This section of the FEDERAL REGISTER

contains regulatory documents having general

applicability and legal effect, most of which

are keyed to and codified in the Code of

Federal Regulations, which is published under

50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by

the Superintendent of Documents. Prices of

new books are listed in the first FEDERAL

REGISTER issue of each week.

Rules and Regulations Federal Register

23373 

Vol. 77, No. 76 

Thursday, April 19, 2012 

SMALL BUSINESS ADMINISTRATION 

13 CFR Part 107 

RIN 3245–AF86 

Small Business Investment 

Companies—Energy Saving Qualified 

Investments 

AGENCY: U.S. Small Business 

Administration 

ACTION: Final rule. 

SUMMARY: In this rule, the U.S. Small 

Business Administration (SBA) sets 

forth defined terms for ‘‘Energy Saving 

Qualified Investment’’ and ‘‘Energy 

Saving Activities’’ for the Small 

Business Investment Company (SBIC) 

Program. These definitions are 

established to implement a provision of 

the Energy Independence and Security 

Act of 2007 (Energy Act), which allows 

an SBIC making an ‘‘energy saving 

qualified investment’’ to obtain SBA 

leverage by issuing a deferred interest 

‘‘energy saving debenture’’. This rule 

also implements a provision of the 

Energy Act that provides access to 

additional SBA leverage for SBICs that 

have made Energy Saving Qualified 

Investments in Smaller Enterprises. This 

final rule includes changes based on 

public comments received on the 

proposed rule published in the Federal 

Register on January 11, 2011. Generally, 

the changes allow a broader range of 

potential investments to qualify as 

Energy Saving Qualified Investments 

and reduce the need for SBICs to obtain 

pre-financing determinations of 

eligibility from SBA. 

DATES: This rule is effective April 19, 

2012. 

FOR FURTHER INFORMATION CONTACT: 

Carol Fendler, Office of Investment, 

(202) 205–7559 or sbic@sba.gov. 

SUPPLEMENTARY INFORMATION: 

I. Background Information 

The Energy Independence and 

Security Act of 2007, Public Law 110– 

140, Title XII, section 1205(a), amended 

section 303 of the Small Business 

Investment Act of 1958 (SBI Act) by 

authorizing SBICs licensed after 

September 30, 2008, to issue Energy 

Saving Debentures. Section 1205(b) of 

the Energy Act amended section 103 of 

the SBI Act by adding the new defined 

terms ‘‘energy saving debenture’’ and 

‘‘energy saving qualified investment.’’ 

Section 1206 of the Energy Act amended 

section 303(b)(2) of the SBI Act to make 

SBICs licensed after September 30, 

2008, eligible for additional leverage if 

they have made Energy Saving Qualified 

Investments. An SBIC making maximum 

use of this provision could have 

approximately 11% more leverage 

outstanding than would be permitted 

under the standard leverage eligibility 

formula. 

On January 11, 2011, SBA published 

a proposed rule to implement the SBICrelated provisions of the Energy Act 

(76 FR 2029). SBA received eleven sets 

of comments on the proposed rule, 

primarily falling into three areas: 

(1) Definitions; (2) procedures and 

timing when SBA must make a prefinancing determination of eligibility, 

including the details of SBA’s 

collaboration with the Department of 

Energy (DOE); and (3) impact of the 

Energy Saving Debenture on SBIC 

program costs. SBA discusses the 

comments in the following section-bysection analysis. 

II. Section by Section Analysis 

Section 107.50—Definitions. The 

Energy Act provides that Energy Saving 

Debentures are to be issued at a 

discount with a five- or ten-year 

maturity, and require no interest 

payment or annual charge for the first 

five years. Although an SBIC can use 

other funds to make an Energy Saving 

Qualified Investment, an SBIC that 

issues an Energy Saving Debenture must 

use the proceeds only to make an 

Energy Saving Qualified Investment. To 

implement these statutory provisions, 

SBA proposed to add ‘‘Energy Saving 

Qualified Investment’’ and ‘‘Energy 

Saving Activities’’ as defined terms in 

§ 107.50. SBA is finalizing both 

definitions with modifications. 

‘‘Energy Saving Qualified Investment’’ 

The proposed regulatory definition of 

Energy Saving Qualified Investment had 

several key points. First, as required by 

statute, an Energy Saving Qualified 

Investment can only be made by an 

SBIC licensed after September 30, 2008. 

Second, the investment must be made in 

a Small Business, as defined in 13 CFR 

part 107. Third, the investment must be 

in the form of a Loan, a Debt Security 

(a debt instrument that includes an 

equity feature, such as warrants or rights 

to convert to equity), or an Equity 

Security. Fourth, the Small Business 

must be ‘‘primarily engaged’’ in 

business activities that reduce the use or 

consumption of non-renewable energy 

sources (‘‘Energy Saving Activities’’). 

Four commenters suggested that SBA 

broaden the criteria under which a 

Small Business is presumed to be 

‘‘primarily engaged’’ in Energy Saving 

Activities. In the proposed rule, the 

presumption applied only to a Small 

Business that derived at least 50% of its 

revenues during its most recently 

completed fiscal year from Energy 

Saving Activities. The commenters’ 

concern was that a Small Business 

would not be able to satisfy a historical 

revenue-based test if it was either a 

start-up or an established company 

expanding its business to include 

Energy Saving Activities. While the 

proposed rule would have allowed SBA 

to make a determination of eligibility in 

such cases, SBA agrees that a broader 

presumption of eligibility would be an 

effective way to encourage investment 

and reduce administrative burden. In 

considering how to expand the 

presumption in the final rule, SBA 

favored a test that would be simple to 

apply and would focus on prospective 

rather than historical activity. In the 

final rule, SBA has retained the 

proposed revenue-based presumption 

while adding a second presumption: a 

Small Business is presumed to meet the 

‘‘primarily engaged’’ test if it will utilize 

100% of the proceeds of a financing to 

engage in Energy Saving Activities. 

‘‘Energy Saving Activities’’ 

The proposed rule defined Energy 

Saving Activities largely by referencing 

certain criteria established by the 

Department of Energy and other Federal 

agencies to identify energy efficient 

products and services and renewable 

energy sources. As one example, the 


srobinson on DSK4SPTVN1PROD with RULES
23374 Federal Register / Vol. 77, No. 76 / Thursday, April 19, 2012 / Rules and Regulations 

design or manufacturing of products 

that satisfy the criteria for use of the 

Energy Star trademark label would 

qualify as an Energy Saving Activity. 

Paragraph (1) of the proposed 

definition provided that Energy Saving 

Activities would include not only 

manufacturing or research and 

development of energy-efficient final 

products, but also ‘‘integral product 

components, integral material, or related 

software’’. One commenter asked SBA 

to clarify that Small Businesses 

producing ‘‘supply chain’’ components 

for products eligible for federal tax 

credits are included in the definition of 

Energy Saving Activities. SBA intended 

paragraph (1) of the proposed definition 

to include the activities of ‘‘supply 

chain’’ Small Businesses. SBA believes 

the proposed rule was sufficiently clear 

on this point and does not require 

modification. 

SBA received a comment to include 

under the definition of Energy Saving 

Activities any Small Business activity 

that qualifies for either the Residential 

Energy Tax Credit or an Advanced 

Research Project Agency—Energy 

(ARPA–E) grant award. With the 

agreement of DOE, SBA has added 

paragraph (1)(v) to the Energy Saving 

Activities definition to include those 

activities, as well as any other 

technology commercialization activity 

that has qualified for a DOE Small 

Business Innovation Research (SBIR) or 

Small Business Technology Transfer 

(STTR) award. 

SBA received, but did not adopt, a 

comment suggesting that paragraph 

(1)(iii) of the definition, which describes 

activities that improve ‘‘automobile’’ 

efficiency, should be broadened to 

include other means of transport such as 

trucks, buses, trains, and aircraft. This 

provision of the proposed rule was 

based upon DOE’s specific expertise in 

energy savings activities related to 

passenger vehicles, whereas other 

transportation alternatives would fall 

across the purview of several Federal 

agencies. SBA expects that many 

activities aimed at achieving results 

similar to those described in paragraph 

(1)(iii) for forms of transportation other 

than automobiles would qualify as 

Energy Saving Activities under 

paragraph (4) of the definition. 

SBA received five comments 

suggesting the definition of Energy 

Saving Activities be expanded to 

specifically include the biomass 

preprocess of pyrolysis, which is one 

method of biomass conversion for the 

ultimate production of renewable solid 

fuels. Based on consultation with DOE, 

SBA did not adopt this suggestion, as 

each preprocess of biomass is 

situational and specific and there are 

currently no approved standards by 

which to evaluate all levels of biomass 

preprocesses and conversion methods. 

With the many possible technological 

permutations, SBA believes that 

potential SBIC investments involving 

pyrolysis or any type of preprocessing of 

biomass should be evaluated on a caseby-case basis under paragraph (4) of the 

definition. 

SBA received one comment to expand 

the definition of Energy Saving 

Activities to include ‘‘earthquake 

disaster potential and pipeline safety’’ 

of both non-renewable and renewable 

energy sources. While SBA agrees that 

these are important concerns, they are 

outside the scope of activities 

contemplated by the Energy Act. 

SBA received one comment to 

broaden the definition of Energy Saving 

Activities ‘‘* * * to include all forms of 

commercialization of R[esearch] 

&D[evelopment], including ‘licensing’ 

and ‘outsourcing’ as well as revenues 

generated by those activities.’’ 

Paragraphs (1) and (4) of the proposed 

definition already encompassed 

research and development activities; the 

commenter’s suggestion would also treat 

the receipt of licensing fees, royalties, or 

similar payments as an Energy Saving 

Activity if such payments were 

generated from the results of previously 

conducted research and development 

that would have qualified as Energy 

Saving Activities. SBA does not believe 

that the passive receipt of payments is 

appropriate for inclusion in the 

definition. Furthermore, if a Small 

Business generates revenues solely from 

licensing or similar activities, it would 

be ineligible for SBIC financing under 

existing § 107.720(b), which prohibits 

the financing of a passive business. It 

should be noted, however, that a Small 

Business that outsources the 

manufacturing of its products may still 

qualify for financing (and its activities 

may qualify as Energy Saving Activities) 

if it is actively engaged in product 

design or deployment. 

Paragraph (1)(v) of the Energy Saving 

Activities definition in the proposed 

rule (redesignated as paragraph (1)(vi) in 

the final rule) included activities that 

meet the standards for receiving Energy 

Credits as defined in Internal Revenue 

Code section 48, among which is a 

credit related to qualified fuel cell 

power plants. In the final rule, at the 

suggestion of DOE, SBA has added 

paragraph (1)(vii) to the Energy Saving 

Activities definition, to clarify that the 

definition includes the provision of 

highly efficient conversion systems for 

fuel cells that can use renewable or nonrenewable fuel. 

SBA has also made non-substantive 

edits to improve the clarity of 

paragraphs (1)(viii) and (2)(v) of the 

Energy Saving Activities definition. 

Paragraph (1)(viii) concerns 

manufacturing or research and 

development activities that improve 

electricity delivery efficiency by 

supporting one or more defined smart 

grid functions; paragraph (2)(v) 

concerns deployment of products, 

services or functionalities for the same 

purpose. 

Section 107.610—Required 

Certifications for Loans and 

Investments. SBA received two 

comments on the certification 

requirements for Energy Saving 

Qualified Investments in proposed 

§ 107.610(f), in particular the 

requirements in paragraph (f)(2) 

applicable to investments for which 

SBA must make a pre-financing 

determination of eligibility. In such 

cases, the proposed rule would have 

required materials submitted to SBA to 

be certified as true and correct by both 

the Small Business and the SBIC to the 

best of their knowledge. The 

commenters pointed out that an SBIC 

might not be in a position to make the 

required certification at the date of 

submission because due diligence on 

the prospective investment would 

probably still be in its early stages. SBA 

agrees that this is a valid concern and 

has modified the final rule so that only 

the Small Business must provide a 

certification at the date of submission. 

As of the closing date of the Financing 

all due diligence should be completed, 

and at that time the SBIC would be 

required to certify that, to the best of its 

knowledge, it has no reason to believe 

that the materials submitted to SBA are 

incorrect. 

As part of its review of the 

certification requirements in response to 

the comments on the proposed rule, 

SBA noted that proposed paragraph 

(f)(1), which concerns Energy Saving 

Qualified Investments that do not 

require a pre-financing determination of 

eligibility by SBA, required a 

certification by the SBIC but not by the 

concern receiving the financing. 

Because not all information can be 

independently confirmed, an SBIC must 

rely to some degree on the integrity of 

the information that a concern provides. 

Therefore, in the final rule, 

§ 107.610(f)(1)(iv) adds a requirement 

under which a concern receiving 

financing must certify, as true and 

correct to the best of its knowledge, any 

information it provided to an SBIC in 

connection with the determination that 

the concern was eligible to receive an 

Energy Saving Qualified Investment. 


srobinson on DSK4SPTVN1PROD with RULES
Federal Register / Vol. 77, No. 76 / Thursday, April 19, 2012 / Rules and Regulations 23375 

As discussed earlier in this preamble, 

SBA has revised the definition of Energy 

Saving Qualified Investment by adding 

a presumption that a Small Business 

will be considered ‘‘primarily engaged’’ 

in Energy Saving Activities if it intends 

to use all of the proceeds of a proposed 

financing for such activities. In 

connection with that revision, SBA has 

added post-investment requirements for 

documentation of the actual use of 

proceeds in § 107.610(f)(5). Under these 

provisions, the Small Business must 

provide the SBIC with documentation of 

the use of proceeds no later than six 

months after the closing date of the 

financing; if some or all of the proceeds 

have not yet been spent, further updates 

would be required at six-month 

intervals. SBA expects, given the 

substantial investment amounts 

typically involved, that an SBIC would 

monitor use of proceeds at least this 

frequently in the ordinary course of 

business. The SBIC would be 

responsible for reviewing the 

information submitted by the Small 

Business and documenting that it had 

reasonably determined that the 

financing proceeds were used 

appropriately to fund Energy Saving 

Activities. 

SBA has also slightly reorganized 

§ 107.610(f) for greater clarity; in the 

final rule, § 107.610(f)(2) includes only 

the requirements for an SBIC seeking a 

determination from SBA that an activity 

in which a concern is engaged is an 

Energy Saving Activity. The 

requirements for an SBIC seeking a 

determination from SBA that a concern 

is ‘‘primarily engaged’’ in Energy Saving 

Activities appear separately in 

§ 107.610(f)(3). The requirement for 

certification by the SBIC as of the 

closing date of the financing appears in 

§ 107.610(f)(4). 

SBA also received three comments 

dealing more generally with the process 

and timeframe for obtaining a prefinancing determination of eligibility 

from SBA. Commenters suggested that 

SBA allow SBICs to submit materials 

electronically and develop an expected 

timeline for consideration for SBA to 

reach a decision in consultation with 

DOE. 

SBA has and will continue to consult 

with DOE technical experts on an asneeded basis when evaluating whether 

certain small business concerns are 

primarily engaged in an energy saving 

activity (per request of an SBIC as part 

of the pre-financing determination of 

eligibility of use for the Energy Savings 

Debenture program). As discussed in the 

‘‘Paperwork Reduction Act’’ section of 

this preamble, SBA will electronically 

collect information from an SBIC 

through the ‘‘Financing Eligibility 

Statement for Usage of Energy Saving 

Debenture’’. 

Section 107.1150—Maximum Amount 

of Leverage for a Section 301(c) 

Licensee. New paragraph (d) 

implements a provision of the Energy 

Act that may provide additional 

leverage eligibility to SBICs licensed on 

or after October 1, 2008, that make 

Energy Saving Qualified Investments in 

Smaller Enterprises. SBA received no 

comments on this provision and is 

finalizing the section as proposed. 

Other Comments. In addition to the 

comments received on specific 

provisions of the proposed rule, SBA 

received four comments suggesting that 

SBA report on various topics, including 

among others: Energy Saving Debenture 

usage, number of Small Businesses 

financed, resulting breakthroughs in 

technology, comparative studies 

quantifying energy savings, and 

performance of Small Businesses 

financed. While SBA is concerned about 

minimizing any increases in the 

reporting burden placed on SBICs and 

Small Businesses, SBA recognizes a 

particular need to monitor the 

performance of investments financed 

with the proceeds of Energy Saving 

Debentures, because of their potential 

impact on fees charged to all SBICs 

utilizing debenture leverage. SBA plans 

to ask SBICs to identify each financing 

that is an Energy Saving Qualified 

Investment through a certification made 

at the time of such financing and 

through quarterly and annual financial 

reports to SBA. SBICs will also be asked 

to indicate whether an Energy Saving 

Qualified Investment was financed with 

the proceeds of an Energy Saving 

Debenture or a standard debenture. 

With these identifiers, SBA will be able 

to track the performance of Energy 

Saving Qualified Investments and the 

SBICs that have made them. SBA 

expects to make the information 

collected available to the public in 

aggregated form. 

Energy Saving Debenture 

As discussed in the preamble to the 

proposed rule, section 1205(b) of the 

Energy Act provided for SBA leverage in 

the form of an ‘‘energy saving 

debenture’’, which would be a five- or 

ten-year debenture issued at a discount 

so as to be, in effect, a ‘‘zero coupon’’ 

debenture for the first five years. SBA 

leverage fees would be paid as required 

under current § 107.1130, except for the 

annual charge in § 107.1130(d) which 

would be deferred for the first five years 

and thereafter be payable semi-annually 

along with the debenture interest. For 

example, an SBIC issuing a $1,000,000 

ten-year debenture with a combined 

interest rate and annual charge of 6% 

would receive roughly $750,000 upon 

issuance and would make no payments 

of interest or annual charge for the first 

five years. Starting with the sixth year, 

the SBIC would make semi-annual 

payments of interest and charges on the 

debenture’s face amount of $1,000,000. 

At maturity the SBIC would pay the 

$1,000,000 face amount of the 

debenture. 

Each SBIC licensed after September 

30, 2008, that is eligible to issue 

debentures under current regulations 

would be eligible to issue an Energy 

Saving Debenture for the purpose of 

making an Energy Saving Qualified 

Investment. No regulatory changes are 

necessary to implement this new type of 

debenture. However, SBA did receive a 

number of comments concerning the 

Energy Saving Debenture. 

SBA received two comments stating 

that SBA should clarify how an SBIC 

will be able to calculate the net 

proceeds it can expect to receive when 

it issues an Energy Saving Debenture. 

The same two commenters also asked 

whether the interest rate on an Energy 

Saving Debenture could change after 

issuance if SBA were to include the 

debenture in a pool of securities offered 

for public or private sale, and if so 

whether the change might affect the 

funds available to the SBIC. 

As discussed elsewhere in this 

preamble, the cash received by an SBIC 

issuing an Energy Saving Debenture 

would be the face value of the debenture 

discounted by the present value of the 

interest and annual Charge for the fiveyear discount period. SBA currently 

maintains a calculator that an SBIC can 

use to estimate the net proceeds of an 

LMI debenture, which has the same 

structure as the Energy Saving 

Debenture. The LMI calculator can be 

accessed through http://www.sba.gov/ 

content/lmi-debenture-calculator. 

SBA does not anticipate that Energy 

Saving Debentures will be pooled. 

SBICs can expect the interest rate on 

such debentures to remain fixed for 

their entire term. 

SBA received two comments stating 

that SBICs planning to use Energy 

Saving Debentures must be able to 

understand how SBA intends to 

apportion availability. Beginning in 

fiscal year 2012, SBA expects to hold 

annual Energy Saving Debenture 

allocations on a semi-annual basis, 

authorizing up to half of the overall 

annual allocation amount in the first 

allocation period and the remainder in 

the second period. SBA will limit the 

maximum initial Energy Saving 

Debenture allocation for an individual 


srobinson on DSK4SPTVN1PROD with RULES
23376 Federal Register / Vol. 77, No. 76 / Thursday, April 19, 2012 / Rules and Regulations 

SBIC to an amount equal to the SBIC’s 

Regulatory Capital (i.e., one tier of 

leverage) in any fiscal year. If aggregate 

demand at one tier of leverage is greater 

than the amount available, SBA will 

scale back SBICs’ leverage requests as 

necessary. An SBIC that received an 

allocation of Energy Saving Debenture 

leverage in the first allocation period 

may seek an additional allocation in the 

second period, subject to availability. 

Finally, SBA received two comments 

regarding the impact of the Energy 

Saving Debenture on program costs; 

these comments are discussed in the 

section of this preamble concerning 

compliance with Executive Order 

12866. 

Electronic Access to Criteria for 

Evaluation of ‘‘Energy Saving Activities’’ 

As discussed in the preamble to the 

proposed rule, SBA intends to link its 

Investment Division Web site 

(www.sba.gov/inv) to other government 

Web sites that will assist users in 

determining whether a company 

providing or developing particular 

products or services is engaged in 

Energy Saving Activities. Some sites 

allow users to search for a specific 

product by name, while others provide 

performance criteria or outcomes that a 

qualifying product or service must 

satisfy. The current addresses for these 

sites are repeated here for the 

convenience of the reader: 

1. Energy Star 

www.energystar.gov/products 

2. Federal Energy Management Program 

www1.eere.energy.gov/femp/ 

technologies/ 

eep_purchasingspecs.html 

3. Renewable Electricity Production Tax 

Credit (Internal Revenue Code Section 

45) 

http://www.irs.gov/irb/2010-18_IRB/ 

ar11.html 

4. Energy Credit (Internal Revenue Code 

Section 48) 

http://frwebgate.access.gpo.gov/cgi-bin/ 

usc.cgi?ACTION=RETRIEVE

&FILE=$$xa$$busc26.wais

&start=1688508

&SIZE=98870&TYPE=PDF 

5. Installation-Related Federal Tax 

Credits for Consumer Energy Efficiency 

http://www.energystar.gov/ 

index.cfm?c=tax_credits.tx_index 

III. Justification for Immediate Effective 

Date 

The Administrative Procedure Act 

(APA), 5 U.S.C. 553(d)(3), requires that 

‘‘publication or service of a substantive 

rule shall be made not less than 30 days 

before its effective date, except * * * as 

otherwise provided by the agency for 

good cause found and published with 

the rule.’’ 

The purpose of this provision is to 

provide interested and affected 

members of the public sufficient time to 

adjust their behavior before the rule 

takes effect. In the case of this 

rulemaking, however, there should be 

no need for any member of the public, 

including any SBIC, to make any 

changes in order to prepare for the rule 

taking effect. This rule implements 

changes to the SBIC program to 

encourage financings in Energy Saving 

Qualified Investments, which are 

expected to contribute to the important 

goal of reducing U.S. dependence on 

non-renewable fuels. Any further delay 

in making leverage available to SBICs in 

the form of Energy Saving Debentures 

will only hold back the potential 

benefits of investment in small business 

engaged in Energy Saving Activities. 

SBA therefore finds that there is good 

cause for making this rule effective 

immediately instead of observing the 

30-day period between publication and 

effective date. 

Compliance With Executive Orders 

12866, 12988 and 13132, the Paperwork 

Reduction Act (44 U.S.C. Ch. 35) and 

the Regulatory Flexibility Act (5 U.S.C. 

601–612) Executive Order 12866 

OMB has determined that this rule is 

a ‘‘significant’’ regulatory action under 

Executive Order 12866. In the proposed 

rule, SBA set forth its initial regulatory 

impact analysis, which addressed the 

following: Necessity of the regulation; 

alternative approaches to the proposed 

rule; and the potential benefits and costs 

of the regulation. SBA received 

comments which addressed both 

alternative approaches to and potential 

costs of the regulation. Those comments 

are discussed in the final Regulatory 

Impact Analysis set forth below: 

1. Necessity of Regulation 

This regulatory action implements 

sections 1205 and 1206 of the Energy 

Independence and Security Act of 2007, 

Public Law 110–140. The statutory 

revisions provide an SBIC seeking to 

make an ‘‘energy saving qualified 

investment’’ with a new SBA leverage 

option in the form of an ‘‘energy saving 

debenture.’’ 

2. Alternative Approaches to Regulation 

Because the regulatory definition of 

Energy Saving Qualified Investment 

must be consistent with the statutory 

definition, SBA had a limited ability to 

consider alternatives. The statute 

defines ‘‘energy saving qualified 

investment’’ as an ‘‘investment in a 

small business concern that is primarily 

engaged in researching, manufacturing, 

developing, or providing products, 

goods, or services that reduce the use or 

consumption of non-renewable energy 

resources.’’ The SBA considered 

adopting this statutory definition 

without modification. However, SBA 

did not select this approach due to 

concerns that without some 

interpretation of the broad statutory 

language, it would be difficult to 

evaluate (a) whether qualifying 

investments would actually contribute 

to the energy-saving objectives of the 

statute and (b) what constitutes 

‘‘primarily engaged’’. 

In considering alternatives for 

determining whether a qualifying 

investment would likely contribute to 

the energy-saving objectives of the 

statute, the SBA conferred with DOE to 

consider two options besides using the 

broad statutory definition: (1) Defining a 

list of specific industries and (2) 

referencing existing standards 

developed for Federal programs that 

promote energy efficiency. SBA did not 

adopt the first option to identify a list 

of specific industries because (1) 

‘‘energy saving’’ efforts take place across 

a broad spectrum of industries; (2) the 

North American Industrial 

Classification System (NAICS) codes, 

typically used to identify industries, are 

inadequate for capturing whether a 

business is involved in ‘‘energy saving’’ 

across this spectrum; and (3) developing 

a static list does not adequately allow 

for either a full range of products and 

services or the rapid growth in this area 

that might further the statutory goals. 

Given the number of Federal programs 

already directed towards ‘‘energy 

saving’’ activities, SBA chose to adopt 

the second option in order to improve 

standardization across agencies, allow 

growth as DOE and other agencies 

update program standards to reflect new 

‘‘energy saving’’ initiatives, and to 

address the broadest spectrum of 

products and services. Towards those 

goals, SBA recognizes that SBICs may 

wish to invest in Small Businesses that 

are manufacturing or researching 

products or performing services that 

have not been identified by existing 

Federal standards. Therefore, SBA will 

also consider other investments on a 

case by case basis, based on the SBIC’s 

ability to demonstrate energy savings 

associated with the Small Business’s 

activities. 

To determine whether a concern is 

‘‘primarily engaged’’ in Energy Saving 

Activities, SBA considered using either 


srobinson on DSK4SPTVN1PROD with RULES
Federal Register / Vol. 77, No. 76 / Thursday, April 19, 2012 / Rules and Regulations 23377 

a specific quantitative standard or an 

evaluation based on total facts and 

circumstances. For simplicity, the 

proposed rule presumed that a business 

is ‘‘primarily engaged’’ if it derived at 

least 50% of revenues during its most 

recently completed fiscal year from 

Energy Saving Activities. As a result of 

comments received, SBA supplemented 

this historical test with an alternative, 

prospective test; in the final rule, a 

Small Business that will use 100% of 

the financing proceeds for Energy 

Saving Activities will also be presumed 

to be ‘‘primarily engaged’’ in such 

activities. SBA believes this change will 

encourage SBICs to make Energy Saving 

Qualified Investments by reducing the 

associated administrative burden. As in 

the proposed rule, an SBIC may also ask 

SBA to determine whether a concern is 

‘‘primarily engaged’’ in Energy Saving 

Activities based on an evaluation of 

various factors, including ‘‘the 

distribution of revenues, employees and 

expenditures, intellectual property 

rights held, and business plans 

presented to investors as part of a formal 

solicitation’’. 

3. Potential Benefits and Costs 

As stated in the proposed rule, SBA 

initially estimated demand for Energy 

Saving Debentures at approximately 

5 percent of the overall SBIC debenture 

program. This estimate was based on 

SBA’s analysis of SBICs’ usage of the 

‘‘low and moderate income’’ (LMI) 

debenture, which has the same structure 

as the Energy Saving Debenture, and on 

venture capital industry data for 

‘‘Cleantech’’ investments, which SBA 

believes are fairly representative of 

energy saving investments. SBA 

estimated that level of demand would 

result in an increase to the annual fee 

of 14.3 basis points versus a formulation 

with no Energy Saving Debentures. 

When calculating the SBA Fiscal Year 

2012 budget, SBA found that the same 

level of demand would increase the 

annual fee for SBIC licensees by 15.5 

basis points versus a formulation with 

no Energy Saving Debentures. This 

increase reflects an overall increase in 

the size of the SBIC program while 

taking into account the additional risk 

associated with SBIC equity investments 

contemplated in the usage of the Energy 

Saving Debenture. 

SBA received two comments stating 

that Energy Saving Debentures should 

not be combined with standard 

debentures when calculating the annual 

fee charged to all debenture users. The 

commenters expressed concern that all 

SBIC debenture issuers would be 

required to subsidize the higher-risk 

Energy Saving Debenture, including 

those SBICs whose access to the Energy 

Saving Debenture is prohibited because 

they were licensed before October 1, 

2008. 

SBA understands the commenters’ 

concern about spreading the costs of the 

Energy Saving Debenture across the 

entire debenture program. In order to 

limit the impact of fee increases, SBA 

has decided to cap the amount of Energy 

Saving Debentures available in a given 

fiscal year at 5 percent of the overall 

SBIC program debenture program level 

for the year, even if demand proves to 

be higher. However, SBA does not 

believe it is feasible to accommodate the 

commenters’ request to separate the 

Energy Saving Debenture from the 

standard debenture. On a stand-alone 

basis, the annual fee for the Energy 

Saving Debenture would exceed the 

statutory maximum of 1.38%, meaning 

that SBA would be unable to implement 

the statutory provisions of the Energy 

Act. SBA will review the demand for 

and performance of the Energy Saving 

Debenture on an annual basis to 

determine whether the modeling 

assumptions underlying this Regulatory 

Impact Analysis should be changed. 

Executive Order 12988 

This action meets applicable 

standards set forth in sections 3(a) and 

3(b)(2) of Executive Order 12988, Civil 

Justice Reform, to minimize litigation, 

eliminate ambiguity, and reduce 

burden. The action does not have 

retroactive or presumptive effect. 

Executive Order 13132 

For the purposes of Executive Order 

13132, SBA has determined that this 

final rule will not have substantial, 

direct effects 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. Therefore, for the 

purposes of Executive Order 13132, 

Federalism, SBA has determined that 

this final rule has no federalism 

implications warranting the preparation 

of a federalism assessment. 

Paperwork Reduction Act, 44 U.S.C. 

Ch. 35 

SBA has determined that this rule 

imposes additional reporting and 

recordkeeping requirements under the 

Paperwork Reduction Act, 44 U.S.C., 

chapter 35. This collection of 

information includes three different 

reporting requirements: (1) Information 

needed for SBA to determine whether a 

Small Business is ‘‘primarily engaged’’ 

in Energy Saving Activities, (2) 

information needed for SBA to 

determine whether a particular activity 

is an ‘‘Energy Saving Activity’’, and (3) 

identification of a completed financing 

as an Energy Saving Qualified 

Investment on the Portfolio Financing 

Report (an existing information 

collection approved under OMB Control 

Number 3245–0078). The descriptions 

of respondents and the titles and 

purpose of the information collections 

are discussed below with an estimate of 

the annual reporting burden. Included 

in the estimate is the time for reviewing 

instructions, searching existing data 

sources, gathering and maintaining the 

data needed, and completing and 

reviewing each collection of 

information. 

A. ‘‘Primarily Engaged’’ and ‘‘Energy 

Saving Activity’’ Determinations 

Title: Financing Eligibility Statement 

for Usage of Energy Saving Debentures, 

SBA Form 2428. 

Summary: The Financing Eligibility 

Statement for Usage of Energy Saving 

Debentures will be used by SBICs 

requesting either or both of the SBA 

determinations that may be requested 

under § 107.610(f)(2) and/or (f)(3) of the 

rule: (1) Whether a particular activity in 

which a Small Business is engaged is an 

Energy Saving Activity, and (2) whether 

a Small Business is ‘‘primarily engaged’’ 

in Energy Saving Activities. The Small 

Business must provide supporting 

evidence of the Small Business’s 

eligibility based on the factors listed in 

the proposed rule. SBA received no 

comments specifically related to the 

proposed information collection. 

However, as a result of two comments 

received on the proposed certification 

requirement in § 107.610(f), SBA has 

eliminated that requirement as it would 

have related to the SBIC. Only the Small 

Business providing the information 

must certify that the information is true 

and correct. 

Need and Purpose: Section 1205 of 

the Energy Independence and Security 

Act of 2007 makes SBA leverage in the 

form of a deferred interest ‘‘energy 

saving debenture’’ available to SBICs 

licensed after September 30, 2008 for 

the purpose of making Energy Saving 

Qualified Investments. This final rule 

identifies various criteria under which a 

financing can qualify as an Energy 

Saving Qualified Investment; however, 

SBA recognizes that some proposed 

investments will need to be individually 

reviewed by SBA to determine whether 

they fulfill the energy saving objectives 

of the statute. SBA will use the 

submitted information to make those 

determinations. 

Description of Respondents: SBICs 

will submit this form to obtain a 


srobinson on DSK4SPTVN1PROD with RULES
23378 Federal Register / Vol. 77, No. 76 / Thursday, April 19, 2012 / Rules and Regulations 

determination from SBA as to whether 

a proposed financing is an Energy 

Saving Qualified Investment. There are 

approximately 294 active SBICs; only 

about 17% of these are debenture SBICs 

that were licensed after September 30, 

2008, and are eligible to issue Energy 

Saving Debentures to make Energy 

Saving Qualified Investments. Based on 

anticipated new licensing activity, SBA 

is estimating the number of eligible 

SBICs at 60. Assuming each of these 

SBICs will invest in five companies per 

year, that 5% of all investments will be 

in energy-saving companies, and that 

one-third of those will require SBA to 

make a pre-financing determination of 

eligibility, SBA estimates five responses 

per year. 

SBA estimates the burden of this 

collection of information as follows: An 

applicant will complete this collection 

once for each prospective Energy Saving 

Qualified Investment that requires SBA 

to make a pre-financing determination 

of eligibility. SBA estimates that the 

time needed to complete this collection 

will average 10 hours. SBA estimates 

that the cost to complete this collection 

will be approximately $150 per hour. 

Total estimated burden is 50 hours per 

annum costing a total of $7,500 for the 

year. 

B. Portfolio Financing Report 

Title: Portfolio Financing Report, SBA 

Form 1031 (OMB Control Number 

3245–0078). 

Summary: SBA Form 1031 is a 

currently approved information 

collection. SBA regulations (§ 107.640) 

require SBICs to submit a Portfolio 

Financing Report on SBA Form 1031 for 

each financing that an SBIC provides to 

a small business concern. The form is 

SBA’s primary source of information for 

compiling statistics on the SBIC 

program as a provider of capital to small 

businesses. SBA also uses the 

information provided on Form 1031 to 

evaluate SBIC compliance with 

regulatory requirements. SBA has 

revised the form by adding one new 

question, which would ask the SBIC to 

use a pull-down menu to identify 

whether a completed financing was an 

Energy Saving Qualified Investment. 

SBA’s financial reporting software 

would automatically transfer this 

designation to the SBA Form 468 (SBIC 

Financial Statements), the source of data 

needed to determine eligibility for 

additional leverage based on Energy 

Saving Qualified Investments under 

§ 107.1150(d)(2)(i). This revised form 

was approved by OMB on March 16, 

2011. 

Need and Purpose: Section 1206 of 

the Energy Independence and Security 

Act of 2007 increases the maximum 

amount of leverage potentially available 

to an SBIC licensed on or after October 

1, 2008, that makes Energy Saving 

Qualified Investments. In this rule, 

§ 107.1150(d) adjusts the basic leverage 

eligibility formula in § 107.1150(a) by 

subtracting from an SBIC’s outstanding 

leverage the cost basis of Energy Saving 

Qualified Investments that the SBIC has 

made in Smaller Enterprises. The 

amount that can be subtracted is limited 

to 33% of the SBIC’s Leverageable 

Capital. SBA will use the information 

submitted on Form 1031 to track Energy 

Saving Qualified Investments that an 

SBIC may use in its leverage eligibility 

calculation, as well as for overall 

program evaluation purposes. 

Description of Respondents: All SBICs 

are required to submit SBA Form 1031 

within 30 days after closing an 

investment. The current estimate of 

2,800 responses per year is not affected 

by this rule. SBA has added one field to 

the form to identify whether the 

investment is an Energy Saving 

Qualified Investment. 

SBA estimates the burden of this 

collection of information as follows: An 

SBIC making an Energy Saving 

Qualified Investment will select that 

descriptor from a pull-down menu on 

SBA Form 1031. There is no 

incremental burden attributable to 

completion of this additional field. An 

SBIC will complete SBA Form 1031 for 

each of its completed financing 

transactions. The currently approved 

hour burden for this collection is 12 

minutes per response (0.2 hours), at a 

cost of $7.00 per response (based on 

$35.00 per hour). The total estimated 

burden is 560 hours per annum at an 

aggregate cost of $19,600. 

The recordkeeping requirements 

under the final rule relate to the 

information that an SBIC must maintain 

in its files to support the required 

certifications for Energy Saving 

Qualified Investments under 

§ 107.610(f)(1). SBA expects that SBICs 

will be able to obtain the necessary 

documentation with minimal effort. The 

SBIC would first document that the 

contemplated investment is in a 

company that provides products or 

services included in the definition of 

Energy Saving Activities, generally by 

referring to one of the government Web 

sites discussed in this preamble. 

Second, the SBIC would document that 

the company derives at least 50% of its 

revenues from the sales of these 

products or services, or, that the 

company will utilize 100% of the 

proceeds from the financing for Energy 

Saving Activities; the company would 

have this information available in the 

ordinary course of business. 

Compliance With the Regulatory 

Flexibility Act, 5 U.S.C. 601–612 

When an agency promulgates a rule, 

the Regulatory Flexibility Act (RFA) (5 

U.S.C. 601–612) requires the agency to 

prepare an initial regulatory flexibility 

analysis (IRFA) which describes the 

potential economic impact of the rule 

on small entities and alternatives that 

may minimize that impact. Section 605 

of the RFA allows an agency to certify 

a rule, in lieu of preparing an IRFA, if 

the rulemaking is not expected to have 

a significant economic impact on a 

substantial number of small entities. 

This final rule affects all SBICs issuing 

debentures, of which there are 

approximately 160, most of which are 

small entities. Therefore, SBA has 

determined that this rule will have an 

impact on a substantial number of small 

entities. However, SBA has determined 

that the impact on entities affected by 

the rule will not be significant. The 

Energy Saving Qualified Investment 

definition identifies the type of 

investment for which an SBIC will be 

permitted to seek SBA funding in the 

form of an Energy Saving Debenture; 

this instrument, because of its deferred 

interest feature, is expected to provide 

SBICs with greater flexibility in 

structuring qualified investments. The 

Energy Saving Debenture is expected to 

increase the annual fee charged on all 

new debenture commitments by 

approximately 15.5 basis points during 

fiscal year 2012; however, the fee would 

continue to remain well below the 

statutorily set maximum fee. 

Accordingly, the Administrator of the 

SBA hereby certifies that this rule will 

not have a significant impact on a 

substantial number of small entities. 

List of Subjects in 13 CFR Part 107 

Investment companies, Loan 

programs—business, Reporting and 

recordkeeping requirements, Small 

businesses. 

For the reasons stated in the 

preamble, SBA amends part 107 of title 

13 of the Code of Federal Regulations as 

follows: 

PART 107—SMALL BUSINESS 

INVESTMENT COMPANIES 

■ 1. The authority citation for part 107 

continues to read as follows: 

Authority: 15 U.S.C. 681 et seq., 683, 

687(c), 687b, 687d, 687g, 687m and Pub. L. 

106–554, 114 Stat. 2763; and Pub. L. 111–5, 

123 Stat. 115. 

■ 2. Amend § 107.50 by adding in 

alphabetical order definitions of 


srobinson on DSK4SPTVN1PROD with RULES
Federal Register / Vol. 77, No. 76 / Thursday, April 19, 2012 / Rules and Regulations 23379 

‘‘Energy Saving Activities’’ and ‘‘Energy 

Saving Qualified Investment’’, to read as 

follows: 

§ 107.50 Definitions of terms. 

* * * * * 

Energy Saving Activities means any of 

the following: 

(1) Manufacturing or research and 

development of products, integral 

product components, integral material, 

or related software that meet one or 

more of the following: 

(i) Improves residential energy 

efficiency as demonstrated by meeting 

Department of Energy or Environmental 

Protection Agency criteria for use of the 

Energy Star trademark label; 

(ii) Improves commercial energy 

efficiency as demonstrated by being in 

the upper 25% of efficiency for all 

similar products as designated by the 

Department of Energy’s Federal Energy 

Management Program; 

(iii) Improves automobile efficiency or 

reduces consumption of non-renewable 

fuels through the use of advanced 

batteries, power electronics, or electric 

motors; advanced combustion engine 

technology; alternative fuels; or 

advanced materials technologies, such 

as lightweighting; 

(iv) Improves industrial energy 

efficiency through combined heat and 

power (CHP) prime mover or power 

generation technologies, heat recovery 

units, absorption chillers, desiccant 

dehumidifiers, packaged CHP systems, 

more efficient process heating 

equipment, more efficient steam 

generation equipment, heat recovery 

steam generators, or more efficient use 

of water recapture, purification and 

reuse for industrial application; 

(v) Advances commercialization of 

technologies developed by recipients of 

awards from the Department of Energy 

under the Advanced Research Projects 

Agency—Energy, Small Business 

Innovation Research, or Small Business 

Technology Transfer programs; 

(vi) Reduces the consumption of nonrenewable energy by providing 

renewable energy sources, as 

demonstrated by meeting the standards, 

applicable to the year in which the 

investment is made, for receiving a 

Renewable Electricity Production Tax 

Credit as defined in Internal Revenue 

Code Section 45 or an Energy Credit as 

defined in Internal Revenue Code 

Section 48; 

(vii) Reduces the consumption of nonrenewable energy for electric power 

generation as described in Internal 

Revenue Code Section 48(c)(1)(A) by 

providing highly efficient energy 

conversion systems that can use 

renewable or non-renewable fuel 

through fuel cells; or 

(viii) Improves electricity delivery 

efficiency by supporting one or more of 

the smart grid functions as identified in 

42 U.S.C. 17386(d), by means of a 

product, service, or functionality that 

serves one or more of the following 

smart grid operational domains: 

Equipment manufacturing, customer 

systems, advanced metering 

infrastructure, electric distribution 

systems, electric transmission systems, 

storage systems, and cyber security. 

(2) Installation and/or inspection 

services associated with the deployment 

of energy saving products as identified 

by meeting one or more of the following 

standards: 

(i) Deploys products that qualify, in 

the year in which the investment is 

made, for installation-related Federal 

Tax Credits for Residential Consumer 

Energy Efficiency; 

(ii) Deploys products related to 

commercial energy efficiency as 

demonstrated by deploying commercial 

equipment that is in the upper 25% of 

efficiency for all similar products as 

designated by the Department of 

Energy’s Federal Energy Management 

Program; 

(iii) Deploys combined heat and 

power products, goods, or services; 

(iv) Deploys products that qualify, in 

the year in which the investment is 

made, for receiving a Renewable 

Electricity Production Tax Credit as 

defined in Internal Revenue Code 

Section 45 or an Energy Credit as 

defined in Internal Revenue Code 

Section 48; or 

(v) Deploys a product, service, or 

functionality that improves electricity 

delivery efficiency by supporting one or 

more of the smart grid functions as 

identified in 42 U.S.C. 17386(d), and 

that serves one or more of the following 

smart grid operational domains: 

Equipment manufacturing, customer 

systems, advanced metering 

infrastructure, electric distribution 

systems, electric transmission systems, 

or grid cyber security. 

(3) Auditing or consulting services 

performed with the objective of 

identifying potential improvements of 

the type described in paragraph (1) or 

(2) of this definition. 

(4) Other manufacturing, service, or 

research and development activities that 

use less energy to provide the same 

level of energy service or reduce the 

consumption of non-renewable energy 

by providing renewable energy sources, 

as determined by SBA. A Licensee must 

obtain such determination in writing 

prior to providing Financing to a Small 

Business. SBA will consider factors 

including but not limited to: 

(i) Results of energy efficiency testing 

performed in accordance with 

recognized professional standards, 

preferably by a qualified third-party 

professional, such as a certified energy 

assessor, energy auditor, or energy 

engineer; 

(ii) Patents or grants awarded to or 

licenses held by the Small Business 

related to Energy Saving Activities 

listed in subsection (1) or (2) above; 

(iii) For research and development of 

products or services that are anticipated 

to reduce the consumption of nonrenewable energy, written evidence 

from an independent, certified thirdparty professional of the feasibility, 

commercial potential, and projected 

energy savings of such products or 

services; and 

(iv) Eligibility of the product or 

service for a Federal tax credit cited in 

this definition that is not available in 

the year in which the investment is 

made, but was available in a previous 

year. 

Energy Saving Qualified Investment 

means a Financing which: 

(1) Is made by a Licensee licensed 

after September 30, 2008; 

(2) Is in the form of a Loan, Debt 

Security, or Equity Security, each as 

defined in this section; 

(3) Is made to a Small Business that 

is primarily engaged in Energy Saving 

Activities. A Licensee must obtain a 

determination from SBA prior to the 

provision of Financing as to whether a 

Small Business is primarily engaged in 

Energy Saving Activities. SBA will 

consider the distribution of revenues, 

employees and expenditures, 

intellectual property rights held, and 

Energy Saving Activities described in a 

business plan presented to investors as 

part of a formal solicitation in making 

its determination. However, a Small 

Business is presumed to be primarily 

engaged in Energy Saving Activities, 

and no pre-Financing determination by 

SBA is required, if: 

(i) The Small Business derived at least 

50% of its revenues during its most 

recently completed fiscal year from 

Energy Saving Activities; or 

(ii) The Small Business will utilize 

100% of the Financing proceeds 

received from a Licensee to engage in 

Energy Saving Activities. 

* * * * * 

■ 3. Amend § 107.610 by revising the 

last sentence of the introductory text 

and adding paragraph (f) to read as 

follows: 


srobinson on DSK4SPTVN1PROD with RULES
23380 Federal Register / Vol. 77, No. 76 / Thursday, April 19, 2012 / Rules and Regulations 

§ 107.610 Required certifications for Loans 

and Investments. 

* * * Except for information and 

documentation prepared under 

paragraphs (f)(2) and (3) of this section, 

you must keep these documents in your 

files and make them available to SBA 

upon request. 

* * * * * 

(f) For each Energy Saving Qualified 

Investment: 

(1) If a pre-Financing determination of 

eligibility by SBA is not required under 

the definition of Energy Saving 

Activities or Energy Saving Qualified 

Investment: 

(i) A certification by you, dated as of 

the closing date of the Financing, as to 

the basis for the qualification of the 

Financing as an Energy Saving Qualified 

Investment; 

(ii) Supporting documentation of the 

Energy Saving Activities engaged in by 

the concern; 

(iii) Supporting documentation of 

either the percentage of its revenues 

derived from Energy Saving Activities 

during the concern’s most recently 

completed fiscal year, which must be at 

least 50 percent, or the concern’s 

intended use of the Financing proceeds, 

all of which must be used for Energy 

Saving Activities; and 

(iv) A certification by the concern, 

dated as of the closing date of the 

Financing, that any information it 

provided to you in connection with this 

paragraph (f)(1) is true and correct to the 

best of its knowledge. 

(2) If, prior to providing Financing, 

you must obtain a determination from 

SBA that the activities in which a 

concern is engaged are Energy Saving 

Activities, submit to SBA in writing a 

description of the product or service 

being provided or developed, including 

all available documentation of the 

energy savings produced or anticipated, 

addressing the factors considered under 

paragraph (4) of the definition of 

‘‘Energy Saving Activities’’ in § 107.50 

and certified by the concern to be true 

and correct to the best of its knowledge. 

(3) If, prior to providing Financing, 

you must obtain a determination from 

SBA that the concern is ‘‘primarily 

engaged’’ in Energy Saving Activities, 

submit to SBA in writing all available 

information concerning the factors 

considered under paragraph (3) of the 

definition of ‘‘Energy Saving Qualified 

Investment’’ in § 107.50, certified by the 

concern to be true and correct to the 

best of its knowledge. 

(4) For each Financing closed after 

you obtain a determination from SBA 

under paragraph (f)(2) or (3) of this 

section, a certification by you, dated as 

of the closing date of the Financing, that 

to the best of your knowledge, you have 

no reason to believe that the materials 

submitted are incorrect. 

(5) For each Financing closed based 

on supporting documentation of the 

concern’s intended use of proceeds for 

Energy Saving Activities under 

paragraph (f)(1)(iii) of this section: 

(i) Documentation by the concern, 

dated no later than six months after the 

closing of the Financing, of the proceeds 

used to date for Energy Saving 

Activities, with further updates 

provided at six month intervals until 

100 percent of the Financing proceeds 

have been accounted for; and 

(ii) Documentation that you have 

reviewed the information submitted by 

the concern under paragraph (f)(5)(i) of 

this section and have reasonably 

determined that 100 percent of the 

Financing proceeds were used for 

Energy Saving Activities. 

■ 4. Amend § 107.1150 by adding a 

sentence at the end of paragraph (c) 

introductory text and adding paragraph 

(d) to read as follows: 

§ 107.1150 Maximum amount of Leverage 

for a Section 301(c) Licensee. 

* * * * * 

(c) * * * Any investment that you 

use as a basis to seek additional leverage 

under this paragraph (c) cannot also be 

used to seek additional leverage under 

paragraph (d) of this section. 

* * * * * 

(d) Additional Leverage based on 

Energy Saving Qualified Investments in 

Smaller Enterprises. (1) Subject to SBA’s 

credit policies, if you were licensed on 

or after October 1, 2008, you may have 

outstanding Leverage in excess of the 

amounts permitted by paragraphs (a) 

and (b) of this section in accordance 

with this paragraph (d). Any investment 

that you use as a basis to seek additional 

Leverage under this paragraph (d) 

cannot also be used to seek additional 

Leverage under paragraph (c) of this 

section. 

(2) To determine whether you may 

request a draw that would cause you to 

have outstanding Leverage in excess of 

the amount determined under paragraph 

(a) of this section: 

(i) Determine the cost basis, as 

reported on your most recent filing of 

SBA Form 468, of any Energy Saving 

Qualified Investments in a Smaller 

Enterprise that individually do not 

exceed 20% of your Regulatory Capital. 

(ii) Calculate the amount that equals 

33% of your Leverageable Capital. 

(iii) Subtract from your outstanding 

Leverage the lesser of (d)(2)(i) or (ii). 

(iv) If the amount calculated in 

paragraph (d)(2)(iii) is less than the 

maximum Leverage determined under 

paragraph (a) of this section, the 

difference between the two amounts 

equals your additional Leverage 

availability. 

Dated: February 9, 2012. 

Karen G. Mills, 

Administrator. 

[FR Doc. 2012–9454 Filed 4–18–12; 8:45 am] 

BILLING CODE 8025–01–P 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Part 39 

[Docket No. FAA–2009–0330; Directorate 

Identifier 2008–NE–43–AD; Amendment 39– 

17015; AD 2012–07–09] 

RIN 2120–AA64 

Airworthiness Directives; Turbomeca 

S.A. Turboshaft Engines 

AGENCY: Federal Aviation 

Administration (FAA), DOT. 

ACTION: Final rule. 

SUMMARY: We are superseding an 

existing airworthiness directive (AD) for 

Turbomeca S.A. Arrius 2F turboshaft 

engines with P3 air pipe (first section) 

part number (P/N) 0 319 71 918 0, 

installed. That AD currently requires 

inspections of the P3 air pipe (first 

section) and right-hand (RH) rear halfwall for proper clearance and 

readjustment of the pipe if necessary. 

This new AD requires the same 

inspections for installed engines, 

eliminates readjusting of the P3 air pipe 

(first section), requires replacement of 

the RH rear half-wall under certain 

conditions, and adds an optional 

terminating action. This AD was 

prompted by Turbomeca determining 

that the clearance between the P3 air 

pipe (first section) and the RH rear halfwall might change during installation of 

the engine on the helicopter. We are 

issuing this AD to prevent an 

uncommanded power loss to flight idle, 

which could result in an emergency 

autorotation landing or accident. 

DATES: This AD is effective May 24, 

2012. 

The Director of the Federal Register 

approved the incorporation by reference 

of a certain publication listed in the AD 

as of May 24, 2012. 

The Director of the Federal Register 

approved the incorporation by reference 

of a certain other publication listed in 

the AD as of August 19, 2009 (74 FR 

34221, July 15, 2009). 

ADDRESSES: For service information 

identified in this AD, contact 


srobinson on DSK4SPTVN1PROD with RULES