I 

110TH CONGRESS 

1ST SESSION H. R. 2389 

To help small businesses to develop, invest in, and purchase energy efficient 

buildings, fixtures, equipment, and technology. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 17, 2007 

Mr. SHULER (for himself and Ms. VELA ́ZQUEZ) introduced the following bill; 

which was referred to the Committee on Small Business 

A BILL 

To help small businesses to develop, invest in, and purchase 

energy efficient buildings, fixtures, equipment, and technology. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘Small Energy Efficient Businesses Act’’. 

6 (b) TABLE OF CONTENTS.—The table of contents for 

7 this Act is as follows: 

Sec. 1. Short title; table of contents. 

Sec. 2. Findings. 

Sec. 3. Larger 504 loan limits to help business develop energy efficient technologies and purchases. 


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Sec. 4. Reduced 7(a) fees and higher loan guarantees for purchase of energy 

efficient technologies. 

Sec. 5. Small Business Sustainability Initiative. 

Sec. 6. Small Business Administration to educate and promote energy efficiency 

ideas to small businesses and work with the small business 

community to make such information widely available. 

Sec. 7. Energy saving debentures. 

Sec. 8. Investments in energy saving small businesses. 

Sec. 9. Renewable fuel capital investment company. 

Sec. 10. Study and report. 

1 SEC. 2. FINDINGS. 

2 Congress finds the following: 

3 (1) Energy efficiency is in our national interest 

4 for our long term economic well being, for the health 

5 and safety of our citizens and the world, and for our 

6 independence and security. 

7 (2) Small businesses are more efficient, nimble, 

8 and innovative than large businesses and therefore 

9 more likely to integrate and benefit from energy effi10 cient technology advances and upgrades, but they 

11 are less likely to have the capital to institute these 

12 advances quickly. 

13 (3) The majority of businesses (two-thirds) say 

14 they have been unable to invest in comprehensive en15 ergy efficiency programs for their businesses thus 

16 far, though they know of them and believe they are 

17 effective. 

18 (4) A pilot program has demonstrated that in19 dividualized counseling and training combined with 

20 loan and grant availability and other incentives are 


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1 very popular and effective in helping small busi2 nesses learn about and adopt energy conservation 

3 methods. 

4 (5) The energy saving benefit of such programs, 

5 if they can be implemented on a national basis, 

6 would contribute significantly to our energy inde7 pendence and security. 

8 (6) New and emerging technologies are on the 

9 rise, and small businesses are leading the way, for 

10 example the vast majority of renewable fuels pro11 ducers, such as biodiesel and ethanol, are small busi12 nesses. 

13 (7) Small businesses currently use almost half 

14 of the Nation’s business related energy consumption 

15 and employ half of the Nation’s workforce, yet the 

16 Energy Star program, the lead Federal energy effi17 ciency program allocates less than 2 percent of its 

18 resources to its small business program and should 

19 allocate more to educate small businesses. 

20 (8) Therefore, it is in the national interest for 

21 the Federal Government to invest in incentives in 

22 the form of improved loan terms, additional invest23 ment inducements, and expert counseling and infor24 mation to assist small businesses to develop, invest 


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1 in, and purchase energy efficient buildings, equip2 ment, fixtures, and other technology. 

3 SEC. 3. LARGER 504 LOAN LIMITS TO HELP BUSINESS DE4 VELOP ENERGY EFFICIENT TECHNOLOGIES 

5 AND PURCHASES. 

6 (a) ELIGIBILITY FOR ENERGY EFFICIENCY

7 PROJECTS.—Section 501(d)(3) of the Small Business In8 vestment Act of 1958 (15 U.S.C. 695(d)(3)) is amended— 

9 (1) in subparagraph (G) by striking ‘‘or’’ at the 

10 end; 

11 (2) in subparagraph (H) by striking the period 

12 at the end and inserting a comma; and 

13 (3) by inserting after subparagraph (H) the fol14 lowing: 

15 ‘‘(I) reduction of energy consumption by at 

16 least 10 percent, 

17 ‘‘(J) increased use of sustainable design or 

18 low-impact design to produce buildings that re19 duce the use of non-renewable resources, mini20 mize environmental impact, and relate people 

21 with the natural environment, or 

22 ‘‘(K) plant, equipment and process up23 grades of renewable energy sources such as 

24 micropower or renewable fuels producers includ25 ing biodiesel and ethanol producers.’’. 


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1 (b) LOANS FOR PLANT PROJECTS USED FOR EN2 ERGY-EFFICIENT PURPOSES.—Section 502(2)(A) of the 

3 Small Business Investment Act of 1958 (15 U.S.C. 

4 696(2)(A)) is amended— 

5 (1) in clause (ii) by striking ‘‘and’’ at the end; 

6 (2) in clause (iii) by striking the period at the 

7 end and inserting a semicolon; and 

8 (3) by adding at the end the following new 

9 clauses: 

10 ‘‘(iv) $4,000,000 for each project that 

11 reduces the borrower’s energy consumption 

12 by at least 10 percent; and 

13 ‘‘(v) $4,000,000 for each project that 

14 generates renewable energy or renewable 

15 fuels, such as biodiesel or ethanol produc16 tion.’’. 

17 SEC. 4. REDUCED 7(a) FEES AND HIGHER LOAN GUARAN18 TEES FOR PURCHASE OF ENERGY EFFICIENT 

19 TECHNOLOGIES. 

20 Section 7(a) of the Small Business Act (15 U.S.C. 

21 636(a)) is amended by adding at the end the following: 

22 ‘‘(35) LOANS FOR ENERGY EFFICIENT TECH23 NOLOGIES.—The Administrator shall carry out a 

24 program for loans the proceeds of which are used to 

25 purchase energy efficient equipment or fixtures or to 


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1 reduce the energy consumption of the borrower, in2 cluding, but not limited to, renewable fuels and en3 ergy products such as biodiesel and ethanol, by 10 

4 percent or more. For a loan made under this para5 graph, the following shall apply: 

6 ‘‘(A) The loan shall include the participa7 tion by the Administration equal to 90 percent 

8 of the balance of the financing outstanding at 

9 the time of disbursement. 

10 ‘‘(B) The fees on the loan under para11 graphs (18) and (23) shall be reduced by half.’’. 

12 SEC. 5. SMALL BUSINESS SUSTAINABILITY INITIATIVE. 

13 Section 21 of the Small Business Act (15 U.S.C. 648) 

14 is amended by adding at the end the following: 

15 ‘‘(n) SMALL BUSINESS SUSTAINABILITY INITIA16 TIVE.— 

17 ‘‘(1) IN GENERAL.—A Small Business Develop18 ment Center may apply for an additional grant to 

19 carry out a small business sustainability initiative 

20 program. 

21 ‘‘(2) ELEMENTS OF PROGRAM.—Under a pro22 gram under paragraph (1), the Center shall— 

23 ‘‘(A) provide necessary support to smaller 

24 and medium-sized businesses to— 


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1 ‘‘(i) evaluate energy efficiency and 

2 green building opportunities; 

3 ‘‘(ii) evaluate renewable energy 

4 sources such as the use of solar and small 

5 wind to supplement power consumption; 

6 ‘‘(iii) secure financing to achieve en7 ergy efficiency or to construct green build8 ings; and 

9 ‘‘(iv) empower management to imple10 ment energy efficiency projects; 

11 ‘‘(B) assist entrepreneurs with clean tech12 nology development and technology commer13 cialization through— 

14 ‘‘(i) technology assessment; 

15 ‘‘(ii) intellectual property; 

16 ‘‘(iii) Small Business Innovation Re17 search submissions; 

18 ‘‘(iv) strategic alliances; 

19 ‘‘(v) business model development; and 

20 ‘‘(vi) preparation for investors; and 

21 ‘‘(C) help small business improve environ22 mental performance by shifting to less haz23 ardous materials and reducing waste and emis24 sions at the source, including by providing as25 sistance for businesses to adapt the materials 


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1 they use, the processes they operate, and the 

2 products and services they produce. 

3 ‘‘(3) MINIMUM AMOUNT.—Each grant under 

4 this subsection shall be for at least $150,000. 

5 ‘‘(4) MAXIMUM AMOUNT.—A grant under this 

6 subsection may not exceed $300,000. 

7 ‘‘(5) AUTHORIZATION OF APPROPRIATIONS.— 

8 Subject to amounts approved in advance in appro9 priations Acts and separate from amounts approved 

10 to carry out section 21(a)(1), the Administrator may 

11 make grants or enter into cooperative agreements to 

12 carry out the provisions of this subsection.’’. 

13 SEC. 6. SMALL BUSINESS ADMINISTRATION TO EDUCATE 

14 AND PROMOTE ENERGY EFFICIENCY IDEAS 

15 TO SMALL BUSINESSES AND WORK WITH THE 

16 SMALL BUSINESS COMMUNITY TO MAKE 

17 SUCH INFORMATION WIDELY AVAILABLE. 

18 The Small Business Act is amended— 

19 (1) by redesignating section 37 as section 99; 

20 and 

21 (2) by inserting after section 36 (15 U.S.C. 

22 657f) the following: 


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1 ‘‘SEC. 37. PROGRAM TO PROVIDE EDUCATION ON ENERGY 

2 EFFICIENCY. 

3 ‘‘(a) PROGRAM REQUIRED.—The Administrator shall 

4 develop and coordinate a Government-wide program, 

5 building on the Energy Star for Small Business program, 

6 to assist small businesses in— 

7 ‘‘(1) becoming more energy efficient; 

8 ‘‘(2) understanding the cost savings from im9 proved energy efficiency; and 

10 ‘‘(3) identifying financing options for energy ef11 ficiency upgrades. 

12 ‘‘(b) CONSULTATION AND COOPERATION.—The pro13 gram required by subsection (a) shall be developed and 

14 coordinated— 

15 ‘‘(1) in consultation with the Secretary of En16 ergy and the Administrator of the Environmental 

17 Protection Agency; and 

18 ‘‘(2) in cooperation with any entities the Ad19 ministrator considers appropriate, such as industry 

20 trade associations, industry members, and energy ef21 ficiency organizations. 

22 ‘‘(c) AVAILABILITY OF INFORMATION.—The Admin23 istrator shall make available the information and materials 

24 developed under the program required by subsection (a) 

25 to— 

26 ‘‘(1) small businesses; and 


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1 ‘‘(2) other Federal programs for energy effi2 ciency, such as the Energy Star for Small Business 

3 program. 

4 ‘‘(d) STRATEGY AND REPORT.— 

5 ‘‘(1) STRATEGY REQUIRED.—The Adminis6 trator shall develop a strategy to educate, encourage, 

7 and assist small business to adopt energy efficient 

8 building fixtures and equipment. 

9 ‘‘(2) REPORT.—Not later than December 31, 

10 2008, the Administrator shall submit to Congress a 

11 report containing a plan to implement the strat12 egy.’’. 

13 SEC. 7. ENERGY SAVING DEBENTURES. 

14 Section 303 of the Small Business Investment Act 

15 of 1958 (15 U.S.C. 683) is amended by adding at the end 

16 the following new subsection: 

17 ‘‘(k) ENERGY SAVING DEBENTURES.— 

18 ‘‘(1) IN GENERAL.—In addition to any other 

19 authority under this Act, a small business invest20 ment company licensed after September 30, 2007, 

21 shall have authority to issue Energy Saving deben22 tures. 

23 ‘‘(2) ENERGY SAVING DEBENTURE DEFINED.— 

24 As used in this Act, the term ‘Energy Saving deben25 ture’ means a deferred interest debenture that— 


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1 ‘‘(A) is issued at a discount; 

2 ‘‘(B) has a five-year maturity or a ten-year 

3 maturity; 

4 ‘‘(C) requires no interest payment or an5 nual charge for the first five years; 

6 ‘‘(D) is restricted to Energy Saving quali7 fied investments; and 

8 ‘‘(E) is issued at no cost (as defined in 

9 section 502 of the Credit Reform Act of 1990) 

10 with respect to purchasing and guaranteeing 

11 the debenture. 

12 ‘‘(3) ENERGY SAVING QUALIFIED INVESTMENT

13 DEFINED.—As used in this Act, the term ‘Energy 

14 Saving qualified investment’ means investment in a 

15 small business that is primarily engaged in research16 ing, manufacturing, developing, or providing prod17 ucts, goods, or services that reduce the use or con18 sumption of non-renewable energy resources.’’. 

19 SEC. 8. INVESTMENTS IN ENERGY SAVING SMALL BUSI20 NESSES. 

21 (a) MAXIMUM LEVERAGE.—Paragraph (2) of sub22 section (b) of section 303 of the Small Business Invest23 ment Act of 1958 (15 U.S.C. 303(b)(2)) is amended by 

24 adding at the end the following new subparagraph: 


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1 ‘‘(D) INVESTMENTS IN ENERGY SAVING

2 SMALL BUSINESSES.—In calculating the out3 standing leverage of a company for purposes of 

4 subparagraph (A), the Administrator shall not 

5 include the amount of the cost basis of any En6 ergy Saving qualified investment (as defined in 

7 subsection (k)) made after September 30, 2007, 

8 by a company licensed after September 30, 

9 2007, in a smaller enterprise, to the extent that 

10 the total of such amounts does not exceed 50 

11 percent of the company’s private capital, sub12 ject to such terms as the Administrator may 

13 impose to assure no cost (as defined in section 

14 502 of the Federal Credit Reform Act of 1990) 

15 with respect to purchasing or guaranteeing any 

16 debenture involved.’’. 

17 (b) MAXIMUM AGGREGATE AMOUNT OF LEVER18 AGE.—Paragraph (4) of subsection (b) of section 303 of 

19 the Small Business Investment Act of 1958 (15 U.S.C. 

20 303(b)(4)) is amended by adding at the end the following 

21 new subparagraph: 

22 ‘‘(E) INVESTMENTS IN ENERGY SAVING

23 SMALL BUSINESSES.—In calculating the aggre24 gate outstanding leverage of a company for pur25 poses of subparagraph (A), the Administrator 


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1 shall not include the amount of the cost basis 

2 of any Energy Saving qualified investment (as 

3 defined in subsection (k)) made after Sep4 tember 30, 2007, by a company licensed after 

5 September 30, 2007, in a smaller enterprise, to 

6 the extent that the total of such amounts does 

7 not exceed 50 percent of the company’s private 

8 capital, subject to such terms as the Adminis9 trator may impose to assure no cost (as defined 

10 in section 502 of the Federal Credit Reform 

11 Act of 1990) with respect to purchasing or 

12 guaranteeing any debenture involved.’’. 

13 SEC. 9. RENEWABLE FUEL CAPITAL INVESTMENT COM14 PANY. 

15 Title III of the Small Business Investment Act of 

16 1958 (15 U.S.C. 681 et seq.) is amended by adding at 

17 the end the following new part: 

18 ‘‘PART C—RENEWABLE FUEL CAPITAL 

19 INVESTMENT PILOT PROGRAM 

20 ‘‘SEC. 381. DEFINITIONS. 

21 ‘‘In this part, the following definitions apply: 

22 ‘‘(1) VENTURE CAPITAL.—The term ‘venture 

23 capital’ means capital in the form of equity capital 

24 investments. For the purposes of this paragraph, the 


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1 term ‘equity capital’ has the same meaning given 

2 such term in section 303(g)(4). 

3 ‘‘(2) RENEWABLE FUEL CAPITAL INVESTMENT

4 COMPANY.—The term ‘Renewable Fuel Capital In5 vestment Company’ means a company that— 

6 ‘‘(A) has been granted final approval by 

7 the Administrator under section 384(e); and 

8 ‘‘(B) has entered into a participation 

9 agreement with the Administrator. 

10 ‘‘(3) OPERATIONAL ASSISTANCE.—The term 

11 ‘operational assistance’ means management, mar12 keting, and other technical assistance that assists a 

13 small business concern with business development. 

14 ‘‘(4) PARTICIPATION AGREEMENT.—The term 

15 ‘participation agreement’ means an agreement, be16 tween the Administrator and a company granted 

17 final approval under section 384(e), that— 

18 ‘‘(A) details the company’s operating plan 

19 and investment criteria; and 

20 ‘‘(B) requires the company to make invest21 ments in smaller enterprises primarily engaged 

22 in researching, manufacturing, developing, or 

23 bringing to market renewable energy sources. 

24 ‘‘(5) RENEWABLE ENERGY.—The term ‘renew25 able energy means’ energy derived from resources 


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1 that are regenerative or that cannot be depleted, in2 cluding but not limited to ethanol and biodiesel 

3 fuels. 

4 ‘‘(6) STATE.—The term ‘State’ means such of 

5 the several States, the District of Columbia, the 

6 Commonwealth of Puerto Rico, the Virgin Islands, 

7 Guam, American Samoa, the Commonwealth of the 

8 Northern Mariana Islands, and any other common9 wealth, territory, or possession of the United States. 

10 ‘‘SEC. 382. PURPOSES. 

11 ‘‘The purposes of the Renewable Fuel Capital Invest12 ment Program established under this part are— 

13 ‘‘(1) to promote the research, development, 

14 manufacture and bringing to market of renewable 

15 energy sources by encouraging venture capital in16 vestments in smaller enterprises primarily engaged 

17 such activities; and 

18 ‘‘(2) to establish a venture capital program, 

19 with the mission of addressing the unmet equity in20 vestment needs of small enterprises engaged in re21 searching, developing, manufacturing, and bringing 

22 to market renewable energy sources, to be adminis23 tered by the Administrator— 


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1 ‘‘(A) to enter into participation agreements 

2 with Renewable Fuel Capital Investment com3 panies; 

4 ‘‘(B) to guarantee debentures of Renew5 able Fuel Capital Investment companies to en6 able each such company to make venture capital 

7 investments in smaller enterprises engaged in 

8 the research, development, manufacture, and 

9 bringing to market renewable energy sources; 

10 and 

11 ‘‘(C) to make grants to Renewable Fuel 

12 Investment Capital companies, and to other en13 tities, for the purpose of providing operational 

14 assistance to smaller enterprises financed, or 

15 expected to be financed, by such companies. 

16 ‘‘SEC. 383. ESTABLISHMENT. 

17 ‘‘In accordance with this part, the Administrator 

18 shall establish a Renewable Fuel Capital Investment Pro19 gram, under which the Administrator may— 

20 ‘‘(1) enter into participation agreements with 

21 companies granted final approval under section 

22 384(e) for the purposes set forth in section 382; and 

23 ‘‘(2) guarantee the debentures issued by Renew24 able Fuel Capital Investment companies as provided 

25 in section 385. 


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1 ‘‘SEC. 384. SELECTION OF RENEWABLE FUEL CAPITAL IN2 VESTMENT COMPANIES. 

3 ‘‘(a) ELIGIBILITY.—A company shall be eligible to 

4 apply to participate, as a Renewable Fuel Capital Invest5 ment company, in the program established under this part 

6 if— 

7 ‘‘(1) the company is a newly formed for-profit 

8 entity or a newly formed for-profit subsidiary of an 

9 existing entity; 

10 ‘‘(2) the company has a management team with 

11 experience in alternative energy financing or relevant 

12 venture capital financing; and 

13 ‘‘(3) the company has a primary objective of in14 vestment in companies that research, manufacture, 

15 develop, or bring to market renewable energy 

16 sources. 

17 ‘‘(b) APPLICATION.—To participate, as a Renewable 

18 Fuel Capital Investment company, in the program estab19 lished under this part a company meeting the eligibility 

20 requirements set forth in subsection (a) shall submit an 

21 application to the Administrator that includes— 

22 ‘‘(1) a business plan describing how the com23 pany intends to make successful venture capital in24 vestments in smaller businesses primarily engaged in 

25 the research, manufacture, development, or bringing 

26 to market of renewable energy sources; 


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1 ‘‘(2) information regarding the relevant venture 

2 capital qualifications and general reputation of the 

3 company’s management; 

4 ‘‘(3) a description of how the company intends 

5 to seek to address the unmet capital needs of the 

6 smaller businesses served; 

7 ‘‘(4) a proposal describing how the company in8 tends to use the grant funds provided under this 

9 part to provide operational assistance to smaller en10 terprises financed by the company, including infor11 mation regarding whether the company intends to 

12 use licensed professionals when necessary on the 

13 company’s staff or from an outside entity; 

14 ‘‘(5) with respect to binding commitments to be 

15 made to the company under this part, an estimate 

16 of the ratio of cash to in-kind contributions; 

17 ‘‘(6) a description of the criteria to be used to 

18 evaluate whether and to what extent the company 

19 meets the objectives of the program established 

20 under this part; 

21 ‘‘(7) information regarding the management 

22 and financial strength of any parent firm, affiliated 

23 firm, or any other firm essential to the success of 

24 the company’s business plan; and 


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1 ‘‘(8) such other information as the Adminis2 trator may require. 

3 ‘‘(c) CONDITIONAL APPROVAL.— 

4 ‘‘(1) IN GENERAL.—From among companies 

5 submitting applications under subsection (b), the 

6 Administrator shall, in accordance with this sub7 section, conditionally approve companies to partici8 pate in the Renewable Fuel Capital Investment Pro9 gram. 

10 ‘‘(2) SELECTION CRITERIA.—In selecting com11 panies under paragraph (1), the Administrator shall 

12 consider the following: 

13 ‘‘(A) The likelihood that the company will 

14 meet the goal of its business plan. 

15 ‘‘(B) The experience and background of 

16 the company’s management team. 

17 ‘‘(C) The need for venture capital invest18 ments in the geographic areas in which the 

19 company intends to invest. 

20 ‘‘(D) The extent to which the company will 

21 concentrate its activities on serving the geo22 graphic areas in which it intends to invest. 

23 ‘‘(E) The likelihood that the company will 

24 be able to satisfy the conditions under sub25 section (d). 


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1 ‘‘(F) The extent to which the activities 

2 proposed by the company will expand economic 

3 opportunities in the geographic areas in which 

4 the company intends to invest. 

5 ‘‘(G) The strength of the company’s pro6 posal to provide operational assistance under 

7 this part as the proposal relates to the ability 

8 of the applicant to meet applicable cash require9 ments and properly utilize in-kind contribu10 tions, including the use of resources for the 

11 services of licensed professionals, when nec12 essary, whether provided by persons on the 

13 company’s staff or by persons outside of the 

14 company. 

15 ‘‘(H) Any other factors deemed appro16 priate by the Administrator. 

17 ‘‘(3) NATIONWIDE DISTRIBUTION.—The Admin18 istrator shall select companies under paragraph (1) 

19 in such a way that promotes investment nationwide. 

20 ‘‘(d) REQUIREMENTS TO BE MET FOR FINAL AP21 PROVAL.—The Administrator shall grant each condi22 tionally approved company a period of time, not to exceed 

23 2 years, to satisfy the following requirements: 

24 ‘‘(1) CAPITAL REQUIREMENT.—Each condi25 tionally approved company shall raise not less than 


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1 $5,000,000 of private capital or binding capital com2 mitments from one or more investors (other than 

3 agencies or departments of the Federal Government) 

4 who met criteria established by the Administrator. 

5 ‘‘(2) NONADMINISTRATION RESOURCES FOR

6 OPERATIONAL ASSISTANCE.— 

7 ‘‘(A) IN GENERAL.—In order to provide 

8 operational assistance to smaller enterprises ex9 pected to be financed by the company, each 

10 conditionally approved company— 

11 ‘‘(i) shall have binding commitments 

12 (for contribution in cash or in kind)— 

13 ‘‘(I) from any sources other than 

14 the Small Business Administration 

15 that meet criteria established by the 

16 Administrator; 

17 ‘‘(II) payable or available over a 

18 multiyear period acceptable to the Ad19 ministrator (not to exceed 10 years); 

20 and 

21 ‘‘(III) in an amount not less than 

22 30 percent of the total amount of cap23 ital and commitments raised under 

24 paragraph (1); 


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1 ‘‘(ii) shall have purchased an annu2 ity— 

3 ‘‘(I) from an insurance company 

4 acceptable to the Administrator; 

5 ‘‘(II) using funds (other than the 

6 funds raised under paragraph (1)), 

7 from any source other than the Ad8 ministrator; and 

9 ‘‘(III) that yields cash payments 

10 over a multiyear period acceptable to 

11 the Administrator (not to exceed 10 

12 years) in an amount not less than 30 

13 percent of the total amount of capital 

14 and commitments raised under para15 graph (1); or 

16 ‘‘(iii) shall have binding commitments 

17 (for contributions in cash or in kind) of the 

18 type described in clause (i) and shall have 

19 purchased an annuity of the type described 

20 in clause (ii), which in the aggregate make 

21 available, over a multiyear period accept22 able to the Administrator (not to exceed 10 

23 years), an amount not less than 30 percent 

24 of the total amount of capital and commit25 ments raised under paragraph (1). 


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1 ‘‘(B) EXCEPTION.—The Administrator 

2 may, in the discretion of the Administrator and 

3 based upon a showing of special circumstances 

4 and good cause, consider an applicant to have 

5 satisfied the requirements of subparagraph (A) 

6 if the applicant has— 

7 ‘‘(i) a viable plan that reasonably 

8 projects the capacity of the applicant to 

9 raise the amount (in cash or in-kind) re10 quired under subparagraph (A); and 

11 ‘‘(ii) binding commitments in an 

12 amount equal to not less than 20 percent 

13 of the total amount required under para14 graph (A). 

15 ‘‘(C) LIMITATION.—In order to comply 

16 with the requirements of subparagraphs (A) 

17 and (B), the total amount of a company’s in18 kind contributions may not exceed 50 percent 

19 of the company’s total contributions. 

20 ‘‘(e) FINAL APPROVAL; DESIGNATION.—The Admin21 istrator shall, with respect to each applicant conditionally 

22 approved to operate as a Renewable Fuel Capital Invest23 ment Company under subsection (c), either— 

24 ‘‘(1) grant final approval to the applicant to op25 erate as a Renewable Fuel Capital Investment comVerDate Aug 31 2005 03:02 May 19, 2007 Jkt 059200 PO 00000 Frm 00023 Fmt 6652 Sfmt 6201 E:\BILLS\H2389.IH H2389

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1 pany under this part and designate the applicant as 

2 such a company, if the applicant— 

3 ‘‘(A) satisfies the requirements of sub4 section (d) on or before the expiration of the 

5 time period described in that subsection; and 

6 ‘‘(B) enters into a participation agreement 

7 with the Administrator; or 

8 ‘‘(2) if the applicant fails to satisfy the require9 ments of subsection (d) on or before the expiration 

10 of the time period described in that subsection, re11 voke the conditional approval granted under that 

12 subsection. 

13 ‘‘SEC. 385. DEBENTURES. 

14 ‘‘(a) IN GENERAL.—The Administrator may guar15 antee the timely payment of principal and interest, as 

16 scheduled, on debentures issued by any Renewable Fuel 

17 Capital Investment company. 

18 ‘‘(b) TERMS AND CONDITIONS.—The Administrator 

19 may make guarantees under this section on such terms 

20 and conditions as it deems appropriate, except that the 

21 term of any debenture guaranteed under this section shall 

22 not exceed 15 years. 

23 ‘‘(c) FULL FAITH AND CREDIT OF THE UNITED

24 STATES.—The full faith and credit of the United States 


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1 is pledged to pay all amounts that may be required to be 

2 paid under any guarantee under this part. 

3 ‘‘(d) MAXIMUM GUARANTEE.— 

4 ‘‘(1) IN GENERAL.—Under this section, the Ad5 ministrator may guarantee the debentures issued by 

6 a Renewable Fuel Capital Investment company only 

7 to the extent that the total face amount of out8 standing guaranteed debentures of such company 

9 does not exceed 150 percent of the private capital of 

10 the company, as determined by the Administrator. 

11 ‘‘(2) TREATMENT OF CERTAIN FEDERAL

12 FUNDS.—For the purposes of paragraph (1), private 

13 capital shall include capital that is considered to be 

14 Federal funds, if such capital is contributed by an 

15 investor other than an agency or department of the 

16 Federal Government. 

17 ‘‘SEC. 386. ISSUANCE AND GUARANTEE OF TRUST CERTIFI18 CATES. 

19 ‘‘(a) ISSUANCE.—The Administrator may issue trust 

20 certificates representing ownership of all or a fractional 

21 part of debentures issued by a Renewable Fuel Capital 

22 Investment company and guaranteed by the Administrator 

23 under this part, if such certificates are based on and 

24 backed by a trust or pool approved by the Administrator 

25 and composed solely of guaranteed debentures. 


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1 ‘‘(b) GUARANTEE.— 

2 ‘‘(1) IN GENERAL.—The Administrator may, 

3 under such terms and conditions as it deems appro4 priate, guarantee the timely payment of the principal 

5 of and interest on trust certificates issued by the 

6 Administrator or its agents for purposes of this sec7 tion. 

8 ‘‘(2) LIMITATION.—Each guarantee under this 

9 subsection shall be limited to the extent of principal 

10 and interest on the guaranteed debentures that com11 pose the trust or pool. 

12 ‘‘(3) PREPAYMENT OR DEFAULT.—In the event 

13 that a debenture in a trust or pool is prepaid, or in 

14 the event of default of such a debenture, the guar15 antee of timely payment of principal and interest on 

16 the trust certificates shall be reduced in proportion 

17 to the amount of principal and interest such prepaid 

18 debenture represents in the trust or pool. Interest on 

19 prepaid or defaulted debentures shall accrue and be 

20 guaranteed by the Administrator only through the 

21 date of payment of the guarantee. At any time dur22 ing its term, a trust certificate may be called for re23 demption due to prepayment or default of all deben24 tures. 


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1 ‘‘(c) FULL FAITH AND CREDIT OF THE UNITED

2 STATES.—The full faith and credit of the United States 

3 is pledged to pay all amounts that may be required to be 

4 paid under any guarantee of a trust certificate issued by 

5 the Administrator or its agents under this section. 

6 ‘‘(d) FEES.—The Administrator shall not collect a fee 

7 for any guarantee of a trust certificate under this section, 

8 but any agent of the Administrator may collect a fee ap9 proved by the Administrator for the functions described 

10 in subsection (f )(2). 

11 ‘‘(e) SUBROGATION AND OWNERSHIP RIGHTS.— 

12 ‘‘(1) SUBROGATION.—In the event the Adminis13 trator pays a claim under a guarantee issued under 

14 this section, it shall be subrogated fully to the rights 

15 satisfied by such payment. 

16 ‘‘(2) OWNERSHIP RIGHTS.—No Federal, State, 

17 or local law shall preclude or limit the exercise by 

18 the Administrator of its ownership rights in the de19 bentures residing in a trust or pool against which 

20 trust certificates are issued under this section. 

21 ‘‘(f) MANAGEMENT AND ADMINISTRATION.— 

22 ‘‘(1) REGISTRATION.—The Administrator may 

23 provide for a central registration of all trust certifi24 cates issued under this section. 

25 ‘‘(2) CONTRACTING OF FUNCTIONS.— 


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1 ‘‘(A) IN GENERAL.—The Administrator 

2 may contract with an agent or agents to carry 

3 out on behalf of the Administrator the pooling 

4 and the central registration functions provided 

5 for in this section including, notwithstanding 

6 any other provision of law— 

7 ‘‘(i) maintenance, on behalf of and 

8 under the direction of the Administrator, 

9 of such commercial bank accounts or in10 vestments in obligations of the United 

11 States as may be necessary to facilitate the 

12 creation of trusts or pools backed by de13 bentures guaranteed under this part; and 

14 ‘‘(ii) the issuance of trust certificates 

15 to facilitate the creation of such trusts or 

16 pools. 

17 ‘‘(B) FIDELITY BOND OR INSURANCE RE18 QUIREMENT.—Any agent performing functions 

19 on behalf of the Administrator under this para20 graph shall provide a fidelity bond or insurance 

21 in such amounts as the Administrator deter22 mines to be necessary to fully protect the inter23 ests of the United States. 


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1 ‘‘(3) REGULATION OF BROKERS AND DEAL2 ERS.—The Administrator may regulate brokers and 

3 dealers in trust certificates issued under this section. 

4 ‘‘(4) ELECTRONIC REGISTRATION.—Nothing in 

5 this subsection may be construed to prohibit the use 

6 of a book-entry or other electronic form of registra7 tion for trust certificates issued under this section. 

8 ‘‘SEC. 387. FEES. 

9 ‘‘(a) IN GENERAL.—Except as provided in section 

10 386(d), the Administrator may charge such fees as it 

11 deems appropriate with respect to any guarantee or grant 

12 issued under this part, in an amount established annually 

13 by the Administration, as necessary to reduce to zero the 

14 cost (as defined in section 502 of the Federal Credit Re15 form Act of 1990) to the Administration of purchasing 

16 and guaranteeing debentures under this Act, which 

17 amounts shall be paid to and retained by the Administra18 tion. 

19 ‘‘(b) OFFSET.—The Administrator may, as provided 

20 by section 388, offset fees changed and collected under 

21 subsection (a). 

22 ‘‘SEC. 388. FEE CONTRIBUTION. 

23 ‘‘(a) IN GENERAL.—To the extent that amounts are 

24 made available to the Administrator for the purpose of fee 

25 contributions, the administrator shall contribute to fees 


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1 paid by the Renewable Fuel Capital Investment companies 

2 under section 387. 

3 ‘‘(b) ANNUAL ADJUSTMENT.—Each fee contribution 

4 under subsection (a) shall be effective for one fiscal year 

5 and shall be adjusted as necessary for each fiscal year 

6 thereafter to ensure that amounts under subsection (a) are 

7 fully used. The fee contribution for a fiscal year shall be 

8 based on the outstanding commitments made and the 

9 guarantees and grants that the Administrator projects will 

10 be made during that fiscal year, given the program level 

11 authorized by law for that fiscal year and any other fac12 tors that the Administrator deems appropriate. 

13 ‘‘SEC. 389. OPERATIONAL ASSISTANCE GRANTS. 

14 ‘‘(a) IN GENERAL.— 

15 ‘‘(1) AUTHORITY.—In accordance with this sec16 tion, the Administrator may make grants to Renew17 able Fuel Capital Investment companies and to 

18 other entities, as authorized by this part, to provide 

19 operational assistance to smaller enterprises fi20 nanced, or expected to be financed, by such compa21 nies or other entities. 

22 ‘‘(2) TERMS.—Grants made under this sub23 section shall be made over a multiyear period not to 

24 exceed 10 years, under such other terms as the Ad25 ministrator may require. 


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1 ‘‘(3) GRANTS TO SPECIALIZED SMALL BUSINESS

2 INVESTMENT COMPANIES.— 

3 ‘‘(A) AUTHORITY.—In accordance with 

4 this section, the Administrator may make 

5 grants to specialized small business investment 

6 companies to provide operational assistance to 

7 smaller enterprises financed, or expected to be 

8 financed, by such companies after the effective 

9 date of the Small Energy Efficient Businesses 

10 Act. 

11 ‘‘(B) USE OF FUNDS.—The proceeds of a 

12 grant made under this paragraph may be used 

13 by the company receiving such grant only to 

14 provide operational assistance in connection 

15 with an equity investment (made with capital 

16 raised after the effective date of the Small En17 ergy Efficient Businesses Act) in a business lo18 cated in a low-income geographic area. 

19 ‘‘(C) SUBMISSION OF PLANS.—A special20 ized small business investment company shall 

21 be eligible for a grant under this section only if 

22 the company submits to the Administrator, in 

23 such form and manner as the Administrator 

24 may require, a plan for use of the grant. 

25 ‘‘(4) GRANT AMOUNT.— 


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1 ‘‘(A) RENEWABLE FUEL CAPITAL INVEST2 MENT COMPANIES.—The amount of a grant 

3 made under this subsection to a Renewable 

4 Fuel Capital Investment company shall be equal 

5 to the resources (in cash or in kind) raised by 

6 the company under section 354(d)(2). 

7 ‘‘(B) OTHER ENTITIES.—The amount of a 

8 grant made under this subsection to any entity 

9 other than a Renewable Fuel Capital Invest10 ment company shall be equal to the resources 

11 (in cash or in kind) raised by the entity in ac12 cordance with the requirements applicable to 

13 Renewable Fuel Capital Investment companies 

14 set forth in section 384(d)(2). 

15 ‘‘(5) PRO RATA REDUCTIONS.—If the amount 

16 made available to carry out this section is insuffi17 cient for the Administrator to provide grants in the 

18 amounts provided for in paragraph (4), the Adminis19 trator shall make pro rata reductions in the amounts 

20 otherwise payable to each company and entity under 

21 such paragraph. 

22 ‘‘(b) SUPPLEMENTAL GRANTS.— 

23 ‘‘(1) IN GENERAL.—The Administrator may 

24 make supplemental grants to Renewable Fuel Cap25 ital Investment companies and to other entities, as 


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•HR 2389 IH

1 authorized by this part under such terms as the Ad2 ministrator may require, to provide additional oper3 ational assistance to smaller enterprises financed, or 

4 expected to be financed, by the companies. 

5 ‘‘(2) MATCHING REQUIREMENT.—The Adminis6 trator may require, as a condition of any supple7 mental grant made under this subsection, that the 

8 company or entity receiving the grant provide from 

9 resources (in a cash or in kind), other then those 

10 provided by the Administrator, a matching contribu11 tion equal to the amount of the supplemental grant. 

12 ‘‘(c) LIMITATION.—None of the assistance made 

13 available under this section may be used for any overhead 

14 or general and administrative expense of a Renewable 

15 Fuel Capital Investment company or a specialized small 

16 business investment company. 

17 ‘‘SEC. 390. BANK PARTICIPATION. 

18 ‘‘(a) IN GENERAL.—Except as provided in subsection 

19 (b), any national bank, any member bank of the Federal 

20 Reserve System, and (to the extent permitted under appli21 cable State law) any insured bank that is not a member 

22 of such system, may invest in any Renewable Fuel Capital 

23 Investment company, or in any entity established to invest 

24 solely in Renewable Fuel Capital Investment companies. 


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•HR 2389 IH

1 ‘‘(b) LIMITATION.—No bank described in subsection 

2 (a) may make investments described in such subsection 

3 that are greater than 5 percent of the capital and surplus 

4 of the bank. 

5 ‘‘SEC. 391. FEDERAL FINANCING BANK. 

6 ‘‘Section 318 shall not apply to any debenture issued 

7 by a Renewable Fuel Capital Investment company under 

8 this part. 

9 ‘‘SEC. 392. REPORTING REQUIREMENT. 

10 ‘‘Each Renewable Fuel Capital Investment company 

11 that participates in the program established under this 

12 part shall provide to the Administrator such information 

13 as the Administrator may require, including— 

14 ‘‘(1) information related to the measurement 

15 criteria that the company proposed in its program 

16 application; and 

17 ‘‘(2) in each case in which the company under 

18 this part makes an investment in, or a loan or a 

19 grant to, a business that is not primarily engaged in 

20 the research, development, manufacture, or bringing 

21 to market or renewable energy sources, a report on 

22 the nature, origin, and revenues of the business in 

23 which investments are made. 


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1 ‘‘SEC. 393. EXAMINATIONS. 

2 ‘‘(a) IN GENERAL.—Each Renewable Fuel Capital 

3 Investment company that participates in the program es4 tablished under this part shall be subject to examinations 

5 made at the direction of the Investment Division of the 

6 Small Business Administration in accordance with this 

7 section. 

8 ‘‘(b) ASSISTANCE OF PRIVATE SECTOR ENTITIES.— 

9 Examinations under this section may be conducted with 

10 the assistance of a private sector entity that has both the 

11 qualifications and the expertise necessary to conduct such 

12 examinations. 

13 ‘‘(c) COSTS.— 

14 ‘‘(1) ASSESSMENT.— 

15 ‘‘(A) IN GENERAL.—The Administrator 

16 may assess the cost of examinations under this 

17 section, including compensation of the exam18 iners, against the company examined. 

19 ‘‘(B) PAYMENT.—Any company against 

20 which the Administrator assesses costs under 

21 this paragraph shall pay such costs. 

22 ‘‘(2) DEPOSIT OF FUNDS.—Funds collected 

23 under this section shall be deposited in the account 

24 for salaries and expenses of the Small Business Ad25 ministration. 


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1 ‘‘SEC. 394. MISCELLANEOUS. 

2 ‘‘To the extent such procedures are not inconsistent 

3 with the requirements of this part, the Administrator may 

4 take such action as set forth in sections 309, 311, 312, 

5 and 314 of this Act. 

6 ‘‘SEC. 395. REMOVAL OR SUSPENSION OF DIRECTORS OR 

7 OFFICERS. 

8 ‘‘Using the procedures for removing or suspending a 

9 director or an officer of a licensee set forth in section 313 

10 (to the extent such procedures are not inconsistent with 

11 the requirements of this part), the Administrator may re12 move or suspend any director or officer of any Renewable 

13 Fuel Capital Investment company. 

14 ‘‘SEC. 396. REGULATIONS. 

15 ‘‘The Administrator may issue such regulations as it 

16 deems necessary to carry out the provisions of this part 

17 in accordance with its purposes. 

18 ‘‘SEC. 397. AUTHORIZATIONS OF APPROPRIATIONS. 

19 ‘‘(a) GRANTS.—The Administrator is authorized to 

20 make $15,000,000 per fiscal year in operational assistance 

21 grants. 

22 ‘‘(b) FUNDS COLLECTED FOR EXAMINATIONS.— 

23 Funds deposited under section 393(c)(2) are authorized 

24 to be appropriated only for the costs of examinations 

25 under section 393 and for the costs of other oversight acVerDate Aug 31 2005 03:02 May 19, 2007 Jkt 059200 PO 00000 Frm 00036 Fmt 6652 Sfmt 6201 E:\BILLS\H2389.IH H2389

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1 tivities with respect to the program established under this 

2 part.’’. 

3 SEC. 10. STUDY AND REPORT. 

4 The Administrator shall conduct a study of the Re5 newable Fuel Capital Investment Program under part C 

6 of title III of the Small Business Investment Act of 1958. 

7 Not later than 3 years after the date of the enactment 

8 of this Act, the Administrator shall complete the study 

9 and submit to the Congress a report of the results of the 

10 study. 

Æ 


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