123-600-0120 Preliminary Certification (1) Pre Screening. Persons interested in applying for a Manufacturing BETC shall first contact the Department to initiate a pre-screening process. (2) Submission of Application. Persons determined by the Department to have projects for proposed facilities eligible for a Manufacturing BETC shall submit the application form approved by the Department for application for preliminary certification along with the appropriate fee under OAR 123-600-0140. The Applicant shall also provide additional information the Director considers necessary to determine whether the proposed facility is in accordance with the provisions of ORS 285C.540 to 285C.559 and these rules, including but not limited to: (a) The type of equipment, machinery or other products being manufactured meet related performance and efficiency standards applicable to the manufactured products; (b) The economic viability of the facility and any other information for consideration of such factors as phases of development, expansion of or additions to existing facilities or product lines, increased production and number of jobs created or maintained by the Applicant; (c) The minimum levels of increased employment in Oregon for the facility are proportionate to industry standards; (d) The compensation paid and benefits provided to employees meet or exceed the national average in annual compensation for comparable employment; (e) Details related to the technology and financial plan that can be independently reviewed by a third party; (f) The credit worthiness of the Applicant and the likelihood of long-term operation and success of the facility; and (g) The Applicant’s decision to locate or expand a facility in Oregon is based on the allowance of a tax credit under ORS 315.341. (3) Qualified Applicant. A qualified Applicant shall meet one of the following criteria: (a) The Applicant is a person to whom a tax credit for the facility has been transferred; or (b) The Applicant shall be the owner, contract purchaser or lessee of the facility at the time of erection, construction, installation or acquisition of the proposed facility, and: (A) The Applicant is the owner, contract purchaser or lessee of a trade or business that plans to utilize the facility in connection with Oregon property; or (B) The Applicant is the owner, contract purchaser or lessee of a trade or business that plans to lease the facility to a person that will utilize the facility in connection with Oregon property. (C) The Applicant is the owner, contract purchaser or lessee of a trade or business that plans to lease the facility to a person that will utilize the facility in connection with Oregon property. (4) Eligible Costs. Subject to the facility cost limitations of OAR 123-600-0100(1) and the criteria established under ORS 285C.543: (a) Eligible costs include land purchase costs, structures, buildings, installations, excavations, machinery, equipment or devices, or any addition, reconstruction or improvements to land or existing structures, buildings, installations, excavations, machinery, equipment or devices, necessarily acquired, constructed or installed by a person in connection with the conduct of a trade or business, that is used to manufacture the equipment, machinery or other products used primarily for: (A) Component parts of electric vehicles; or (B) Electric vehicles; or (C) Renewable energy storage devices; or (D) Equipment, machinery or other products designed to use a renewable energy resource. (b) An application shall demonstrate compliance with these provisions to be accepted, including clearly describing the specific characteristics of the equipment, machinery or other products that demonstrate why such equipment, machinery or other products will be used primarily for component parts of electric vehicles or; electric vehicles; renewable energy storage devices or; equipment, machinery or other products designed to use a renewable energy resource that meets the criteria established under ORS 285C.543 and not for other commercial purposes and therefore why the costs of such of such equipment, machinery or other products are eligible costs. (c) The Department may conduct inspections to verify eligible costs. (d) Eligible facility costs are limited by costs for a facility, or portion thereof, that has previously received a Business Energy Tax Credit. (e) The sum of any payments from federal grants and the Manufacturing BETC may not exceed total costs. (f) Eligible costs do not include fees or costs associated with the review of the application. (g) Eligible costs cannot be incurred prior to submitting an application for preliminary certification, except as provided for under OAR 123-600-0120(7). (h) Cost can include payments for: (A) Fees to finance, design or engineer the facility, including but not limited to debt fees and equity fees; (B) Title searches, escrow fees, government fees, excluding fees required by OAR 330-091-0150, and shipping; (C) All materials and supplies needed for the erection, construction, installation or acquisition of the proposed facility; and (D) Work performed by employees or independent contractors of the applicant based on the following conditions: (i) Employees or contractors must be certified, accredited, licensed, or otherwise qualified to do the work; (ii) The work must be associated with the erection, construction, installation or acquisition of the proposed facility or in the case of a research development and demonstration facility, the work shall be directly related to the research, development, demonstration, facility design, monitoring, assessment, evaluation and reporting related to the product or technology; (iii) Project management and other similar costs may only account for up to 15 percent of the total eligible costs; and (iv) Costs for employee’s or contractor’s work on the facility must be detailed and documented as to specific tasks, hours worked, and compensation costs. Donated, in-kind or volunteer labor is not eligible; (E) Costs for legal counsel that is directly related to the development of a qualifying facility (non-litigation related) or directly linked to the research, development or demonstration facility; and (F) Other costs the Director includes. (i) Cost may not include: (A) Interest; (B) Litigation or other operational-related legal fees and court costs; (C) Costs to maintain and operate a facility; (D) Administrative costs to apply for grants, loans, tax credits or other similar funding for a facility including, but not limited to, the BETC charge, costs associated with the creation and development of the CPA verification letter and costs associated with securing a pass-through partner for the facility; (E) Routine operational or maintenance costs associated with the facility, including services, supplies and labor; (F) Expenses that are directly or indirectly offset with federal fee waivers; and (G) Other costs the Director excludes. (j) If a facility is built under a lease, lease-option or lease-purchase contract, the lessee's cost to acquire the facility is the value paid for the facility. If that amount is not known, the cost is the sum of: (A) Tax credits passed-through by the lessor to the lessee; (B) The amount paid when the facility is transferred; and (C) The lease payments not including taxes, insurance, interest, and operating costs. (C) Payments to be made in the future must be discounted to present value. (5) Preliminary Certification Review Process. Except as provided in OAR 123-600-0120(7), an application for preliminary certification shall be received by the Department on or prior to the facility start for the erection, construction, installation or acquisition of a facility. (a) The application for preliminary certification shall be considered received on the date marked received by the Department, unless the application does not contain all information required in the application form and the payment as required in OAR 123-600-0140. (b) An application is incomplete if it does not include information needed to demonstrate substantive compliance with the provisions of ORS 285C.540 to 285C.559 and any applicable rules or standards adopted by the Director. The Department shall provide the Applicant a written notice relating to the incomplete application and the information needed to make the application complete. If no action is taken within 30 days by the Applicant, the application shall expire. (c) After a completed application is received, the Department shall notify the Applicant of the procedures for the Department’s due diligence review. (d) If the application complies with the provisions of ORS 285C.540 to 285C.559, the Director may approve the preliminary certificate. The preliminary certificate shall state the amount of eligible costs for a Manufacturing BETC up to the maximum amount of certifiable costs under ORS 285C.545. It may differ from the amount requested for reasons explained and based on these rules. Also, it shall state any conditions that shall be met before development, final certification, or some other event can occur. The Director shall explain why each condition is needed to comply with these rules. (e) If it does not comply, the Director may deny the application. No later than 60 days after the Director issues an order denying the application, the Applicant may request reconsideration as provided in these rules. (f) An Applicant can re-submit an application that is denied if features of the facility change, the Applicant provides data the absence of which resulted in the denial, or other changes warrant. An application for preliminary certification can be amended or withdrawn by the Applicant before the Director issues a preliminary certificate. The Applicant may be required to pay additional fee for expenses incurred by the Department in connection with the additional review of the application for preliminary certification or amendment to the preliminary certificate. (6) Preliminary Certification for Less than Total Eligible Costs. If under the provisions of ORS 285C.545(2), the Department intends to certify less than the total or no amount of eligible costs of renewable energy resource equipment Manufacturing BETC facility, the Department shall notify the Applicant in writing of that intent before approving the preliminary certificate. (a) The Applicant shall have 30 calendar days from the date notification was issued to inform the Department in writing whether it wishes to withdraw the application or suspend further consideration of the application until a future date specified or submit additional information in support of the application. (b) If the Department has not received notification or additional information in support of the application within that period of time, the Director may certify less than the total or no amount of eligible costs of the Manufacturing BETC facility. (c) Once eligible costs are certified and a preliminary certificate is issued under this section, the certified eligible costs may be revised if conditions under ORS 285C.545(2) change or upon notification from the Applicant or other information indicating that the scope of the project or the facility has changed in such a way to impact the preliminary certificate. (7) Eligibility of Costs Before Facility Start. The Director may approve a preliminary certificate for costs incurred prior to the Department’s receipt of the application for preliminary certification if the Applicant files a written request for a waiver in accordance with these rules. (a) Special circumstances beyond the Applicant's control made application for preliminary certification before facility start impracticable. Such circumstances include process delays, facility funding and energy supplies or markets; and (b) The Department is in receipt of the application for preliminary certification and receives a waiver request from the Applicant within 90 days of the facility start. Under extraordinary circumstances the Department may extend the waiver period provided the facility serves the aims of the program. (c) Failing to submit an application for preliminary certification before signing contracts for the facility does not constitute special circumstances supporting a waiver. (8) Preliminary Certificate. If the Department determines that the application for preliminary certification qualifies the Applicant and the facility for a Manufacturing BETC, the Director may issue a preliminary certificate. (a) The preliminary certificate may contain specific criteria and conditions for the facility to meet in order to complete final certification based on the information provided in the application for the BETC and type of facility that is described in the application. In addition, the Department shall require the Applicant to enter into a performance agreement or other similar agreement as a condition of approval. The Director may consider a broad range of comparative data sources in determining criteria and conditions for job creation, job maintenance and compensation in the preliminary certificate or performance agreement, including but not limited to: (A) National Compensation Survey (NCS), US Department of Labor Bureau of Labor Statistics (B) Quarterly Census of Employment and Wages, US Department of Labor Bureau of Labor Statistics (C) Oregon Labor Market Information System including the Oregon Employment Department’s most current Covered Employment and Wages Summary Report for Total Private Coverage. (b) If the facility does not proceed the Applicant shall inform the Department in writing if it does not proceed with the facility or intends to proceed without the tax credit. In that case, the Director shall cancel the preliminary certificate. (9) Applicant’s Request to Amend a Preliminary Certificate. An Applicant shall file a written request with the Department prior to the completion of the facility to amend a preliminary certificate. (a) The request shall describe the change to the facility and reasons for the change. It may include changes in cost, tax credit amount, facility design, and materials. The request may also include changes in the jobs created, project financing, the Applicant, the location, or other matters that demonstrate substantial change in the project’s scope. The request shall be accompanied by the appropriate fee. (b) If a request does not include information needed to demonstrate substantive compliance with the provisions of ORS 285C.540 to 285C.559 and any applicable rules or standards adopted by the Director shall provide the Applicant a written notice relating to the information needed to make the request complete. If the Applicant does not provide all of the requested information to the Department within 30 days, the request shall expire and no changes shall be made to the preliminary certificate. (c) After the Applicant files the change request, the Department shall decide if the facility as modified complies with ORS 285C.540 to 285C.559 and these rules. (A) If it complies, the Director may issue an amended preliminary certificate which may contain new or amended criteria, conditions and requirements. (B) If it does not comply, the Director shall issue an order that denies the change and provide written reasons for the denial. (10) Director’s Amendment or Revocation of a Preliminary Certificate. The Director may issue an order altering, conditioning, suspending or denying preliminary certification if the Director determines that: (a) The erection, construction, installation or acquisition does not comply with the provisions of ORS 285C.540 to 285C.559 and applicable rules and standards; or (b) The Applicant has previously received preliminary or final certification for the same costs; or (c) The Applicant is unable to demonstrate that the facility would be economically viable without the allowance of additional credits under ORS 315.341; or (d) The Applicant was directly involved in an act for which the Director has levied civil penalties or revoked, canceled or suspended any certification under ORS 285C.540 to 285C.559; or (e) The Applicant or the principal, director, officer, owner, majority shareholder or member of the Applicant, or the manager of the Applicant if the Applicant is a limited liability company, is in arrears for payments owed to any government agency while in any capacity with direct or indirect control over a business; or (f) The facility undergoes changes without the changes being approved under these rules; (g) Any other reason allowed by the amendments to ORS 285C.551(3) in Oregon Laws, 2011, Chapter 474, Section 11. Statutory/Other Authority: ORS 285C.540 - 285C.559, ORS 315.341, OL 2011 & Ch. 474 HB2523 Statutes/Other Implemented: ORS 285C.540-559, 315.341, OL 2011, Ch. 474 HB2523, OL 2012 & Ch. 45 HB 4079 History: OBDD 8-2012, f. & cert. ef. 6-1-12