to grants 
and sub-grants.


Sec. Sec.  4280.197-4280.199  [Reserved]


Sec.  4280.200  OMB control numbers.

    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 numbers 0570-0050, 0570-0059, and 0570-
0061. A person is not required to respond to a collection of 
information unless it displays a currently valid OMB control number.

Appendix A to Subpart B of Part 4280--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.

Section 1. Bioenergy

    The technical requirements specified in this section apply to 
bioenergy projects, which are, as defined in Sec.  4280.103, 
renewable system[s] 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. 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.
    (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 agreements, 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) Resources assessment. 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. 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. 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. 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. 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. 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. 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. 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. Describe a 
plan for dismantling and disposing of project components and 
associated wastes at the end of their useful lives.

Section 2. Anaerobic Digester Projects

    The technical requirements specified in this section apply to 
anaerobic digester projects, which are, as defined in Sec.  
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. 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.
    (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

[[Page 21148]]

interconnection requirements, power purchase agreements, 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) Resources assessment. 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.
    (d) Design and engineering. 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. 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. 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. 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.
    (h) Equipment installation. 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. 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. Describe a 
plan for dismantling and disposing of project components and 
associated wastes at the end of their useful lives.

Section 3. Geothermal, Electric Generation

    The technical requirements specified in this section apply to 
electric generation geothermal projects, which are, as defined in 
Sec.  4280.103, systems that use geothermal energy to produce high 
pressure steam for electric power production.
    (a) Qualifications of key project service providers. 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.
    (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 agreements, 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) Resources assessment. 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. 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. 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. 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. Include a statement from the 
applicant certifying that ``open and free'' competition will be used 
for

[[Page 21149]]

the procurement of project components in a manner consistent with 
the requirements of 7 CFR part 3015 of this title.
    (h) Equipment installation. 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. 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. Describe a 
plan for dismantling and disposing of project components and 
associated wastes at the end of their useful lives.

Section 4. Geothermal, Direct Use

    The technical requirements specified in this section apply to 
direct use geothermal projects, which are, as defined in Sec.  
4280.103, systems that use thermal energy directly from a geothermal 
source.
    (a) Qualifications of key project service providers. 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.
    (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) Resources assessment. 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. 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;
    (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. 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. 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. 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. 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. 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. Describe a 
plan for dismantling and disposing of project components and 
associated wastes at the end of their useful lives.

Section 5. Hydrogen

    The technical requirements specified in this section apply to 
hydrogen projects, which are, as defined in Sec.  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. 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.
    (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 agreements, 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) Resources assessment. 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. 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 
proximity to the load or the electrical grid, unique safety 
concerns, and whether special circumstances exist.
    (e) Project development schedule. Provide a project schedule in 
an appropriate level of

[[Page 21150]]

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. 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. 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. 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. 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. Describe a 
plan for dismantling and disposing of project components and 
associated wastes at the end of their useful lives.

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 Sec.  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. 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.
    (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 agreements, 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) Resources assessment. Provide adequate and appropriate data 
to demonstrate the amount of solar resource available. Indicate the 
source of the solar data and assumptions.
    (d) Design and engineering. 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. 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. 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. 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. 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. 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. Describe a 
plan for dismantling and disposing of project components and 
associated wastes at the end of their useful lives.

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 Sec.  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. 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.
    (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 agreements, 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) Resources assessment. Provide adequate and appropriate data 
to demonstrate the amount of solar resource available. Indicate the 
source of the solar data and assumptions.
    (d) Design and engineering. Applicants must submit a statement 
certifying that their project will be designed and engineered so as

[[Page 21151]]

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. 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. 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. 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. 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. 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. Describe a 
plan for dismantling and disposing of project components and 
associated wastes at the end of their useful lives.

Section 8. Wind, Small

    The technical requirements specified in this section apply to 
small wind systems, which are, as defined in Sec.  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. 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.
    (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 agreements, 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) Resources assessment. 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. 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:
    (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. 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. 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. 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. 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. 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. Describe a 
plan for dismantling and disposing of project components and 
associated wastes at the end of their useful lives.

Section 9. Wind, Large

    The technical requirements specified in this section apply to 
large wind systems, which are, as defined in Sec.  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. 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.
    (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 agreements, 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

[[Page 21152]]

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) Resources assessment. 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.
    (d) Design and engineering. 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. 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. 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. 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. 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. 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. Describe a 
plan for dismantling and disposing of project components and 
associated wastes at the end of their useful lives.

Section 10. Energy Efficiency Improvements

    The technical requirements specified in this section apply to 
energy efficiency improvement projects, which are, as defined in 
Sec.  4280.103, improvements to a facility, building, or process 
that reduce energy consumption, or reduce energy consumed per square 
foot.
    (a) Qualifications of key project service providers. 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.
    (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 and audits. For all energy efficiency 
improvement projects, provide adequate and appropriate evidence of 
energy savings expected when the system is operated as designed.
    (1) 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. The 
methodology of the energy audit must meet professional and industry 
standards.
    (2) The energy assessment or energy audit must cover the 
following:
    (i) Situation report. 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 assessment or audit. Any energy 
conversion should be based on use rather than source.
    (ii) Potential improvements. List specific information on all 
potential energy-saving opportunities and the associated costs.
    (iii) Technical analysis. Discuss the interactions of the 
potential improvements with existing 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. Provide a narrative 
summary of the potential improvement and its ability to provide 
needed benefits, including a discussion of non-energy 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. Provide the actual total 
quantity of energy used (BTU)in the original building and/or 
equipment in the 12 months prior to the EEI project and the 
projected energy usage after the EEI project shall be the projected 
total quantity of energy used (BTU) on an annual basis for the same 
size or capacity as the original building or equipment. For energy 
efficiency improvement to equipment, if the new piece of equipment 
has a different capacity than the piece of equipment being replaced, 
the projected total quantity of energy used for the new piece of 
equipment shall be adjusted based on the ratio of the capacity of 
the replaced piece of equipment to the capacity of the new piece of 
equipment in accordance with the regulation. 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.
    (d) Design and engineering. 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.

[[Page 21153]]

    (2) Describe the components, materials, or systems to be 
installed. Include the location of the project.
    (e) Project development schedule. 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. 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. 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. 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. 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. Describe a 
plan for dismantling and proper disposal of the project components 
and associated wastes at the end of their useful lives.

Appendix B to Subpart B of Part 4280--Technical Reports for Projects 
With Total Eligible Project Costs of 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.

Section 1. Bioenergy

    The technical requirements specified in this section apply to 
bioenergy projects, which are, as defined in Sec.  4280.103, 
renewable energy systems that produces fuel, thermal energy, or 
electric power from a renewable biomass source only, other than an 
anaerobic digester project.
    (a) Qualifications of project team. 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.
    (b) Agreements, permits, and certifications. 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 agreements, 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.
    (c) Resources assessment. 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. 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

[[Page 21154]]

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. 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. 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. 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. 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. Identify the operations and 
maintenance requirements of the system necessary for the system to 
operate as designed over the design life. In addition:
    (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. 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.

Section 2. Anaerobic Digester Projects

    The technical requirements specified in this section apply to 
anaerobic digester projects, which are, as defined in Sec.  
4280.103, renewable energy systems that use animal or other waste 
and may include other organic substrates to produce biofuel, biogas, 
thermal, or electrical energy via anaerobic digestion.
    (a) Qualifications of project team. 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
    (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. 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.

[[Page 21155]]

    (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 agreements, 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.
    (c) Resources assessment. 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. 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.
    (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. 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. 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. 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.
    (h) Equipment installation. 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. 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. 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.

Section 3. Geothermal, Electric Generation

    The technical requirements specified in this section apply to 
electric generation geothermal projects, which are, as defined in 
Sec.  4280.103, systems that use geothermal energy to produce high 
pressure steam for electric power production.
    (a) Qualifications of project team. 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,

[[Page 21156]]

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.
    (b) Agreements, permits, and certifications. 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 agreements, 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) Resources assessment. 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.
    (d) Design and engineering. 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. 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. 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.
    (g) Equipment procurement. 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. 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. 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
    (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. 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.

Section 4. Geothermal, Direct Use

    The technical requirements specified in this section apply to 
direct use geothermal projects, which are, as defined in Sec.  
4280.103, systems that use thermal energy directly from a geothermal 
source.
    (a) Qualifications of project team. 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

[[Page 21157]]

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.
    (b) Agreements, permits, and certifications. 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) Resources assessment. 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.
    (d) Design and engineering. 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. 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. 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. 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. 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. 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
    (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. 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.

Section 5. Hydrogen Projects

    The technical requirements specified in this section apply to 
hydrogen projects, which are, as defined in Sec.  4280.103, 
renewable energy systems that produce

[[Page 21158]]

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. 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.
    (b) Agreements, permits, and certifications. 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 agreements, 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.
    (c) Resources assessment. 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. 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. 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. 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. 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. 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. 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) Provide information regarding system warranties and 
availability of spare parts;

[[Page 21159]]

    (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. 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.

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 Sec.  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. 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. 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 agreements, 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) Resources assessment. 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. 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.
    (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. 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. 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. 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.
    (h) Equipment installation. 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. 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

[[Page 21160]]

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. 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.

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 Sec.  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. 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
    (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. 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 agreements, 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) Resources assessment. 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. 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.
    (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. 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. 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. 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

[[Page 21161]]

``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. 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. 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, 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. 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.

Section 8. Wind, Small

    The technical requirements specified in this section apply to 
small wind systems, which are, as defined in Sec.  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. 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. 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 agreements, 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) Resources assessment. 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. 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.
    (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. 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. 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. Demonstrate that equipment required 
by the system is available and can be procured and delivered

[[Page 21162]]

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. 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. 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
    (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. 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.

Section 9. Wind, Large

    The technical requirements specified in this section apply to 
wind energy systems, which are, as defined in Sec.  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. 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 
developer's 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
    (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. 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 agreements, 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) Resources assessment. 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.
    (d) Design and engineering. 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

[[Page 21163]]

whether special circumstances such as proximity to airports exist.
    (e) Project development schedule. 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. 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. 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. 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. 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 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. 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.

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 Sec.  4280.103, improvements to a facility, building, or 
process that reduce energy consumption, or reduce energy consumed 
per square foot. The system engineering for such projects must be 
performed by a qualified party or certified Professional Engineer.
    (a) Qualifications of project team. 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. 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.
    (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 audits. For all energy efficiency improvement 
projects, provide adequate and appropriate evidence of energy 
savings expected when the system is operated as designed.
    (1) 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. The 
methodology of the energy audit must meet professional and industry 
standards.
    (2) The energy audit must cover the following:
    (i) Situation report. 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. List specific information on all 
potential energy-saving opportunities and the associated costs.
    (iii) Technical analysis. Discuss the interactions of the 
potential improvements with existing 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.

[[Page 21164]]

    (iv) Potential improvement description. Provide a narrative 
summary of the potential improvement and its ability to provide 
needed benefits, including a discussion of non-energy 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. Provide the actual total 
quantity of energy used (BTU) in the original building and/or 
equipment in the 12 months prior to the EEI project and the 
projected energy usage after the EEI project shall be the projected 
total quantity of energy used (BTU) on an annual basis for the same 
size or capacity as the original building or equipment. For energy 
efficiency improvement to equipment, if the new piece of equipment 
has a different capacity than the piece of equipment being replaced, 
the projected total quantity of energy used for the new piece of 
equipment shall be adjusted based on the ratio of the capacity of 
the replaced piece of equipment to the capacity of the new piece of 
equipment in accordance with the regulation. 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.
    (d) Design and engineering. 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.
    (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. 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. 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.
    (g) Equipment procurement. 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. 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. 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;
    (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. 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.

Appendix C to Subpart B of Part 4280--Technical Report for Hydropower 
Projects

    The technical requirements specified in this appendix apply to 
all hydropower projects. Hydropower projects are those projects that 
create hydroelectric or ocean energy.
    The Technical Report for hydropower projects must demonstrate 
that the project design, procurement, installation, startup, 
operation, and maintenance of the renewable energy system 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 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. Hydropower 
projects with total eligible project costs greater than $400,000 
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.
    (a) Qualifications of project team. The hydropower 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

[[Page 21165]]

project team must have demonstrated expertise in hydropower 
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 hydropower 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 hydropower 
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 hydropower projects. 
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. 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 (b)(6).
    (1) Identify zoning and code issues and required permits and the 
anticipated schedule for meeting those requirements and securing 
those permits. This list should include all local, state, and 
federal permits required, estimated timeline for each permit and 
current status of acquiring each permit.
    (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 agreements, 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. (Note: The environmental review process, 
including all required publications, must be completed prior to 
approval of any Rural Development funding.) The applicant may want 
to work with all Federal organizations involved with the project to 
promulgate a single environmental review document.
    (6) Submit a statement certifying that the project will be 
installed in accordance with applicable local, State, and national 
codes, regulations, and permits.
    (c) Resource assessment. Provide adequate and appropriate data 
to demonstrate the amount of renewable resource available. Indicate 
the quality of the resource, including temperature (if applicable), 
flow, and sustainability of the resource, including a summary of the 
resource evaluation process and the specifications of the 
measurement setup and the date and duration of the evaluation 
process and proximity to the proposed site. If less than 1 year of 
data is used, a qualified consultant must provide a detailed 
analysis of the correlation between the site data and a nearby, 
long-term measurement site.
    (d) Design and engineering. 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 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 hydropower 
project, including location of the project, resource 
characteristics, 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. 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. 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. Demonstrate that equipment required 
by the system is available and can be procured and delivered within 
the proposed project development schedule. Hydropower 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. Describe fully the management of and 
plan for site development and system installation, provide details 
regarding the scheduling of major installation equipment, including 
cranes, barges 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. 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 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;

[[Page 21166]]

    (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. 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.

Appendix D to Subpart B of Part 4280--Technical Report for Flexible 
Fuel Pumps

    The technical requirements specified in this appendix apply to 
flexible fuel pump projects, as defined in Sec.  4280.103.
    (a) Qualifications of project team. The flexible fuel pump 
project team is expected to consist of 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 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 flexible fuel 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 fuel 
dispensing 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 fuel dispensing equipment 
or projects. 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. 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 (b)(8).
    (1) Include Underwriters Laboratory certifications for installed 
flexible fuel pumps.
    (2) Identify zoning and code issues and required permits and the 
anticipated schedule for meeting those requirements and securing 
those permits.
    (3) Identify licenses where required and the schedule for 
obtaining those licenses.
    (4) Identify land use agreements required for the project and 
the anticipated schedule for securing the agreements and the term of 
those agreements.
    (5) Identify any permits or agreements required for solid, 
liquid, and gaseous emissions or effluents and the schedule for 
securing those permits and agreements.
    (6) Identify available component warranties for the specific 
project location and size.
    (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. Provide adequate and appropriate data 
to demonstrate the amount of renewable fuels available. Indicate the 
type, quantity, and quality and the demand for that fuel in its 
service area.
    (d) Design and engineering. 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 flexible 
fuel pump project, including location of the project, resource 
characteristics, system specifications, electric power system, fire 
suppression systems, and monitoring equipment. Identify possible 
vendors and models of major system components. Describe the system 
capacity, storage tank(s), and dispensing apparatus of the proposed 
system as rated and as expected in actual field conditions.
    (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. 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. Provide a report that describes 
the costs and revenues of the proposed project to demonstrate the 
financial performance of the project (the projected increase in 
annual net income resulting by the installation of the project) and 
include the calculation of simple payback. Provide a detailed 
analysis and description of project costs, including project 
management, resource assessment, project design, project permitting, 
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. Demonstrate that equipment required 
by the system is available and can be procured and delivered within 
the proposed project development schedule. Flexible fuel 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.
    (h) Equipment installation. 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. Identify the operations and 
maintenance requirements of the system necessary for the system to 
operate as designed over the design life. In addition:
    (1) Provide information regarding available system and component 
warranties and availability of spare parts;

[[Page 21167]]

    (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. Water infiltration should be checked daily. Replace 
filters if pump/dispenser is running slowly. Check/calibrate pump 
two weeks after initial load conversion.
    (j) Dismantling and disposal of project components. 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.

Appendix E to Subpart B of Part 4280--Feasibility Study Content

    Elements in an acceptable feasibility study include, but are not 
necessarily limited to, the elements specified in Sections A through 
G, as applicable, of this Appendix. Both a technical report for the 
project and an economic analysis of the project are required as part 
of the feasibility study. The technical report to be provided must 
conform to that required under Appendix A, B, C, or D of this 
subpart, as applicable.
    Section A. Executive Summary. Provide an introduction and 
overview of the project. In the overview, describe the nature and 
scope of the proposed project, including purpose, project location, 
design features, capacity, and estimated total capital cost. Include 
a summary of each of the elements of the feasibility study, 
including:
    (1) Economic feasibility determinations;
    (2) Market feasibility determinations;
    (3) Technical feasibility determinations;
    (4) Financial feasibility determinations;
    (5) Management feasibility determinations; and
    (6) Recommendations for implementation of the proposed project.
    Section B. Economic Feasibility. Provide information regarding 
project site; the availability of trained or trainable labor; and 
the availability of infrastructure, including utilities, and rail, 
air and road service to the site. Discuss feedstock source 
management, including feedstock collection, pre-treatment, 
transportation, and storage, and provide estimates of feedstock 
volumes and costs. Discuss the proposed project's potential impacts 
on existing manufacturing plants or other facilities that use 
similar feedstock if the proposed technology is adopted. Provide 
projected impacts of the proposed project on resource conservation, 
public health, and the environment. Provide an overall economic 
impact of the project including any additional markets created 
(e.g., for agricultural and forestry products and agricultural waste 
material) and potential for rural economic development. Provide 
feasibility/plans of project to work with producer associations or 
cooperatives including estimated amount of annual feedstock and 
biofuel and byproduct dollars from producer associations and 
cooperatives.
    Section C. Market Feasibility. Provide information on the sales 
organization and management. Discuss the nature and extent of market 
and market area and provide marketing plans for sale of projected 
output, including both the principal products and the by-products. 
Discuss the extent of competition including other similar facilities 
in the market area. Provide projected total supply of and projected 
competitive demand for raw materials. Describe the procurement plan, 
including projected procurement costs and the form of commitment of 
raw materials (e.g., marketing agreements, etc.). Identify 
commitments from customers or brokers for both the principal 
products and the by-products. Discuss all risks related to the 
industry, including industry status.
    Section D. Technical Feasibility. The technical feasibility 
report shall be based upon verifiable data and contain sufficient 
information and analysis so that a determination may be made on the 
technical feasibility of achieving the levels of income or 
production that are projected in the financial statements. The 
project engineer or architect is considered an independent party 
provided neither the principals of the firm nor any individual of 
the firm who participates in the technical feasibility report has a 
financial interest in the project. If no other individual or firm 
with the expertise necessary to make such a determination is 
reasonably available to perform the function, an individual or firm 
that is not independent may be used.
    (1) Identify any constraints or limitations in the financial 
projections and any other facility or design-related factors that 
might affect the success of the enterprise. Identify and estimate 
project operation and development costs and specify the level of 
accuracy of these estimates and the assumptions on which these 
estimates have been based.
    (2) Discuss all risks related to construction of the project and 
regulation and governmental action as they affect the technical 
feasibility of the project.
    Section E. Financial Feasibility. Discuss the reliability of the 
financial projections and assumptions on which the financial 
statements are based including all sources of project capital both 
private and public, such as Federal funds. Provide 3 years (minimum) 
projected Balance Sheets and Income Statements and cash flow 
projections for the life of the project. Discuss the ability of the 
business to achieve the projected income and cash flow. Provide an 
assessment of the cost accounting system. Discuss the availability 
of short-term credit or other means to meet seasonable business 
costs and the adequacy of raw materials and supplies. Provide a 
sensitivity analysis, including feedstock and energy costs. Discuss 
all risks related to the project, financing plan, the operational 
units, and tax issues.
    Section F. Management Feasibility. Discuss the continuity and 
adequacy of management. Identify applicant and/or management's 
previous experience concerning the receipt of federal financial 
assistance, including amount of funding, date received, purpose, and 
outcome. Discuss all risks related to the applicant as a company 
(e.g., applicant is at the Development-Stage) and conflicts of 
interest, including appearances of conflicts of interest.
    Section G. Qualifications. Provide a resume or statement of 
qualifications of the author of the feasibility study, including 
prior experience.

Appendixes A and B to Part 4280 [Removed]

0
3. Appendixes A and B to part 4280 are removed.

    Dated: April 1, 2011.
Dallas Tonsager,
Under Secretary, Rural Development.
[FR Doc. 2011-8460 Filed 4-13-11; 8:45 am]
BILLING CODE 3410-XY-P


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