[Federal Register Volume 86, Number 10 (Friday, January 15, 2021)]
[Rules and Regulations]
[Pages 3747-3761]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-29278]


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DEPARTMENT OF ENERGY

10 CFR Parts 609 and 611

RIN 1910-AA54


Policies and Procedures for Loan Guarantees for Projects That 
Employ Innovative Technologies and for Direct Loans Under the Advanced 
Technology Vehicles Manufacturing Program

AGENCY: Loan Programs Office, U.S. Department of Energy.

ACTION: Final rule.

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SUMMARY: The U.S. Department of Energy (DOE) Loan Programs Office (LPO) 
establishes amended policies and procedures for the issuance of DOE 
loan guarantees pursuant to the Title XVII

[[Page 3748]]

Program and funding awards and loans pursuant to the Advanced 
Technology Vehicles Manufacturing Program in accordance with the 
Executive order of September 30, 2020, entitled ``Addressing the Threat 
to the Domestic Supply Chain from Reliance on Critical Minerals from 
Foreign Adversaries''. The rule will establish revised policies and 
procedures for receiving, evaluating, and approving applications for 
loan guarantees, funding awards and loans from DOE. The rule will 
refine the definition of ``Eligible Project'' and address the use of 
Preliminary Term sheets and conditional commitments, as well as the 
payment of costs and fees by non-Federal third parties.

DATES: This rule is effective on January 15, 2021.

FOR FURTHER INFORMATION CONTACT: Mr. John Lushetsky, Senior Advisor, 
Loan Programs Office, Loan Guarantee Program, U.S. Department of Energy 
LP 10, 1000 Independence Avenue SW, Washington, DC 20585, (202) 586-
2678, or by email to: <a href="/cdn-cgi/l/email-protection#244e4b4c4a0a4851574c4150574f5d644c550a404b410a434b52"><span class="__cf_email__" data-cfemail="73191c1b1d5d1f06001b160700180a331b025d171c165d141c05">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Introduction and Background
II. Discussion of Final Rule
III. Regulatory Review

I. Introduction and Background

    DOE issues this final rule to update regulations in accordance with 
the requirements of Executive Order 13953, ``Addressing the Threat to 
the Domestic Supply Chain from Reliance on Critical Minerals from 
Foreign Adversaries,'' 85 FR 62539 (Sept. 30, 2020). Executive Order 
13953 establishes policy pertaining to lending activities by LPO 
pursuant to Title XVII of the Energy Policy Act of 2005, as amended (42 
U.S.C. 16511, et seq.) (``Title XVII''), and Section 136 of the Energy 
Independence and Security Act of 2007, as amended (42 U.S.C. 17013) 
(the ``ATVM Statute''), as they apply to ``Critical Minerals,'' 
``Critical Minerals Production,'' and related activities, including 
activities related to minerals more broadly. Executive Order 13953 
requires that DOE update the relevant regulation in accordance with the 
policy presented in the Executive order.

II. Discussion of Final Rule

    Executive Order 13953 requires that DOE LPO establish amended 
policies and procedures for the issuance of DOE loan guarantees, in 
order to provide financial support to eligible projects that will 
support a domestic supply chain for critical minerals and critical 
minerals production. The rule will establish revised policies and 
procedures for receiving, evaluating, and approving applications for 
loan guarantees from DOE. The rule will revise the definition of 
Eligible Project, for both the Title XVII and ATVM Programs, consistent 
with E.O. 13953 and address the use of Preliminary Term sheets and 
conditional commitments, as well as the payment of costs and fees by 
non-Federal third parties. These changes will facilitate the 
accessibility and availability of loan guarantees from DOE to potential 
applicants in both the critical minerals space, as well as traditional 
innovative projects. These changes also will allow for the use of 
Preliminary Term sheets between DOE and potential applicants in the 
critical minerals space and other innovative projects. The use of 
Preliminary Term Sheets will aid potential applicants in obtaining 
their offtake agreements, while negotiating with DOE for a potential 
loan guarantee, subject to conditions required by DOE. The final rule 
will also clarify that payment by non-Federal third parties of costs 
and fees associated with a loan guarantee will be permissible, where 
necessary, to support the applicant. As required by Executive Order 
13953, these changes will make DOE loan guarantees more available and 
accessible to critical minerals projects.

III. Regulatory Review

A. Executive Order 12866

    This final rule is not a ``significant regulatory action'' under 
Executive Order 12866, ``Regulatory Planning and Review.'' 58 FR 51735 
(October 4, 1993). The rule revises the definition of Eligible Project 
consistent with E.O. 13953 and clarifies DOE's procedures for the 
review of applications to LPO for loan guarantees under the Title XVII 
Program and funding awards and loans under the ATVM Program.

B. Executive Orders 13771 and 13777

    On January 30, 2017, the President issued Executive Order 13771, 
``Reducing Regulation and Controlling Regulatory Costs.'' See 82 FR 
9339 (January 30, 2017). E.O. 13771 states that the policy of the 
executive branch is to be prudent and financially responsible in the 
expenditure of funds, from both public and private sources. E.O. 13771 
states that it is essential to manage the costs associated with the 
governmental imposition of private expenditures required to comply with 
Federal regulations.
    Additionally, on February 24, 2017, the President issued Executive 
Order 13777, ``Enforcing the Regulatory Reform Agenda.'' The order 
required the head of each agency designate an agency official as its 
Regulatory Reform Officer (RRO). Each RRO oversees the implementation 
of regulatory reform initiatives and policies to ensure that agencies 
effectively carry out regulatory reforms, consistent with applicable 
law. Further, E.O. 13777 requires the establishment of a regulatory 
task force at each agency. The regulatory task force is required to 
make recommendations to the agency head regarding the repeal, 
replacement, or modification of existing regulations, consistent with 
applicable law. At a minimum, each regulatory reform task force must 
attempt to identify regulations that:
    (i) Eliminate jobs, or inhibit job creation;
    (ii) Are outdated, unnecessary, or ineffective;
    (iii) Impose costs that exceed benefits;
    (iv) Create a serious inconsistency or otherwise interfere with 
regulatory reform initiatives and policies;
    (v) Are inconsistent with the requirements of Information Quality 
Act, or the guidance issued pursuant to that Act, in particular those 
regulations that rely in whole or in part on data, information, or 
methods that are not publicly available or that are insufficiently 
transparent to meet the standard for reproducibility; or
    (vi) Derive from or implement Executive orders or other 
Presidential directives that have been subsequently rescinded or 
substantially modified.
    Finally, on March 28, 2017, the President signed Executive Order 
13783, entitled ``Promoting Energy Independence and Economic Growth.'' 
Among other things, E.O. 13783 requires the heads of agencies to review 
all existing regulations, orders, guidance documents, policies, and any 
other similar agency actions (collectively, agency actions) that 
potentially burden the development or use of domestically produced 
energy resources, with particular attention to oil, natural gas, coal, 
and nuclear energy resources. Such review does not include agency 
actions that are mandated by law, necessary for the public interest, 
and consistent with the policy set forth elsewhere in that order.
    DOE concludes that this final rule is consistent with the 
directives set forth in these Executive orders. This final rule is 
expected to be an E.O. 13771 deregulatory action. The provisions in 
this final rule, as described in section II, revise the definition of 
Eligible Project consistent with E.O. 13953 and establish amended 
policies and procedures for the issuance of DOE loan guarantees,

[[Page 3749]]

funding awards and loans in accordance with Executive Order 13953 and 
for receiving, evaluating, and approving applications for loan 
guarantees from DOE.

C. Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires 
preparation of an initial regulatory flexibility analysis for any rule 
that by law must be proposed for public comment, unless the agency 
certifies that the rule, if promulgated, will not have a significant 
economic impact on a substantial number of small entities. Because a 
notice of proposed rulemaking is not required for this action pursuant 
to 5 U.S.C. 553, or any other law, no regulatory flexibility analysis 
has been prepared for this final rule.
    In addition, DOE notes that the rule would clarify DOE's policies 
and procedures for processing applications for loan guarantees, funding 
awards, and loans, and would not impose a burden on applicants, 
including small entities. Specifically, these changes will facilitate 
the accessibility and availability of loan guarantees, funding awards, 
and loans from DOE to potential applicants in the critical minerals 
space, as well as for traditional innovative projects. The changes also 
will allow for the use of Preliminary Term sheets between DOE and 
potential applicants in the critical minerals space and for other 
innovative projects. The use of Preliminary Term Sheets will aid 
potential applicants in obtaining their offtake agreements, while 
negotiating with DOE for a potential loan guarantee, subject to 
conditions required by DOE. The final rule will clarify that payment by 
non-Federal third parties of costs and fees associated with a loan 
guarantee will be permissible, where necessary, to support the 
applicant.

D. Paperwork Reduction Act

    The final rule would impose no new information or record keeping 
requirements. Accordingly, Office of Management and Budget (OMB) 
clearance is not required under the Paperwork Reduction Act. (44 U.S.C. 
3501 et seq.). The information collection necessary to administer DOE 
loan guarantees for projects that employ innovative technologies under 
10 CFR part 609 is subject to OMB approval under the Paperwork 
Reduction Act (PRA), 44 U.S.C. 3501 et seq. The information collection 
provisions of this part were previously approved by OMB under OMB 
Control No. 1910-5134.
    Notwithstanding any other provision of the law, no person is 
required to respond to, nor shall any person be subject to a penalty 
for failure to comply with, a collection of information subject to the 
requirements of the PRA, unless that collection of information displays 
a currently valid OMB Control Number.

E. National Environmental Policy Act

    DOE has determined that this final rule will be covered under the 
Categorical Exclusion found in DOE's National Environmental Policy Act 
regulations at paragraph A5 of appendix A to subpart D, 10 CFR part 
1021, which applies to a rulemaking that amends an existing rule or 
regulation and that does not change the environmental effect of the 
rule or regulation being amended. Accordingly, neither an environmental 
assessment nor an environmental impact statement is required.

F. Executive Order 13132

    Executive Order 13132, ``Federalism,'' 64 FR 43255 (August 4, 1999) 
imposes certain requirements on agencies formulating and implementing 
policies or regulations that preempt State law or that have federalism 
implications. Agencies are required to examine the constitutional and 
statutory authority supporting any action that would limit the 
policymaking discretion of the States and carefully assess the 
necessity for such actions. DOE has examined this final rule and has 
determined that it will not preempt State law and will not have a 
substantial direct effect on the States, on the relationship between 
the National Government and the States, or on the distribution of power 
and responsibilities among the various levels of government. No further 
action is required by Executive Order 13132.

G. Executive Order 12988

    With respect to the review of existing regulations and the 
promulgation of new regulations, section 3(a) of Executive Order 12988, 
``Civil Justice Reform,'' 61 FR 4729 (February 7, 1996), imposes on 
Executive agencies the general duty to adhere to the following 
requirements: (1) Eliminate drafting errors and ambiguity; (2) write 
regulations to minimize litigation; and (3) provide a clear legal 
standard for affected conduct rather than a general standard and 
promote simplification and burden reduction. With regard to the review 
required by section 3(a), section 3(b) of Executive Order 12988 
specifically requires that Executive agencies make every reasonable 
effort to ensure that the regulation: (1) Clearly specifies the 
preemptive effect, if any; (2) clearly specifies any effect on existing 
Federal law or regulation; (3) provides a clear legal standard for 
affected conduct while promoting simplification and burden reduction; 
(4) specifies the retroactive effect, if any; (5) adequately defines 
key terms; and (6) addresses other important issues affecting clarity 
and general draftsmanship under any guidelines issued by the Attorney 
General. Section 3(c) of Executive Order 12988 requires Executive 
agencies to review regulations in light of applicable standards in 
section 3(a) and section 3(b) to determine whether they are met or it 
is unreasonable to meet one or more of them. DOE has completed the 
required review and determined that, to the extent permitted by law, 
this final rule meets the relevant standards of Executive Order 12988.

H. Unfunded Mandates Reform Act of 1995

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) 
requires each Federal agency to assess the effects of Federal 
regulatory actions on State, local, and Tribal governments and the 
private sector. Public Law 104-4, sec. 201 (codified at 2 U.S.C. 1531). 
For a regulatory action likely to result in a rule that may cause the 
expenditure by State, local, and Tribal governments, in the aggregate, 
or by the private sector of $100 million or more in any one year 
(adjusted annually for inflation), section 202 of UMRA requires a 
Federal agency to publish a written statement that estimates the 
resulting costs, benefits, and other effects on the national economy. 
(2 U.S.C. 1532(a), (b)). The UMRA also requires a Federal agency to 
develop an effective process to permit timely input by elected officers 
of State, local, and Tribal governments on a ``significant 
intergovernmental mandate,'' and requires an agency plan for giving 
notice and opportunity for timely input to potentially affected small 
governments before establishing any requirements that might 
significantly or uniquely affect them. On March 18, 1997, DOE published 
a statement of policy on its process for intergovernmental consultation 
under UMRA. 62 FR 12820. DOE's policy statement is also available at 
http://energy.gov/sites/prod/files/gcprod/documents/umra_97.pdf. UMRA 
sections 202 and 205 do not apply to this action because they apply 
only to rules for which a general notice of proposed rulemaking is 
published. Nevertheless, DOE has determined that this final rule does 
not contain a Federal intergovernmental mandate, nor is it expected to 
require expenditures of $100 million or more in any one year by the 
private sector.

[[Page 3750]]

I. Treasury and General Government Appropriations Act, 1999

    Section 654 of the Treasury and General Government Appropriations 
Act, 1999, 5 U.S.C. 601 note, requires Federal agencies to issue a 
Family Policymaking Assessment for any rulemaking that may affect 
family well-being. While this final rule will apply to individuals who 
may be members of a family, the rule will not have any impact on the 
autonomy or integrity of the family as an institution. Accordingly, DOE 
has concluded that it is not necessary to prepare a Family Policymaking 
Assessment.

J. Treasury and General Government Appropriations Act, 2001

    The Treasury and General Government Appropriations Act, 2001 (44 
U.S.C. 3516, note) provides for agencies to review most disseminations 
of information to the public under guidelines established by each 
agency pursuant to general guidelines issued by OMB. OMB's guidelines 
were published at 67 FR 8452 (February 22, 2002), and DOE's guidelines 
were published at 67 FR 62446 (October 7, 2002). DOE has reviewed the 
final rule under the OMB and DOE guidelines and has concluded that it 
is consistent with applicable policies in those guidelines.

K. Executive Order 13211

    Executive Order 13211, ``Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use,'' 66 FR 28355 
(May 22, 2001), requires Federal agencies to prepare and submit to the 
Office of Information and Regulatory Affairs (OIRA), Office of 
Management and Budget, a Statement of Energy Effects for any proposed 
significant energy action. A ``significant energy action'' is defined 
as any action by an agency that promulgated or is expected to lead to 
promulgation of a final rule, and that: (1) Is a significant regulatory 
action under Executive Order 12866, or any successor order; and (2) is 
likely to have a significant adverse effect on the supply, 
distribution, or use of energy, or (3) is designated by the 
Administrator of OIRA as a significant energy action. For any proposed 
significant energy action, the agency must give a detailed statement of 
any adverse effects on energy supply, distribution, or use should the 
proposal be implemented, and of reasonable alternatives to the action 
and their expected benefits on energy supply, distribution, and use. 
This regulatory action will not have a significant adverse effect on 
the supply, distribution, or use of energy and is therefore not a 
significant energy action. Accordingly, DOE has not prepared a 
Statement of Energy Effects.

L. Administrative Procedure Act

    In accordance with 5 U.S.C. 553(b), the Administrative Procedure 
Act, DOE generally publishes a proposed rule and solicits public 
comment on it before issuing the rule in final. DOE also generally 
provides at least a 30-day delay in effective date for final rules 
pursuant to 5 U.S.C. 553(d). This rulemaking, as a matter relating to 
loans, is exempt from the requirement to publish a notice of proposed 
rulemaking under 5 U.S.C. 553(a)(2). In addition, Executive Order 13953 
specifically directs DOE to consider LPO loan guarantees, funding 
awards, and loans involving critical minerals projects and supply 
chains, and such projects that otherwise satisfy the requirements of 
Title XVII and the ATVM Statute are already accepted, and deemed to be, 
``Eligible Projects'' by DOE under applicable law and regulations.

M. Congressional Notification

    As required by 5 U.S.C. 801, DOE will submit to Congress a report 
regarding the issuance of this final rule prior to the effective date 
set forth at the outset of this rulemaking. The report will state that 
it has been determined that the rule is not a ``major rule'' as defined 
by 5 U.S.C. 801(2).

N. Approval of the Office of the Secretary

    The Secretary of Energy has approved publication of this final 
rule.

List of Subjects

10 CFR Part 609

    Administrative practice and procedure, Energy, Loan programs, 
Reporting and recordkeeping requirements.

10 CFR Part 611

    Administrative practice and procedure, Loan programs-energy, 
Reporting and recordkeeping requirements.

Signing Authority

    This document of the Department of Energy was signed on December 
31, 2020, by Steven E. Winberg, Acting Under Secretary of Energy, 
pursuant to delegated authority from the Secretary of Energy. That 
document with the original signature and date is maintained by DOE. For 
administrative purposes only, and in compliance with requirements of 
the Office of the Federal Register, the undersigned DOE Federal 
Register Liaison Officer has been authorized to sign and submit the 
document in electronic format for publication, as an official document 
of the Department of Energy. This administrative process in no way 
alters the legal effect of this document upon publication in the 
Federal Register.

    Signed in Washington, DC, on December 31, 2020.
Treena V. Garrett,
Federal Register Liaison Officer, U.S. Department of Energy.

    For the reasons stated in the preamble, DOE amends parts 609 and 
611 of chapter II of title 10 of the Code of Federal Regulations as set 
forth below:

0
1. Part 609 is revised to read as follows:

PART 609--LOAN GUARANTEES FOR PROJECTS THAT EMPLOY INNOVATIVE 
TECHNOLOGIES

Sec.
609.1 Purpose and scope.
609.2 Definitions and interpretation.
609.3 Solicitations.
609.4 Submission of applications.
609.5 Programmatic, technical, and financial evaluation of 
applications.
609.6 Term sheets and conditional commitments.
609.7 Closing on the loan guarantee agreement.
609.8 Loan guarantee agreement.
609.9 Lender servicing requirements.
609.10 Project costs.
609.11 Fees and charges.
609.12 Full faith and credit and incontestability.
609.13 Default, demand, payment, and foreclosure on collateral.
609.14 Preservation of collateral.
609.15 Audit and access to records.
609.16 Deviations.

    Authority:  42 U.S.C. 16511-16514.


Sec.  609.1  Purpose and scope.

    (a) This part sets forth the policies and procedures that DOE uses 
for receiving, evaluating, and approving applications for loan 
guarantees to support Eligible Projects under section 1703 of the 
Energy Policy Act of 2005 (Act).
    (b) This part applies to all Applications, Conditional Commitments, 
and Loan Guarantee Agreements.
    (c) Part 1024 of chapter X of title 10 of the Code of Federal 
Regulations shall not apply to actions taken under this part.
    (d) This part incorporates the policies set forth in Executive 
Order 13953 (``Executive Order Addressing the Threat to the Domestic 
Supply Chain from Reliance on Critical Minerals from Foreign 
Adversaries,'' dated September

[[Page 3751]]

20, 2020), and Executive Order 13817 (``A Federal Strategy to Ensure 
Secure and Reliable Supplies of Critical Minerals,'' dated December 20, 
2017), as amended.


Sec.  609.2  Definitions and interpretation.

    (a) Definitions. When used in this part the following words have 
the following meanings.
    Act means Title XVII of the Energy Policy Act of 2005 (42 U.S.C. 
16511-16514), as amended.
    Administrative Cost of Issuing a Loan Guarantee means the total of 
all administrative expenses that DOE incurs during:
    (i) The evaluation of an Application for a loan guarantee;
    (ii) The negotiation and offer of a Term Sheet;
    (iii) The negotiation of a Loan Guarantee Agreement and related 
documents, including the issuance of a Guarantee; and
    (iv) The servicing and monitoring of a Loan Guarantee Agreement, 
including during the construction, startup, commissioning, shakedown, 
and operational phases of an Eligible Project.
    Applicant means a Person, including a prospective Borrower or 
Project Sponsor, that submits an Application to DOE.
    Application means a written submission of materials responsive to a 
Solicitation that satisfies Sec.  609.4.
    Application Fee means the fee or fees required to be paid by an 
Applicant in connection with submission of an Application and specified 
in a Solicitation. The Application Fee does not include the Credit 
Subsidy Cost.
    Attorney General means the Attorney General of the United States.
    Borrower means any Person that enters into a Loan Guarantee 
Agreement with DOE and issues Guaranteed Obligations.
    Cargo Preference Act means the Cargo Preference Act of 1954, 46 
U.S.C. 55305, as amended.
    Commercial Technology means a technology in general use in the 
commercial marketplace in the United States at the time the Term Sheet 
is offered by DOE. A technology is in general use if it is being used 
in three or more facilities that are in commercial operation in the 
United States for the same general purpose as the proposed project, and 
has been used in each such facility for a period of at least five 
years. The five-year period for each facility shall start on the in-
service date of the facility employing that particular technology or, 
in the case of a retrofit of a facility to employ a particular 
technology, the date the facility resumes commercial operation 
following completion and testing of the retrofit. For purposes of this 
section, facilities that are in commercial operation include projects 
that have been the recipients of a loan guarantee from DOE under this 
part.
    Conditional Commitment means a Term Sheet offered by DOE and 
accepted by the offeree of the Term Sheet, all in accordance with Sec.  
609.6(c); provided, that the Secretary may terminate a Conditional 
Commitment for any reason at any time prior to the execution of the 
Loan Guarantee Agreement; and provided, further, that the Secretary may 
not delegate this authority to terminate a Conditional Commitment.
    Contracting Officer means the Secretary of Energy or a DOE official 
authorized by the Secretary to enter into, administer or terminate DOE 
Loan Guarantee Agreements and related contracts on behalf of DOE.
    Credit Subsidy Cost has the same meaning as ``cost of a loan 
guarantee'' in section 502(5)(C) of the Federal Credit Reform Act of 
1990, which is the net present value, at the time the Loan Guarantee 
Agreement is executed, of the following estimated cash flows, 
discounted to the point of disbursement:
    (i) Payments by the Government to cover defaults and delinquencies, 
interest subsidies, or other payments; less
    (ii) Payments to the Government including origination and other 
fees, penalties, and recoveries; including the effects of changes in 
loan or debt terms resulting from the exercise by the Borrower, 
Eligible Lender, or other Holder of an option included in the Loan 
Guarantee Agreement.
    Davis-Bacon Act means the statute referenced in section 1702(k) of 
the Act.
    DOE means the United States Department of Energy.
    Eligible Lender means either:
    (i) Any Person formed for the purpose of, or engaged in the 
business of, lending money that, as determined by DOE in each case, is:
    (A) Not debarred or suspended from participation in a Federal 
Government contract or participation in a non-procurement activity 
(under a set of uniform regulations implemented for numerous agencies, 
such as DOE, at 2 CFR part 180);
    (B) Not delinquent on any Federal debt or loan;
    (C) Legally authorized and empowered to enter into loan guarantee 
transactions authorized by the Act and this part;
    (D) Able to demonstrate experience in originating and servicing 
loans for commercial projects similar in size and scope to the Eligible 
Project, or able to procure such experience through contracts 
acceptable to DOE; and
    (E) Able to demonstrate experience as the lead lender or 
underwriter by presenting evidence of its participation in large 
commercial projects or energy-related projects or other relevant 
experience, or able to procure such experience through contracts 
acceptable to DOE; or
    (ii) The Federal Financing Bank.
    Eligible Project means a project that:
    (i) Is located in the United States at one location, except that 
the project may be located at two or more locations in the United 
States if the project is comprised of installations or facilities 
employing a single New or Significantly Improved Technology that is 
deployed pursuant to an integrated and comprehensive business plan. An 
Eligible Project in more than one location is a single Eligible 
Project;
    (ii) Deploys a New or Significantly Improved Technology; and
    (iii) Satisfies all applicable requirements of section 1703 of the 
Act, the applicable Solicitation, and this part. For purposes of this 
paragraph (iii):
    (A) Eligible Projects may include manufacturing, recycling, 
processing, reprocessing, remediation, or reuse of materials, 
components, or subcomponents involving critical minerals, critical 
minerals production, or the supply chain for such materials, as set 
forth in Executive Order 13953 (``Executive Order Addressing the Threat 
to the Domestic Supply Chain from Reliance on Critical Minerals from 
Foreign Adversaries,'' dated September 20, 2020), and Executive Order 
13817 (``A Federal Strategy to Ensure Secure and Reliable Supplies of 
Critical Minerals,'' dated December 20, 2017), as amended, to the 
extent such critical minerals-related activities are eligible under 
section 1703 of the Act; and
    (B) Some avoidance, reduction, or sequestration of air pollutants 
or anthropogenic emissions of greenhouse gases by a proposed project, 
or facilitated by such project, where applicable, shall be deemed to 
satisfy the requirement of section 1703(a)(1).
    Equity means cash contributed to the permanent capital stock (or 
equivalent) of the Borrower or the Eligible Project by the shareholders 
or other owners of the Borrower or the Eligible Project. Equity does 
not include proceeds from the non-guaranteed portion of a Guaranteed 
Obligation, proceeds from any other non-guaranteed loan or obligation, 
or the value of any government assistance or support.

[[Page 3752]]

    Facility Fee means the fee, to be paid in the amount and in the 
manner provided in the Term Sheet, to cover the Administrative Cost of 
Issuing a Loan Guarantee for the period from the Borrower's acceptance 
of the Term Sheet through issuance of the Guarantee.
    Federal Financing Bank means an instrumentality of the United 
States Government created by the Federal Financing Bank Act of 1973, 
under the general supervision of the Secretary of the Treasury.
    Guarantee means the undertaking of the United States of America, 
acting through the Secretary pursuant to Title XVII of the Energy 
Policy Act of 2005, to pay in accordance with the terms thereof, 
principal and interest of a Guaranteed Obligation.
    Guaranteed Obligation means any loan or other debt obligation of 
the Borrower for an Eligible Project for which DOE guarantees all or 
any part of the payment of principal and interest under a Loan 
Guarantee Agreement entered into pursuant to the Act.
    Holder means any Person that holds a promissory note made by the 
Borrower evidencing the Guaranteed Obligation (or his designee or 
agent).
    Intercreditor Agreement means any agreement or instrument (or 
amendment or modification thereof) among DOE and one or more other 
Persons providing financing or other credit arrangements to the 
Borrower or an Eligible Project) or that otherwise provides for rights 
of DOE in respect of a Borrower or in respect of an Eligible Project, 
in each case in form and substance satisfactory to DOE.
    Loan Agreement means a written agreement between a Borrower and an 
Eligible Lender containing the terms and conditions under which the 
Eligible Lender will make a loan or loans to the Borrower for an 
Eligible Project.
    Loan Guarantee Agreement means a written agreement that, when 
entered into by DOE and a Borrower, and, if applicable, an Eligible 
Lender, establishes the obligation of DOE to guarantee the payment of 
all or a portion of the principal of, and interest on, specified 
Guaranteed Obligations, subject to the terms and conditions specified 
in the Loan Guarantee Agreement.
    New or Significantly Improved Technology means a technology, or a 
defined suite of technologies, concerned with the production, 
consumption, or transportation of energy and that is not a Commercial 
Technology, and that has either:
    (i) Only recently been developed, discovered, or learned; or
    (ii) Involves or constitutes one or more meaningful and important 
improvements in productivity or value, in comparison to Commercial 
Technologies in use in the United States at the time the Term Sheet is 
issued.
    OMB means the Office of Management and Budget in the Executive 
Office of the President.
    Person means any natural person or any legally constituted entity, 
including a state or local government, tribe, corporation, company, 
voluntary association, partnership, limited liability company, joint 
venture, and trust.
    Preliminary Term Sheet means the principal terms upon which DOE and 
the Applicant have agreed to in writing that will serve as the basis 
for a Loan Agreement or Loan Guarantee Agreement, following a 
determination by DOE that such Application adequately describes an 
Eligible Project, or a project that has a reasonable likelihood of 
becoming an Eligible Project, consistent with Sec.  609.4(a)).
    Project Costs mean those costs, including escalation and 
contingencies, that are to be expended or accrued by a Borrower and are 
necessary, reasonable, customary, and directly related to the design, 
engineering, financing, construction, startup, commissioning, and 
shakedown of an Eligible Project, as specified in Sec.  609.10(a). 
Project Costs do not include costs for the items set forth in Sec.  
609.10(b).
    Project Sponsor means any Person that assumes substantial 
responsibility for the development, financing, and structuring of an 
Eligible Project and, if not the Applicant, owns or controls, by itself 
and/or through individuals in common or affiliated business entities, a 
five percent or greater interest in the proposed Eligible Project, the 
Borrower, or the Applicant.
    Risk-Based Charge means a charge that, together with the principal 
and interest on the guaranteed loan, or at such other times as DOE may 
determine, is payable on specified dates during the term of a 
Guaranteed Obligation.
    Secretary means the Secretary of Energy or a duly authorized 
designee or successor in interest.
    Solicitation means an announcement that DOE is accepting 
Applications that is widely disseminated to the public on the DOE 
website or otherwise.
    Term Sheet means a written offer for the issuance of a loan 
guarantee, executed by the Secretary (or a DOE official authorized by 
the Secretary to execute such offer), delivered to the offeree, that 
sets forth the detailed terms and conditions under which DOE and the 
Applicant will execute a Loan Guarantee Agreement.
    United States means the several States, the District of Columbia, 
the Commonwealth of Puerto Rico, the Virgin Islands, Guam, American 
Samoa, and any territory or possession of the United States of America.
    (b) Interpretations. This part shall be interpreted using the 
following guidelines.
    (1) The word ``discretion'' when used with reference to DOE, 
including the Secretary, means ``sole discretion.''
    (2) Defined terms in the singular shall include the plural and vice 
versa, and the masculine, feminine, or neuter gender shall include all 
genders.
    (3) The word ``or'' is not exclusive.
    (4) References to laws by name or popular name are references to 
the version of such law appearing in the United States Code and include 
any amendment, supplement, or modification of such law, and all 
regulations, rulings, and other laws promulgated thereunder.
    (5) References to information or documents required or allowed to 
be submitted to DOE mean information or documents that are marked as 
provided in 10 CFR 600.15(b). A document or information that is not 
marked as provided in 10 CFR 600.15(b) will not be considered as having 
been submitted to or received by DOE.
    (6) A reference to a Person includes such Person's successors and 
permitted assigns.
    (7) The words ``include,'' ``includes,'' and ``including'' are not 
limiting and mean include, includes and including ``without 
limitation'' and ``without limitation by specification.''
    (8) The words ``hereof,'' ``herein,'' and ``hereunder'' and words 
of similar import refer this part as a whole and not to any particular 
provision of this part.


Sec.  609.3  Solicitations.

    DOE may invite the submission of Applications for loan guarantees 
for Eligible Projects pursuant to a Solicitation.
    (a) Each Solicitation must include, at a minimum, the following 
information:
    (1) The dollar amount of loan guarantee authority potentially being 
made available by DOE in that Solicitation;
    (2) The place for submission of Applications;
    (3) The name and address of the DOE representative whom a potential 
Applicant may contact to receive further information and a copy of the 
Solicitation;
    (4) The form, format, and page limits applicable to the 
Application;

[[Page 3753]]

    (5) The amount of the Application Fee and any other fees that will 
be required;
    (6) The programmatic, technical, financial, and other factors that 
DOE will use to evaluate response submissions, and their relative 
weightings in that evaluation; and
    (7) Such other information as DOE may deem appropriate.
    (b) Using procedures as may be announced by DOE a potential 
Applicant may request a meeting with DOE to discuss its potential 
Application. At its discretion, DOE may meet with a potential 
Applicant, either in person or electronically, to discuss its potential 
Application. DOE may provide a potential Applicant with a preliminary 
response regarding whether its proposed Application may constitute an 
Eligible Project. DOE's responses to questions from potential 
Applicants and DOE's statements to potential Applicants are pre-
decisional and preliminary in nature. Any such responses and statements 
are subject in their entirety to any final action by DOE with respect 
to an Application submitted in accordance with Sec.  609.4.


Sec.  609.4  Submission of applications.

    (a) In response to a Solicitation, an Applicant must meet all 
requirements and provide all information specified in this part and the 
Solicitation in the manner and on or before the date specified in the 
Solicitation. DOE may direct that Applications be submitted in more 
than one part; provided, that the parts of such Application, taken as a 
whole, satisfy the requirements of paragraph (d) of this section and 
this part. In such event, subsequent parts of an Application may be 
filed only after DOE invites an Applicant to make an additional 
submission. If DOE directs that Applications be submitted in more than 
one part, the initial part of an Application shall contain information 
sufficient for DOE to determine that the project proposed by an 
Applicant will be, or may reasonably become, an Eligible Project, and 
to evaluate such project's readiness to proceed. If there have been any 
material amendments, modifications, or additions made to the 
information previously submitted by an Applicant, the Applicant shall 
provide a detailed description thereof, including any changes in the 
proposed project's financing structure or other terms, promptly upon 
request by DOE. Where DOE has directed that an Application be submitted 
in parts, DOE may provide for payment of the Application Fee in parts.
    (b) An Applicant may submit only one Application for one proposed 
project using a particular technology. An Applicant may not submit an 
Application or Applications for multiple Eligible Projects using the 
same technology. An Applicant may submit Applications for multiple 
proposed projects using different technologies. For purposes of this 
paragraph (b), the term Applicant shall include the Project Sponsor and 
any subsidiaries or affiliates of the Project Sponsor.
    (c) The open application period shall be rolling, and DOE may 
accept Applications at any time.
    (d) An Application must include, at a minimum, the following 
information and materials:
    (1) A completed Application form signed by an individual with full 
authority to bind the Applicant, including the commitments and 
representations made in each part of the Application;
    (2) The applicable Application Fee;
    (3) A description of how, and to what measurable extent, the 
proposed project avoids, reduces, or sequesters air pollutants and/or 
anthropogenic emissions of greenhouse gases at any level, including how 
to measure and verify those effects; there is not a minimum threshold 
of avoidance, reduction, or sequestration of air pollutants and/or 
anthropogenic emissions of greenhouse gases that a proposed project 
must show to be accepted so long as some reduction is reasonably 
demonstrated;
    (4) A description of the nature and scope of the proposed project 
(with preliminary information where appropriate), including:
    (i) Key project milestones;
    (ii) Location or locations of the proposed project;
    (iii) Identification and commercial feasibility of the New or 
Significantly Improved Technology to be deployed;
    (iv) How the Applicant intends to deploy such New or Significantly 
Improved Technology in the proposed project; and
    (v) How the Applicant intends to assure, to the extent possible, 
the further commercial availability of the New or Significantly 
Improved Technology in the United States;
    (5) An explanation of how the proposed project qualifies as a 
project within the category or categories of projects referred to in 
the Solicitation;
    (6) A detailed estimate of the total Project Costs together with a 
description of the methodology and assumptions used;
    (7) A detailed description of the engineering and design 
contractor(s), construction contractor(s), and equipment supplier(s);
    (8) The construction schedules for the proposed project, including 
major activity and cost milestones;
    (9) A description of the material terms and conditions of the 
development and construction contracts to include the performance 
guarantees, performance bonds, liquidated damages provisions, and 
equipment warranties;
    (10) A detailed description of the operations and maintenance 
provider(s), the proposed project operating plan, estimated staffing 
requirements, parts inventory, major maintenance schedule, estimated 
annual downtime, and performance guarantees and related liquidated 
damage provisions, if any;
    (11) A description of the management plan of operations to be 
employed in carrying out the proposed project, and information 
concerning the management experience of each officer or key person 
associated with the proposed project;
    (12) A detailed description of the proposed project 
decommissioning, deconstruction, and disposal plan, and the anticipated 
costs associated therewith;
    (13) An analysis of the market for any product (including but not 
limited to electricity and chemicals) to be produced by, or services to 
be provided by, the proposed project, including relevant economics 
justifying the analysis, and copies of:
    (i) Any contracts, or draft contracts reflecting the current state 
of actual negotiations between relevant parties, for the sale of such 
products or the provision of such services; or
    (ii) Any other assurance of the revenues to be generated from sale 
of such products or provision of such services;
    (14) A detailed description of the overall financial plan for the 
proposed project, including all sources and uses of funding, equity and 
debt, and the liability of parties associated with the proposed project 
over the term of the Loan Guarantee Agreement;
    (15) A copy of all material agreements, whether entered into or 
proposed, relevant to the investment, design, engineering, financing, 
construction, startup commissioning, shakedown, operations, and 
maintenance of the proposed project;
    (16) A copy of the financial closing checklist for the equity and 
debt to the extent available;
    (17) The Applicant's business plan on which the proposed project is 
based and Applicant's financial model with respect to the proposed 
project for the proposed term of the Guaranteed Obligations, including, 
as applicable, pro forma income statements, balance sheets, and cash 
flows. All such

[[Page 3754]]

information and data must include assumptions made in their preparation 
and the range of revenue, operating cost, and credit assumptions 
considered;
    (18) Financial statements for the three immediately preceding 
fiscal years of the Applicant (or such shorter period as the Applicant 
has been in existence) that have been audited by an independent 
certified public accounting firm, including all associated 
certifications, notes and letters to management, as well as interim 
financial statements and notes for the current fiscal year for the 
Applicant and all other Persons the credit of which is material to the 
success of the transactions described in the Application;
    (19) A copy of all legal opinions, and other material reports, 
analyses, and reviews related to the proposed project that have been 
delivered prior to submission of any part of the Application;
    (20) An engineering report prepared by an engineer with experience 
in the industry and familiarity with similar projects. The report 
should address the proposed project's siting and permitting 
arrangements, engineering and design, contractual requirements, 
environmental compliance, testing, commissioning and operations, and 
maintenance;
    (21) A credit history of the Applicant and each Project Sponsor;
    (22) A preliminary credit assessment for the proposed project 
without a loan guarantee from a nationally recognized rating agency for 
projects where the estimated total Project Costs exceed $25 million. 
For proposed projects where the total estimated Project Costs are $25 
million or less and where conditions justify, in the sole discretion of 
the Secretary, DOE may require such an assessment;
    (23) A list showing the status of and estimated completion date of 
Applicant's required applications for Federal, state, and local 
permits, authorizations or approvals to site, construct, and operate 
the proposed project;
    (24) A report containing an analysis of the potential environmental 
impacts of the proposed project that will enable DOE to--
    (i) Assess whether the proposed project will comply with all 
applicable environmental requirements; and
    (ii) Undertake and complete any necessary reviews under the 
National Environmental Policy Act of 1969;
    (25) A listing and description of the assets of or to be utilized 
for the benefit of the proposed project, and of any other asset that 
will serve as collateral pledged in respect of the Guaranteed 
Obligations, including appropriate data as to the value of such assets 
and the useful life of any physical assets. With respect to real 
property assets listed, an appraisal that is consistent with the 
``Uniform Standards of Professional Appraisal Practice,'' promulgated 
by the Appraisal Standards Board of the Appraisal Foundation, and 
performed by licensed or certified appraisers, is required;
    (26) An analysis demonstrating that, at the time of the 
Application, there is a reasonable prospect that Borrower will be able 
to repay the Guaranteed Obligations (including interest) according to 
their terms, and a complete description of the operational and 
financial assumptions and methodologies on which this demonstration is 
based; and
    (27) If proposed project assets or facilities are or will be 
jointly owned by the Applicant and one or more other Persons, each of 
which owns an undivided ownership interest in such proposed project 
assets or facilities, a description of the Applicant's rights and 
obligations in respect of its undivided ownership interest in such 
proposed project assets or facilities.
    (e) During the Application evaluation process pursuant to Sec.  
609.5, DOE may request additional information, potentially including a 
preliminary credit rating or credit assessment, with respect to the 
proposed project.
    (f) DOE will not consider any part of any Application or the 
Application as a whole complete unless the Application Fee (or the 
required portion of the Application Fee related to a particular part of 
the Application) has been paid. An Application Fee paid in connection 
with one Application is not transferable to another Application. Except 
in the discretion of DOE, no portion of the Application Fee is 
refundable.
    (g) DOE has no obligation to evaluate an Application that is not 
complete, and may proceed with such evaluation, or a partial 
evaluation, only in its discretion.
    (h) Unless an Applicant requests an extension and such an extension 
is granted by DOE in its discretion, an Application may be rejected if 
it is not complete within four years from the date of submission (or 
date of submission of the first part thereof, in the case of 
Applications made in more than one part).
    (i) Upon making a determination to engage independent consultants 
or outside counsel with respect to an Application, DOE will proceed to 
evaluate and process such Application only following execution by an 
Applicant or Project Sponsor, as appropriate, of an agreement 
satisfactory to DOE to pay the fees and expenses charged by the 
independent consultants and outside legal counsel.
    (j) Following a determination by DOE that an Application or, if 
applicable, the initial part of an Application, adequately describes an 
Eligible Project, or a project that may reasonably become an Eligible 
Project, DOE may offer a Preliminary Term Sheet to be utilized by an 
Applicant for the purpose of obtaining its third party contracts or 
offtake agreements, or for any other lawful purpose that may reasonably 
assist an Applicant in obtaining the information or conditional 
agreements required to complete an Application, subject to any terms 
and conditions required by DOE and applicable law. DOE may issue a 
Preliminary Term Sheet only if it determines that an Applicant has 
shown in an Application or, if applicable, the initial part of an 
Application, a reasonable likelihood of being able to satisfy the 
requirements of the Act and enter into a Conditional Commitment, but 
for the lack of a Preliminary Term Sheet. The Applicant shall be 
responsible for payment of any fees assessed or costs incurred by DOE 
that are associated with the issuance of the Preliminary Term Sheet. 
Notwithstanding any provision of a Preliminary Term Sheet to the 
contrary, the issuance of a Preliminary Term Sheet shall impose no 
obligation on DOE to proceed with an Application, or to enter into a 
Conditional Commitment, which matters shall be governed exclusively by 
the Act and the requirements set forth in Sec.  609.5. Further, DOE 
may, in its sole discretion, terminate or rescind a Preliminary Term 
Sheet should an Applicant fail to meet any of the terms and conditions 
required therein.
    (k) At any time in the lending process, the Secretary of Energy may 
exercise his deviation authority under Sec.  609.16 to make such 
deviations from this part as he may deem to be in the best interests of 
DOE, where such deviation supports program objectives and the special 
circumstances stated in any deviation request are clearly in the best 
interests of the Government.
    (l) DOE shall respond, in writing, to any inquiry by an Applicant 
about the status of its Application within ten (10) business days of 
receipt of such request.


Sec.  609.5  Programmatic, technical, and financial evaluation of 
applications.

    (a) In reviewing completed Applications, and in prioritizing and 
selecting those as to which a Term Sheet should be offered, DOE will 
apply the criteria set forth in the Act, any

[[Page 3755]]

applicable Solicitation, and this part. Applications will be considered 
in a competitive process, i.e. each Application will be evaluated 
against other Applications responsive to the Solicitation. At any time, 
DOE may request additional information or supporting documentation from 
an Applicant. Applications will be denied if:
    (1) The proposed project is not an Eligible Project, however, DOE 
may provide an Applicant with a reasonable opportunity to correct or 
amend any Application in order to meet the conditions for an Eligible 
Project;
    (2) The applicable technology is not ready to be deployed 
commercially in the United States, cannot yield a commercially viable 
product or service in the use proposed in the Application, does not 
have the potential to be deployed in other commercial projects in the 
United States, or is not or will not be available for further 
commercial use in the United States;
    (3) The Person proposed to issue the loan or purchase other debt 
obligations constituting the Guaranteed Obligations is not an Eligible 
Lender;
    (4) The proposed project is for demonstration, research, or 
development;
    (5) Significant Equity for the proposed project will not be 
provided by the date of issuance of the Guaranteed Obligations, or such 
later time as DOE in its discretion may determine; or
    (6) The proposed project does not present a reasonable prospect of 
repayment of the Guaranteed Obligations.
    (b) If an Application has not been denied pursuant to paragraph (a) 
of this section, DOE will evaluate the proposed project based on the 
criteria set forth in the Act, any applicable Solicitation, and the 
following:
    (1) To what measurable extent the proposed project avoids, reduces, 
or sequesters air pollutants or anthropogenic emissions of greenhouses 
gases, as applicable, or contributes to the avoidance, reduction or 
sequestration of air pollutants or anthropogenic emissions of 
greenhouse gases;
    (2) To what extent the technology to be deployed in the proposed 
project--
    (i) Is ready to be deployed commercially in the United States, can 
be replicated, yields a commercially viable product or service in the 
use proposed in the proposed project, has potential to be deployed in 
other commercial projects in the United States, and is or will be 
available for further commercial use in the United States; and
    (ii) Constitutes an important improvement in technology, as 
compared to available Commercial Technologies, used to avoid, reduce or 
sequester air pollutants or anthropogenic emissions of greenhouse 
gases, as applicable;
    (3) To what extent the Applicant has a plan to advance or assist in 
the advancement of that technology into the commercial marketplace in 
the United States;
    (4) The extent to which the level of proposed support in the 
Application is consistent with a reasonable prospect of repayment of 
the Guaranteed Obligations by considering, among other factors:
    (i) The extent to which the requested amount of the loan guarantee, 
the requested amount of Guaranteed Obligations and, if applicable, the 
expected amount of any other financing or credit arrangements, are 
reasonable relative to the nature and scope of the proposed project;
    (ii) The total amount and nature of the Project Costs and the 
extent to which Project Costs are to be funded by Guaranteed 
Obligations; and
    (iii) The feasibility of the proposed project and likelihood that 
it will produce sufficient revenues to service its debt obligations 
over the life of the loan guarantee and assure timely repayment of 
Guaranteed Obligations;
    (5) The likelihood that the proposed project will be ready for full 
commercial operations in the time frame stated in the Application;
    (6) The amount of Equity committed and to be committed to the 
proposed project by the Borrower, the Project Sponsor, and other 
Persons;
    (7) Whether there is sufficient evidence that the Borrower will 
diligently implement the proposed project, including initiating and 
completing the proposed project in a timely manner;
    (8) Whether and to what extent the Applicant will rely upon other 
Federal and non-Federal Government assistance such as grants, tax 
credits, or other loan guarantees to support the financing, 
construction, and operation of the proposed project and how such 
assistance will impact the proposed project;
    (9) The levels of safeguards provided to the Federal Government in 
the event of default through collateral, warranties, and other 
assurance of repayment described in the Application, including the 
nature of any anticipated intercreditor arrangements;
    (10) The Applicant's, or the relevant contractor's, capacity and 
expertise to operate the proposed project successfully, based on 
factors such as financial soundness, management organization, and the 
nature and extent of corporate and individual experience;
    (11) The ability of the proposed Borrower to ensure that the 
proposed project will comply with all applicable laws and regulations, 
including all applicable environmental statutes and regulations;
    (12) The levels of market, regulatory, legal, financial, 
technological, and other risks associated with the proposed project and 
their appropriateness for a loan guarantee provided by DOE;
    (13) Whether the Application contains sufficient information, 
including a detailed description of the nature and scope of the 
proposed project and the nature, scope, and risk coverage of the loan 
guarantee sought to enable DOE to perform a thorough assessment of the 
proposed project; and
    (14) Such other criteria that DOE deems relevant in evaluating the 
merits of an Application.
    (c) After DOE completes its review and evaluation of a proposed 
project pursuant to paragraph (b) of this section and this part, DOE 
will notify the Applicant in writing of its determination whether to 
proceed with due diligence and negotiation of a Term Sheet in 
accordance with Sec.  609.6. DOE will proceed only if it determines 
that the proposed project is highly qualified and suitable for a 
Guarantee. Upon written confirmation from the Applicant that it desires 
to proceed, DOE and the Applicant will commence negotiations.
    (d) DOE shall provide all Applicants with a reasonable opportunity 
to correct or amend any Application in order to meet the criteria set 
forth in this part or any other conditions required by DOE, prior to 
any denial of such Application. A determination by DOE not to proceed 
with a proposed project following evaluation pursuant to paragraph (b) 
of this section shall be final and non-appealable, but shall not 
prejudice the Applicant or other affected Persons from applying for a 
Guarantee in respect of a different proposed project pursuant to 
another, separate Application. Prior to DOE's denial of any 
Application, DOE shall advise the Applicant in writing, not less than 
ten (10) business days prior to the effective date of such denial, and 
set forth the reasons for such proposed denial along with a list of 
items that may be corrected or amended by the Applicant in order to 
satisfy the requirements that would create an Eligible Application, if 
such items can be corrected or appropriately amended. If requested by 
any Applicant, DOE shall meet with such Applicant in order

[[Page 3756]]

to address questions or concerns raised by the Applicant.


Sec.  609.6  Term sheets and conditional commitments.

    (a) DOE, after negotiation of a Term Sheet with an Applicant, may 
offer such Term Sheet to an Applicant or such other Person that is an 
affiliate of the Applicant and that is acceptable to DOE. DOE's offer 
of a Term Sheet shall be in writing and signed by the Contracting 
Officer. DOE's negotiation of a Term Sheet imposes no obligation on the 
Secretary to offer a Term Sheet to the Applicant.
    (b) DOE shall terminate its negotiations of a Term Sheet if it has 
not offered a Term Sheet in respect of an Eligible Project within four 
years after the date of the written notification set forth in Sec.  
609.5(c), unless extended in writing in the discretion of the 
Contracting Officer.
    (c) If and when the offeree specified in a Term Sheet satisfies all 
terms and conditions for acceptance of the Term Sheet, including 
written acceptance thereof and payment of all fees specified in Sec.  
609.11(f) and therein to be paid at or prior to acceptance of the Term 
Sheet, the Term Sheet shall become a Conditional Commitment. Each 
Conditional Commitment shall include an expiration date no more than 
two years from the date it is issued, unless extended in writing in the 
discretion of the Contracting Officer. When and if all of the terms and 
conditions specified in the Conditional Commitment have been met, DOE 
and the Applicant may enter into a Loan Guarantee Agreement.
    (d) If, subsequent to execution of a Conditional Commitment, the 
financing arrangements of the Borrower, or in respect of an Eligible 
Project, change from those described in the Conditional Commitment, the 
Applicant shall promptly provide updated financing information in 
writing to DOE. All such updated information shall be deemed to be 
information submitted in connection with an Application and shall be 
subject to Sec.  609.4(b). Based on such updated information, DOE may 
take one or more of the following actions:
    (1) Determine that such changes are not material to the Borrower, 
the Eligible Project or DOE;
    (2) Amend the Conditional Commitment accordingly;
    (3) Postpone the expected closing date of the associated Loan 
Guarantee Agreement; or
    (4) Terminate the Conditional Commitment.


Sec.  609.7   Closing on the loan guarantee agreement.

    (a) Subsequent to entering into a Conditional Commitment with an 
Applicant, DOE, after consultation with the Applicant, will set a 
closing date for execution of a Loan Guarantee Agreement.
    (b) Prior to or on the closing date of a Loan Guarantee Agreement, 
DOE will ensure that:
    (1) One of the following has occurred:
    (i) An appropriation for the Credit Subsidy Cost has been made;
    (ii) The Secretary has received from the Borrower payment in full 
for the Credit Subsidy Cost and deposited the payment into the 
Treasury; or
    (iii) A combination of one or more appropriations under paragraph 
(b)(1)(i) of this section and one or more payments from the Borrower 
under paragraph (b)(1)(ii) of this section has been made that is equal 
to the Credit Subsidy Cost;
    (2) Pursuant to section 1702(h) of the Act, DOE has received from 
the Applicant the remainder of the Facility Fee referred to in Sec.  
609.11(b);
    (3) OMB has reviewed and approved DOE's calculation of the Credit 
Subsidy Cost of the Guarantee;
    (4) The Department of the Treasury has been consulted as to the 
terms and conditions of the Loan Guarantee Agreement;
    (5) The Loan Guarantee Agreement and related documents contain all 
terms and conditions DOE deems reasonable and necessary to protect the 
interest of the United States;
    (6) Each holder of the Guaranteed Obligations is an Eligible 
Lender, and the servicer of the Guaranteed Obligations meets the 
servicing performance requirements of Sec.  609.9(b);
    (7) DOE has determined the principal amount of the Guaranteed 
Obligations expected to be issued in respect of the Eligible Project, 
as estimated at the time of issuance, will not exceed 80 percent of the 
Project Costs of the Eligible Project;
    (8) All conditions precedent specified in the Conditional 
Commitment are either satisfied or waived by the Contracting Officer 
and all other applicable contractual, statutory, and regulatory 
requirements have been satisfied or waived by the Contracting Officer. 
If the counterparty to the Conditional Commitment has not satisfied all 
such terms and conditions on or prior to the closing date of the Loan 
Guarantee Agreement, the Secretary may, in his discretion, set a new 
closing date, or terminate the Conditional Commitment; and
    (9) Where the total Project Costs for an Eligible Project are 
projected to exceed $25 million, the Applicant must provide a credit 
rating from a nationally recognized rating agency reflecting the 
revised Conditional Commitment for the project without a Federal 
guarantee. Where total Project Costs are projected to be $25 million or 
less, the Secretary may, on a case-by-case basis, require a credit 
rating. If a credit rating is required, an updated rating must be 
provided to the Secretary not later than 30 days prior to closing.


Sec.  609.8   Loan guarantee agreement.

    (a) Only a Loan Guarantee Agreement executed by the Contracting 
Officer can obligate DOE to issue a Guarantee in respect of Guaranteed 
Obligations.
    (b) DOE is not bound by oral representations.
    (c) Each Loan Guarantee Agreement shall contain the following 
requirements and conditions, and shall not be executed until the 
Contracting Officer determines that the following requirements and 
conditions are satisfied:
    (1) The Federal Financing Bank shall be the only Eligible Lender in 
transactions where DOE guarantees 100 percent (but not less than 100 
percent) of the principal and interest of the Guaranteed Obligations 
issued under a Loan Guarantee Agreement.
    (i) Where DOE guarantees more than 90 percent of the Guaranteed 
Obligation, the guaranteed portion cannot be separated from or 
``stripped'' from the non-guaranteed portion of the Guaranteed 
Obligation if the loan is participated, syndicated or otherwise resold 
in the secondary market; and
    (ii) Where DOE guarantees 90 percent or less of the Guaranteed 
Obligation, the guaranteed portion may be separated from or 
``stripped'' from the non-guaranteed portion of the Guaranteed 
Obligation, if the loan is participated, syndicated or otherwise resold 
in the secondary debt market.
    (2) The Borrower shall be obligated to make full repayment of the 
principal and interest on the Guaranteed Obligations and other debt of 
a Borrower over a period of up to the lesser of 30 years or 90 percent 
of the projected useful life of the Eligible Project's major physical 
assets, as calculated in accordance with U.S. generally accepted 
accounting principles and practices. The non-guaranteed portion (if 
any) of any Guaranteed Obligations must be repaid pro rata, and on the 
same amortization schedule, with the guaranteed portion.
    (3) If any financing or credit arrangement of the Borrower or 
relating

[[Page 3757]]

to the Eligible Project, other than the Guaranteed Obligations, has an 
amortization period shorter than that of the Guaranteed Obligations, 
DOE shall have determined that the resulting financing structure 
allocates to DOE a reasonably proportionate share of the default risk, 
in light of:
    (i) DOE's share of the total debt financing of the Borrower;
    (ii) Risk allocation among the credit providers to the Borrower; 
and
    (iii) Internal and external credit enhancements.
    (4) The loan guarantee does not finance, either directly or 
indirectly tax-exempt debt obligations, consistent with the 
requirements of section 149(b) of the Internal Revenue Code.
    (5) The principal amount of the Guaranteed Obligations, when 
combined with funds from other sources committed and available to the 
Borrower, shall be sufficient to pay for expected Project Costs 
(including adequate contingency amounts), the applicable items 
specified in Sec.  609.10(b), and otherwise to carry out the Eligible 
Project.
    (6) There shall be a reasonable prospect of repayment by the 
Borrower of the principal of and interest on the Guaranteed Obligations 
and all of its other debt obligations.
    (7) The Borrower shall pledge collateral or surety determined by 
DOE to be necessary to secure the repayment of the Guaranteed 
Obligations. Such collateral or security may include Eligible Project 
assets and assets not related to the Eligible Project.
    (8) The Loan Guarantee Agreement and related documents shall 
include detailed terms and conditions that DOE deems necessary and 
appropriate to protect the interests of the United States in the case 
of default, including ensuring availability of all relevant 
intellectual property rights, technical data including software, and 
technology necessary for DOE or any Person selected by DOE, to 
complete, operate, convey, and dispose of the defaulted Borrower or the 
Eligible Project.
    (9) The Guaranteed Obligations shall not be subordinate to other 
financing. Guaranteed Obligations are not subordinate to other 
financing if the lien on property securing the Guaranteed Obligations, 
together with liens that are pari passu with such lien, if any, take 
priority or precedence over other charges or encumbrances upon the same 
property and must be satisfied before such other charges are entitled 
to participate in proceeds of the property's sale. In DOE's discretion, 
Guaranteed Obligations may share a lien position with other financing.
    (10) There is satisfactory evidence that the Borrower will 
diligently pursue the Eligible Project and is willing, competent, and 
capable of performing its obligations under the Loan Guarantee 
Agreement and the loan documentation relating to its other debt 
obligations.
    (11) The Borrower shall have paid all fees and expenses due to DOE 
or the U.S. Government, including such amount of the Credit Subsidy 
Cost as may be due and payable from the Borrower pursuant to the 
Conditional Commitment, upon execution of the Loan Guarantee Agreement.
    (12) The Borrower, any Eligible Lender, and each other relevant 
party shall take, and be obligated to continue to take, those actions 
necessary to perfect and maintain liens on collateral in respect of the 
Guaranteed Obligations.
    (13) DOE or its representatives shall have access to the offices of 
the Borrower and the Eligible Project site at all reasonable times in 
order to monitor the--
    (i) Performance by the Borrower of its obligations under the Loan 
Guarantee Agreement; and
    (ii) Performance of the Eligible Project.
    (14) DOE and Borrower have reached an agreement regarding the 
information that will be made available to DOE and the information that 
will be made publicly available.
    (15) The Borrower shall have filed applications for or obtained any 
required regulatory approvals for the Eligible Project and is in 
compliance, or promptly will be in compliance, where appropriate, with 
all Federal, state, and local regulatory requirements.
    (16) The Borrower shall have no delinquent Federal debt.
    (17) The Project Sponsors have made or will make a significant 
Equity investment in the Borrower or the Eligible Project, and will 
maintain control of the Borrower or the Eligible Project as agreed in 
the Loan Guarantee Agreement.
    (18) The Loan Guarantee Agreement and related agreements shall 
include such other terms and conditions as DOE deems necessary or 
appropriate to protect the interests of the United States.
    (d) The Loan Guarantee Agreement shall provide that, in the event 
of a default by the Borrower:
    (1) Interest on the Guaranteed Obligations shall accrue at the rate 
stated in the Loan Guarantee Agreement or the Loan Agreement, until DOE 
makes full payment of the defaulted Guaranteed Obligations and, except 
when such Guaranteed Obligations are funded through the Federal 
Financing Bank, DOE shall not be required to pay any premium, default 
penalties, or prepayment penalties; and
    (2) The holder of collateral pledged in respect of the Guaranteed 
Obligations shall be obligated to take such actions as DOE may 
reasonably require to provide for the care, preservation, protection, 
and maintenance of such collateral so as to enable the United States to 
achieve maximum recovery.
    (e)(1) An Eligible Lender or other Holder may sell, assign or 
transfer a Guaranteed Obligation to another Eligible Lender that meets 
the requirements of Sec.  609.9. Such latter Eligible Lender shall be 
required to assume all servicing, monitoring, and reporting 
requirements as provided in the Loan Guarantee Agreement. Any transfer 
of the servicing, monitoring, and reporting functions shall be subject 
to the prior written approval of DOE.
    (2) The Secretary, or the Secretary's designee or contractual 
agent, for the purpose of identifying Holders with the right to receive 
payment under the Guaranteed Obligations, shall include in the Loan 
Guarantee Agreement or related documents a procedure for tracking and 
identifying Holders of Guaranteed Obligations. Any contractual agent 
approved by the Secretary to perform this function may transfer or 
assign this responsibility only with the Secretary's prior written 
approval.
    (f) Each Loan Guarantee Agreement shall require the Borrower to 
make representations and warranties, agree to covenants, and satisfy 
conditions precedent to closing and to each disbursement that, in each 
case, relate to its compliance with the Davis-Bacon Act and the Cargo 
Preference Act.
    (g) The Applicant, the Borrower, or the Project Sponsor must 
estimate, calculate, record, and provide to DOE any time DOE requests 
such information and at the times provided in the Loan Guarantee 
Agreement all costs incurred in the design, engineering, financing, 
construction, startup, commissioning, and shakedown of the Eligible 
Project in accordance with generally accepted accounting principles and 
practices.


Sec.  609.9  Lender servicing requirements.

    (a) When reviewing and evaluating a proposed Eligible Project, all 
Eligible Lenders (other than the Federal Financing Bank) shall at all 
times exercise the level of care and diligence that a reasonable and 
prudent lender would exercise when reviewing, evaluating, and 
disbursing a loan made by it without a Federal guarantee.

[[Page 3758]]

    (b) Loan servicing duties shall be performed by an Eligible Lender, 
DOE, or another qualified loan servicer approved by DOE. When 
performing its servicing duties, the loan servicer shall at all times 
exercise the level of care and diligence that a reasonable and prudent 
lender would exercise when servicing a loan made without a Federal 
guarantee, including:
    (1) During the construction period, monitoring the satisfaction of 
all of the conditions precedent to all loan disbursements, as provided 
in the Loan Guarantee Agreement, Loan Agreement, or related documents;
    (2) During the operational phase, monitoring and servicing the 
Guaranteed Obligations and collection of the outstanding principal and 
accrued interest as well as undertaking to ensure that the collateral 
package securing the Guaranteed Obligations remains uncompromised; and
    (3) Until the Guaranteed Obligation has been repaid, providing 
annual or more frequent financial and other reports on the status and 
condition of the Guaranteed Obligations and the Eligible Project, and 
promptly notifying DOE if it becomes aware of any problems or 
irregularities concerning the Eligible Project or the ability of the 
Borrower to make payment on the Guaranteed Obligations or its other 
debt obligations.


Sec.  609.10  Project costs.

    (a) Project Costs include:
    (1) Costs of acquisition, lease, or rental of real property, 
including engineering fees, surveys, title insurance, recording fees, 
and legal fees incurred in connection with land acquisition, lease or 
rental, site improvements, site restoration, access roads, and fencing;
    (2) Costs of engineering, architectural, legal and bond fees, and 
insurance paid in connection with construction of the facility;
    (3) Costs of equipment purchases, including a reasonable reserve of 
spare parts to the extent required;
    (4) Costs to provide facilities and services related to safety and 
environmental protection;
    (5) Costs of financial, legal, and other professional services, 
including services necessary to obtain required licenses and permits 
and to prepare environmental reports and data;
    (6) Costs of issuing Eligible Project debt, such as fees, 
transaction, and costs referred to in paragraph (a)(5) of this section, 
and other customary charges imposed by Eligible Lenders;
    (7) Costs of necessary and appropriate insurance and bonds of all 
types including letters of credit and any collateral required therefor;
    (8) Costs of design, engineering, startup, commissioning, and 
shakedown;
    (9) Costs of obtaining licenses to intellectual property necessary 
to design, construct, and operate the Eligible Project;
    (10) To the extent required by the Loan Guarantee Agreement and not 
intended or available for any cost referred to in paragraph (b) of this 
section, costs of funding any reserve fund, including without 
limitation, a debt service reserve, a maintenance reserve, and a 
contingency reserve for cost overruns during construction; provided 
that proceeds of a Guaranteed Loan deposited to any reserve fund shall 
not be removed from such fund except to pay Project Costs, to pay 
principal of the Guaranteed Loan, or otherwise to be used as provided 
in the Loan Guarantee Agreement;
    (11) Capitalized interest necessary to meet market requirements and 
other carrying costs during construction; and
    (12) Other necessary and reasonable costs, including, without 
limitation, previously acquired real estate, equipment, or other 
materials, and any engineering, construction, make-ready, design, 
permitting, or other work completed on an existing facility or project.
    (b) Project Costs do not include:
    (1) Fees and commissions charged to Borrower, including finder's 
fees, for obtaining Federal or other funds;
    (2) Parent corporation or other affiliated entity's general and 
administrative expenses, and non-Eligible Project related parent 
corporation or affiliated entity assessments, including organizational 
expenses;
    (3) Goodwill, franchise, trade, or brand name costs;
    (4) Dividends and profit sharing to stockholders, employees, and 
officers;
    (5) Research, development, and demonstration costs of readying an 
innovative technology for employment in a commercial project;
    (6) Costs that are excessive or are not directly required to carry 
out the Eligible Project, as determined by DOE;
    (7) Expenses incurred after startup, commissioning, and shakedown 
of the facility, or, in DOE's discretion, any portion of the facility 
that has completed startup, commissioning, and shakedown;
    (8) Borrower-paid Credit Subsidy Costs, the Administrative Cost of 
Issuing a Loan Guarantee, and any other fee collected by DOE; and
    (9) Operating costs.


Sec.  609.11  Fees and charges.

    (a) Unless explicitly authorized by statute, no funds obtained from 
the Federal Government, or from a loan or other instrument guaranteed 
by the Federal Government, may be used to pay for the Credit Subsidy 
Cost, the Application Fee, the Facility Fee, the Guarantee Fee, the 
maintenance fee, and any other fees charged by or paid to DOE relating 
to the Act or any Guarantee thereunder. An applicant may, at any time, 
use non-Federal monies to pay the Credit Subsidy Cost or DOE fees.
    (b) DOE may charge Applicants a non-refundable Facility Fee, with a 
portion being payable on or prior to the date on which the Applicant 
executes the Commitment Letter and the remainder being payable on or 
prior to the closing date for the Loan Guarantee Agreement.
    (c) In order to encourage and supplement private lending activity 
DOE may collect from Borrowers for deposit in the United States 
Treasury a non-refundable Risk-Based Charge which, together with the 
interest rate on the Guaranteed Obligation that LPO determines to be 
appropriate, will take into account the prevailing rate of interest in 
the private sector for similar loans and risks. The Risk-Based Charge 
shall be paid at such times and in such manner as may be determined by 
DOE, but no less frequently than once each year, commencing with 
payment of a pro-rated payment on the date the Guarantee is issued. The 
amount of the Risk-Based Charge will be specified in the Loan Guarantee 
Agreement.
    (d) DOE may collect a maintenance fee to cover DOE's administrative 
expenses, other than extraordinary expenses, incurred in servicing and 
monitoring a Loan Guarantee Agreement. The maintenance fee shall accrue 
from the date of execution of the Loan Guarantee Agreement through the 
date of payment in full of the related Guaranteed Obligations. If DOE 
determines to collect a maintenance fee, it shall be paid by the 
Borrower each year (or portion thereof) in advance in the amount 
specified in the applicable Loan Guarantee Agreement.
    (e) In the event a Borrower or an Eligible Project experiences 
difficulty relating to technical, financial, or legal matters or other 
events (e.g., engineering failure or financial workouts), the Borrower 
shall be liable as follows:
    (1) If such difficulty requires DOE to incur time or expenses 
beyond those customarily expended to monitor and administer performing 
loans, DOE may collect an extraordinary expenses fee from the Borrower 
that will reimburse

[[Page 3759]]

DOE for such time and expenses, as determined by DOE; and
    (2) For all fees and expenses of DOE's independent consultants and 
outside counsel, to the extent that such fees and expenses are elected 
to be paid by DOE notwithstanding the provisions of paragraphs (f) and 
(g) of this section.
    (f) Each Applicant, Borrower, or Project Sponsor, as applicable, 
shall be responsible for the payment of all fees and expenses charged 
by DOE's independent consultants and outside legal counsel in 
connection with an Application, Conditional Commitment, or Loan 
Guarantee Agreement, as applicable. Upon making a determination to 
engage independent consultants or outside counsel with respect to an 
Application, DOE will proceed to evaluate and process such Application 
only following execution by an Applicant or Project Sponsor, as 
appropriate, of an agreement satisfactory to DOE to pay the fees and 
expenses charged by the independent consultants and outside legal 
counsel. Appropriate provisions regarding payment of such fees and 
expenses shall also be included in each Term Sheet and Loan Guaranty 
Agreement or, upon a determination by DOE, in other appropriate 
agreements.
    (g) Notwithstanding payment by Applicant, Borrower, or Project 
Sponsor, all services rendered by an independent consultant or outside 
legal counsel to DOE in connection with an Application, Conditional 
Commitment, or Loan Guarantee Agreement shall be solely for the benefit 
of DOE (and such other creditors as DOE may agree in writing). DOE may 
require, in its discretion, the payment of an advance retainer to such 
independent consultants or outside legal counsel as security for the 
collection of the fees and expenses charged by the independent 
consultants and outside legal counsel. In the event an Applicant, 
Borrower, or Project Sponsor fails to comply with the provisions of 
such payment agreement, DOE in its discretion, may stop work on or 
terminate an Application, a Conditional Commitment, or a Loan Guarantee 
Agreement, or may take such other remedial measures in its discretion 
as it deems appropriate.
    (h) DOE shall not be financially liable under any circumstances to 
any independent consultant or outside counsel for services rendered in 
connection with an Application, Conditional Commitment, or Loan 
Guarantee Agreement except to the extent DOE has previously entered 
into an express written agreement to pay for such services.


Sec.  609.12   Full faith and credit and incontestability.

    The full faith and credit of the United States is pledged to the 
payment of principal and interest of Guaranteed Obligations pursuant to 
Guarantees issued in accordance with the Act and this part. The 
issuance by DOE of a Guarantee shall be conclusive evidence that it has 
been properly obtained; that the underlying loan qualified for such 
Guarantee; and that, but for fraud or material misrepresentation by the 
Holder, such Guarantee shall be legal, valid, binding, and enforceable 
against DOE in accordance with its terms.


Sec.  609.13   Default, demand, payment, and foreclosure on collateral.

    (a) If a Borrower defaults in making a required payment of 
principal or interest on a Guaranteed Obligation and such default has 
not been cured within the applicable grace period, the Holder may make 
written demand for payment upon the Secretary in accordance with the 
terms of the applicable Guarantee. If a Borrower defaults in making a 
required payment of principal or interest on a Guaranteed Obligation 
and such default has not been cured within the applicable grace period, 
the Secretary shall notify the Attorney General.
    (b) Subject to the terms of the applicable Guarantee, the Secretary 
shall make payment within 60 days after receipt of written demand for 
payment from the Holder, provided that the demand for payment complies 
in all respects with the terms of the applicable Guarantee. Interest 
shall accrue to the Holder at the rate stated in the promissory note 
evidencing the Guaranteed Obligation, without giving effect to the 
Borrower's default in making a required payment of principal or 
interest on the applicable Guarantee Obligation or any other default by 
the Borrower, until the Guaranteed Obligation has been fully paid by 
DOE. Payment by the Secretary on the applicable Guarantee does not 
change Borrower's obligations under the promissory note evidencing the 
Guaranteed Obligation, Loan Guarantee Agreement, Loan Agreement, or 
related documents, including an obligation to pay default interest.
    (c) Following payment by the Secretary pursuant to the applicable 
Guarantee, upon demand by DOE, the Holder shall transfer and assign to 
the Secretary (or his designee or agent) the promissory note evidencing 
the Guaranteed Obligation, all rights and interests of the Holder in 
the Guaranteed Obligation, and all rights and interests of the Holder 
in respect of the Guaranteed Obligation, except to the extent that the 
Secretary determines that such promissory note or any of such rights 
and interests shall not be transferred and assigned to the Secretary. 
Such transfer and assignment shall include, without limitation, all of 
the liens, security, and collateral rights of the Holder (or his 
designee or agent) in respect of the Guaranteed Obligation.
    (d) Following payment by the Secretary pursuant to a Guarantee or 
other default of a Guaranteed Obligation, the Secretary is authorized 
to protect and foreclose on the collateral, take action to recover 
costs incurred by, and all amounts owed to, the United States as a 
result of the defaulted Guarantee Obligation, and take such other 
action necessary or appropriate to protect the interests of the United 
States. In respect of any such authorized actions that involve a 
judicial proceeding or other judicial action, the Secretary shall act 
through the Attorney General. The foregoing provisions of this 
paragraph (d) shall not relieve the Secretary from its obligations 
pursuant to any applicable Intercreditor Agreement. Nothing in this 
paragraph (d) shall limit the Secretary from exercising any rights or 
remedies pursuant to the terms of the Loan Guarantee Agreement.
    (e) The cash proceeds received as a result of any foreclosure on 
the collateral, or other action, shall be distributed in accordance 
with the Loan Guarantee Agreement (subject to any applicable 
Intercreditor Agreement).
    (f) The Loan Guarantee Agreement shall provide that cash proceeds 
received by the Secretary (or his designee or agent) as a result of any 
foreclosure on the collateral or other action shall be applied in the 
following order of priority:
    (1) Toward the pro rata payment of any costs and expenses 
(including unpaid fees, fees and expenses of counsel, contractors and 
agents, and liabilities and advances made or incurred) of the 
Secretary, the Attorney General, the Holder, a collateral agent, or 
other responsible person of any of them (solely in their individual 
capacities as such and not on behalf of or for the benefit of their 
principals), incurred in connection with any authorized action 
following payment by the Secretary pursuant to a Guarantee or other 
default of a Guaranteed Obligation, or as otherwise permitted under the 
Loan Agreement or Loan Guarantee Agreement;
    (2) To pay all accrued and unpaid fees due and payable to the 
Secretary, the Attorney General, the Holder, a collateral agent, or 
other responsible

[[Page 3760]]

person of any of them on a pro rata basis in respect of the Guaranteed 
Obligation;
    (3) To pay all accrued and unpaid interest due and payable to the 
Secretary, the Attorney General, the Holder, a collateral agent, or 
other responsible person of any of them on a pro rata basis in respect 
of the Guaranteed Obligation;
    (4) To pay all unpaid principal of the Guaranteed Obligation;
    (5) To pay all other obligations of the Borrower under the Loan 
Guarantee Agreement, the Loan Agreement, and related documents that are 
remaining after giving effect to the preceding provisions and are then 
due and payable; and
    (6) To pay to the Borrower, or its successors and assigns, or as a 
court of competent jurisdiction may direct, any cash proceeds then 
remaining following the application of all payment described in 
paragraphs (f)(1) through (5) of this section.
    (g) No action taken by the Holder or its agent or designee in 
respect of any collateral will affect the rights of any person, 
including the Secretary, having an interest in the Guaranteed 
Obligations or other debt obligations, to pursue, jointly or severally, 
legal action against the Borrower or other liable persons, for any 
amounts owing in respect of the Guaranteed Obligation or other 
applicable debt obligations.
    (h) In the event that the Secretary considers it necessary or 
desirable to protect or further the interest of the United States in 
connection with exercise of rights as a lien holder or recovery of 
deficiencies due under the Guaranteed Obligation, the Secretary may 
take such action as he determines to be appropriate under the 
circumstances.
    (i) Nothing in this part precludes, nor shall any provision of this 
part be construed to preclude, the Secretary from purchasing any 
collateral or Holder's or other Person's interest in the Eligible 
Project upon foreclosure of the collateral.
    (j) Nothing in this part precludes, nor shall any provision of this 
part be construed to preclude, forbearance by any Holder with the 
consent of the Secretary for the benefit of the Borrower and the United 
States.
    (k) The Holder and the Secretary may agree to a formal or informal 
plan of reorganization in respect of the Borrower, to include a 
restructuring of the Guaranteed Obligation and other applicable debt of 
the Borrower on such terms and conditions as the Secretary determines 
are in the best interest of the United States.


Sec.  609.14   Preservation of collateral.

    (a) If the Secretary exercises his right under the Loan Guarantee 
Agreement to require the holder of pledged collateral to take such 
actions as the Secretary (subject to any applicable Intercreditor 
Agreement) may reasonably require to provide for the care, 
preservation, protection, and maintenance of such collateral so as to 
enable the United States to achieve maximum recovery from the 
collateral, the Secretary shall, subject to compliance with the 
Antideficiency Act, 31 U.S.C. 1341 et seq., reimburse the holder of 
such collateral for reasonable and appropriate expenses incurred in 
taking actions required by the Secretary (unless otherwise provided in 
applicable agreements). Except as provided in Sec.  609.13, no party 
may waive or relinquish, without the consent of the Secretary, any such 
collateral to which the United States would be subrogated upon payment 
under the Loan Guarantee Agreement.
    (b) In the event of a default, the Secretary may enter into such 
contracts as he determines are required or appropriate, taking into 
account the term of any applicable Intercreditor Agreement, to care 
for, preserve, protect or maintain collateral pledged in respect of 
Guaranteed Obligations. The cost of such contracts may be charged to 
the Borrower.


Sec.  609.15   Audit and access to records.

    Each Loan Guarantee Agreement and related documents shall provide 
that:
    (a) The Eligible Lender, or DOE in conjunction with the Federal 
Financing Bank where loans are funded by the Federal Financing Bank or 
other Holder or other party servicing the Guaranteed Obligations, as 
applicable, and the Borrower, shall keep such records concerning the 
Eligible Project as are necessary, including the Application, Term 
Sheet, Conditional Commitment, Loan Guarantee Agreement, Credit 
Agreement, mortgage, note, disbursement requests and supporting 
documentation, financial statements, audit reports of independent 
accounting firms, lists of all Eligible Project assets and non-Eligible 
Project assets pledged in respect of the Guaranteed Obligations, all 
off-take and other revenue producing agreements, documentation for all 
Eligible Project indebtedness, income tax returns, technology 
agreements, documentation for all permits and regulatory approvals, and 
all other documents and records relating to the Borrower or the 
Eligible Project, as determined by the Secretary, to facilitate an 
effective audit and performance evaluation of the Eligible Project; and
    (b) The Secretary and the Comptroller General, or their duly 
authorized representatives, shall have access, for the purpose of audit 
and examination, to any pertinent books, documents, papers, and records 
of the Borrower, Eligible Lender, or DOE or other Holder or other party 
servicing the Guaranteed Obligation, as applicable. Such inspection may 
be made during regular office hours of the Borrower, Eligible Lender. 
or DOE or other Holder, or other party servicing the Eligible Project 
and the Guaranteed Obligations, as applicable, or at any other time 
mutually convenient.


Sec.  609.16  Deviations.

    (a) Whenever permitted by applicable law, the Secretary may 
authorize deviations from the requirements of this part upon:
    (1) Either receipt from the Applicant, Borrower, or Project 
Sponsor, as applicable, of--
    (i) A written request that the Secretary deviate from one or more 
requirements; and
    (ii) A supporting statement briefly describing one or more 
justifications for such deviation; or
    (iii) A determination by the Secretary in his discretion to 
undertake a deviation;
    (2) A finding by the Secretary that such deviation supports program 
objectives and the special circumstances stated in the request make 
such deviation clearly in the best interest of the Government; and
    (3) If the waiver would constitute a substantial change in the 
financial terms of the Loan Guarantee Agreement and related documents, 
DOE shall consult with OMB and the Secretary of the Treasury.
    (b) If a deviation under this section results in an increase in the 
applicable Credit Subsidy Cost, such increase shall be funded either by 
additional fees paid by the Borrower or on behalf of the Borrower by 
any third party or, if an appropriation is available, by means of an 
appropriations act. The Secretary has discretion to determine how the 
cost of a deviation is funded. The Secretary may waive, alter, or 
amend, through a deviation, all or any part of the Application Fee, the 
Facility Fee, the Guarantee Fee, the maintenance fee, and any other 
fees associated with any Application, or allow for alternative plans to 
pay such fees over time or through any other means agreed upon by DOE 
and the Applicant.

[[Page 3761]]

PART 611--ADVANCED TECHNOLOGY VEHICLES MANUFACTURING ASSISTANCE 
PROGRAM

0
2. The authority citation for part 611 continues to read as follows:

    Authority: Pub. L. 110-140 (42 U.S.C. 17013), Pub. L. 110-329.

0
3. Section 611.2 is revised to read as follows:


Sec.  611.2  Definitions.

    The definitions contained in this section apply to provisions 
contained in both this subpart and subpart B of this part.
    Adjusted average fuel economy means a harmonic production weighted 
average of the combined fuel economy of all vehicles in a fleet, which 
were subject to CAFE.
    Advanced technology vehicle means a passenger automobile or light 
truck that meets--
    (1) The Bin 5 Tier II emission standard established in regulations 
issued by the Administrator of the Environmental Protection Agency 
under section 202(i) of the Clean Air Act (the Act) (42 U.S.C. 
7521(i)), as of the date of application, or a lower-numbered Bin 
emission standard;
    (2) Any new emission standard in effect for fine particulate matter 
prescribed by the Administrator under the Act (42 U.S.C. 7401 et seq.), 
as of the date of application; and
    (3) At least 125 percent of the harmonic production weighted 
average combined fuel economy, for vehicles with substantially similar 
attributes in model year 2005.
    Agreement means the contractual loan arrangement between DOE and a 
Borrower for a loan made by and through the Federal Financing Bank with 
the full faith and credit of the United States Government on the 
principal and interest.
    Applicant means a party that submits a substantially complete 
application pursuant to this part.
    Application means the compilation of the materials required by this 
part to be submitted to DOE by an Applicant. One Application can 
include requests for one or more loans and one or more projects. 
However, an Application covering more than one project must contain 
complete and separable information with respect to each project.
    Automobile is used as that term is defined in 49 CFR part 523.
    Borrower means an Applicant that receives a loan under the program 
under this part.
    CAFE means the Corporate Average Fuel Economy program of the Energy 
Policy and Conservation Act, 49 U.S.C. 32901 et seq.
    Combined fuel economy means the combined city/highway miles per 
gallon values, as are reported in accordance with section 32904 of 
title 49, United States Code. If CAFE compliance data is not available, 
the combined average fuel economy of a vehicle must be demonstrated 
through the use of a peer-reviewed model.
    DOE or Department means the United States Department of Energy.
    Eligible Facility means a manufacturing facility in the United 
States that produces qualifying advanced technology vehicles, or 
qualifying components.
    Eligible Project means:
    (1) Reequipping, expanding, or establishing a manufacturing 
facility in the United States to produce qualifying advanced technology 
vehicles, or qualifying components; or
    (2) Engineering integration performed in the United States for 
qualifying advanced technology vehicles and qualifying components; or
    (3) Manufacturing, recycling, processing, reprocessing, 
remediation, or reuse of materials, components, or subcomponents 
involving critical minerals, critical minerals production, or the 
supply chain for such materials, as set forth in Executive Order 13953 
(``Executive Order Addressing the Threat to the Domestic Supply Chain 
from Reliance on Critical Minerals from Foreign Adversaries,'' dated 
September 20, 2020), and Executive Order 13817 (``A Federal Strategy to 
Ensure Secure and Reliable Supplies of Critical Minerals,'' dated 
December 20, 2017), as amended.
    Engineering integration costs are the costs of engineering tasks 
relating to--
    (1) Incorporating qualifying components into the design of advanced 
technology vehicles; and
    (2) Designing tooling and equipment and developing manufacturing 
processes and material suppliers for production facilities that produce 
qualifying components or advanced technology vehicles.
    Equivalent vehicle means a light-duty vehicle of the same vehicle 
classification as specified in 10 CFR part 523.
    Financially viable means a reasonable prospect that the Applicant 
will be able to make payments of principal and interest on the loan as 
and when such payments become due under the terms of the loan 
documents, and that the Applicant has a net present value that is 
positive, taking all costs, existing and future, into account.
    Grantee means an entity awarded a grant made pursuant to section 
136 of the Energy Independence and Security Act of 2007 and this part.
    Light-duty vehicle means passenger automobiles and light trucks.
    Light truck is used as that term is defined in 49 CFR part 523.
    Loan Documents mean the Agreement and all other instruments, and 
all documentation among DOE, the Borrower, and the Federal Financing 
Bank evidencing the making, disbursing, securing, collecting, or 
otherwise administering the loan [references to loan documents also 
include comparable agreements, instruments, and documentation for other 
financial obligations for which a loan is requested or issued].
    Model year is defined as that term is defined in 49 U.S.C. 32901.
    Passenger automobile is used as that term is defined in 49 CFR part 
523.
    Qualifying components means components that the DOE determines are:
    (1) Designed for advanced technology vehicles; and
    (2) Installed for the purpose of meeting the performance 
requirements of advanced technology vehicles; or
    (3) Involving critical minerals, as set forth in Executive Order 
13953 (``Executive Order Addressing the Threat to the Domestic Supply 
Chain from Reliance on Critical Minerals from Foreign Adversaries,'' 
dated September 20, 2020), and Executive Order 13817 (``A Federal 
Strategy to Ensure Secure and Reliable Supplies of Critical Minerals,'' 
dated December 20, 2017), as amended, as a component of advanced 
technology vehicles.
    Secretary means the United States Secretary of Energy.
    Security means all property, real or personal, tangible or 
intangible, required by the provisions of the Loan Documents to secure 
repayment of any indebtedness of the Borrower under the Loan Documents.

[FR Doc. 2020-29278 Filed 1-14-21; 8:45 am]
BILLING CODE 6450-01-P


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