Sec 136 Interim Final Rule Published Nov12

Federal Register / Vol. 73, No. 219 / Wednesday, November 12, 2008 / Rules and Regulations
Board’s staff. In addition, the rule was
made available through the Internet by
USDA and the Office of the Federal
Register. That rule provided for a
60-day comment period which ended on
September 22, 2008. No comments were
received.
A small business guide on complying
with fruit, vegetable, and specialty crop
marketing agreements and orders may
be viewed at: http://www.ams.usda.gov
/AMSv1.0/ams.fetchTemplateData.do?
template=TemplateN&
page=MarketingOrders
SmallBusinessGuide. Any questions
about the compliance guide should be
sent to Jay Guerber at the previously
mentioned address in the FOR FURTHER
INFORMATION CONTACT section.
After consideration of all relevant
material presented, including the
Board’s recommendation, and other
information, it is found that finalizing
the interim final rule, without change,
as published in the Federal Register on
July 24, 2008 (73 FR 43056), will tend
to effectuate the declared policy of the
Act.
List of Subjects in 7 CFR Part 981
Almonds, Marketing agreements,
Nuts, Reporting and recordkeeping
requirements.
PART 981—ALMONDS GROWN IN
CALIFORNIA
Accordingly, the interim final rule
amending 7 CFR part 981, which was
published at 73 FR 43056 on July 24,
2008, is adopted as a final rule without
change.

■

Dated: November 5, 2008.
David R. Shipman,
Associate Administrator, Agricultural
Marketing Service.
[FR Doc. E8–26851 Filed 11–10–08; 8:45 am]
BILLING CODE 3410–02–P

DEPARTMENT OF ENERGY
10 CFR Part 611
RIN 1901–AB25

Advanced Technology Vehicles
Manufacturing Incentive Program
Office of the Chief Financial
Officer, Department of Energy
(Department or DOE).
ACTION: Interim final rule; request for
comment.

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AGENCY:

SUMMARY: Today’s interim final rule
establishes the Advanced Technology
Vehicles Manufacturing Incentive
Program authorized by section 136 of
the Energy Independence and Security

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Act of 2007, as amended. Section 136
provides for grants and loans to eligible
automobile manufacturers and
component suppliers for projects that
reequip, expand, and establish
manufacturing facilities in the United
States to produce light-duty vehicles
and components for such vehicles,
which provide meaningful
improvements in fuel economy
performance beyond certain specified
levels. Section 136 also provides that
grants and loans may cover engineering
integration costs associated with such
projects. This interim final rule
establishes applicant eligibility and
project eligibility requirements for both
the grant and the loan program. Today’s
interim final rule also establishes the
application requirements and the
general terms for the loan program. At
present, Congress has appropriated
funds through the Consolidated
Security, Disaster Assistance, and
Continuing Appropriations Act, 2009,
for only the loan program. As such, DOE
will be implementing the loan program
only at this time, though issuing rules
for both the grant and loan programs.
DATES: This interim final rule is
effective November 12, 2008.
Applications for a direct loan will be
reviewed by DOE in tranches. To be
eligible for the first tranche,
applications may be submitted or hand
delivered to the Postal Mail address
listed in ADDRESSES until December 31,
2008. The deadline for loan applications
for subsequent tranches of loans will be
the end of every calendar quarter
thereafter as funds and available loan
authority permit. Comments must be
received by DOE no later than December
12, 2008. If you submit information that
you believe to be exempt by law from
public disclosure, you should submit
one complete copy, as well as one copy
from which the information claimed to
be exempt by law from public
disclosure has been deleted. DOE is
responsible for the final determination
with regard to disclosure or
nondisclosure of the information and for
treating it accordingly under the DOE
Freedom of Information regulations at
10 CFR 1004.11.
ADDRESSES: You may submit comments,
identified by any of the following
methods:
• Federal eRulemaking Portal: http://
www.regulations.gov. Follow the
instructions for submitting comments.
• E-mail: [email protected].
• Postal Mail: Advanced Technology
Vehicles Manufacturing Incentive
Program, U.S. Department of Energy,
1000 Independence Avenue, SW.,
Washington, DC 20585.

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• Hand Delivery/Courier: Advanced
Technology Vehicles Manufacturing
Incentive Program, U.S. Department of
Energy, 1000 Independence Avenue,
SW., Washington, DC 20585.
Instructions: All submissions must
include the agency name and docket
number or Regulatory Information
Number (RIN) for this rulemaking.
FOR FURTHER INFORMATION CONTACT:
Lachlan Seward, Advanced Technology
Vehicles Manufacturing Incentive
Program, U.S. Department of Energy,
1000 Independence Avenue, SW.,
Washington, DC 20585, 202–586–8146;
or Daniel Cohen, Assistant General
Counsel for Legislation and Regulatory
Law, Office of the General Counsel,
1000 Independence Avenue, SW.,
Washington, DC 20585, 202–586–2918.
SUPPLEMENTARY INFORMATION:
I. Introduction and Background
II. Discussion of Interim Final Rule
A. Applicant Eligibility for Grant and Loan
Programs—Statutory Criteria
B. Applicant Eligibility for Direct Loan
Program—Secretarial Determinations
C. Project Eligibility for Grant and Loan
Programs
D. Terms for Direct Loans
E. Application Process for Direct Loan
Program
F. Credit Subsidy Cost for Direct Loans
G. Project Costs
H. Assessment of Fees for Direct Loan
Program
I. Assessment of Applications and Program
Priorities
III. Application Submission
IV. Regulatory Review
A. Review Under Executive Order 12866
B. Review Under National Environmental
Policy Act of 1969
C. Review Under the Regulatory Flexibility
Act
D. Review Under the Paperwork Reduction
Act
E. Review Under the Unfunded Mandates
Reform Act of 1995
F. Review Under the Treasury and General
Government Appropriations Act, 1999
G. Review Under Executive Order 13132
H. Review Under Executive Order 12988
I. Review Under the Treasury and General
Government Appropriations Act, 2001
J. Review Under Executive Order 13211
K. Congressional Notification
L. Approval by the Office of the Secretary
of Energy

I. Introduction and Background
Section 136 of the Energy
Independence and Security Act of 2007
(‘‘EISA’’), enacted on December 19,
2007, Public Law 110–140, authorizes
the Secretary of Energy (‘‘Secretary’’) to
make grants and direct loans to eligible
applicants for projects that reequip,
expand, or establish manufacturing
facilities in the United States to produce
qualified advanced technology vehicles,
or qualifying components and also for

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Federal Register / Vol. 73, No. 219 / Wednesday, November 12, 2008 / Rules and Regulations

engineering integration costs associated
with such projects.
On September 30, 2008, President
Bush signed into law the Consolidated
Security, Disaster Assistance, and
Continuing Appropriations Act, 2009.
(Pub. L. 110–329; ‘‘Continuing
Resolution, 2009’’). Section 129(a) of the
Continuing Resolution, 2009,
appropriated $7,500,000,000 for the
‘‘Advanced Technology Vehicles
Manufacturing Loan Program Account’’
for the cost of direct loans as authorized
by EISA section 136(d) and states that
commitments for direct loans using
such amount shall not exceed
$25,000,000,000 in total loan principal,
and $10 million for DOE’s
administrative expenses for
implementing the program.
Further, section 129(c) of the
Continuing Resolution, 2009, also made
several substantive amendments to
section 136. Specifically, section 136
was amended to provide:
1. That the Department will pay the
full credit subsidy cost of the loans;
2. The Department with limited
flexibility from the general rules
applicable to the hiring of Federal staff
and consultants necessary to administer
the program; and
3. That, not later than 60 days after
enactment of the Continuing Resolution,
2009, the Secretary shall promulgate an
interim final rule establishing
regulations that the Secretary deems
necessary to administer section 136 and
any loans made by the Secretary
pursuant thereto.
By directing the Department to issue
an interim final rule, Congress required
the Department to issue a rule without
having first issued a proposed rule for
public comment. Though under no
obligation to accept public comment
prior to issuance, the Department
received comments at a series of
meetings it held with a variety of
stakeholders. The comments received at
those meetings were considered in the
development of this interim final rule.
A list of the meetings held and the
written comments that were received
can be viewed at: http://
www.atvmloan.energy.gov. Through
publication of this interim final rule, the
Department is also providing a comment
period until December 12, 2008.
Comments submitted during this period
will be reviewed and a final rule,
responding to those comments as well
as reflecting the experience the
Department gains in implementing this
interim final rule, will be issued at a
later date.
Today’s interim final rule establishes
regulations necessary to implement the
loan and grant programs authorized by

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section 136 of EISA, as amended by the
Continuing Resolution, 2009
(hereinafter referred to as ‘‘section
136’’). Additionally, concurrent with the
release of today’s interim final rule, the
Department is announcing that
applications for the first tranche of loans
must be submitted to the Department on
or before the effective date of today’s
interim final rule. The deadline for loan
applications for subsequent tranches of
loans will be every 90 days thereafter as
funds and available loan authority
permit.
II. Discussion of the Interim Final Rule
Section 136 authorizes the Secretary
to issue grants and direct loans to
applicants for the costs of reequipping,
expanding, or establishing
manufacturing facilities in the United
States to produce qualified advanced
technology vehicles, or qualifying
components. Section 136 also
authorizes the Secretary to issue grants
and direct loans for the costs of
engineering integration performed in the
United States of qualifying advanced
technology vehicles and qualifying
components. Section 136 sets forth
certain specific conditions pertaining to
the grant and direct loan programs, but
also leaves to the Secretary’s discretion
the interpretation of other criteria. This
interim final rule sets forth eligibility
criteria, application procedures,
outlines specific terms and conditions
for the receipt of grants and direct loans,
and sets forth interpretations of other
provisions that section 136 requires the
Department to address.
Section 136 defines ‘‘advanced
technology vehicle’’ as a ‘‘light duty
vehicle that meets—(A) the Bin 5 Tier
II emission standard established in
regulations issued by the Administrator
of the Environmental Protection Agency
under section 202(i) of the Clean Air Act
(42 U.S.C. 7521(i)), or a lower-numbered
Bin emission standard; (B) any new
emission standard in effect for fine
particulate matter prescribed by the
Administrator under that Act (42 U.S.C.
7401 et seq.); and (C) at least 125
percent of the average base year
combined fuel economy for vehicles
with substantially similar attributes.’’
Section 136 defines the term
‘‘qualifying components’’ to mean
‘‘components that the Secretary
determines to be—(A) designed for
advanced technology vehicles; and (B)
installed for the purpose of meeting the
performance requirements of advanced
technology vehicles.’’
Section 136 defines ‘‘engineering
integration costs’’ to include the cost of
engineering tasks relating to ‘‘(A)
incorporating qualifying components

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into the design of advanced technology
vehicles; and (B) designing tooling and
equipment and developing
manufacturing processes and material
suppliers for production facilities that
produce qualifying components or
advanced technology vehicles.’’
In today’s interim final rule DOE
adopts several definitions and
provisions contained in the corporate
average fuel economy (CAFE)
regulations established by the National
Highway Traffic Safety Administration
(NHTSA) (codified at 49 CFR Parts 523–
538). DOE recognizes that NHTSA has
proposed to amend some of these
definitions and provisions, in part, in
response to EISA. See, 73 FR 24352;
May 2, 2008. It is anticipated that any
amendments to the CAFE definitions
that may result from NHTSA issuing a
final rule will not impact the regulations
established in today’s interim final rule.
However, if necessary, DOE may amend,
in a future rulemaking document,
today’s interim final rule in response to
future amendments to the CAFE
regulations.
A. Applicant Eligibility for Grant and
Direct Loan Programs—Statutory
Criteria
Section 136, as amended, directs the
Secretary to establish ‘‘regulations that
the Secretary deems necessary to
administer this section and any loans
made by the Secretary pursuant to this
section.’’ The statute requires the
Department’s regulations to establish
eligibility requirements for both the
grant and direct loan programs. To that
end, section 136 lays out specific
criteria for the Secretary to use to
determine an applicant’s eligibility, and
directs the Secretary to make other
determinations relating to eligibility
prior to issuance of any loan or award
of any grant.
Section 136 contains a requirement
that the Department promulgate
regulations regarding eligibility of
automobile manufacturers. There is no
similar statutory eligibility requirement
for component manufacturers. With
regard to automobile manufacturers,
section 136 requires the Department’s
regulations to establish that
[I]n order for an automobile manufacturer
to be eligible for an award or loan under this
section during a particular year, the adjusted
average fuel economy of the manufacturer for
light duty vehicles produced by the
manufacturer during the most recent year for
which data are available shall be not less
than the average fuel economy for all light
duty vehicles of the manufacturer for model
year 2005.

(42 U.S.C. 17013(e))

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Federal Register / Vol. 73, No. 219 / Wednesday, November 12, 2008 / Rules and Regulations
To determine the relevant fuel
economy baselines for a new
manufacturer or for a manufacturer that
has not previously produced equivalent
vehicles, the statute allows the Secretary
to substitute industry averages. (42
U.S.C. 17013(e))
Today’s interim final rule establishes
the regulations necessary to determine
whether an automobile manufacturer
meets the minimum fuel economy
improvement threshold. If the applicant
is an automobile manufacturer that
manufactured vehicles in model year
(MY) 2005 that were subject to the
CAFE standards (existing
manufacturers), that manufacturer must
demonstrate that the fuel economy of its
vehicle fleet (the manufacturer’s
passenger and light-duty truck fleets) for
the most recent MY that data are
available is no less than the fuel
economy of its MY 2005 fleet.
The statute requires that an existing
manufacturer’s MY 2005 average fuel
economy is to be compared to the
adjusted average fuel economy of that
manufacturer’s light-duty fleet from the
most recent year for which there is
available data, but the statute does not
specify which data. DOE interprets the
‘‘most recent year for which data are
available’’ to mean the most recent
model year for which a manufacturer
has final data for the purpose of
compliance with the fuel economy
standards for passenger automobiles (49
CFR Part 531) and light trucks (49 CFR

Part 533).1 By relying on the most recent
MY for which final CAFE compliance
data are available, the fuel economy
comparison for existing manufacturers
will be based on data approved by the
U.S. Environmental Protection Agency
(EPA) under 10 CFR Part 600.1
Section 136 directs that this fuel
economy comparison is to be based on
an adjusted average fuel economy.
Although the statute does not define
‘‘adjusted average fuel economy,’’ DOE,
for purposes of today’s interim final
rule, has defined ‘‘adjusted average fuel
economy’’ to mean a harmonic
production weighted average of the
combined fuel economy, as determined
under the Energy Policy and
Conservation Act (Pub. L. 94–163;
‘‘EPCA’’), as amended, of the vehicles
within a manufacturer’s vehicle fleet. In
MY 2005, there was a CAFE standard
applicable to vehicles defined as
passenger automobiles 2 and a CAFE
standard applicable to vehicles defined
as light trucks.3 The adjusted average
fuel economy combines a
manufacturer’s passenger automobile
fleet and light truck fleet, measured in
miles per gallon (mpg).
The fuel economy improvement
threshold for eligibility specified in
section 136(e) requires that automobile
manufacturers applying under either the
loan or grant program demonstrate a
history of maintaining or improving the
fuel economy of its fleet. Consistent
with section 136, DOE is requiring that

66723

an existing manufacturer demonstrate
that the fuel economy of its passenger
automobile and light duty truck fleet is
at least as efficient as that
manufacturer’s MY 2005 fleet.
To demonstrate compliance with the
fuel economy level as required by
subsection (e) of section 136, the
adjusted average fuel economy of an
existing automobile manufacturer’s MY
2005 passenger automobile and light
truck fleet is compared to the adjusted
average fuel economy of that
manufacturer’s passenger automobile
and light truck fleet for the most recent
year in which final CAFE compliance
data are available. The adjusted average
fuel economy of an existing automobile
manufacturer’s fleet in the most recent
year for which CAFE compliance data
are available must be no less than the
adjusted average fuel economy of that
manufacturer’s fleet in MY 2005.
For example, if in MY 2005 a
manufacturer produced vehicles as
follows:
Model
Passenger Automobile
A ..............................
Light Truck B ..............
Light Truck C ..............

MPG

27
20
17

Production
volume
150,000
200,000
100,000

the adjusted average fuel economy for
that manufacturer in MY 2005 would be
calculated as:

Total Production Volume
# VehicleC
# VehicleA
# VehicleB
, or
+
+
FuelEconomy FuelEconomy FuelEconomy

In this example, the manufacturer’s
adjusted fuel economy average for the
most recent year, at time of application,

for which CAFE compliance data are
available, must be no less than 20.99
mpg. Otherwise the manufacturer would

not be eligible for a section 136 grant
award or direct loan.

1 Compliance with the fuel economy standards is
based on data approved by EPA. (See, 49 CFR
537.9).
2 ‘‘Passenger automobile’’ is defined for the
purpose of CAFE as essentially any 4-wheeled
vehicle propelled by fuel which is manufactured
primarily for use on public roads, is rated at 10,000
pounds gross vehicle weight or less, is
manufactured primarily for the use in the
transportation of 10 or fewer individuals, and is not
a ‘‘light truck.’’ (See, 42 FR 38362, July 28, 1977,
as amended at 43 FR 12013, March 23, 1978; 44 FR
4493, Jan. 2, 1979)
3 ‘‘Light truck’’ is defined for the purpose of the
CAFE requirements, as
(a) an automobile other than a passenger
automobile which is either designed for offhighway operation, as described in paragraph (b) of

this section, or designed to perform at least one of
the following functions:
(1) Transport more than 10 persons;
(2) Provide temporary living quarters;
(3) Transport property on an open bed;
(4) Provide greater cargo-carrying than passengercarrying volume; or
(5) Permit expanded use of the automobile for
cargo-carrying purposes or other nonpassengercarrying purposes through the removal of seats by
means installed for that purpose by the
automobile’s manufacturer or with simple tools,
such as screwdrivers and wrenches, so as to create
a flat, floor level surface extending from the forward
most point of installation of those seats to the rear
of the automobile’s interior.

(b) An automobile capable of off-highway
operation is an automobile—
(1)(i) That has 4-wheel drive; or
(ii) Is rated at more than 6,000 pounds gross
vehicle weight; and
(2) That has at least four of the following
characteristics [ ]—
(i) Approach angle of not less than 28 degrees.
(ii) Breakover angle of not less than 14 degrees.
(iii) Departure angle of not less than 20 degrees.
(iv) Running clearance of not less than 20
centimeters.
(v) Front and rear axle clearances of not less than
18 centimeters each.
(See, 42 FR 38362, July 28, 1977, as amended at
43 FR 12013, Mar. 23, 1978; 58 FR 18029, Apr. 7,
1993).

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ER12NO08.008

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450, 000
= 20.99 MPG
150, 000 200, 0000 100, 000
+
+
27
20
17

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Federal Register / Vol. 73, No. 219 / Wednesday, November 12, 2008 / Rules and Regulations

If an automobile manufacturer is a
new manufacturer, or has not previously
produced ‘‘equivalent vehicles’’ (new
automobile manufacturer), section 136
permits the Secretary to base the fuel
economy improvement comparison on
‘‘industry averages.’’ Section 136 does
not define ‘‘new manufacturer’’’ nor
does it define ‘‘equivalent vehicles.’’
Based on the statute’s specification of
MY 2005 as the MY against which the
fuel economy is compared, DOE
interprets ‘‘new manufacturer’’ to mean
a manufacturer that did not manufacture
vehicles in MY 2005 that were subject
to the CAFE standards.
Further, section 136 does not define
the term ‘‘equivalent vehicles.’’ The
comparison for new automobile
manufacturers is in terms of ‘‘equivalent
vehicles,’’ which indicates a comparison
at a level other than the fleet wide
comparison required for existing
manufacturers, i.e., a comparison of
‘‘light duty vehicles produced by the
manufacturer.’’ However, use of
‘‘equivalent vehicles’’ in section 136(e)
does not indicate that the fuel economy
comparison should be at a level as
narrow as the comparison between
vehicles with ‘‘substantially similar
attributes’’ as the statute specifies for
criteria in determining whether a
vehicle is an ‘‘advanced technology
vehicle.’’ DOE interprets ‘‘equivalent
vehicle’’ to mean a vehicle within the
same class as is defined for the purpose
of CAFE compliance, i.e., a passenger
automobile or a light truck.
For a new automobile manufacturer,
eligibility under subsection (e) of
section 136 is based on the fuel
economy of the vehicle or vehicles that
are the subject of the application. The
projected combined fuel economy of the
vehicles that are the subject of the
application must be at least equal to the
adjusted average fuel economy for all
vehicles that were in the same vehicle
class as the subject vehicles in MY 2005.
It is likely that a new manufacturer will
not have CAFE compliance data for a
vehicle that is the subject of an
application. In demonstrating the
projected combined fuel economy of a
vehicle for CAFE compliance data are
not available, a new manufacturer must
rely on a peer reviewed model (e.g., the
Powertrain System Analysis Toolkit
(PSAT) 4). A new automobile
manufacturer is eligible if the
demonstrated combined fuel economy
of the subject vehicle is at least as
efficient as the industry average for that
vehicle class in MY 2005.
4 See, http://www.transportation.anl.gov/
modeling_simulation/PSAT/index.html.

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As noted above, an applicant that is
a manufacturer of a qualifying
component does not need to make a
showing of improved fuel economy for
the purpose of threshold applicant
eligibility for a section 136 grant or loan.
However, a component manufacturer
will be required to demonstrate the
contributions to fuel economy
improvements of the qualifying
component that is the subject of the
grant or loan application. The necessary
demonstration of a qualifying
component’s improvement to fuel
economy is discussed later in this
document.
B. Applicant Eligibility for Direct Loan
Program—Secretarial Determinations
Section 136 directs the Secretary to
make certain determinations with regard
to applicants for direct loans. First, the
Secretary must determine that the
applicant is ‘‘financially viable without
the receipt of additional Federal funding
associated with the proposed project [.]’’
In today’s interim final rule, the
Department interprets the term
‘‘financially viable’’ to mean that an
applicant must demonstrate a
reasonable prospect that the Applicant
will be able to make payments of
principal and interest on the loan as and
when such payments become due under
the terms of the loan documents, and
that the applicant has a net present
value which is positive, taking all costs,
existing and future, into account.
Determining whether an applicant has
met this criterion is a decision
committed by law to the Secretary. In
making that determination, today’s
regulations provide that the Secretary
will consider a number of factors,
including, but not limited to:
(1) The applicant’s debt-to-equity
ratio as of the date of the loan
application;
(2) The applicant’s earnings before
interest, taxes, depreciation, and
amortization (EBITDA) for the
applicant’s most recent fiscal year prior
to the date of the loan application;
(3) The applicant’s debt to EBITDA
ratio as of the date of the loan
application;
(4) the applicant’s interest coverage
ratio (calculated as EBITDA divided by
interest expenses) for the applicant’s
most recent fiscal year prior to the date
of the loan application;
(5) the applicant’s fixed charge
coverage ratio (calculated as EBITDA
plus fixed charges divided by fixed
charges plus interest expenses) for the
applicant’s most recent fiscal year prior
to the date of the loan application;
(6) the applicant’s liquidity as of the
date of the loan application;

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(7) statements from applicant’s
lenders that the applicant is current
with all payments due under loans
made by those lenders at the time of the
loan application; and
(8) financial projections
demonstrating the applicant’s solvency
through the period of time that the loan
is outstanding.
As stated in section 136, the Secretary
must find that the loan recipient is
financially viable without ‘‘additional
Federal funding associated with the
proposed project.’’ In today’s interim
final rule, the Department interprets the
term ‘‘additional Federal funding’’ to
mean any loan, grant, guarantee,
insurance, payment, rebate, subsidy,
credit, tax benefit, or any other form of
direct or indirect assistance from the
Federal government, or any agency or
instrumentality thereof, other than the
proceeds of a loan approved under
section 136, that is, or is expected to be
made available with respect to, the
project or activities for which the loan
is sought under section 136, and is to be
received by the applicant after entering
into an Agreement with DOE.
Section 136 also requires the
Secretary to ensure that the proceeds of
the direct loan are expended ‘‘efficiently
and effectively.’’ The Secretary will
carry out this obligation by reviewing
documents required in 611.109 for
purposes of loan monitoring and audit.
Loan funds will be considered as being
expended ‘‘efficiently and effectively’’ if
that documentation demonstrates, in the
sole judgment of the Secretary, that the
borrower is making appropriate progress
toward achieving the purpose for which
the loan was originally made. The
Department anticipates that in order to
meet this requirement, loan proceeds
will be disbursed through periodic
drawdowns that correspond to actual
project expenses.
Section 136 also requires applicants
to submit to the Secretary written
assurance that ‘‘(A) all laborers and
mechanics employed by contractors or
subcontractors during construction,
alteration, or repair that is financed, in
whole or in part, by a loan under this
section shall be paid wages at rates not
less than those prevailing on similar
construction in the locality, as
determined by the Secretary of Labor in
accordance with sections 3141–3144,
3146, and 3147 of title 40, United States
Code; and (B) the Secretary of Labor
shall, with respect to the labor standards
described in this paragraph, have the
authority and functions set forth in
Reorganization Plan Numbered 14 of
1950 (5 U.S.C. App.) and section 3145
of title 40, United States Code.’’
Accordingly, section 611.101(m) of

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Federal Register / Vol. 73, No. 219 / Wednesday, November 12, 2008 / Rules and Regulations
today’s interim final rule requires
applicants to submit this required
assurance as part of any direct loan
application.
C. Project Eligibility for Grant and Loan
Programs
Under section 136, grants and direct
loans may be provided for the costs of
reequipping, expanding, or establishing
manufacturing facilities in the United
States to produce qualified advanced
technology vehicles, or qualifying
components. Section 136 also
authorizes the Secretary to issue grants
and direct loans for the costs of
engineering integration performed in the
United States of qualifying advanced
technology vehicles and qualifying
components. Specifically, subsection (b)
of section 136 directs that for the grant
program 5—
The Secretary shall provide facility
funding awards under this section to
automobile manufacturers and component
suppliers to pay not more than 30 6 percent
of the cost of—
(1) reequipping, expanding, or establishing
a manufacturing facility in the United States
to produce—
(A) qualifying advanced technology
vehicles; or
(B) qualifying components; and
(2) engineering integration performed in
the United States of qualifying vehicles and
qualifying components.

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(42 U.S.C. 17013(b))
Under the loan provisions of section
136, the Secretary is directed ‘‘to
provide a total of not more than
$25,000,000,000 in loans to eligible
individuals and entities (as determined
by the Secretary) for the costs of
activities described in subsection (b).’’
(42 U.S.C. 17013(d)(1)). Section 136
provides two categories of projects
eligible for direct loans: (1)
Manufacturing facilities in the United
States designed to produce qualified
advanced technology vehicles or
qualified components; and (2)
engineering integration performed in the
United States of qualifying advanced
technology vehicles and qualifying
components. Eligible costs of such
projects are: (a) Those costs that are
reasonably related to the reequipping,
expanding, or establishing a
manufacturing facility in the United
States to produce qualifying advanced
technology vehicles or qualifying
components; (b) costs of engineering
integration performed in the United
5 At this time, no funds have been appropriated
for the purpose of making grant awards under
section 136(b).
6 As discussed later in this document, section 136
does not place a restriction on the percent of costs
eligible under the direct loan program.

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States for qualifying vehicles or
qualifying components. Costs eligible
for payment with loan proceeds are
costs incurred, but not yet paid by the
borrower, after a substantially complete
application has been submitted to DOE
and costs incurred after the closing of
the loan.
The statute defines ‘‘advanced
technology vehicle’’ as—
[L]ight duty vehicle that meets—
(A) the Bin 5 Tier II emission standard
established in regulations issued by the
Administrator of the Environmental
Protection Agency under section 202(i) of the
Clean Air Act (42 U.S.C. 7521(i)), or a lowernumbered Bin emission standard;
(B) any new emission standard in effect for
fine particulate matter prescribed by the
Administrator under that Act (42 U.S.C. 7401
et seq.); and
(C) at least 125 percent of the average base
year combined fuel economy for vehicles
with substantially similar attributes.

(42 U.S.C. 17013(a)(1))
As stated above, the statute does not
define ‘‘light duty vehicle.’’ DOE
interprets ‘‘light duty vehicles’’ to be
vehicles currently subject to the CAFE
requirements under EPCA, (i.e.,
passenger automobiles and light trucks).
The first two provisions of the
statutory definition of ‘‘advanced
technology vehicle’’ ensure that such a
vehicle has low emissions. Pursuant to
its authority under the Clean Air Act, on
February 10, 2000, the EPA published a
final rule establishing new Federal
emission standards for passenger cars
and light trucks (see 65 FR 6698).
Known as the Tier II Program, the
emissions standards in EPA’s final rule
cover light-duty vehicles (i.e., passenger
cars and light trucks with a gross
vehicle weight rating (GVWR) of 6,000
pounds or less, as well as ‘‘mediumduty passenger vehicles’’ (MDPVs)).7
The Tier II standards are designed to
reduce the emissions most responsible
for the ozone and particulate matter
impact from these vehicles (e.g., nitrous
oxides and non-methane organic gases)
and contributing to ambient volatile
organic compounds.
7 An MDPV is defined as a light truck rated at
more than 8,500 lbs GVWR, or that has a vehicle
curb weight of more than 6,000 pounds, or that has
a basic vehicle frontal area in excess of 45 square
feet. MDPV does not include a vehicle that:
Is an ‘‘incomplete truck’’; or
Has a seating capacity of more than 12 persons;
or
Is designed for more than 9 persons in seating
rearward of the driver’s seat; or
Is equipped with an open cargo area (for example,
a pick-up truck box or bed) of 72.0 inches in
interior length or more. A covered box not readily
accessible from the passenger compartment will be
considered an open cargo area for purposes of this
definition.
40 CFR 86–1803–01.

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The Tier II emission standards are
based on a system of emission bins in
which light-duty vehicles are certified
in one of eight bins; Bin 1 represents the
cleanest or lowest emitting vehicles, and
Bin 8 represents the highest emitting
vehicles of the Tier II bins. The
emission standards for a manufacturer’s
vehicle fleet must comply on average
with the Tier II Bin 5 level. Thus, the
Tier II Bin 5 emission certification
levels are the average of the Tier II
emission levels with lower bins (i.e., 4,
3, 2, or 1) representing lower emitting
vehicles and higher bins (i.e., 6, 7, or 8)
representing vehicles that are more
polluting. 72 FR 29102, 29103 (May 24,
2007). Section 136 limits ‘‘advanced
technology vehicles’’ to those vehicles
that, at a minimum, comply with Bin 5
levels at the time an application is
submitted to DOE.
The grant and loan programs provide
assistance for the production of vehicles
and components that demonstrate
advanced fuel economy improvements.
In order to qualify as an ‘‘advanced
technology vehicle’’ a vehicle must meet
at least 125 percent of the average base
year combined fuel economy for
vehicles with substantially similar
attributes.8 It should be noted that the
at least 25 percent improvement in fuel
economy performance necessary for a
vehicle to qualify as an advanced
technology vehicle is the minimum
improvement necessary for eligibility
under the section 136 grant and loan
programs. As discussed later in this
notice, in prioritizing projects to receive
either a grant or a loan, DOE will
consider the extent to which an
advanced technology vehicle exceeds
the 125 percent minimum.
For the purpose of demonstrating the
at least 25 percent improvement, vehicle
fuel economies are compared without
consideration of whether the vehicles
are dual fueled automobiles under
CAFE. A ‘‘dual fueled automobile’’ is an
automobile that is capable of operating
on alternative fuel or a mixture of
biodiesel and diesel, and on gasoline or
diesel. 49 U.S.C. 32901(a)(9). Dual
fueled vehicles are commonly referred
to as flexible fuel vehicles.
The CAFE statute specifies special
calculations for determining the fuel
economy of dual fueled automobiles
that give those vehicles higher fuel
economy ratings than automobiles that
8 In calculating the percent improvement in
average base year combined fuel economy, if the
vehicle at issue is an all electric drive, a range
extended electric vehicle, or a plug in hybrid
vehicle, then the applicant will need to submit
information that allows the Department to
determine that the vehicle meets the 125% average
combined fuel economy test.

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Federal Register / Vol. 73, No. 219 / Wednesday, November 12, 2008 / Rules and Regulations

are identical except that they are not
dual fueled.9 49 U.S.C. 32905(b). The
incentive provided to dual fueled
vehicles was enacted to encourage the
production of vehicles that would
promote consumer acceptance and
ultimately lead to the development of
infrastructure to distribute and make
alternative fuel available. (See 69 FR
7689, 7691; February 19, 2004.) While
DOE supports the development and
increased distribution of dual fueled
vehicles, we have determined not to
consider dual fueled capabilities under
the criteria for identifying an advanced
technology vehicle. For the purpose of
determining whether a vehicle achieves
a fuel economy performance of at least
125 percent of the average base year
combined fuel economy for vehicles
with substantially similar attributes,
DOE will consider the fuel economy
performance of vehicles as calculated
for non-dual fueled vehicles.
Section 136 does not define the term
‘‘base year’’ and therefore DOE may
exercise its sound policy discretion in
defining that term. DOE is defining
‘‘base year’’ as MY 2005.
DOE recognizes that the fuel economy
standard for light trucks increases in
stringency through MY 2010, and that
NHTSA has proposed to increase the
stringency of both the passenger car and
further increase the light truck fuel
economy standard beginning MY 2011.
See 49 CFR 533.5 and 73 FR 24352,
respectively. Given the potential for a
vehicle that is the subject of an
application to begin being manufactured
in a future MY, DOE considered using

a future MY for the base year. However,
the definition of ‘‘advanced technology
vehicle’’ requires a fuel economy
performance comparison to be in terms
of vehicles with ‘‘substantially similar
attributes.’’
At present, DOE does not have
sufficient data on the types of vehicles
to be manufactured in future MYs,
including the fuel economy
performance of vehicles yet to be
manufactured. Although manufacturers
have product plans for future years, that
information is subject to change. DOE
considered relying on fuel economy
targets established for specific vehicle
footprint values (i.e., area calculated by
multiplying vehicle width by vehicle
length). In the MYs 2008–2010,
standards for light trucks, NHTSA
assigns a fuel economy target for each
light truck based on vehicle footprint.
49 CFR 533.5. There are currently no
similar targets established for passenger
automobiles.
As a result of the lack of sufficient
data for future MYs and the lack of
attribute-based fuel economy targets for
passenger cars, DOE has decided that
the ‘‘base year’’ should be a year for
which CAFE compliance data are
available. To date, NHTSA has not
received all of the approved compliance
data from EPA for MY 2007.10 DOE
notes that the total fleet fuel economy
for MY 2006 is higher than in MY 2005
(25.8 mpg as compared to 25.4 mpg), the
industry average for passenger
automobile fuel economy is higher in
MY 2005 than in MY 2006 (30.3 mpg as
compared to 30.1 mpg).11 However,

Class

relying on MY 2006 as a base year
would not necessarily result in a more
stringent fuel economy comparison for
determining whether a particular
vehicle is an advanced technology
vehicle. Furthermore, MY 2005 CAFE
data are fully available and known at
the present time, and using MY 2005
would promote efficient and effective
administration of the section 136
program. Thus, and consistent with the
model year for which Congress
established automobile manufacturer
eligibility under section 136(e), DOE has
interpreted base year for the purpose of
defining an ‘‘advanced technology
vehicle’’ to mean MY 2005.
A determination of whether a vehicle
has sufficiently improved fuel economy
to qualify as an advanced technology
vehicle is further refined by section
136’s reference to vehicles with
‘‘substantially similarly attributes.’’ To
identify those vehicles with
substantially similar attributes, DOE
first relied on the vehicle classes used
for EPA’s fuel economy guidelines. EPA,
in conjunction with DOE, publishes
information on the fuel economy
performance of the vehicle fleet for each
model year.12 EPA segments the vehicle
fleet by size classes to permit more
practicable comparisons of fuel
economy performance between vehicles.
The size class for cars is based on
interior passenger and cargo volumes as
described below. The size class for
trucks is defined by GVWR, which is the
weight of the vehicle and its carrying
capacity. For MY 2005, EPA has
identified the various classes as follows.

Passenger & cargo volume (cu. ft.)
Cars

Two-Seaters ....................................
Sedans
Minicompact .............................
Subcompact .............................
Compact ...................................
Mid-Size ...................................
Large ........................................
Station Wagons
Small ........................................
Mid-Size ...................................
Large ........................................
Class ............................................

Any (cars designed to seat only two adults).
< 85.
85–99.
100–109.
110–119.
120 or more.
<130.
130–159.
160 or more.
Gross Vehicle Weight Rating (GVWR)
Trucks

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Pickup Trucks
Small ........................................

< 4,500 pounds.

9 Through MY 2014, manufacturers may use this
‘‘dual-fuel’’ incentive to raise their average fuel
economy up to 1.2 miles a gallon higher than it
would otherwise be; after MY 2014, Congress has
set a schedule by which the dual-fuel incentive

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diminishes ratably until it is extinguished after MY
2019. 49 U.S.C. 32906(a).
10 For CAFE compliance purposes the average
fuel economy of passenger automobiles and light
trucks is determined in accordance with procedures
established by EPA. 49 CFR 531.6(a) and 533.6(b),

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respectively. To date, EPA has not approved the
data for Ford’s domestic passenger automobile fleet.
11 Summary of Fuel Economy Performance,
NHTSA (March 2008).
12 http://www.fueleconomy.gov/feg/info.shtml
(last visited October 30, 2008).

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Federal Register / Vol. 73, No. 219 / Wednesday, November 12, 2008 / Rules and Regulations
Class

Passenger & cargo volume (cu. ft.)

Standard ..................................
Vans
Passenger ................................
Cargo .......................................
Minivans ..........................................
Sport Utility Vehicles (SUVs) ..........

4,500–8,500 pounds.
<
<
<
<

8,500
8,500
8,500
8,500

DOE notes that in MY 2005 not every
EPA vehicle class was populated by
vehicle models manufactured in that
model year (i.e., small pickups and large
wagons). If an EPA class did not have
a representative MY 2005 model, DOE
combined that class with another EPA
class in a manner consistent with the
grouping of vehicles by ‘‘substantially
similar attributes.’’
DOE further categorized vehicles by
performance. Performance vehicles
generally have lower fuel economy
ratings than non-performance vehicles
in the same EPA class. Also, different
fuel economy technologies may be

pounds.
pounds.
pounds.
pounds.

applicable to performance as opposed to
non-performance vehicles (i.e.,
additional aerodynamic improvements
may not be available for performance
vehicles). In order to distinguish
between vehicles that are manufactured
to achieve higher performance from
other similarly sized non-performance
vehicles, DOE evaluated the peak
horsepower to curb weight ratio of each
vehicle in a size class. DOE plotted the
peak horsepower to curb weight ratio for
each vehicle by EPA class. Generally, if
there was at least a doubling of the peak
horsepower to curb weight ratio along
the plotted line, as compared to the

lowest plotted value, DOE then looked
at the plotted data to see if there was a
reasonably identifiable point beyond the
doubling that divided the vehicles, i.e.,
a break point. For those classes in which
DOE was able to identify a break point,
DOE created an additional
‘‘performance’’ class. DOE identified a
point in several of the EPA classes at
which there was a substantial increase
in the ratio. In those instances in which
there was a marked increase, the more
powerful vehicles were placed into a
‘‘performance class.’’ This additional
analysis resulted in a total of 17 classes.

Class of vehicles with substantially similar attributes

Example of MY 2005 vehicles

Two-seater .........................................................................
Two Seater Performance ...................................................
Minicompact sedan ............................................................
Minicompact sedan Performance ......................................
Subcompact sedan ............................................................
Subcompact performance sedan .......................................
Compact sedan ..................................................................
Compact performance sedan .............................................
Mid-size sedan ...................................................................

Mazda MX–5 Miata, Chrysler Crossfire Roadster, Porsche Boxter.
GMC Corvette, Mercedes SL65 AMG, Chrysler Viper Coupe.
Mini Cooper, Volkswagen Beetle Convertible, Mitsubishi Eclipse Spyder.
Porsche 911, Ford Jaguar XKR Convertible, Mercedes CLK55 AMG.
GMC Aveo, Toyota Celica, Honda Acura.
Mercedes CLK500, BMW M3.
Volkswagen Jetta, Toyota Corolla, Ford Focus, Chrysler Sebring convertible.
Mercedes CL 55 AMG, Bentley Continental GT.
Mercury Sable, Chevrolet Malibu, Honda Accord, GM Monte Carlo, Hyundai Sonata,
Toyota Camry, Nissan Altima.
Ford Jaguar S–Type, Mercedes E55 AMG, Nissan Infiniti G35.
Mercedes S C lass, Cadillac Deville, Kia Amanti, Dodge 300 Base, Ford Five Hundred, General Motors Impala.
Toyota Corolla Matrix, GMC Vibe, Chrysler PT Cruiser, Toyota Scion.
Volkswagen Passat Wagon, Ford Taurus wagon, Mercedes E320, GM Saab 9–5
Wagon.
Ford F150, GM Silverado, Nissan Frontier, Dodge Dakota, Toyota Tundra, GM Sierra.
Dodge Caravan, Chrysler Town & Country, Toyota Sienna, GMC Montana, Nissan
Quest, Honda Odyssey, Ford Monterey Wagon.
Chevrolet Astro, Ford E150.
Jeep Wrangler, Ford Escape, Chevrolet Blazer, Range Rover, Mercedes M-class,
GM Equinox, Toyota Sequoia, GMC Envoy.

Mid-size performance sedan ..............................................
Large sedan .......................................................................
Small wagon .......................................................................
Mid-size and large wagons ................................................
Small and standard pickup ................................................
Minivan ...............................................................................
Cargo van ...........................................................................
Sport Utility Vehicle ............................................................

In order to determine the average
combined fuel economy for each class,
DOE will calculate the harmonic

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66727

production weighted average for each
class. As previously stated, DOE relied
on the MY 2005 CAFE compliance data

that are available, and assumed each
vehicle was a non-dual fueled vehicle.

Vehicle class

Power 1/
weight 2

Two-Seater ..................................................................................................................................
Two-Seater Performance .............................................................................................................
Minicompact Sedan .....................................................................................................................
Minicompact Performance Sedan ...............................................................................................
Subompact Sedan .......................................................................................................................
Subcompact Performance Sedan ................................................................................................
Compact Sedan ...........................................................................................................................
Compact Performance Sedan .....................................................................................................
Mid-Size Sedan ...........................................................................................................................
Mid-Size Performance Sedan ......................................................................................................

<
≥
<
≥
<
≥
<
≥
<
≥

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E:\FR\FM\12NOR1.SGM

2005 Fuel
economy average 3

0.121
0.121
0.088
0.088
0.082
0.082
0.073
0.073
0.085
0.085

12NOR1

25.3
22.2
29.3
22.4
29.6
22.8
33.8
23.6
29.4
23.1

2005 mpg ×
125%
31.6
27.8
36.7
28.0
37.0
28.5
42.2
29.5
36.7
28.9

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Federal Register / Vol. 73, No. 219 / Wednesday, November 12, 2008 / Rules and Regulations
2005 Fuel
economy average 3

Power 1/
weight 2

Vehicle class
Large Sedan ................................................................................................................................
Small Wagon ...............................................................................................................................
Mid-Size and Large Wagons .......................................................................................................
Small and Standard Pickup .........................................................................................................
Minivan .........................................................................................................................................
Passenger Van ............................................................................................................................
Cargo Van ....................................................................................................................................
Sport Utility Vehicle .....................................................................................................................

n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a

26.2
32.7
26.7
19.7
24.3
19.0
24.2
21.8

2005 mpg ×
125%
32.7
40.8
33.4
24.6
30.4
23.8
30.2
27.2

1 Peak

horsepower (hp).
weight (lbs).
3 Harmonic production weighted average of combined fuel economy.
2 Curb

A project eligible for a grant or loan
under section 136 may include a project
for ‘‘reequipping, expanding, or
establishing a manufacturing facility in
the United States to produce’’ a
‘‘qualifying component.’’ (42 U.S.C.
17031(b)(1)) Section 136 defines
‘‘qualifying component’’ as a component
that
[T]he Secretary determines to be—
(A) designed for advanced technology
vehicles; and
(B) installed for the purpose of meeting the
performance requirements of advanced
technology vehicles.

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(42 U.S.C. 17013(a)(4))
Although a component needs to be
designed for an advanced technology
vehicle and installed to assist meeting
performance requirements of an
advanced technology vehicle, DOE does
not interpret the statutory definition to
mean that the use of these components
in either other conventional vehicles or
in aftermarket sales is precluded. In
making a determination on component
eligibility, the Secretary will consider
factors such as the overall impact of the
component and extent to which the
component contributes to the efficiency
of advanced technology vehicles.
Eligible costs for facilities that
manufacture qualified components may
include the costs of ‘‘engineering
integration performed in the United
States of qualifying vehicles and
qualifying components.’’ (42 U.S.C.
17013(b)(2)) ‘‘Engineering integration’’
is defined to include—
[T]he cost of engineering tasks relating to—
(A) incorporating qualifying components
into the design of advanced technology
vehicles; and
(B) designing tooling and equipment and
developing manufacturing processes and
material suppliers for production facilities
that produce qualifying components or
advanced technology vehicles.

(49 U.S.C. 17013(a)(3))
In both the specification of eligible
activities and the definition of
‘‘engineering integration,’’ eligible
engineering integration costs relate to

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18:26 Nov 10, 2008

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those costs associated with advanced
technology vehicles and qualifying
components. Subsection (b) of section
136 states that facility funding awards
are for the cost of engineering
integration performed in the United
States for qualifying vehicles and
qualifying components. (42 U.S.C.
17013(b)(2)) ‘‘Engineering integration’’
is statutorily defined to include the cost
of incorporating qualifying components
into the design of an advanced
technology vehicle and the costs of
design and development for production
facilities producing qualifying
components or advanced technology
vehicles. Engineering costs not
associated with the production of an
advanced technology vehicle or the
production of a qualifying component,
are not eligible costs under section 136.
D. Terms for Direct Loans
Section 136 prescribes certain specific
terms for loan documents. First, the
statute establishes that the loans will
have an interest rate that, ‘‘as of the date
on which the loan is made, is equal to
the cost of funds to the Department of
the Treasury for obligations of
comparable maturity[.]’’ In determining
the date upon which the interest rate
will be calculated, the Department of
the Treasury will set the loan rate at the
time the loan funds are disbursed.
Additionally, the statute prescribes that
the loans shall have a term ‘‘equal to the
lesser of—(i) the projected life, in years,
of the eligible project to be carried out
using funds from the loan, as
determined by the Secretary; and (ii) 25
years[.]’’
The statute also states that loans may
be subject to a deferral in repayment for
‘‘not more than 5 years after the date on
which the eligible project carried out
using funds from the loan first begins
operations, as determined by the
Secretary[.]’’ Section 136 is silent as to
whether a deferral is available for
interest on the loan. In today’s interim
final rule, the Department interprets the
deferral of repayment option to apply to

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only loan principal, not interest.
Allowing a deferral of interest would
have the effect of increasing the
principal amount of the loan, perhaps
beyond the authority provided by
Congress for this program. Moreover,
the statute allows only for deferral of
‘‘repayment’’ of a loan. The principal
amount of a loan is the amount that is
actually being ‘‘repaid’’ to the
Government. Finally, the statute
requires that all loans be made by the
Federal Financing Bank.
In addition to the minimum terms
prescribed in section 136, today’s
interim final rule sets forth other
parameters for loan terms intended to
protect the significant taxpayer costs for
this program. Accordingly, the rule
states that the Secretary must have a
first lien or security interest in all
property acquired with loan funds. This
requirement may be waived only by the
Secretary on a non-delegable basis.
Additionally, DOE must also have a lien
on any other property of the applicant
pledged to secure the loan.
E. Application Process for Direct Loan
Program
Section 136 states that applicants for
direct loans shall submit applications
‘‘at such time, in such manner, and
containing such information as the
Secretary may require[.]’’ To further the
statutory purpose of providing funding
to assist in the development and
production of advanced technology
vehicles and qualifying components,
applications for the first tranche of
direct loans will be due on the date the
interim final rule becomes effective. The
deadline for loan applications for
subsequent tranches of loans will be
every 90 days thereafter as funds and
available loan authority permit. The
Department will evaluate and make
decisions on a tranche of loan
applications before proceeding to
evaluate and make decisions on a
subsequent tranche of loan applications.
Application requirements are set forth
in section 611.101. These application

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Federal Register / Vol. 73, No. 219 / Wednesday, November 12, 2008 / Rules and Regulations
materials are intended to provide
adequate information for the
Department to comply with the
requirements and goals of section 136
and other applicable legal and
regulatory requirements. One such
requirement, written assurance that all
laborers and mechanics are paid
prevailing wages, explicitly appears in
section 136(d)(2) and appears in today’s
interim final rule. Other requirements in
section 136 relate to Secretarial
determinations of applicant eligibility
such as: (i) Financial viability absent
receipt of additional Federal funding
associated with the proposed project
and (ii) the efficient and effective
expenditure of loan proceeds. Today’s
interim final rule specifies the
information to be submitted by an
applicant in order for the Secretary to be
able to make such determinations.

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F. Credit Subsidy Cost for Direct Loans
To date, Congress has appropriated
$7,500,000,000 to cover the subsidy cost
of the direct loans issued under section
136, and provided an overall cap of
$25,000,000,000 on the principal
amount of the loans that may be issued.
Under the Federal Credit Reform Act of
1990, the subsidy cost reflects ‘‘the
estimated long-term cost to the
Government of the direct loan,
calculated on a net present value basis,
excluding administrative costs and any
incidental effects on governmental
receipts or outlays.’’ 2 U.S.C. 661a(5)(A).
This amount will be unique for each
loan issued under section 136, and is
dependent on the particular
circumstances of the borrower and the
project for which the loan will be
issued. While Congress has
appropriated funds at approximately a
30 percent subsidy rate, the subsidy cost
for individual borrowers and projects
may be valued at more or less than 30
percent. If the subsidy costs are
estimated to be higher than 30 percent
the Department will only be able to
issue loans which may be covered by
the actual amount appropriated for use
as the subsidy, an amount which will
not reach the $25,000,000,000 cap.
Thus, while there is a limit on the total
amount of loans the Department is able
to make, the value of the loans the
Department is able to make with the
credit subsidy amount appropriated
may be less than $25,000,000,000.
G. Project Costs
Section 136 states that awards under
the grant program for eligible projects
shall pay ‘‘not more than 30 percent’’ of
project cost. On the other hand, section
136 does not impose a maximum
percentage of funding associated with a

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particular project for the direct loan
program. In accordance with Federal
credit policies under OMB Circular A–
129, the Department will adhere to
requirements for a significant borrower
stake. Under the interim final rule, the
Federal loan may only constitute up to
80% of a project’s cost. Section 611.102
sets forth the types of costs the
Department will consider to be eligible
project costs—i.e., costs for which grant
or loan proceeds may be expended.
Eligible costs are: (a) Those costs that
are reasonably related to the
reequipping, expanding, or establishing
a manufacturing facility in the United
States to produce qualifying advanced
technology vehicles or qualifying
components; (b) costs of engineering
integration performed in the United
States for qualifying vehicles or
qualifying components. Costs eligible
for payment with loan proceeds are
costs incurred, but not yet paid by the
borrower, after a substantially complete
application has been submitted to DOE
and costs incurred after the closing of
the loan. In determining the overall total
cost of an Eligible Project, DOE and the
applicant may include significant costs
already incurred and capitalized by the
applicant in accordance with Generally
Accepted Accounting Principles and
these costs may be considered by DOE
in determining the Borrower’s
contribution to total project costs.
H. Assessment of Fees for Direct Loans
Section 136(f) states that
administrative costs ‘‘shall be no more
than $100,000 or 10 basis points of the
loan.’’ The Department interprets this
subsection as authorizing DOE to charge
borrowers an administrative fee, which
shall be deposited into the U.S.
Treasury, and as providing DOE with
the flexibility to choose either monetary
option set forth in the statute. DOE has
decided that administrative costs for a
particular loan will be 10 basis points of
the loan to be paid by the borrower on
the closing date of the loan. No
application fee will be charged, and
therefore applicants that do not receive
a loan will pay no administrative fee.
The Department bases its decision on
the need for fairness among applicants
and the belief that administrative costs
for a loan will be in excess of 10 basis
points. By including a fee provision in
section 136, Congress demonstrated an
intent that applicants should pay a fee
in connection with a loan. By selecting
10 basis points as the fee for all loans,
the Department assures that applicants
for smaller loans will pay smaller fees.

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I. Assessment of Applications and
Priorities
All applications received will be
reviewed to determine whether the
applicant is eligible and that the
application contains all information
required of an applicant by section 136,
this interim final rule and other
applicable law. Applications that are
determined to be eligible and
substantially complete will undergo a
substantive review by DOE based upon
certain evaluation factors. These factors
include, but are not limited to, the
technical merit of the proposed
advanced technology vehicles or
qualifying components, with greater
weight given for improved vehicle fuel
economy above the minimum required
for an advanced technology vehicle,
potential contributions to improved fuel
economy of the U.S. light-duty vehicle
fleet, promotion of the use of advanced
fuel (e.g., E85, ultra-low sulfur diesel),
and potential reductions in petroleum
use by the U.S. light-duty fleet. DOE
will also assess the adequacy of the
proposed provisions to protect the
Government, including offers of
participation in project gains,
sufficiency of Security, the priority of
the lien position in the Security, and the
percentage of the project to be financed
with the loan.
III. Application Submission
Section 611.101 of this interim final
rule sets forth the information DOE will
need an applicant to submit in order to
make the determinations required in
section 136 and this interim final rule
for issuance of a loan or award.
Applicants may submit loan requests for
multiple eligible projects in a single
application provided that the
application provides a way to segregate
each proposed eligible project in such a
way that permits DOE to evaluate each
project in the application. Applications
for the first tranche of loans may be
submitted or hand delivered to the
Postal Mail address listed in ADDRESSES.
DOE will consider and evaluate
substantially complete applications as
and when they are submitted during the
first tranche period, which will close
December 31, 2008. DOE may make
decisions on such applications and
close loans with respect to such
applications at any time. After
December 31, 2008, subsequent tranche
periods will close on the last day of
each calendar year quarter (i.e., March
31, 2009; June 30, 2009, etc.) For
applications submitted during those
subsequent periods, no final decisions
will be made with respect to such

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applications until after the close of the
particular tranche period.

obliged to prepare a regulatory
flexibility analysis for this rulemaking.

IV. Regulatory Review

D. Paperwork Reduction Act
This rule contains a collection-ofinformation requirement subject to the
Paperwork Reduction Act (PRA) and
which has been submitted to OMB with
a request for emergency processing.
DOE will publish a notice of approval
once received from OMB.
Public reporting burden for this
collection of information is estimated to
average 256.5 hours per response,
including time for reviewing
instructions, searching existing data
sources, gathering and maintaining the
data needed, and completing and
reviewing the collection of information.
Send comments regarding this burden
estimate, or any other aspect of the data
collection, including suggestions for
reducing the burden, to DOE (see Postal
Mail in ADDRESSES) or to the Office of
Management and Budget, Office of
Information and Regulatory Affairs, 725
17th Street, NW., Washington, DC
20503.
Notwithstanding any other provision
of the law, no person is required to
respond to, nor shall any person be
subject to a penalty for failure to comply
with, a collection of information subject
to the requirements of the PRA, unless
that collection of information displays a
currently valid OMB Control Number.

A. Executive Order 12866
Today’s interim final rule has been
determined to be an economically
significant regulatory action under
Executive Order 12866, ‘‘Regulatory
Planning and Review,’’ 58 FR 51735
(October 4, 1993). Accordingly, this
action was subject to review under that
Executive Order by the Office of
Information and Regulatory Affairs at
the Office of Management and Budget
(OMB).
B. National Environmental Policy Act
Through the issuance of this rule,
DOE is making no decision relative to
the approval of a loan or grant for a
particular project. DOE has, therefore,
determined that publication of this rule
is covered under the Categorical
Exclusion found at paragraph A.6 of
Appendix A to Subpart D, 10 CFR Part
1021, which applies to the
establishment of procedural
rulemakings. Accordingly, neither an
environmental assessment nor an
environmental impact statement is
required at this time. However,
appropriate NEPA project review will be
conducted in connection with a section
136 loan or grant.

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C. Regulatory Flexibility Act
The Regulatory Flexibility Act (5
U.S.C. 601 et seq.) requires preparation
of an initial regulatory flexibility
analysis for any rule that by law must
be proposed for public comment, unless
the agency certifies that the rule, if
promulgated, will not have a significant
economic impact on a substantial
number of small entities. As required by
Executive Order 13272, ‘‘Proper
Consideration of Small Entities in
Agency Rulemaking,’’ 67 FR 53461
(August 16, 2002), DOE published
procedures and policies on February 19,
2003, to ensure that the potential
impacts of its rules on small entities are
properly considered during the
rulemaking process (68 FR 7990). DOE
has made its procedures and policies
available on the Office of the General
Counsel’s Web site: http://
www.gc.doe.gov.
Because a notice of proposed
rulemaking is not required pursuant to
5 U.S.C. 553, EISA section 136, as
amended, or any other law, prior to
issuance of this interim final rule, the
analytical requirements of the
Regulatory Flexibility Act are
inapplicable. As such, DOE is not

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E. Unfunded Mandates Reform Act of
1995
Title II of the Unfunded Mandates
Reform Act of 1995 (Act) (2 U.S.C. 1531
et seq.) requires each federal agency, to
the extent permitted by law, to prepare
a written assessment of the effects of
any federal mandate in an agency rule
that may result in the expenditure by
state, local, and tribal governments, in
the aggregate, or by the private sector, of
$100 million or more (adjusted annually
for inflation) in any one year. The Act
also requires a federal agency to develop
an effective process to permit timely
input by elected officials of state, tribal,
or local governments on a proposed
‘‘significant intergovernmental
mandate,’’ and requires an agency plan
for giving notice and opportunity to
provide timely input to potentially
affected small governments before
establishing any requirements that
might significantly or uniquely affect
small governments.
The term ‘‘federal mandate’’ is
defined in the Act to mean a federal
intergovernmental mandate or a federal
private sector mandate (2 U.S.C. 658(6)).
Although the rule will impose certain
requirements on non-federal
governmental and private sector

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applicants for loans, the Act’s
definitions of the terms ‘‘federal
intergovernmental mandate’’ and
‘‘federal private sector mandate’’
exclude, among other things, any
provision in legislation, statute, or
regulation that is a condition of federal
assistance or a duty arising from
participation in a voluntary program (2
U.S.C. 658(5) and (7), respectively).
Today’s interim final rule establishes
requirements that persons voluntarily
seeking loans for projects that would
use certain advanced vehicle
technologies must satisfy as a condition
of a federal loan. Thus, the interim final
rule falls under the exceptions in the
definitions of ‘‘federal
intergovernmental mandate’’ and
‘‘federal private sector mandate’’ for
requirements that are a condition of
federal assistance or a duty arising from
participation in a voluntary program.
Accordingly, the Unfunded Mandates
Reform Act of 1995 does not apply to
this rulemaking.
F. Treasury and General Government
Appropriations Act, 1999
Section 654 of the Treasury and
General Government Appropriations
Act, 1999 (Pub. L. 105–277) requires
Federal agencies to issue a Family
Policymaking Assessment for any
proposed rule that may affect family
well being. This rule would not have
any impact on the autonomy or integrity
of the family as an institution.
Accordingly, DOE has concluded that it
is not necessary to prepare a Family
Policymaking Assessment.
G. Executive Order 13132
Executive Order 13132, ‘‘Federalism,’’
64 FR 43255 (August 4, 1999) imposes
certain requirements on agencies
formulating and implementing policies
or regulations that preempt State law or
that have federalism implications.
Agencies are required to examine the
constitutional and statutory authority
supporting any action that would limit
the policymaking discretion of the
States and carefully assess the necessity
for such actions. DOE has examined this
interim final rule and has determined
that it would not preempt State law and
would not have a substantial direct
effect on the States, on the relationship
between the national government and
the States, or on the distribution of
power and responsibilities among the
various levels of government.
Accordingly, no further action is
required by Executive Order 13132.
H. Executive Order 12988
With respect to the review of existing
regulations and the promulgation of

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

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I. Treasury and General Government
Appropriations Act, 2001
The Treasury and General
Government Appropriations Act, 2001
(44 U.S.C. 3516 note) provides for
agencies to review most disseminations
of information to the public under
guidelines established by each agency
pursuant to general guidelines issued by
OMB.
OMB’s guidelines were published at
67 FR 8452 (February 22, 2002), and
DOE’s guidelines were published at 67
FR 62446 (October 7, 2002). DOE has
reviewed today’s final rule under the
OMB and DOE guidelines and has
concluded that it is consistent with
applicable policies in those guidelines.
J. Executive Order 13211
Executive Order 13211, ‘‘Actions
Concerning Regulations That
Significantly Affect Energy Supply,
Distribution, or Use,’’ 66 FR 28355 (May
22, 2001) requires Federal agencies to
prepare and submit to the OMB, a
Statement of Energy Effects for any
proposed significant energy action. A

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‘‘significant energy action’’ is defined as
any action by an agency that
promulgated or is expected to lead to
promulgation of a final rule, and that:
(1) Is a significant regulatory action
under Executive Order 12866, or any
successor order; and (2) is likely to have
a significant adverse effect on the
supply, distribution, or use of energy, or
(3) is designated by the Administrator of
OIRA as a significant energy action. For
any proposed significant energy action,
the agency must give a detailed
statement of any adverse effects on
energy supply, distribution, or use
should the proposal be implemented,
and of reasonable alternatives to the
action and their expected benefits on
energy supply, distribution, and use.
Today’s regulatory action would not
have a significant adverse effect on the
supply, distribution, or use of energy
and is therefore not a significant energy
action. Accordingly, DOE has not
prepared a Statement of Energy Effects.
K. Congressional Notification
As required by 5 U.S.C. 801, DOE will
submit to Congress a report regarding
the issuance of today’s interim final
rule. The report will state that it has
been determined that the interim final
rule is a ‘‘major rule’’ as defined by 5
U.S.C. 804(2). Pursuant to 5 U.S.C.
808(2), DOE finds good cause that the
effective date of this major rule need not
be delayed because notice and public
procedure thereon are unnecessary,
impracticable, and contrary to the
public interest. In the Continuing
Resolution, 2009, Congress amended
section 136 of EISA to require DOE to
act with extreme expedition in the
establishment and implementation of
the Advanced Technology Vehicle
Manufacturing Incentive Program.
Specifically, Congress mandated that
the Secretary issue an interim final
rule—a rule that is issued and becomes
effective without prior public notice and
comment. Furthermore, Congress
mandated that this interim final rule be
promulgated no later than 60 days after
enactment of the Continuing Resolution
2009. In addition, the Department is
cognizant of the current extraordinary
and adverse credit market conditions,
and believes it would be contrary to the
public interest to delay the effective
date of regulations implementing a
program that may help respond to those
conditions. Thus, it would be
inconsistent with that Congressional
mandate, and thereby unnecessary,
impracticable and contrary to the public
interest, for the effective date of this
interim final rule to be delayed beyond
the date of its publication. For the
reasons stated above, DOE also finds

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66731

good cause, pursuant to 5 U.S.C.
553(d)(3), to waive the 30-delay in
effective date required by the
rulemakings provisions of the
Administrative Procedure Act.
L. Approval by the Office of the
Secretary of Energy
The Secretary of Energy has approved
the issuance of this interim final rule.
List of Subjects in 10 CFR Part 611
Administrative practice and
procedure, Energy, Loan programs, and
Reporting and recordkeeping
requirements.
Issued in Washington, DC, on November 5,
2008.
Owen Barwell,
Deputy Chief Financial Officer.

For the reasons stated in the Preamble,
chapter II of title 10 of the Code of
Federal Regulations is amended by
adding a new part 611 as set forth
below.

■

PART 611—ADVANCED TECHNOLOGY
VEHICLES MANUFACTURER
ASSISTANCE PROGRAM
Subpart A—General
§ 611.1 Purpose.
§ 611.2 Definitions.
§ 611.3 Advanced technology vehicle.
Subpart B—Direct Loan Program
§ 611.100 Eligible applicant.
§ 611.101 Application.
§ 611.102 Eligible project costs.
§ 611.103 Application evaluation.
§ 611.104 [Reserved].
§ 611.105 Agreement.
§ 611.106 Environmental requirements.
§ 611.107 Loan terms.
§ 611.108 Perfection of liens and
preservation of collateral.
§ 611.109 Audit and access to records.
§ 611.110 Assignment or transfer of loans.
§ 611.111 Default, demand, payment, and
collateral liquidation.
§ 611.112 Termination of obligations.
Subpart C—Facility Funding Awards
§ 611.200 Purpose and scope.
§ 611.201 Applicability.
§ 611.202 Advanced Technology Vehicle
Manufacturing Facility Award Program.
§ 611.203 Eligibility.
§ 611.204 Awards.
§ 611.205 Period of award availability.
§ 611.206 Existing facilities.
§ 611.207 Small automobile and component
manufacturers.
§ 611.208 [Reserved].
§ 611.209 [Reserved].
Authority: Pub. L. 110–140 (42 U.S.C.
17013), Pub. L. 110–329.

Subpart A—General
§ 611.1

Purpose.

This part is issued by the Department
of Energy (DOE) pursuant to section 136

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of the Energy Independence and
Security Act of 2007, Public Law 110–
140, as amended by section 129 of
Public Law 110–329. Specifically,
section 136(e) directs DOE to
promulgate an interim final rule
establishing regulations that specify
eligibility criteria and that contain other
provisions that the Secretary deems
necessary to administer this section and
any loans made by the Secretary
pursuant to this section.

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§ 611.2

Definitions.

The definitions contained in this
section apply to provisions contained in
both Subpart A and Subpart B.
Adjusted average fuel economy means
a harmonic production weighted
average of the combined fuel economy
of all vehicles in a fleet, which were
subject to CAFE.
Advanced technology vehicle means a
passenger automobile or light truck that
meets—
(1) The Bin 5 Tier II emission
standard established in regulations
issued by the Administrator of the
Environmental Protection Agency under
section 202(i) of the Clean Air Act (42
U.S.C. 7521(i)), as of the date of
application, or a lower-numbered Bin
emission standard;
(2) Any new emission standard in
effect for fine particulate matter
prescribed by the Administrator under
that Act (42 U.S.C. 7401 et seq.), as of
the date of application; and
(3) At least 125 percent of the
harmonic production weighted average
combined fuel economy, for vehicles
with substantially similar attributes in
model year 2005.
Agreement means the contractual loan
arrangement between DOE and a
Borrower for a loan made by and
through the Federal Financing Bank
with the full faith and credit of the
United States government on the
principal and interest.
Applicant means a party that submits
a substantially complete application
pursuant to this Part.
Application means the compilation of
the materials required by this Part to be
submitted to DOE by an Applicant. One
Application can include requests for
one or more loans and one or more
projects. However, an Application
covering more than one project must
contain complete and separable
information with respect to each project.
Automobile is used as that term is
defined in 49 CFR Part 523.
Borrower means an Applicant that
receives a loan under this Program.
CAFE means the Corporate Average
Fuel Economy program of the Energy

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Policy and Conservation Act, 49 U.S.C.
32901 et seq.
Combined fuel economy means the
combined city/highway miles per gallon
values, as are reported in accordance
with section 32904 of title 49, United
States Code. If CAFE compliance data is
not available, the combined average fuel
economy of a vehicle must be
demonstrated through the use of a peerreviewed model.
DOE or Department means the United
States Department of Energy.
Eligible Facility means a
manufacturing facility in the United
States that produces qualifying
advanced technology vehicles, or
qualifying components.
Eligible Project means:
(1) Reequipping, expanding, or
establishing a manufacturing facility in
the United States to produce qualifying
advanced technology vehicles, or
qualifying components; or
(2) Engineering integration performed
in the United States for qualifying
advanced technology vehicles and
qualifying components.
Engineering integration costs are the
costs of engineering tasks relating to—
(1) Incorporating qualifying
components into the design of advanced
technology vehicles; and
(2) Designing tooling and equipment
and developing manufacturing
processes and material suppliers for
production facilities that produce
qualifying components or advanced
technology vehicles.
Equivalent vehicle means a light-duty
vehicle of the same vehicle
classification as specified in 10 CFR Part
523.
Financially viable means a reasonable
prospect that the Applicant will be able
to make payments of principal and
interest on the loan as and when such
payments become due under the terms
of the loan documents, and that the
applicant has a net present value that is
positive, taking all costs, existing and
future, into account.
Grantee means an entity awarded a
grant made pursuant to section 136 and
this Part.
Light-duty vehicle means passenger
automobiles and light trucks.
Light truck is used as that term is
defined in 49 CFR Part 523.
Loan Documents mean the Agreement
and all other instruments, and all
documentation among DOE, the
borrower, and the Federal Financing
Bank evidencing the making,
disbursing, securing, collecting, or
otherwise administering the loan
[references to loan documents also
include comparable agreements,
instruments, and documentation for

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other financial obligations for which a
loan is requested or issued].
Model year is defined as that term is
defined in 49 U.S.C. 32901.
Passenger automobile is used as that
term is defined in 49 CFR Part 523.
Qualifying components means
components that the DOE determines
are
(1) Designed for advanced technology
vehicles; and
(2) Installed for the purpose of
meeting the performance requirements
of advanced technology vehicles.
Secretary means the United States
Secretary of Energy.
Security means all property, real or
personal, tangible or intangible,
required by the provisions of the Loan
Documents to secure repayment of any
indebtedness of the Borrower under the
Loan Documents.
§ 611.3

Advanced technology vehicle.

In order to demonstrate that a vehicle
is an ‘‘advanced technology vehicle’’, an
automobile manufacturer must provide
the following:
(a) Emissions certification. An
automobile manufacturer must written
certify that the vehicle meets, or will
meet, the emissions requirements
specified in the definition of ‘‘advanced
technology vehicle’’; and
(b) Demonstration of fuel economy
performance. An automobile
manufacturer must demonstrate that the
vehicle has a combined average fuel
economy of at least 125 percent of the
average combined fuel economy for
vehicles with substantially similar
attributes for model year 2005.
(1) A combined average fuel economy
calculation required under this
paragraph for a vehicle that is a dual
fueled automobile for the purpose of
CAFE is calculated as if the vehicle
were not a dual fueled automobile.
(2) The average combined fuel
economy for vehicles with substantially
similar attributes is a harmonic
production weighted average of the
combined average fuel economy of all
vehicles with substantially similar
attributes in model year 2005, as
published by DOE.
(3) In the case of an electric drive
vehicle with the ability to recharge from
an off-board source, an automobile
manufacturer must provide DOE with a
test procedure and sufficient data to
demonstrate that the vehicle meets or
exceeds the applicable average
combined fuel economy of vehicles with
substantially similar attributes.

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Subpart B—Direct Loan Program

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§ 611.100

Eligible applicant.

(a) In order to be eligible to receive a
loan under this part, an applicant
(1) Must be either—
(i) An automobile manufacturer that
can demonstrate an improved fuel
economy as specified in paragraph (b) of
this section, or
(ii) A manufacturer of a qualifying
component; and
(2) Must be financially viable without
receipt of additional Federal funding
associated with the proposed eligible
project.
(b) Improved fuel economy. (1) If the
applicant is an automobile manufacturer
that manufactured in model year 2005,
vehicles subject to the CAFE
requirements, the applicant must
demonstrate that its adjusted average
fuel economy for its light-duty vehicle
fleet produced in the most recent year
for which final CAFE compliance data
is available, at the time of application,
is greater than or equal to the adjusted
average fuel economy of the applicant’s
fleet for MY 2005, based on the MY
2005 final CAFE compliance data.
(2) If the applicant is an automobile
manufacturer that did not manufacture
in model year 2005, vehicles subject to
the CAFE requirements, the applicant
must demonstrate that the projected
combined fuel economy for the relevant
the advanced technology vehicle that is
the subject of the application is greater
than or equal to the industry adjusted
average fuel economy for model year
2005 of equivalent vehicles, based on
final CAFE compliance data.
(3) The CAFE values under this
paragraph are to be calculated using the
CAFE procedures applicable to the
model year being evaluated.
(4) An applicant must provide fuel
economy data, at the model level, relied
upon to make the demonstration
required by this section.
(5) An applicant that is a
manufacturer of a qualifying component
under paragraph (a)(1)(ii) of this section
does not need to make a showing of
improved fuel economy under this
paragraph.
(c) In determining under paragraph
(a)(2) of this section whether an
applicant is financially viable, the
Department will consider a number of
factors, including, but not limited to:
(1) The applicant’s debt-to-equity
ratio as of the date of the loan
application;
(2) The applicant’s earnings before
interest, taxes, depreciation, and
amortization (EBITDA) for the
applicant’s most recent fiscal year prior
to the date of the loan application;

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(3) The applicant’s debt to EBITDA
ratio as of the date of the loan
application;
(4) The applicant’s interest coverage
ratio (calculated as EBITDA divided by
interest expenses) for the applicant’s
most recent fiscal year prior to the date
of the loan application;
(5) The applicant’s fixed charge
coverage ratio (calculated as EBITDA
plus fixed charges divided by fixed
charges plus interest expenses) for the
applicant’s most recent fiscal year prior
to the date of the loan application;
(6) The applicant’s liquidity as of the
date of the loan application;
(7) Statements from applicant’s
lenders that the applicant is current
with all payments due under loans
made by those lenders at the time of the
loan application; and
(8) Financial projections
demonstrating the applicant’s solvency
through the period of time that the loan
is outstanding.
(d). For purposes of making a
determination under paragraph (a)(2) of
this section, additional Federal funding
includes any loan, grant, guarantee,
insurance, payment, rebate, subsidy,
credit, tax benefit, or any other form of
direct or indirect assistance from the
Federal government, or any agency or
instrumentality thereof, other than the
proceeds of a loan approved under this
Part, that is, or is expected to be made
available with respect to, the project for
which the loan is sought under this Part.
§ 611.101

Application.

An application must include, at a
minimum, the following information
and materials:
(a) A certification by the applicant
that it meets each of the requirements of
the program as set forth in statute, the
regulations in this part, and any
supplemental requirements issued by
DOE;
(b) A description of the nature and
scope of the proposed project for which
a loan or award is sought under this
part, including key milestones and
location of the project;
(c) A detailed explanation of how the
proposed project qualifies under
applicable law to receive a loan or
award under this part, including vehicle
simulations using industry standard
model (need to add name and location
of this open source model) to show
projected fuel economy;
(d) A detailed estimate of the total
project costs together with a description
of the methodology and assumptions
used to produce that estimate;
(e) A detailed description of the
overall financial plan for the proposed
project, including all sources and uses

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of funding, equity, and debt, and the
liability of parties associated with the
project;
(f) Applicant’s business plan on
which the project is based and
applicant’s financial model presenting
project pro forma statements for the
proposed term of the obligations
including income statements, balance
sheets, and cash flows. All such
information and data must include
assumptions made in their preparation
and the range of revenue, operating cost,
and credit assumptions considered;
(g) An analysis of projected market
use for any product (vehicle or
component) to be produced by or
through the project, including relevant
data and assumptions justifying the
analysis, and copies of any contractual
agreements for the sale of these products
or assurance of the revenues to be
generated from sale of these products;
(h) Financial statements for the past
three years, or less if the applicant has
been in operation less than three years,
that have been audited by an
independent certified public
accountant, including all associated
notes, as well as interim financial
statements and notes for the current
fiscal year, of the applicant and parties
providing the applicant’s financial
backing, together with business and
financial interests of controlling or
commonly controlled organizations or
persons, including parent, subsidiary
and other affiliated corporations or
partners of the applicant;
(i) A list showing the status of and
estimated completion date of applicant’s
required project-related applications or
approvals for Federal, state, and local
permits and authorizations to site,
construct, and operate the project, a
period of 5 years preceding the
submission of an application under this
Part;
(j) Information sufficient to enable
DOE to comply with the National
Environmental Policy Act of 1969, as
required by § 611.106 of this part;
(k) A listing and description of assets
associated, or to be associated, with the
project and any other asset that will
serve as collateral for the Loan,
including appropriate data as to the
value of the assets and the useful life of
any physical assets. With respect to real
property assets listed, an appraisal that
is consistent with the ‘‘Uniform
Standards of Professional Appraisal
Practice,’’ promulgated by the Appraisal
Standards Board of the Appraisal
Foundation, and performed by licensed
or certified appraisers, is required;
(l) An analysis demonstrating that, at
the time of the application, the
applicant is financially viable without

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receipt of additional Federal funding
associated with the proposed project,
and that there is a reasonable prospect
that the Applicant will be able to make
payments of principal and interest on
the loan as and when such payments
become due under the terms of the loan
documents, and that the applicant has a
net present value which is positive,
taking all costs, existing and future, into
account. This information must include,
from publicly traded companies,
relevant filings with the Securities and
Exchange Commission;
(m) Written assurance that all laborers
and mechanics employed by contractors
or subcontractors during construction,
alteration, or repair that is financed, in
whole or in part, by a loan under this
Part shall be paid wages at rates not less
than those prevailing on similar
construction in the locality, as
determined by the Secretary of Labor in
accordance with 40 U.S.C. sections
3141–3144, 3146, and 3147;
(n) Completed Form SF–LLL, as
required by 10 CFR Part 601; and
(o) Other information, as determined
necessary by DOE.
§ 611.102

Eligible project costs.

(a) Eligible costs are:
(1) Those costs that are reasonably
related to the reequipping, expanding,
or establishing a manufacturing facility
in the United States to produce
qualifying advanced technology
vehicles or qualifying components;
(2) Costs of engineering integration
performed in the United States for
qualifying vehicles or qualifying
components;
(3) Costs for payment with loan
proceeds that are incurred, but not yet
paid by the borrower, after a
substantially complete application has
been submitted to DOE; and
(4) Costs incurred after closing of the
loan.
(b) In determining the overall total
cost of an Eligible Project, DOE and the
applicant may include significant costs
already incurred and capitalized by the
applicant in accordance with Generally
Accepted Accounting Principles and
these costs may be considered by DOE
in determining the Borrower’s
contribution to total project costs.

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§ 611.103

Application evaluation.

(a) Eligibility screening. Applications
will be reviewed to determine whether
the applicant is eligible, the information
required under § 611.101 is complete,
and the proposed loan complies with
applicable statutes and regulations. DOE
can at any time reject an application, in
whole or in part, that does not meet
these requirements.

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(b) Evaluation criteria. Applications
that are determined to be eligible
pursuant to paragraph (a) of this section
shall be subject to a substantive review
by DOE based upon factors that include,
but are not limited to, the following:
(1) The technical merit of the
proposed advanced technology vehicles
or qualifying components, with greater
weight given for factors including, but
not limited to:
(i) Improved vehicle fuel economy
above that required for an advanced
technology vehicle;
(ii) Potential contributions to
improved fuel economy of the U.S.
light-duty vehicle fleet;
(iii) Likely reductions in petroleum
use by the U.S. light-duty fleet; and
(iv) Promotion of use of advanced fuel
(e.g., E85, ultra-low sulfur diesel).
(2) Technical Program Factors such as
economic development and diversity in
technology, company, risk, and
geographic location.
(3) The adequacy of the proposed
provisions to protect the Government,
including sufficiency of Security, the
priority of the lien position in the
Security, and the percentage of the
project to be financed with the loan.
(4) In making loans to those
manufacturers that have existing
facilities, priority will be given to those
facilities that are oldest or have been in
existence for at least 20 years even if
such facilities are idle at the time of
application.
§ 611.104

[Reserved]

§ 611.105

Agreement.

(a) Only an Agreement executed by a
duly authorized DOE Contracting
Officer can contractually obligate the
government to make a loan made by and
through the Federal Financing Bank
with the full faith and credit of the
United States government on the
principal and interest.
(b) DOE is not bound by oral
representations made during the
Application stage, or during any
negotiation process.
(c) No funds obtained from the
Federal Government, or from a loan or
other instrument guaranteed by the
Federal Government, may be used to
pay administrative fees, or other fees
charged by or paid to DOE relating to
the section 136 loan program.
(d) Prior to the execution by DOE of
an Agreement, DOE must ensure that
the following requirements and
conditions, which must be specified in
the Agreement, are satisfied:
(1) The Borrower is a Eligible
Applicant as defined in this Part;
(2) The Agreement is for an Eligible
Project as defined in this Part;

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(3) The principal amount of the loan
is limited to no more than 80 percent of
reasonably anticipated total Project
Costs;
(4) Loan funds will be disbursed only
to meet immediate cash disbursement
needs of the Borrower and not for
investment purposes, and any
investment earnings obtained in excess
of accrued interest expense will be
returned to United States Government;
and
(5) Such documents, representations,
warrants and covenants as DOE may
require.
§ 611.106

Environmental requirements.

(a)(1) In general. Environmental
review of the proposed projects under
this part will be conducted in
accordance with applicable statutes,
regulations, and Executive Orders.
(2) The applicant must submit a
comprehensive environmental report.
The comprehensive environmental
report shall consist of the specific
reports and related material set forth in
paragraphs (d) through (f) of this
section.
(3) The regulations of the Council on
Environmental Quality implementing
NEPA require DOE to provide public
notice of the availability of project
specific environmental documents such
as environmental impact statements,
environmental assessments, findings of
no significant impact, records of
decision etc., to the affected public. See
40 CFR 1506.6(b). The comprehensive
environmental report will provide
substantial basis for any required
environmental impact statement or
environmental assessment and findings
of no significant impact, pursuant to the
procedures set forth in 10 CFR
1021.215. DOE may also make a
determination as to whether a
categorical exclusion is available with
regard to an Application.
(b) The detail of each specific report
must be commensurate with the
complexity of the proposal and its
potential for environmental impact.
Each topic in each specific report shall
be addressed or its omission justified,
unless the specific report description
indicates that the data is not required
for that type of project. If material
required for one specific report is
provided in another specific report or in
another exhibit, it may be incorporated
by reference. If any specific report topic
is required for a particular project but is
not provided at the time the application
is filed, the comprehensive
environmental report shall explain why
it is missing and when the applicant
anticipates it will be filed.

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Federal Register / Vol. 73, No. 219 / Wednesday, November 12, 2008 / Rules and Regulations
(c) As appropriate, each specific
report shall:
(1) Address conditions or resources
that might be directly or indirectly
affected by the project;
(2) Identify significant environmental
effects expected to occur as a result of
the project;
(3) Identify the effects of construction,
operation (including maintenance and
malfunctions), and termination of the
project, as well as cumulative effects
resulting from existing or reasonably
foreseeable projects;
(4) Identify measures proposed to
enhance the environment or to avoid,
mitigate, or compensate for adverse
effects of the project; and
(5) Provide a list of publications,
reports, and other literature or
communications that were cited or
relied upon to prepare each report.
(d) Specific Report 1—Project impact
and description. This report must
describe the environmental impacts of
the project, facilities associated with the
project, special construction and
operation procedures, construction
timetables, future plans for related
construction, compliance with
regulations and codes, and permits that
must be obtained.
(e) Specific Report 2—
Socioeconomics. This report must
identify and quantify the impacts of
constructing and operating the proposed
project on factors affecting towns and
counties in the vicinity of the project.
The report must:
(1) Describe the socioeconomic
impact area;
(2) Evaluate the impact of any
substantial immigration of people on
governmental facilities and services and
plans to reduce the impact on the local
infrastructure;
(3) Describe on-site manpower
requirements and payroll during
construction and operation, including
the number of construction personnel
who currently reside within the impact
area, would commute daily to the site
from outside the impact area, or would
relocate temporarily within the impact
area;
(4) Determine whether existing
housing within the impact area is
sufficient to meet the needs of the
additional population;
(5) Describe the number and types of
residences and businesses that would be
displaced by the project, procedures to
be used to acquire these properties, and
types and amounts of relocation
assistance payments; and
(6) Conduct a fiscal impact analysis
evaluating incremental local
government expenditures in relation to
incremental local government revenues

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that would result from construction of
the project. Incremental expenditures
include, but are not limited to, school
operating costs, road maintenance and
repair, public safety, and public utility
costs.
(f) Specific Report 3—Alternatives.
This report must describe alternatives to
the project and compare the
environmental impacts of such
alternatives to those of the proposal.
The discussion must demonstrate how
environmental benefits and costs were
weighed against economic benefits and
costs, and technological and procedural
constraints. The potential for each
alternative to meet project deadlines
and the environmental consequences of
each alternative shall be discussed. The
report must discuss the ‘‘no action’’
alternative and the potential for
accomplishing the proposed objectives
through the use of other means. The
report must provide an analysis of the
relative environmental benefits and
costs for each alternative.
§ 611.107

Loan terms.

(a) All loans provided under this part
shall be due and payable in full at the
earlier of:
(1) the projected life, in years, of the
Eligible facility that is built or installed
as a result of the Eligible Project carried
out using funds from the loan, as
determined by the Secretary; or
(2) Twenty-five (25) years after the
date the loan is closed.
(b) Loans provided under the Part
must bear a rate of interest that is equal
to the rate determined by the Secretary
of the Treasury, taking into
consideration current market yields
outstanding marketable obligations of
the United States of comparable
maturity. This rate will be determined
separately for each drawdown of the
loan.
(c) A loan provided under this part
may be subject to a deferral in
repayment of principal for not more
than 5 years after the date on which the
Eligible facility that is built or installed
as a result of the Eligible Project first
begins operations, as determined by the
Secretary.
(d)(1) The performance of all of the
Borrower’s obligations under the Loan
Documents shall be secured by, and
shall have the priority in, such Security
as provided for within the terms and
conditions of the Loan Documents.
(2) Accordingly, the rule states that
the Secretary must have a first lien or
security interest in all property acquired
with loan funds. This requirement may
be waived only by the Secretary on a
non-delegable basis. DOE must also

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66735

have a lien on any other property of the
applicant pledged to secure the loan.
(3) In the event of default, if
recoveries from the property and
revenues pledged to the repayment of
the loan are insufficient to fully repay
all principal and interest on the loan,
then the Federal Government will have
recourse to the assets and revenues of
the Borrower to the same extent as
senior unsecured general obligations of
the Borrower.
(e) The Borrower will be required to
pay at the time of the closing of the loan
a fee equal to 10 basis points of the
principal amount of the loan.
§ 611.108 Perfection of liens and
preservation of collateral.

(a) The Agreement and other
documents related thereto shall provide
that:
(1) DOE and the Applicant, in
conjunction with the Federal Financing
Bank if necessary, will take those
actions necessary to perfect and
maintain liens, as applicable, on assets
which are pledged as collateral for the
loan; and
(2) Upon default by the Borrower, the
holder of pledged collateral shall take
such actions as DOE may reasonably
require to provide for the care,
preservation, protection, and
maintenance of such collateral so as to
enable the United States to achieve
maximum recovery from the pledged
assets. DOE shall reimburse the holder
of collateral for reasonable and
appropriate expenses incurred in taking
actions required by DOE.
(b) In the event of a default, DOE may
enter into such contracts as the
Secretary determines are required to
preserve the collateral. The cost of such
contracts may be charged to the
Borrower.
§ 611.109

Audit and access to records.

(a) The Agreement and related
documents shall provide that:
(1) DOE in conjunction with the
Federal Financing Bank, as applicable,
and the Borrower, shall keep such
records concerning the project as are
necessary, including the Application,
Term Sheet, Conditional Commitment,
Agreement, mortgage, note,
disbursement requests and supporting
documentation, financial statements,
audit reports of independent accounting
firms, lists of all project assets and nonproject assets pledged as security for the
loan, all off-take and other revenue
producing agreements, documentation
for all project indebtedness, income tax
returns, technology agreements,
documentation for all permits and
regulatory approvals and all other

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documents and records relating to the
Eligible Project, as determined by the
Secretary, to facilitate an effective audit
and performance evaluation of the
project; and
(2) The Secretary and the Comptroller
General, or their duly authorized
representatives, shall have access, for
the purpose of audit and examination,
to any pertinent books, documents,
papers and records of the Borrower or
DOE, as applicable. Such inspection
may be made during regular office hours
of the Borrower or DOE, as applicable,
or at any other time mutually
convenient.
(b) The Secretary may from time to
time audit any or all statements or
certificates submitted to the Secretary.
The Borrower will make available to the
Secretary all books and records and
other data available to the Borrower in
order to permit the Secretary to carry
out such audits. The Borrower should
represent that it has within its rights
access to all financial and operational
records and data relating to the project
financed by the loan, and agrees that it
will, upon request by the Secretary,
exercise such rights in order to make
such financial and operational records
and data available to the Secretary. In
exercising its rights hereunder, the
Secretary may utilize employees of
other Federal agencies, independent
accountants, or other persons.
(c) Loan funds are being expended
efficiently and effectively if
documentation submitted and audits
conducted under this section
demonstrate that the borrower is making
appropriate progress toward achieving
the purpose for which the loan was
originally made.

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§ 611.110

Assignment or transfer of loans.

(a) The Loan Documents may not be
modified, in whole or in part, without
the prior written approval of DOE.
(b) Upon prior written approval by
DOE and the Federal Financing Bank, a
certification by the assignor that the
assignee is an Eligible Applicant as
described in § 611.100 of this part, and
subject to paragraph (c) of this section
and other provisions of this part, a
Borrower may assign or transfer its
interest in a loan provided under this
part, including the loan documents, to
a party that qualifies as an Eligible
Applicant.
(c) The provisions of paragraph (b) of
this section shall not apply to transfers
which occur by operation of law.
§ 611.111 Default, demand, payment, and
collateral liquidation.

(a) In the event that the Borrower has
defaulted in the making of required

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payments of principal or interest, and
such default has not been cured within
the period of grace provided in the
Agreement, DOE may cause the
principal amount of the loan, together
with accrued interest thereon, and all
amounts owed to the United States by
Borrower pursuant to the Agreement, to
become immediately due and payable
by giving the Borrower written notice to
such effect.
(b) In the event that the Borrower is
in default as a result of a breach of one
or more of the terms and conditions of
the Agreement, note, mortgage, or other
contractual obligations related to the
transaction, other than the Borrower’s
obligation to pay principal or interest on
the loan, and DOE determines, in
writing, that such a default has
materially affected the rights of the
parties, the Borrower shall be given the
period of grace provided in the
Agreement to cure such default. If the
default is not cured during the period of
grace, DOE may cause the principal
amount of the loan, together with
accrued interest thereon, and all
amounts owed to the United States by
Borrower pursuant to the Agreement, to
become immediately due and payable
by giving the Borrower written notice to
such effect.
(c) In the event that the Borrower has
defaulted as described in paragraphs (a)
or (b) of this section and such default is
not cured during the grace period
provided in the Agreement, DOE shall
notify the U.S. Attorney General. DOE,
acting through the U.S. Attorney
General, may seek to foreclose on the
collateral assets and/or take such other
legal action as necessary for the
protection of the Government.
(d) If DOE is awarded title to
collateral assets pursuant to a
foreclosure proceeding, DOE may take
action to complete, maintain, operate, or
lease the Eligible Facilities, or otherwise
dispose of any property acquired
pursuant to the Agreement or take any
other necessary action which DOE
deems appropriate.
(e) In addition to foreclosure and sale
of collateral pursuant thereto, the U.S.
Attorney General shall take appropriate
action in accordance with rights
contained in the Agreement to recover
costs incurred by the Government as a
result of the defaulted loan or other
defaulted obligation. Any recovery so
received by the U.S. Attorney General
on behalf of the Government shall be
applied in the following manner: First
to the expenses incurred by the U.S.
Attorney General and DOE in effecting
such recovery; second, to
reimbursement of any amounts paid by
DOE as a result of the defaulted

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obligation; third, to any amounts owed
to DOE under related principal and
interest assistance contracts; and fourth,
to any other lawful claims held by the
Government on such process. Any sums
remaining after full payment of the
foregoing shall be available for the
benefit of other parties lawfully entitled
to claim them.
(f) In the event that DOE considers it
necessary or desirable to protect or
further the interest of the United States
in connection with the liquidation of
collateral or recovery of deficiencies due
under the loan, DOE will take such
action as may be appropriate under the
circumstances.
§ 611.112

Termination of obligations.

DOE, the Federal Financing Bank, and
the Borrower shall have such rights to
terminate the Agreement as are set forth
in the loan documents.
Subpart C—Facility/Funding Awards
§ 611.200

Purpose and scope.

This subpart sets forth the policies
and procedures applicable to the award
and administration of grants by DOE for
advanced technology vehicle
manufacturing facilities as authorized
by section 136(b) of the Energy
Independence and Security Act (Pub. L.
110–140).
§ 611.201

Applicability.

Except as otherwise provided by this
subpart, the award and administration
of grants shall be governed by 10 CFR
part 600 (DOE Financial Assistance
Rules).
§ 611.202 Advanced Technology Vehicle
Manufacturing Facility Award Program.

DOE may issue, under the Advanced
Technology Vehicle Manufacturing
Facility Award Program, 10 CFR part
611, subpart C, awards for eligible
projects.
§ 611.203

Eligibility.

In order to be eligible for an award,
an applicant must be either—
(a) An automobile manufacturer that
can demonstrate an improved fuel
economy as specified in paragraph (b) of
section 611.3, or
(b) A manufacturer of a qualifying
component.
§ 611.204

Awards.

Awards issued for eligible projects
shall be for an amount of no more than
30 percent of the eligible project costs.
§ 611.205

Period of award availability.

An award under section 611.204 shall
apply to—
(a) Facilities and equipment placed in
service before December 30, 2020; and

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(b) Engineering integration costs
incurred during the period beginning on
December 19, 2007 and ending on
December 30, 2020.
§ 611.206

Existing facilities.

The Secretary shall, in making awards
to those manufacturers that have
existing facilities, give priority to those
facilities that are oldest or have been in
existence for at least 20 years. Such
facilities can currently be sitting idle.
§ 611.207 Small automobile and
component manufacturers.

(a) In this section, the term ‘‘covered
firm’’ means a firm that—
(1) Employs less than 500 individuals;
and
(2) Manufactures automobiles or
components of automobiles.
(b) Set Aside.—Of the amount of
funds that are used to provide awards
for each fiscal year under this subpart,
not less than 10 percent shall be used
to provide awards to covered firms or
consortia led by a covered firm.

freeplay-induced vibration on the
control surfaces on Boeing Model 727,
737, 757, and 767 airplanes. We are
issuing this AD to prevent damage to the
control surface structure during flight,
which could result in loss of control of
the airplane.
DATES: This AD is effective December
17, 2008.
The Director of the Federal Register
approved the incorporation by reference
of a certain publication listed in this AD
as of December 17, 2008.
ADDRESSES: For service information
identified in this AD, contact Boeing
Commercial Airplanes, P.O. Box 3707,
Seattle, Washington 98124–2207;
telephone 206–544–9990; fax 206–766–
5682; e-mail [email protected];
Internet https://
www.myboeingfleet.com.

AGENCY:

Examining the AD Docket
You may examine the AD docket on
the Internet at http://
www.regulations.gov; or in person at the
Docket Management Facility between 9
a.m. and 5 p.m., Monday through
Friday, except Federal holidays. The AD
docket contains this AD, the regulatory
evaluation, any comments received, and
other information. The address for the
Docket Office (telephone 800–647–5527)
is the Document Management Facility,
U.S. Department of Transportation,
Docket Operations, M–30, West
Building Ground Floor, Room W12–140,
1200 New Jersey Avenue SE.,
Washington, DC 20590.
FOR FURTHER INFORMATION CONTACT:
Kathleen Arrigotti, Aerospace Engineer,
Airframe Branch, ANM–120S, FAA,
Seattle Aircraft Certification Office,
1601 Lind Avenue, SW., Renton,
Washington 98057–3356; telephone
(425) 917–6426; fax (425) 917–6590.
SUPPLEMENTARY INFORMATION:

We are adopting a new
airworthiness directive (AD) for all
Boeing Model 747SP series airplanes.
This AD requires repetitive lubrication
of the rudder tab hinges and repetitive
replacement of the rudder tab control
rods. This AD results from reports of

Discussion
We issued a notice of proposed
rulemaking (NPRM) to amend 14 CFR
part 39 to include an airworthiness
directive (AD) that would apply to all
Boeing Model 747SP series airplanes.
That NPRM was published in the
Federal Register on May 23, 2008 (73
FR 30007). That NPRM proposed to

§ 611.208

[Reserved]

§ 611.209 [Reserved]
[FR Doc. E8–26832 Filed 11–6–08; 4:15 pm]
BILLING CODE 6450–01–P

DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
14 CFR Part 39
[Docket No. FAA–2008–0585; Directorate
Identifier 2008–NM–027–AD; Amendment
39–15704; AD 2008–22–09]
RIN 2120–AA64

Airworthiness Directives; Boeing
Model 747SP Series Airplanes
Federal Aviation
Administration (FAA), DOT.
ACTION: Final rule.
SUMMARY:

66737

require repetitive lubrication of the
rudder tab hinges and repetitive
replacement of the rudder tab control
rods.
Comments
We gave the public the opportunity to
participate in developing this AD. We
considered the comment received from
the one commenter.
Request To Revise Discussion Section of
NPRM
Boeing requests that we revise the
Discussion section of the NPRM to
remove the statement that the affected
control surfaces on Boeing Model 727,
737, 757, and 767 airplanes and Boeing
Model 747SP airplanes are similar in
design. Boeing states that the only
similarity between Model 727, 737, 757,
and 767 airplanes and Model 747SP
airplanes pertains to flutter-critical
unbalanced control surfaces of the
identified unsafe condition. Boeing
requests that we revise that section of
the NPRM to state: ‘‘There have been no
reports of freeplay-induced vibration of
the 747SP rudder tabs. However, there
have been reports pertaining to fluttercritical unbalanced control surfaces on
727, 737, 757 and 767 airplanes. This
lubrication and replacement will help
prevent conditions which allow
excessive freeplay of control surfaces.’’
We agree with Boeing that the
Discussion section could be clarified as
Boeing specified. However, since that
section of the preamble does not
reappear in the final rule, no change to
the final rule is necessary.
Conclusion
We reviewed the relevant data,
considered the comment received, and
determined that air safety and the
public interest require adopting the AD
as proposed.
Costs of Compliance
We estimate that this AD affects 7
airplanes of U.S. registry. The following
table provides the estimated costs for
U.S. operators to comply with this AD.
The average labor rate is $80 per work
hour.

ESTIMATED COSTS

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Action

Work hours

Lubrication ....................................
Replacement ................................

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2
16

Parts

Cost per product

None ............................................
$39,511 ........................................

$160, per cycle ............................
40,791, per cycle .........................

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12NOR1

Fleet cost
$1,120, per cycle.
285,537, per cycle.