10 CFR Part 609 submitted 7.29.16

Pt. 609

10 CFR Ch. II (1–1–12 Edition)

within eligible States may apply for planning, implementation and/or training efforts
(list of eligible States and activities to be
supported in any given year as well as costsharing requirements are available from the
program office). Separate applications for
planning/implementation
and
graduate
traineeships are required. Planning/implementation applications must contain information that details development of a Statewide improvement plan for energy-related
research and human resources, while training grant applications must detail the need
for energy-related specific and technical educational disciplines.
(e) Nuclear Engineering Research
The objective of this program is to support
research efforts aimed at strengthening University-based nuclear engineering programs.
Specific areas of basic and applied research
of interest include, but are not limited to: (1)
Material behavior in a radiation environment typical of advanced nuclear power
plants; (2) real-time instrumentation that
identifies and applies innovative measurements technologies in nuclear-related fields;
(3) advanced nuclear reactor concepts; (4) applied nuclear sciences that address improvements in the applications of radiation and
the understanding of the interaction of radiation with matter; (5) engineering science research applicable to advanced nuclear reactor concepts, industry safety and reliability
concerns; (6) neutronics that address improvements in reactor computational methodologies and knowledge of the basic fission
processes; and (7) nuclear thermal hydraulics
that address improvements of models and
analysis of thermal hydraulic behavior in an
advanced nuclear reactor system.

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(f) Used Energy-Related Laboratory Equipment
(ERIE) Program
In accordance with DOE’s responsibility to
encourage research and development in the
energy area, grants of used energy-related
laboratory equipment for use in energy-oriented educational programs in the life, physical and environmental sciences, and engineering are available to universities, colleges and other non-profit educational institutions of higher learning in the United
States. An institution is not required to
have a current DOE grant or contract in
order to participate in this program. The
program office should be contacted for specific information on how to access the list of
eligible equipment under this program. The
cost of care and handling incident to the
grant must be borne by the institution.
9. PROGRAM ANALYSIS
The Office of Program Analysis conducts
assessments to identify research opportuni-

ties in specific areas of interest to DOE programs.

PART 609—LOAN GUARANTEES
FOR PROJECTS THAT EMPLOY INNOVATIVE TECHNOLOGIES
Sec.
609.1 Purpose and scope.
609.2 Definitions.
609.3 Solicitations.
609.4 Submission of Pre-Applications.
609.5 Evaluation of Pre-Applications.
609.6 Submission of Applications.
609.7 Programmatic, technical and financial
evaluation of Applications.
609.8 Term sheets and conditional commitments.
609.9 Closing on the Loan Guarantee Agreement.
609.10 Loan Guarantee Agreement.
609.11 Lender eligibility and servicing requirements.
609.12 Project Costs.
609.13 Principal and interest assistance contract.
609.14 Full faith and credit and incontestability.
609.15 Default, demand, payment, and collateral liquidation.
609.16 Perfection of liens and preservation
of collateral.
609.17 Audit and access to records.
609.18 Deviations.
AUTHORITY: 42 U.S.C. 7254, 16511–16514.
SOURCE: 74 FR 63549, Dec. 4, 2009, unless
otherwise noted.

§ 609.1 Purpose and scope.
(a) This part sets forth the policies
and procedures that DOE uses for receiving, evaluating, and, after consultation with the Department of the
Treasury, approving applications for
loan guarantees to support Eligible
Projects under Section 1703 of Title
XVII of the Energy Policy Act of 2005,
as amended.
(b) Except as set forth in paragraph
(c) of this section, this part applies to
all
Pre-Applications,
Applications,
Conditional Commitments and Loan
Guarantee Agreements to support Eligible Projects under Section 1703 of
Title XVII of the Energy Policy Act of
2005, as amended.
(c) Sections 609.3, 609.4 and 609.5 of
this part shall not apply to any PreApplications, Applications, Conditional
Commitments or Loan Guarantee
Agreements submitted, or entered into,

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as applicable, on or before December
31, 2007; provided, that DOE accepted
the Pre-Application and invited an Application pursuant to such Pre-Application.
(d) Part 1024 of chapter X of title 10
of the Code of Federal Regulations
shall not apply to actions taken under
this part.
§ 609.2 Definitions.
Act means Title XVII of the Energy
Policy Act of 2005 (42 U.S.C. 16511–
16514), as amended.
Administrative Cost of Issuing a Loan
Guarantee means the total of all administrative expenses that DOE incurs during:
(1) The evaluation of a Pre-Application, if a Pre-Application is requested
in a solicitation, and an Application
for a loan guarantee;
(2) The offering of a Term Sheet, executing the Conditional Commitment,
negotiation, and closing of a Loan
Guarantee Agreement; and
(3) The servicing and monitoring of a
Loan Guarantee Agreement, including
during the construction, startup, commissioning, shakedown, and operational phases of an Eligible Project.
Applicant means any person, firm,
corporation, company, partnership, association, society, trust, joint venture,
joint stock company, or other business
entity or governmental non-Federal
entity that has submitted an Application to DOE and has the authority to
enter into a Loan Guarantee Agreement with DOE under the Act.
Application means a comprehensive
written submission in response to a solicitation or a written invitation from
DOE to apply for a loan guarantee pursuant to § 609.6 of this part.
Borrower means any Applicant who
enters into a Loan Guarantee Agreement with DOE and issues Guaranteed
Obligations.
Commercial Technology means a technology in general use in the commercial marketplace in the United States
at the time the Term Sheet is issued by
DOE. A technology is in general use if
it has been installed in and is being
used in three or more commercial
projects in the United States in the
same general application as in the proposed project, and has been in oper-

ation in each such commercial project
for a period of at least five years. The
five-year period shall be measured, for
each project, starting on the in service
date of the project or facility employing that particular technology. For
purposes of this section, commercial
projects include projects that have
been the recipients of a loan guarantee
from DOE under this part.
Conditional Commitment means a
Term Sheet offered by DOE and accepted by the Applicant, with the understanding of the parties that if the Applicant thereafter satisfies all specified
and precedent funding obligations and
all other contractual, statutory and
regulatory requirements, or other requirements, DOE and the Applicant
will execute a Loan Guarantee Agreement: Provided that the Secretary may
terminate a Conditional Commitment
for any reason at any time prior to the
execution of the Loan Guarantee
Agreement; and Provided further that
the Secretary may not delegate this
authority to terminate a Conditional
Commitment.
Contracting Officer means the Secretary of Energy or a DOE official authorized by the Secretary to enter into,
administer and/or terminate DOE Loan
Guarantee Agreements and related
contracts on behalf of DOE.
Credit Subsidy Cost has the same
meaning as ‘‘cost of a loan guarantee’’
in section 502(5)(C) of the Federal Credit Reform Act of 1990 (2 U.S.C.
661a(5)(C)), which is the net present
value, at the time the Loan Guarantee
Agreement is executed, of the following estimated cash flows, discounted to the point of disbursement:
(1) Payments by the Government to
cover defaults and delinquencies, interest subsidies, or other payments; less
(2) Payments to the Government including origination and other fees, penalties, and recoveries; including the effects of changes in loan or debt terms
resulting from the exercise by the Borrower, Eligible Lender or other Holder
of an option included in the Loan Guarantee Agreement.
DOE means the United States Department of Energy.
Eligible lender means:
(1) Any person or legal entity formed
for the purpose of, or engaged in the

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§ 609.2

10 CFR Ch. II (1–1–12 Edition)

business of, lending money, including,
but not limited to, commercial banks,
savings and loan institutions, insurance companies, factoring companies,
investment banks, institutional investors, venture capital investment companies, trusts, or other entities designated as trustees or agents acting on
behalf of bondholders or other lenders;
and
(2) Any person or legal entity that
meets the requirements of § 609.11 of
this part, as determined by DOE; or
(3) The Federal Financing Bank.
Eligible project means a project located in the United States that employs a New or Significantly Improved
Technology that is not a Commercial
Technology, and that meets all applicable requirements of section 1703 of
the Act (42 U.S.C. 16513), the applicable
solicitation and this part.
Equity means cash contributed by the
Borrowers and other principals. Equity
does not include proceeds from the
non-guaranteed portion of Title XVII
loans, proceeds from any other nonguaranteed loans, or the value of any
form of government assistance or support.
Federal Financing Bank means an instrumentality of the United States
government created by the Federal Financing Bank Act of 1973 (12 U.S.C. 2281
et seq). The Bank is under the general
supervision of the Secretary of the
Treasury.
Guaranteed Obligation means any loan
or other debt obligation of the Borrower for an Eligible Project for which
DOE guarantees all or any part of the
payment of principal and interest
under a Loan Guarantee Agreement entered into pursuant to the Act.
Holder means any person or legal entity that owns a Guaranteed Obligation
or has lawfully succeeded in due course
to all or part of the rights, title, and
interest in a Guaranteed Obligation,
including any nominee or trustee empowered to act for the Holder or Holders.
Intercreditor Agreement means any
agreement or instrument among DOE
and one or more other persons providing financing or other credit arrangements or that otherwise provides
for rights of DOE, in each case, in form
and substance satisfactory to DOE and

entered into or accepted by DOE in
connection with a DOE loan guarantee
upon a determination by DOE that
such agreement or instrument is reasonable and necessary to protect the
interests of the United States, and addressing such matters as collateral
sharing, priorities (subject always to
Section 1702(d)(3) of Title XVII) and
voting rights among creditors and
other intercreditor arrangements, as
such agreement or instrument may be
amended or modified from time to time
with the consent of DOE.
Loan Agreement means a written
agreement between a Borrower and an
Eligible Lender or other Holder containing the terms and conditions under
which the Eligible Lender or other
Holder will make loans to the Borrower
to start and complete an Eligible
Project.
Loan Guarantee Agreement means a
written agreement that, when entered
into by DOE and a Borrower, an Eligible Lender or other Holder, pursuant to
the Act, establishes the obligation of
DOE to guarantee the payment of all
or a portion of the principal and interest on specified Guaranteed Obligations
of a Borrower to Eligible Lenders or
other Holders subject to the terms and
conditions specified in the Loan Guarantee Agreement.
New or Significantly Improved Technology means a technology concerned
with the production, consumption or
transportation of energy and that is
not a Commercial Technology, and
that has either:
(1) Only recently been developed, discovered or learned; or
(2) Involves or constitutes one or
more meaningful and important improvements in productivity or value, in
comparison to Commercial Technologies in use in the United States at
the time the Term Sheet is issued.
OMB means the Office of Management and Budget in the Executive Office of the President.
Pre-Application means a written submission in response to a DOE solicitation that broadly describes the project
proposal, including the proposed role of
a DOE loan guarantee in the project,

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and the eligibility of the project to receive a loan guarantee under the applicable solicitation, the Act and this
part.
Project costs means those costs, including escalation and contingencies,
that are to be expended or accrued by
Borrower and are necessary, reasonable, customary and directly related to
the design, engineering, financing, construction, startup, commissioning and
shakedown of an Eligible Project, as
specified in § 609.12 of this part. Project
costs do not include costs for the items
set forth in § 609.12(c) of this part.
Project Sponsor means any person,
firm, corporation, company, partnership, association, society, trust, joint
venture, joint stock company or other
business entity that assumes substantial responsibility for the development,
financing, and structuring of a project
eligible for a loan guarantee and, if not
the Applicant, owns or controls, by
itself and/or through individuals in
common or affiliated business entities,
a five percent or greater interest in the
proposed Eligible Project, or the Applicant.
Secretary means the Secretary of Energy or a duly authorized designee or
successor in interest.
Term Sheet means an offering document issued by DOE that specifies the
detailed terms and conditions under
which DOE may enter into a Conditional Commitment with the Applicant. A Term Sheet imposes no obligation on the Secretary to enter into a
Conditional Commitment.
United States means the several
States, the District of Columbia, the
Commonwealth of Puerto Rico, the
Virgin Islands, Guam, American Samoa
or any territory or possession of the
United States of America.
§ 609.3 Solicitations.
(a) DOE may issue solicitations to invite the submission of Pre-Applications
or Applications for loan guarantees for
Eligible Projects. DOE must issue a solicitation before proceeding with other
steps in the loan guarantee process including issuance of a loan guarantee. A
Project Sponsor or Applicant may only
submit one Pre-Application or Application for one project using a particular
technology. A Project Sponsor or Ap-

plicant, in other words, may not submit a Pre-Application or Application
for multiple projects using the same
technology.
(b) Each solicitation must include, at
a minimum, the following information:
(1) The dollar amount of loan guarantee authority potentially being made
available by DOE in that solicitation;
(2) The place and time for response
submission;
(3) The name and address of the DOE
representative
whom
a
potential
Project Sponsor may contact to receive
further information and a copy of the
solicitation;
(4) The form, format, and page limits
applicable to the response submission;
(5) The amount of the application fee
(First Fee), if any, that will be required;
(6) The programmatic, technical, financial and other factors the Secretary
will use to evaluate response submissions, including the loan guarantee
percentage requested by the Applicant
and the relative weightings that DOE
will use when evaluating those factors;
and
(7) Such other information as DOE
may deem appropriate.
§ 609.4 Submission of Pre-Applications.
In response to a solicitation requesting the submission of Pre-Applications,
either Project Sponsors or Applicants
may submit Pre-Applications to DOE.
The information submitted in or in
connection with Pre-Applications will
be treated as provided in 10 CFR 600.15
and must be marked as provided in 10
CFR 600.15(b). Pre-Applications must
meet all requirements specified in the
solicitation and this part. At a minimum, each Pre-Application must contain all of the following:
(a) A cover page signed by an individual with full authority to bind the
Project Sponsor or Applicant that attests to the accuracy of the information in the Pre-Application, and that
binds the Project Sponsor(s) or Applicant to the commitments made in the
Pre-Application. In addition, the information requested in paragraphs (b) and
(c) of this section should be submitted
in a volume one and the information
requested in paragraphs (d) through (h)
of this section should be submitted in a

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§ 609.4

10 CFR Ch. II (1–1–12 Edition)

volume two, to expedite the DOE review process.
(b) An executive summary briefly encapsulating the key project features
and attributes of the proposed project
(for clarity, with respect to any project
in which project assets or facilities are
jointly owned by the Applicant and one
or more other persons, each of whom
owns an undivided ownership interest
in such project assets or facilities, the
Applicant may submit a project proposal with respect to its undivided
ownership interest in such project assets or facilities);
(c) A business plan which includes an
overview of the proposed project, including:
(1) A description of the Project Sponsor, including all entities involved, and
its experience in project investment,
development, construction, operation
and maintenance;
(2) A description of the new or significantly improved technology to be
employed in the project, including:
(i) A report detailing its successes
and failures during the pilot and demonstration phases;
(ii) The technology’s commercial applications;
(iii) The significance of the technology to energy use or emission control;
(iv) How and why the technology is
‘‘new’’ or ‘‘significantly improved’’
compared to technology already in general use in the commercial marketplace in the United States;
(v) Why the technology to be employed in the project is not in ‘‘general
use;’’
(vi) The owners or controllers of the
intellectual property incorporated in
and utilized by such technologies; and
(vii) The manufacturer(s) and licensee(s), if any, authorized to make
the technology available in the United
States, the potential for replication of
commercial use of the technology in
the United States, and whether and
how the technology is or will be made
available in the United States for further commercial use;
(3) The estimated amount, in reasonable detail, of the total Project Costs;
(4) The timeframe required for construction and commissioning of the
project;

(5) A description of any primary offtake or other revenue-generating
agreements that will provide the primary sources of revenues for the
project, including repayment of the
debt obligations for which a guarantee
is sought.
(6) An overview of how the project
complies with the eligibility requirements in section 1703 of the Act (42
U.S.C. 16513);
(7) An outline of the potential environmental impacts of the project and
how these impacts will be mitigated;
(8) A description of the anticipated
air pollution and/or anthropogenic
greenhouse gas reduction benefits and
how these benefits will be measured
and validated; and
(9) A list of all of the requirements
contained in this part and the solicitation and where in the Pre-Application
these requirements are addressed;
(d) A financing plan overview describing:
(1) The amount of equity to be invested and the sources of such equity;
(2) The amount of the total debt obligations to be incurred and the funding
sources of all such debt if available;
(3) The amount of the Guaranteed
Obligation as a percentage of total
project debt; and as a percentage of
total project cost; and
(4) A financial model detailing the investments in and the cash flows generated and anticipated from the project
over the project’s expected life-cycle,
including a complete explanation of
the facts, assumptions, and methodologies in the financial model;
(e) An explanation of what estimated
impact the loan guarantee will have on
the interest rate, debt term, and overall financial structure of the project;
(f) Where the Federal Financing
Bank is not the lender, a copy of a letter from an Eligible Lender or other
Holder(s) expressing its commitment
to provide, or interest in providing, the
required debt financing necessary to
construct and fully commission the
project;
(g) A copy of the equity commitment
letter(s) from each of the Project Sponsors and a description of the sources
for such equity; and

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§ 609.6

(h) A commitment to pay the Application fee (First Fee), if invited to submit an Application.

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[74 FR 63549, Dec. 4, 2009, as amended at 76
FR 26582, May 9, 2011]

§ 609.5 Evaluation of Pre-Applications.
(a) Where Pre-Applications are requested in a solicitation, DOE will conduct an initial review of the Pre-Application to determine whether:
(1) The proposal is for an Eligible
Project;
(2) The submission contains the information required by § 609.4 of this
part; and
(3) The submission meets all other requirements of the applicable solicitation.
(b) If a Pre-Application fails to meet
the requirements of paragraph (a) of
this section, DOE may deem it non-responsive and eliminate it from further
review.
(c) If DOE deems a Pre-Application
responsive, DOE will evaluate:
(1) The commercial viability of the
proposed project;
(2) The technology to be employed in
the project;
(3) The relevant experience of the
principal(s); and
(4) The financial capability of the
Project Sponsor (including personal
and/or business credit information of
the principal(s)).
(d) After the evaluation described in
paragraph (c) of this section, DOE will
determine if there is sufficient information in the Pre-Application to assess
the technical and commercial viability
of the proposed project and/or the financial capability of the Project Sponsor and to assess other aspects of the
Pre-Application. DOE may ask for additional information from the Project
Sponsor during the review process and
may request one or more meetings
with the Project Sponsor. Any additional information submitted will be
treated as provided in 10 CFR 600.15 and
must be marked as provided in 10 CFR
600.15(b).
(e) After reviewing a Pre-Application
and other information acquired under
paragraph (c) of this section, DOE may
provide a written response to the
Project Sponsor or Applicant either inviting the Applicant to submit an Ap-

plication for a loan guarantee and
specifying the amount of the Application filing fee (First Fee) or advising
the Project Sponsor that the project
proposal will not receive further consideration. Neither the Pre-Application
nor any written or other feedback that
DOE may provide in response to the
Pre-Application eliminates the requirement for an Application.
(f) No response by DOE to, or communication by DOE with, a Project Sponsor, or an Applicant submitting a PreApplication or subsequent Application
shall impose any obligation on DOE to
enter into a Loan Guarantee Agreement.
[74 FR 63549, Dec. 4, 2009, as amended at 76
FR 26582, May 9, 2011]

§ 609.6 Submission of Applications.
(a) In response to a solicitation or
written invitation to submit an Application, an Applicant submitting an Application must meet all requirements
and provide all information specified in
the solicitation and/or invitation and
this part. The information submitted
in or in connection with Applications
will be treated as provided in 10 CFR
600.15 and must be marked as provided
in 10 CFR 600.15(b).
(b) An Application must include, at a
minimum, the following information
and materials:
(1) A completed Application form
signed by an individual with full authority to bind the Applicant and the
Project Sponsors;
(2) Payment of the Application filing
fee (First Fee) for the Pre-Application,
if any, and Application phase;
(3) A detailed description of all material amendments, modifications, and
additions made to the information and
documentation provided in the Pre-Application, if a Pre-Application was requested in the solicitation, including
any changes in the proposed project’s
financing structure or other terms;
(4) A description of how and to what
measurable extent the project avoids,
reduces, or sequesters air pollutants
and/or anthropogenic emissions of
greenhouse gases, including how to
measure and verify those benefits;
(5) A description of the nature and
scope of the proposed project, including:

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§ 609.6

10 CFR Ch. II (1–1–12 Edition)

(i) Key milestones;
(ii) Location of the project;
(iii) Identification and commercial
feasibility of the new or significantly
improved technology(ies) to be employed in the project;
(iv) How the Applicant intends to employ such technology(ies) in the
project; and
(v) How the Applicant intends to assure, to the extent possible, the further
commercial availability of the technology(ies) in the United States;
(vi) For clarity, with respect to any
project in which project assets or facilities are jointly owned by the Applicant and one or more other persons,
each of whom owns an undivided ownership interest in such project assets or
facilities, the Applicant may submit a
project proposal with respect to its undivided ownership interest in such
project assets or facilities.
(6) A detailed explanation of how the
proposed project qualifies as an Eligible Project;
(7) A detailed estimate of the total
Project Costs together with a description of the methodology and assumptions used;
(8) A detailed description of the engineering and design contractor(s), construction contractor(s), equipment supplier(s), and construction schedules for
the project, including major activity
and cost milestones as well as the performance
guarantees,
performance
bonds, liquidated damages provisions,
and equipment warranties to be provided;
(9) A detailed description of the operations and maintenance provider(s),
the plant operating plan, estimated
staffing requirements, parts inventory,
major maintenance schedule, estimated annual downtime, and performance guarantees and related liquidated
damage provisions, if any;
(10) A description of the management
plan of operations to be employed in
carrying out the project, and information concerning the management experience of each officer or key person associated with the project;
(11) A detailed description of the
project
decommissioning,
deconstruction, and disposal plan, and
the anticipated costs associated therewith;

(12) An analysis of the market for
any product to be produced by the
project, including relevant economics
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;
(13) A detailed description of the
overall financial plan for the proposed
project, including all sources and uses
of funding, equity and debt, and the liability of parties associated with the
project over the term of the Loan
Guarantee Agreement;
(14) A copy of all material agreements, whether entered into or proposed, relevant to the investment, design, engineering, financing, construction, startup commissioning, shakedown, operations and maintenance of
the project;
(15) A copy of the financial closing
checklist for the equity and debt to the
extent available;
(16) 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 Guaranteed 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;
(17) 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 Applicant and parties providing 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;
(18) A copy of all legal opinions, and
other material reports, analyses, and
reviews related to the project;
(19) An independent engineering report prepared by an engineer with experience in the industry and familiarity with similar projects. The report

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Department of Energy

§ 609.7

should address: the project’s siting and
permitting, engineering and design,
contractual
requirements,
environmental compliance, testing and commissioning and operations and maintenance;
(20) Credit history of the Applicant
and, if appropriate, any party who
owns or controls, by itself and/or
through individuals in common or affiliated business entities, a five percent
or greater interest in the project or the
Applicant;
(21) A preliminary credit assessment
for the project without a loan guarantee from a nationally recognized rating agency for projects where the estimated total Project Costs exceed $25
million. For projects where the total
estimated Project Costs are $25 million
or less and where conditions justify, in
the sole discretion of the Secretary,
DOE may require such an assessment;
(22) 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;
(23) A report containing an analysis
of the potential environmental impacts
of the project that will enable DOE to
assess whether the project will comply
with all applicable environmental requirements, and that will enable DOE
to undertake and complete any necessary reviews under the National Environmental Policy Act of 1969;
(24) 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
Guaranteed Obligations, 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;
(25) An analysis demonstrating that,
at the time of the Application, there is
a reasonable prospect that Borrower
will be able to repay the Guaranteed
Obligations (including interest) accord-

ing to their terms, and a complete description of the operational and financial assumptions and methodologies on
which this demonstration is based;
(26) Written affirmation from an officer of the Eligible Lender or other
Holder confirming that it is in good
standing with DOE’s and other Federal
agencies’ loan guarantee programs;
(27) A list of all of the requirements
contained in this part and the solicitation and where in the Application these
requirements are addressed;
(28) A statement from the Applicant
that it believes that there is ‘‘reasonable prospect’’ that the Guaranteed Obligations will be fully paid from project
revenue; and
(29) Any other information requested
in the invitation to submit an Application or requests from DOE in order to
clarify an Application;
(c) DOE will not consider any Application complete unless the Applicant
has paid the First Fee and the Application is signed by the appropriate entity
or entities with the authority to bind
the Applicant to the commitments and
representations made in the Application.
[74 FR 63549, Dec. 4, 2009, as amended at 76
FR 26582, May 9, 2011]

§ 609.7 Programmatic, technical and financial evaluation of Applications.
(a) In reviewing completed Applications, and in prioritizing and selecting
those to whom a Term Sheet should be
offered, DOE will apply the criteria set
forth in the Act, the applicable solicitation, and this part. Applications will
be considered in a competitive process,
i.e. each Application will be evaluated
against other Applications responsive
to the Solicitation. Greater weight will
be given to applications that rely upon
a smaller guarantee percentage, all
else being equal. Concurrent with its
review process, DOE will consult with
the Secretary of the Treasury regarding the terms and conditions of the potential loan guarantee. Applications
will be denied if:
(1) The project will be built or operated outside the United States;
(2) The project is not ready to be employed commercially in the United
States, cannot yield a commercially
viable product or service in the use

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§ 609.7

10 CFR Ch. II (1–1–12 Edition)

proposed in the project, does not have
the potential to be employed in other
commercial projects in the United
States, and is not or will not be available for further commercial use in the
United States;
(3) The entity or person issuing the
loan or other debt obligations subject
to the loan guarantee is not an Eligible
Lender or other Holder, as defined in
§ 609.11 of this part;
(4) The project is for demonstration,
research, or development.
(5) The project does not avoid, reduce
or sequester air pollutants or anthropogenic emissions of greenhouse gases;
or
(6) The Applicant will not provide an
equity contribution.
(b) In evaluating Applications, DOE
will consider the following factors:
(1) To what measurable extent the
project avoids, reduces, or sequesters
air pollutants or anthropogenic emissions of greenhouses gases;
(2) To what extent the new or significantly improved technology to be employed in the project, as compared to
Commercial Technology in general use
in the United States, is ready to be employed commercially in the United
States, can be replicated, yields a commercially viable project or service in
the use proposed in the project, has potential to be employed in other commercial projects in the United States,
and is or will be available for further
commercial use in the United States;
(3) To what extent the new or significantly improved technology used in the
project constitutes an important improvement in technology, as compared
to Commercial Technology, used to
avoid, reduce or sequester air pollutants or anthropogenic emissions of
greenhouse gases, and the Applicant
has a plan to advance or assist in the
advancement of that technology into
the commercial marketplace;
(4) The extent to which the requested
amount of the loan guarantee, the requested amount of Guaranteed Obligations and, if applicable, the expected
amount of any other financing or credit arrangements are reasonable relative to the nature and scope of the
project;
(5) The total amount and nature of
the Eligible Project Costs and the ex-

tent to which Project Costs are funded
by Guaranteed Obligations;
(6) The likelihood that the project
will be ready for full commercial operations in the time frame stated in the
Application;
(7) The amount of equity commitment to the project by the Applicant
and other principals involved in the
project;
(8) Whether there is sufficient evidence that the Applicant will diligently pursue the project, including
initiating and completing the project
in a timely manner;
(9) Whether and to what extent the
Applicant will rely upon other Federal
and non-Federal governmental assistance such as grants, tax credits, or
other loan guarantees to support the financing, construction, and operation of
the project and how such assistance
will impact the project;
(10) The feasibility of the project and
likelihood that the project will produce
sufficient revenues to service the
project’s debt obligations over the life
of the loan guarantee and assure timely repayment of Guaranteed Obligations;
(11) The levels of safeguards provided
to the Federal government in the event
of default through collateral, warranties, and other assurance of repayment
described in the Application, including
the nature of any anticipated intercreditor arrangements;
(12) The Applicant’s capacity and expertise to successfully operate the
project, based on factors such as financial soundness, management organization, and the nature and extent of corporate and personal experience;
(13) The ability of the applicant to
ensure that the project will comply
with all applicable laws and regulations, including all applicable environmental statutes and regulations;
(14) The levels of market, regulatory,
legal, financial, technological, and
other risks associated with the project
and their appropriateness for a loan
guarantee provided by DOE;
(15) Whether the Application contains sufficient information, including
a detailed description of the nature and
scope of the project and the nature,
scope, and risk coverage of the loan

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Department of Energy

§ 609.9

guarantee sought to enable DOE to perform a thorough assessment of the
project; and
(16) Such other criteria that DOE
deems relevant in evaluating the merits of an Application.
(c) During the Application review
process DOE may raise issues or concerns that were not raised during the
Pre-Application review process where a
Pre-Application was requested in the
applicable solicitation. Any additional
information submitted to DOE will be
treated as provided in 10 CFR 600.15 and
must be marked as provided in 10 CFR
600.15(b).
(d) If DOE determines that a project
may be suitable for a loan guarantee,
DOE will notify the Applicant and Eligible Lender or other Holder in writing
and provide them with a Term Sheet. If
DOE reviews an Application and decides not to proceed further with the
issuance of a Term Sheet, DOE will inform the Applicant in writing of the
reason(s) for denial.

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[74 FR 63549, Dec. 4, 2009, as amended at 76
FR 26582, May 9, 2011]

§ 609.8 Term sheets and conditional
commitments.
(a) DOE, after review and evaluation
of the Application, additional information requested and received by DOE,
potentially including a preliminary
credit rating or credit assessment, and
information obtained as the result of
meeting with the Applicant and the Eligible Lender or other Holder, may
offer to an Applicant and the Eligible
Lender or other Holder detailed terms
and conditions that must be met, including terms and conditions that
must be met by the Applicant and the
Eligible Lender or other Holder.
(b) The terms and conditions required
by DOE will be expressed in a written
Term Sheet signed by a Contracting
Officer and addressed to the Applicant
and the Eligible Lender or other Holder, where appropriate. The Term Sheet
will request that the Project Sponsor
and the Eligible Lender or other Holder
express agreement with the terms and
conditions contained in the Term
Sheet by signing the Term Sheet in the
designated place. Each person signing
the Term Sheet must be a duly authorized official or officer of the Applicant

and Eligible Lender or other Holder.
The Term Sheet will include an expiration date on which the terms offered
will expire unless the Contracting Officer agrees in writing to extend the expiration date.
(c) The Applicant and/or the Eligible
Lender or other Holder may respond to
the Term Sheet offer in writing or may
request discussions or meetings on the
terms and conditions contained in the
Term Sheet, including requests for
clarifications or revisions. When DOE,
the Applicant, and the Eligible Lender
or other Holder agree on all of the final
terms and conditions and all parties
sign the Term Sheet, the Term Sheet
becomes a Conditional Commitment.
When and if all of the terms and conditions specified in the Conditional Commitment have been met, DOE and the
Applicant may enter into a Loan Guarantee Agreement.
(d) DOE’s obligations under each
Conditional Commitment are conditional upon statutory authority having
been provided in advance of the execution of the Loan Guarantee Agreement
sufficient under FCRA and Title XVII
for DOE to execute the Loan Guarantee
Agreement, and either an appropriation has been made or a borrower has
paid into the Treasury sufficient funds
to cover the full Credit Subsidy Cost
for the loan guarantee that is the subject of the Conditional Commitment.
(e) The Applicant is required to pay
fees to DOE to cover the Administrative Cost of Issuing a Loan Guarantee
for the period of the Term Sheet
through the closing of the Loan Guarantee Agreement (Second Fee).
§ 609.9 Closing on the Loan Guarantee
Agreement.
(a) Subsequent to entering into a
Conditional Commitment with an Applicant, DOE, after consultation with
the Applicant, will set a closing date
for execution of a Loan Guarantee
Agreement.
(b) By the closing date, the Applicant
and the Eligible Lender or other Holder
must have satisfied all of the detailed
terms and conditions contained in the

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§ 609.10

10 CFR Ch. II (1–1–12 Edition)

Conditional Commitment and other related documents and all other contractual, statutory, and regulatory requirements. If the Applicant and the Eligible Lender or other Holder has not satisfied all such terms and conditions by
the closing date, the Secretary may, in
his/her sole discretion, set a new closing date or terminate the Conditional
Commitment.
(c) In order to enter into a Loan
Guarantee Agreement at closing:
(1) DOE must have received authority
in an appropriations act for the loan
guarantee; and
(2) All other applicable statutory,
regulatory, or other requirements must
be fulfilled.
(d) Prior to, or on, the closing date,
DOE will ensure that:
(1) Pursuant to section 1702(b) of the
Act, DOE has received payment of the
Credit Subsidy Cost of the loan guarantee, as defined in § 609.2 of this part
from either (but not from a combination) of the following:
(i) A Congressional appropriation of
funds; or
(ii) A payment from the Borrower.
(2) Pursuant to section 1702(h) of the
Act, DOE has received from the Borrower the First and Second Fees and, if
applicable, the Third fee, or portions
thereof, for the Administrative Cost of
Issuing the Loan Guarantee, as specified in the Loan Guarantee Agreement;
(3) OMB has reviewed and approved
DOE’s calculation of the Credit Subsidy Cost of the loan guarantee;
(4) The Department of the Treasury
has been consulted as to the terms and
conditions of the Loan Guarantee
Agreement;
(5) The Loan Guarantee Agreement
and related documents contain all
terms and conditions DOE deems reasonable and necessary to protect the
interest of the United States; and
(6) All conditions precedent specified
in the Conditional Commitment are either satisfied or waived by a Contracting Officer and all other applicable contractual, statutory, and regulatory requirements are satisfied.
(e) Not later than the period approved in writing by the Contracting
Officer, which may not be less than 30
days prior to the closing date, the Applicant must provide in writing up-

dated project financing information if
the terms and conditions of the financing arrangements changed between
execution of the Conditional Commitment and that date. The Conditional
Commitment must be updated to reflect the revised terms and conditions.
(f) Where the total Project Costs for
an Eligible Project are projected to exceed $25 million, the Applicant must
provide a credit rating from a nationally recognized rating agency reflecting the revised Conditional Commitment for the project without a Federal
guarantee. Where total Project Costs
are projected to be $25 million or less
than $25 million, the Secretary may, on
a case-by-case basis, require a credit
rating. If a rating is required, an updated rating must be provided to the
Secretary not later than 30 days prior
to closing.
(g) Changes in the terms and conditions of the financing arrangements
will affect the Credit Subsidy Cost for
the Loan Guarantee Agreement. DOE
may postpone the expected closing date
pursuant to any changes submitted
under paragraph (e) and (f) of this section. In addition, DOE may choose to
terminate the Conditional Commitment.
§ 609.10

Loan Guarantee Agreement.

(a) Only a Loan Guarantee Agreement executed by a duly authorized
DOE Contracting Officer can contractually obligate DOE to guarantee loans
or other debt obligations.
(b) DOE is not bound by oral representations made during the Pre-Application stage, if Pre-Applications
were solicited, or Application stage, or
during any negotiation process.
(c) Except if explicitly authorized by
an Act of Congress, no funds obtained
from the Federal Government, or from
a loan or other instrument guaranteed
by the Federal Government, may be
used to pay for Credit Subsidy Costs,
administrative fees, or other fees
charged by or paid to DOE relating to
the Title XVII program or any loan
guarantee there under.
(d) Prior to the execution by DOE of
a Loan Guarantee Agreement, DOE
must ensure that the following requirements and conditions are satisfied:

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Department of Energy

§ 609.10

(1) The project qualifies as an Eligible Project under the Act and is not a
research, development, or demonstration project or a project that employs
Commercial Technologies in service in
the United States;
(2) The project will be constructed
and operated in the United States, the
employment of the new or significantly
improved technology in the project has
the potential to be replicated in other
commercial projects in the United
States, and this technology is or is
likely to be available in the United
States for further commercial application;
(3) The face value of the debt guaranteed by DOE is limited to no more than
80 percent of total Project Costs;
(4)(i) Where DOE guarantees 100 percent of the Guaranteed Obligation, the
loan shall be funded by the Federal Financing Bank;
(ii) Where DOE guarantees more than
90 percent of the Guaranteed Obligation, the guaranteed portion cannot be
separated from or ‘‘stripped’’ from the
non-guaranteed portion of the Guaranteed Obligation if the loan is participated, syndicated or otherwise resold
in the secondary market;
(iii) Where DOE guarantees 90 percent or less of the Guaranteed Obligation, the guaranteed portion may be
separated from or ‘‘stripped’’ from the
non-guaranteed portion of the Guaranteed Obligation, if the loan is participated, syndicated or otherwise resold
in the secondary debt market;
(5) The Borrower and other principals
involved in the project have made or
will make a significant equity investment in the project;
(6) The Borrower is obligated to
make full repayment of the principal
and interest on the Guaranteed Obligation and other project debt over a period of up to the lesser of 30 years or 90
percent of the projected useful life of
the project’s major physical assets, as
calculated in accordance with generally accepted accounting principles
and practices. The non-guaranteed portion (if any) of any Guaranteed Obligation must be repaid on a pro-rata basis,
and may not be repaid on a shorter or
faster amortization schedule than the
guaranteed portion. Any project-related financing or credit arrangement

(other than the Guaranteed Obligation)
may have a shorter or faster amortization schedule than the Guaranteed Obligation if DOE determines that the resulting financing structure of the
project—
(i) Allocates to DOE a reasonably
proportionate share of the default risk,
in light of—
(A) DOE’s share of the total project
financing,
(B) Risk allocation among the credit
providers, and
(C) Internal and external credit enhancements; and
(ii) Is appropriate to assure reasonable prospect of repayment of the principal of and interest on the DOE Guaranteed Obligation and to protect the
interests of the United States in the
case of default;
(7) The loan guarantee does not finance, either directly or indirectly,
tax-exempt debt obligations, consistent with the requirements of section 149(b) of the Internal Revenue
Code;
(8) The amount of the loan guaranteed, when combined with other funds
committed to the project, will be sufficient to carry out the project, including adequate contingency funds;
(9) There is a reasonable prospect of
repayment by Borrower of the principal of and interest on the Guaranteed
Obligations and other project debt;
(10) The Borrower has pledged project
assets and other collateral or surety,
including non project-related assets,
determined by DOE to be necessary to
secure the repayment of the Guaranteed Obligations;
(11) The Loan Guarantee Agreement
and related documents include detailed
terms and conditions necessary and appropriate to protect the interest of the
United States in the case of default, including ensuring availability of all the
intellectual property rights, technical
data including software, and technology necessary for any person or entity selected, including DOE, to complete, operate, convey, and dispose of
the defaulted project;
(12) The interest rate on any Guaranteed Obligation is determined by DOE,
after consultation with the Treasury
Department, to be reasonable, taking
into account the range of interest rates

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§ 609.10

10 CFR Ch. II (1–1–12 Edition)

prevailing in the private sector for
similar obligations of comparable risk
guaranteed by the Federal government;
(13) Any Guaranteed Obligation is
not subordinate to any loan or other
debt obligation;
(14) There is satisfactory evidence
that Borrower and Eligible Lenders or
other Holders are willing, competent,
and capable of performing the terms
and conditions of the Guaranteed Obligations and other debt obligation and
the Loan Guarantee Agreement, and
will diligently pursue the project;
(15) The Borrower has made the initial (or total) payment of fees for the
Administrative Cost of Issuing a Loan
Guarantee for the construction and
operational phases of the project
(Third Fee), as specified in the Conditional Commitment;
(16) The Eligible Lender, other Holder
or servicer has taken and is obligated
to continue to take those actions necessary to perfect and maintain liens on
assets which are pledged as collateral
for the Guaranteed Obligation;
(17) If Borrower is to make payment
in full for the Credit Subsidy Cost of
the loan guarantee pursuant to section
1702(b)(2) of the Act, such payment
must be received by DOE prior to, or at
the time of, closing;
(18) DOE or its representatives have
access to the project site at all reasonable times in order to monitor the performance of the project;
(19) DOE, the Eligible Lender, or
other Holder and Borrower have
reached an agreement as to the information that will be made available to
DOE and the information that will be
made publicly available;
(20) The prospective Borrower has
filed applications for or obtained any
required regulatory approvals for the
project and is in compliance, or
promptly will be in compliance, where
appropriate, with all Federal, State,
and local regulatory requirements;
(21) The Borrower has no delinquent
Federal debt, including tax liabilities,
unless the delinquency has been resolved with the appropriate Federal
agency in accordance with the standards of the Debt Collection Improvement Act of 1996;
(22) The Loan Guarantee Agreement
and related agreements contain such

other terms and conditions as DOE
deems reasonable and necessary to protect the interests of the United States,
including without limitation provisions for (i) such collateral and other
credit support for the Guaranteed Obligation, and (ii) such collateral sharing,
priorities (subject always to Section
1702(d)(3) of Title XVII) and voting
rights among creditors and other intercreditor arrangements as, in each case,
DOE deems reasonable and necessary
to protect the interests of the United
States; and
(23)(i) The Lender is an Eligible
Lender, as defined in § 609.2 of this part,
and meets DOE’s lender eligibility and
performance requirement contained in
§§ 609.11 (a) and (b) of this part; and
(ii) The servicer meets the servicing
performance requirements of § 609.11(c)
of this part.
(e) The Loan Guarantee Agreement
must provide that, in the event of a default by the Borrower:
(1) Interest accrues on the Guaranteed Obligations at the rate stated in
the Loan Guarantee Agreement or
Loan Agreement, until DOE makes full
payment of the defaulted Guaranteed
Obligations and, except when debt is
funded through the Federal Financing
Bank, DOE is not required to pay any
premium, default penalties, or prepayment penalties;
(2) Upon payment of the Guaranteed
Obligations by DOE, DOE is subrogated
to the rights of the Holders of the debt,
including all related liens, security,
and collateral rights;
(3) The Eligible Lender or other
servicer acting on DOE’s behalf is obligated to take those actions necessary
to perfect and maintain liens on assets
which are pledged as collateral for the
Guaranteed Obligations;
(4) The holder of pledged collateral is
obligated to take such actions as DOE
may reasonably require to provide for
the care, preservation, protection, and
maintenance of such collateral so as to
enable the United States to achieve
maximum recovery upon default by the
Borrower on the Guaranteed Obligations;
(f) The Loan Guarantee Agreement
must contain audit provisions which
provide, in substance, as follows:

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Department of Energy

§ 609.11

(1) The Eligible Lender or other Holder or other party servicing the Guaranteed Obligations, as applicable, and the
Borrower, must keep such records concerning the project as are necessary to
facilitate an effective and accurate
audit and performance evaluation of
the project as required in § 609.17 of this
part; and
(2) DOE and the Comptroller General,
or their duly authorized representatives, must have access, for the purpose
of audit and examination, to any pertinent books, documents, papers, and
records of the Borrower, Eligible Lender or other Holder, or other party servicing the Guaranteed Obligations, as
applicable. Examination of records
may be made during the regular business hours of the Borrower, Eligible
Lender or other Holder, or other party
servicing the Guaranteed Obligations,
or at any other time mutually convenient as required in § 609.17 of this part.
(g)(1) An Eligible Lender or other
Holder may sell, assign or transfer a
Guaranteed Obligation to another Eligible Lender that meets the requirements of § 609.11 of this part. Such Eligible Lender to which a Guaranteed
Obligation is assigned or transferred, is
required to fulfill all servicing, monitoring, and reporting requirements
contained in the Loan Guarantee
Agreement and these regulations if the
transferring Eligible Lender was performing these functions and transfer
such functions to the new Eligible
Lender. Any assignment or transfer,
however, of the servicing, monitoring,
and reporting functions must be approved by DOE in writing in advance of
such assignment.
(2) The Secretary, or the Secretary’s
designee or contractual agent, for the
purpose of identifying Holders with the
right to receive payment under the
guarantees shall include in the Loan
Guarantee Agreement or related documents a procedure for tracking and
identifying Holders of Guarantee Obligations. These duties usually will be
performed by the servicer. Any contractual agent approved by the Secretary to perform this function cannot
transfer or assign this responsibility
without the prior written consent of
the Secretary.

§ 609.11 Lender eligibility and servicing requirements.
(a) An Eligible Lender shall meet the
following requirements:
(1) Not be debarred or suspended from
participation in a Federal government
contract (under 48 CFR part 9.4) or participation in a non-procurement activity (under a set of uniform regulations
implemented for numerous agencies,
such as DOE, at 2 CFR part 180);
(2) Not be delinquent on any Federal
debt or loan;
(3) Be legally authorized to enter into
loan guarantee transactions authorized
by the Act and these regulations and is
in good standing with DOE and other
Federal agency loan guarantee programs;
(4) Be able to demonstrate, or has access to, experience in originating and
servicing loans for commercial projects
similar in size and scope to the project
under consideration; and
(5) Be able to demonstrate experience
or capability as the lead lender or underwriter by presenting evidence of its
participation in large commercial
projects or energy-related projects or
other relevant experience; or
(6) Be the Federal Financing Bank.
(b) When performing its duties to review and evaluate a proposed Eligible
Project prior to the submission of a
Pre-Application or Application, as appropriate, by the Project Sponsor
through the execution of a Loan Guarantee Agreement, the Eligible Lender
or DOE if loans are funded by the Federal Financing Bank, shall exercise the
level of care and diligence that a reasonable and prudent lender would exercise when reviewing, evaluating and
disbursing a loan made by it without a
Federal guarantee.
(c) The servicing duties shall be performed by the Eligible Lender, DOE or
other servicer if approved by the Secretary. When performing the servicing
duties the Eligible Lender, DOE or
other servicer shall exercise the level
of care and diligence that a reasonable
and prudent lender would exercise
when servicing a loan made without a
Federal guarantee, including:

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10 CFR Ch. II (1–1–12 Edition)

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(1) During the construction period,
enforcing all of the conditions precedent to all loan disbursements, as provided in the Loan Guarantee Agreement, Loan Agreement and related
documents;
(2) During the operational phase,
monitoring and servicing the Debt Obligations and collection of the outstanding principal and accrued interest
as well as ensuring that the collateral
package securing the Guaranteed Obligations remains uncompromised; and
(3) As specified by DOE, providing annual or more frequent financial and
other reports on the status and condition of the Guaranteed Obligations and
the Eligible Project, and promptly notifying DOE if it becomes aware of any
problems or irregularities concerning
the Eligible Project or the ability of
the Borrower to make payment on the
Guaranteed Obligations or other debt
obligations.
(d) With regard to partial guarantees,
even though DOE may in part rely on
the Eligible Lender or other servicer to
service and monitor the Guaranteed
Obligation, DOE will also conduct its
own independent monitoring and review of the Eligible Project.
§ 609.12 Project Costs.
(a) Before entering into a Loan Guarantee Agreement, DOE shall determine
the estimated Project Costs for the
project that is the subject of the agreement. To assist the Department in
making that determination, the Applicant must estimate, calculate and
record all such costs incurred in the design, engineering, financing, construction, startup, commissioning and
shakedown of the project in accordance
with generally accepted accounting
principles and practices. Among other
things, the Applicant must calculate
the sum of necessary, reasonable and
customary costs that it has paid and
expects to pay, which are directly related to the project, including costs for
escalation and contingencies, to estimate the total Project Costs.
(b) Project Costs include:
(1) Costs of acquisition, lease, or
rental of real property, including engineering fees, surveys, title insurance,
recording fees, and legal fees incurred
in connection with land acquisition,

lease or rental, site improvements, site
restoration, access roads, and fencing;
(2) Costs of engineering, architectural, legal and bond fees, and insurance paid in connection with construction of the facility; and materials,
labor, services, travel and transportation for facility design, construction,
startup, commissioning and shakedown;
(3) Costs of equipment purchases;
(4) Costs to provide equipment, facilities, and services related to safety and
environmental protection;
(5) Financial and legal services costs,
including other professional services
and fees necessary to obtain required
licenses and permits and to prepare environmental reports and data;
(6) The cost of issuing project debt,
such as fees, transaction and legal
costs and other normal charges imposed by Eligible Lenders and other
Holders;
(7) Costs of necessary and appropriate
insurance and bonds of all types;
(8) Costs of design, engineering,
startup, commissioning and shakedown;
(9) Costs of obtaining licenses to intellectual property necessary to design,
construct, and operate the project;
(10) A reasonable contingency reserve
for cost overruns during construction;
and
(11) Capitalized interest necessary to
meet market requirements, reasonably
required reserve funds and other carrying costs during construction; and
(12) Other necessary and reasonable
costs.
(c) Project Costs do not include:
(1) Fees and commissions charged to
Borrower, including finder’s fees, for
obtaining Federal or other funds;
(2) Parent corporation or other affiliated entity’s general and administrative expenses, and non-project related
parent corporation or affiliated entity
assessments, including organizational
expenses;
(3) Goodwill, franchise, trade, or
brand name costs;
(4) Dividends and profit sharing to
stockholders, employees, and officers;

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§ 609.15

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(5) Research, development, and demonstration costs of readying the innovative energy or environmental technology for employment in a commercial project;
(6) Costs that are excessive or are not
directly required to carry out the
project, as determined by DOE, including but not limited to the cost of hedging instruments;
(7) Expenses incurred after startup,
commissioning, and shakedown before
the facility has been placed in service;
(8) Borrower-paid Credit Subsidy
Costs and Administrative Costs of
Issuing a Loan Guarantee; and
(9) Operating costs.
§ 609.13 Principal and interest assistance contract.
With respect to the guaranteed portion of any Guaranteed Obligation, and
subject to the availability of appropriations, DOE may enter into a contract to pay Holders, for and on behalf
of Borrower, from funds appropriated
for that purpose, the principal and interest charges that become due and
payable on the unpaid balance of the
guaranteed portion of the Guaranteed
Obligation, if DOE finds that:
(a) The Borrower:
(1) Is unable to make the payments
and is not in default; and
(2) Will, and is financially able to,
continue to make the scheduled payments on the remaining portion of the
principal and interest due under the
non-guaranteed portion of the debt obligation, if any, and other debt obligations of the project, or an agreement,
approved by DOE, has otherwise been
reached in order to avoid a payment
default on non-guaranteed debt.
(b) It is in the public interest to permit Borrower to continue to pursue the
purposes of the project;
(c) In paying the principal and interest, the Federal government expects a
probable net benefit to the Government
will be greater than that which would
result in the event of a default;
(d) The payment authorized is no
greater than the amount of principal
and interest that Borrower is obligated
to pay under the terms of the Loan
Guarantee Agreement; and
(e) Borrower agrees to reimburse
DOE for the payment (including inter-

est) on terms and conditions that are
satisfactory to DOE and executes all
written contracts required by DOE for
such purpose.
§ 609.14 Full faith and credit and incontestability.
The full faith and credit of the
United States is pledged to the payment of all Guaranteed Obligations
issued in accordance with this part
with respect to principal and interest.
Such guarantee shall be conclusive evidence that it has been properly obtained; that the underlying loan qualified for such guarantee; and that, but
for fraud or material misrepresentation by the Holder, such guarantee will
be presumed to be valid, legal, and enforceable.
§ 609.15 Default, demand, payment,
and collateral liquidation.
(a) In the event that the Borrower
has defaulted in the making of required
payments of principal or interest on
any portion of a Guaranteed Obligation, and such default has not been
cured within the period of grace provided in the Loan Guarantee Agreement and/or the Loan Agreement, the
Eligible Lender or other Holder, or
nominee or trustee empowered to act
for the Eligible Lender or other Holder
(referred to in this section collectively
as ‘‘Holder’’), may make written demand upon the Secretary for payment
pursuant to the provisions of the Loan
Guarantee Agreement.
(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 Loan Guarantee Agreement, note,
mortgage, Loan Agreement, or other
contractual obligations related to the
transaction, other than the Borrower’s
obligation to pay principal or interest
on the Guaranteed Obligation, as provided in paragraph (a) of this section,
the Holder will not be entitled to make
demand for payment pursuant to the
Loan Guarantee Agreement, unless the
Secretary agrees in writing that such
default has materially affected the
rights of the parties, and finds that the
Holder should be entitled to receive
payment pursuant to the Loan Guarantee Agreement.

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§ 609.15

10 CFR Ch. II (1–1–12 Edition)

(c) In the event that the Borrower
has defaulted as described in paragraph
(a) of this section and such default is
not cured during the grace period provided in the Loan Guarantee Agreement, the Secretary shall notify the
U.S. Attorney General and, subject to
the terms of any applicable Intercreditor Agreement, may cause the principal amount of all Guaranteed Obligations, together with accrued interest
thereon, and all amounts owed to the
United States by Borrower pursuant to
the Loan Guarantee Agreement, to become immediately due and payable by
giving the Borrower written notice to
such effect (without the need for consent or other action on the part of the
Holders of the Guaranteed Obligations)
and may exercise any other remedies
available under the applicable agreements. In the event the Borrower is in
default as described in paragraph (b) of
this section, where the Secretary 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
Loan Guarantee Agreement to cure
such default. If the default is not cured
during the period of grace, the Secretary may, subject to the terms of any
applicable Intercreditor Agreement,
cause the principal amount of all Guaranteed Obligations, together with accrued
interest
thereon,
and
all
amounts owed to the United States by
Borrower pursuant to the Loan Guarantee Agreement, to become immediately due and payable by giving the
Borrower written notice to such effect
(without any need for consent or other
action on the part of the Holders of the
Guaranteed Obligations) and may exercise any other remedies available
under the applicable agreements.
(d) No provision of this regulation
shall be construed to preclude forbearance by any Holder with the consent of
the Secretary for the benefit of the
Borrower.
(e) Upon the making of demand for
payment as provided in paragraph (a)
or (b) of this section, the Holder shall
provide, in conjunction with such demand or immediately thereafter, at the
request of the Secretary, the supporting documentation specified in the
Loan Guarantee Agreement and any

other supporting documentation as
may reasonably be required to justify
such demand.
(f) Payment as required by the Loan
Guarantee Agreement of the Guaranteed Obligation shall be made 60 days
after receipt by the Secretary of written demand for payment, provided that
the demand complies with the terms of
the Loan Guarantee Agreement. The
Loan Guarantee Agreement shall provide that interest shall accrue to the
Holder at the rate stated in the Loan
Guarantee Agreement until the Guaranteed Obligation has been fully paid
by the Federal government.
(g) The Loan Guarantee Agreement
shall provide that, upon payment of
the Guaranteed Obligations, the Secretary shall be subrogated to the rights
of the Holders. The Holder shall transfer and assign to the Secretary all
rights held by the Holder of the Guaranteed Obligation. Such assignment
shall include all related liens, security,
and collateral rights to the extent held
by the Holder.
(h) Where the Loan Guarantee Agreement or any applicable Intercreditor
Agreement so provides, the Eligible
Lender or other Holder, or other agent
or servicer, as appropriate, and the
Secretary may jointly agree to a workout strategy and/or a plan of liquidation of the assets pledged to secure the
Guaranteed Obligation and other applicable debt.
(i) Where payment of the Guaranteed
Obligation has been made (or at any
such earlier time as may be permitted
by applicable agreements), the Secretary, acting through the U.S. Attorney General, in accordance with the
rights received through subrogation or
other applicable agreements, subject to
any applicable Intercreditor Agreement, may seek to foreclose on the collateral assets and/or take such other
legal action as necessary for the protection of the Government.
(j) If the Secretary (or an agent acting for the benefit of the Secretary) is
awarded title to collateral assets pursuant to a foreclosure proceeding, the
Secretary may take action to complete, maintain, operate, or lease such
assets, or otherwise dispose of any such

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Department of Energy

§ 609.16

assets or take any other necessary action which the Secretary deems appropriate (and consistent with any applicable Intercreditor Agreement), in
order that the original goals and objectives of the project will, to the extent
possible, be realized.
(k) 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 Loan Guarantee
Agreement and any applicable Intercreditor Agreement to recover costs incurred by, and other amounts owed to,
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,
DOE and any agent acting for the benefit of DOE in effecting such recovery;
second, to reimbursement of any
amounts paid by DOE, and to pay any
other amounts owed to DOE, as a result of the defaulted 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.
(l) If there was a partial guarantee by
DOE of the Guaranteed Obligation or if
any other creditors are secured by a
lien on collateral pledged to secure the
Guaranteed Obligation, the proceeds
received by the collateral agent or
other responsible party as a result of
any liquidation or sale of, collection
from or other realization on any such
collateral may, if so agreed in advance
or unless otherwise agreed in the applicable agreements, be applied as follows
(with any money distributed to the
Federal Government to be further distributed according to § 609.15(k)):
(1) First, to the payment of reasonable and customary fees and expenses
incurred in the liquidation or sale, collection or other realization (including
without limitation any fees and expenses that the Attorney General of
the United States is lawfully entitled

to claim in connection with such action);
(2) Second, distributed among the
Holders of the Guaranteed Obligation
(including DOE, as subrogee) and the
other creditors entitled to share in
such proceeds on no greater than a pro
rata share basis; and
(3) Third, as otherwise provided in
the applicable agreement or agreements.
(m) No action taken by the Eligible
Lender or other Holder or other agent
or servicer in respect of any pledged assets will affect the rights of any party,
including the Secretary, having an interest in the loan or other debt obligations, to pursue, jointly or severally, to
the extent provided in the Loan Guarantee Agreement or other applicable
agreement, legal action against the
Borrower or other liable parties, for
any deficiencies owing on the balance
of the Guaranteed Obligations or other
debt obligations after application of
the proceeds received upon liquidation.
(n) In the event that the Secretary
considers it necessary or desirable to
protect or further the interest of the
United States in connection with the
liquidation or sale of, collection from
or other realization on the collateral or
recovery of deficiencies due under the
loan, the Secretary will take such action as may be appropriate under the
circumstances.
(o) Nothing in this part precludes the
Secretary from purchasing any Holder’s or other person’s interest in the
project upon liquidation or sale of, collection from or other realization on the
collateral.
§ 609.16 Perfection of liens and preservation of collateral.
(a) The Loan Guarantee Agreement
and other documents related thereto
shall provide that:
(1) The Eligible Lender, or DOE in
conjunction with the Federal Financing Bank where the loan is funded by
the Federal Financing Bank, or other
Holder or other agent or servicer will
take those actions necessary or appropriate to perfect and maintain liens, as
applicable, on assets which are pledged
as collateral for the Guaranteed Obligation; and

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§ 609.17

10 CFR Ch. II (1–1–12 Edition)

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(2) Upon default by the Borrower, the
holder of pledged collateral shall take
such actions as the Secretary (subject
to any applicable Intercreditor Agreement) may reasonably require to provide for the care, preservation, protection, and maintenance of such collateral so as to enable the United States
to achieve maximum recovery from the
pledged assets. The Secretary shall reimburse the holder of collateral for
reasonable and appropriate expenses
incurred in taking actions required by
the Secretary (unless otherwise provided in applicable agreements). Except as provided in § 609.15, no party
may waive or relinquish, without the
consent of the Secretary, any collateral securing the Guaranteed Obligation to which the United States would
be subrogated upon payment under the
Loan Guarantee Agreement.
(b) In the event of a default, the Secretary may enter into such contracts
as the Secretary (subject to any applicable Intercreditor Agreement) determines are required or appropriate to
care for, preserve, protect or maintain
the collateral. The cost of such contracts may be charged to the Borrower.
§ 609.17 Audit and access to records.
(a) The Loan Guarantee Agreement
and related documents shall provide
that:
(1) The Eligible Lender, or DOE in
conjunction with the Federal Financing Bank where loans are funded by the
Federal Financing Bank or other Holder or other party servicing the Guaranteed Obligations, as applicable, and the
Borrower, shall keep such records concerning the project as is necessary, including the Pre-Application, Application, Term Sheet, Conditional Commitment, Loan Guarantee Agreement,
Credit Agreement, mortgage, note, disbursement requests and supporting
documentation, financial statements,
audit reports of independent accounting firms, lists of all project assets and
non-project assets pledged as security
for the Guaranteed Obligations, all offtake 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 docu-

ments 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, Eligible Lender or DOE or other
Holder or other party servicing the
Guaranteed Obligation, as applicable.
Such inspection may be made during
regular office hours of the Borrower,
Eligible Lender or DOE or other Holder, or other party servicing the Eligible
Project and the Guaranteed Obligations, as applicable, or at any other
time mutually convenient.
(b) The Secretary may from time to
time audit any or all items of costs included as Project Costs in statements
or certificates submitted to the Secretary or the servicer or otherwise, and
may exclude or reduce the amount of
any item which the Secretary determines to be unnecessary or excessive,
or otherwise not to be an item of
Project Costs. 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 will represent that it has
within its rights access to all financial
and operational records and data relating to Project Costs, 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.
§ 609.18 Deviations.
To the extent that such requirements
are not specified by the Act or other
applicable statutes, DOE may authorize deviations on an individual request
basis from the requirements of this
part upon a finding that such deviation
is essential to program objectives and
the special circumstances stated in the
request make such deviation clearly in
the best interest of the Government.

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Department of Energy

§ 611.2

DOE will consult with OMB and the
Secretary of the Treasury before DOE
grants any deviation that would constitute a substantial change in the financial terms of the Loan Guarantee
Agreement and related documents. Any
deviation, however, that was not captured in the Credit Subsidy Cost will
require either additional fees or discretionary appropriations. A recommendation for any deviation shall be submitted in writing to DOE. Such recommendation must include a supporting statement, which indicates
briefly the nature of the deviation requested and the reasons in support
thereof.

PART
611—ADVANCED
TECHNOLOGY VEHICLES MANUFACTURER ASSISTANCE PROGRAM
Subpart A—General
Sec.
611.1
611.2
611.3

Purpose.
Definitions.
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.

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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.
611.208–611.209 [Reserved]
AUTHORITY: Pub. L. 110–140 (42 U.S.C. 17013),
Pub. L. 110–329.

SOURCE: 73 FR 66731, Nov. 12, 2008, unless
otherwise noted.

Subpart A—General
§ 611.1 Purpose.
This part is issued by the Department of Energy (DOE) pursuant to section 136 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.
§ 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.

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