2016-30006_Final_LPO_Employ_Innovative

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limited to, chips, ice cream, crackers,
cupcakes, cookies, popcorn, pastries,
and candy, and other food items that
complement or supplement meals, such
as, but not limited to, coffee, tea, cocoa,
carbonated and uncarbonated drinks,
condiments, spices, salt, and sugar.
Items shall not be classified as accessory
food exclusively based on packaging
size but rather based on the
aforementioned definition and as
determined by FNS. A food product
containing an accessory food item as its
main ingredient shall be considered an
accessory food item. Accessory food
items shall not be considered staple
foods for purposes of determining the
eligibility of any firm.
*
*
*
*
*
PART 278—PARTICIPATION OF
RETAIL FOOD STORES WHOLESALE
FOOD CONCERNS AND INSURED
FINANCIAL INSTITUTIONS
3. In § 278.1:
a. Amend the last sentence in
paragraph (b)(1)(i)(A) by removing the
word ‘‘two’’ and adding in its place the
word ‘‘three’’.
■ b. Revise paragraph (b)(1)(ii)(A);
■ c. Amend the first sentence in
paragraph (b)(1)(ii)(B) by removing the
word ‘‘two’’ and adding in its place the
word ‘‘three’’.
■ d. Revise paragraph (b)(1)(ii)(C);
■ e. Revise the fourth sentence in
paragraph (b)(1)(iv);
■ f. Redesignate paragraph (b)(6) as
paragraph (b)(7);
■ g. Add new paragraph (b)(6).
■ h. Add paragraph (q)(5).
The additions and revisions read as
follows:
■
■

§ 278.1 Approval of retail food stores and
wholesale food concerns.

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*

*
*
*
*
(b) * * *
(1) * * *
(ii) * * *
(A) Offer for sale and normally
display in a public area, qualifying
staple food items on a continuous basis,
evidenced by having, on any given day
of operation, no fewer than seven
different varieties of food items in each
of the four staple food categories with a
minimum depth of stock of three
stocking units for each qualifying staple
variety and at least one variety of
perishable foods in at least three staple
food categories. Documentation to
determine if a firm stocks a sufficient
amount of required staple foods to offer
them for sale on a continuous basis may
be required in cases where it is not clear
that the firm has made reasonable
stocking efforts to meet the stocking

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requirement. Such documentation can
be achieved through verifying
information, when requested by FNS,
such as invoices and receipts in order to
prove that the firm had ordered and/or
received a sufficient amount of required
staple foods up to 21 calendar days
prior to the date of the store visit.
Failure to provide verifying information
related to stock when requested may
result in denial or withdrawal of
authorization. Failure to cooperate with
store visits shall result in the denial or
withdrawal of authorization.
*
*
*
*
*
(C) Offer a variety of staple foods
which means different types of foods
within each staple food category. For
example: Apples, cabbage, tomatoes,
bananas, pumpkins, broccoli, and
grapes in the vegetables or fruits
category; or cow milk, almond milk, soy
yogurt, soft cheese, butter, sour cream,
and cow milk yogurt in the dairy
products category; or rice, bagels, pitas,
bread, pasta, oatmeal, and whole wheat
flour in the bread or cereals category; or
chicken, beans, nuts, beef, pork, eggs,
and tuna in the meat, poultry, or fish
category. Variety of foods is not to be
interpreted as different brands, nutrient
values (e.g., low sodium and lite),
flavorings (e.g., vanilla and chocolate),
packaging types or styles (e.g., canned
and frozen) or package sizes of the same
or similar foods. Similar food items
such as, but not limited to, tomatoes and
tomato juice, different types of rice,
whole milk and skim milk, ground beef
and beefsteak, or different types of
apples (e.g., Empire, Jonagold, and
McIntosh), shall count as depth of stock
but shall not each be counted as more
than one staple food variety for the
purpose of determining the number of
varieties in any staple food category.
Accessory foods shall not be counted as
staple foods for purposes of determining
eligibility to participate in SNAP as a
retail food store.
*
*
*
*
*
(iv) * * * In addition, firms that are
considered to be restaurants, that is,
firms that have more than 50 percent of
their total gross sales in foods cooked or
heated on-site by the retailer before or
after purchase; and hot and/or cold
prepared foods not intended for home
preparation or consumption, including
prepared foods that are consumed on
the premises or sold for carryout, shall
not qualify for participation as retail
food stores under Criterion A or
B. * * *
*
*
*
*
*
(6) Need for access. FNS will consider
whether the applicant firm is located in
an area with significantly limited access

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to food when the applicant firm fails to
meet Criterion A per paragraph (b)(1)(ii)
or Criterion B per paragraph (b)(1)(iii) of
this section so long as the applicant firm
meets all other SNAP authorization
requirements. In determining whether
an applicant is located in such an area,
FNS may consider access factors such
as, but not limited to, the distance from
the applicant firm to the nearest
currently SNAP authorized firm and
transportation options. In determining
whether to authorize an applicant
despite its failure to meet Criterion A
and Criterion B, FNS will also consider
factors such as, but not limited to, the
extent of the applicant firm’s stocking
deficiencies in meeting Criterion A and
Criterion B and whether the store
furthers the purposes of the Program.
Such considerations will be conducted
during the application process as
described in paragraph (a) of this
section.
*
*
*
*
*
(q) * * *
(5) Public disclosure of firms
sanctioned for SNAP violations. FNS
may disclose information to the public
when a retail food store has been
disqualified or otherwise sanctioned for
violations of the Program after the time
for administrative and judicial appeals
has expired. This information is limited
to the name and address of the store, the
owner(s’) name(s) and information
about the sanction itself. FNS may
continue to disclose this information for
as long as the duration of the sanction.
In the event that a sanctioned firm is
assigned a civil penalty in lieu of a
period of disqualification, as described
in § 278.6(a), FNS may continue to
disclose this information for as long as
the duration of the period of
disqualification or until the civil
penalty has been paid in full, whichever
is longer.
*
*
*
*
*
Dated: December 7, 2016.
Audrey Rowe,
Acting Under Secretary, Food, Nutrition and
Consumer Services.
[FR Doc. 2016–29837 Filed 12–14–16; 8:45 am]
BILLING CODE 3410–30–P

DEPARTMENT OF ENERGY
10 CFR Part 609
RIN 1901–AB38

Loan Guarantees for Projects That
Employ Innovative Technologies
Loan Programs Office,
Department of Energy.

AGENCY:

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ACTION:

Federal Register / Vol. 81, No. 241 / Thursday, December 15, 2016 / Rules and Regulations
IV. Approval of the Office of the Secretary

Final rule.

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The Department of Energy
(DOE or the Department) publishes a
final rule to amend the existing
regulations for the loan guarantee
program authorized by Title XVII of the
Energy Policy Act of 2005 (Title XVII or
the Act). Section 1703 of Title XVII
(section 1703) authorizes the Secretary
of Energy (Secretary) to make loan
guarantees for projects that avoid,
reduce, or sequester air pollutants or
anthropogenic emissions of greenhouse
gases. Such projects must also employ
new or significantly improved
technologies as compared to commercial
technologies in service in the United
States at the time the guarantee is
issued. The two principal goals of
section 1703 are to encourage
commercial use in the United States of
new or significantly improved energyrelated technologies and to achieve
substantial environmental benefits.
Section 1703 also identifies ten
categories of technologies and projects
that are potentially eligible for loan
guarantees. Commercial use of these
technologies is expected to help sustain
and promote economic growth, produce
a more stable and secure energy supply
and economy for the United States, and
improve the environment.
As a result of experience gained
implementing the loan guarantee
program authorized by section 1703,
and information received from program
participants, including applicants,
borrowers, sponsors, and lenders, as
well as various energy industry groups,
DOE finalizes amendments to the
existing regulations to provide increased
clarity and transparency, reduce
paperwork, and provide a more
workable interpretation of certain
statutory provisions in light of DOE’s
experience with operation of the Title
XVII program.
DATES: This rule is effective on January
17, 2017.
FOR FURTHER INFORMATION CONTACT:
Mark S. Westergard, Assistant Chief
Counsel Regulatory Affairs, Loan
Programs Office, United States
Department of Energy, 1000
Independence Avenue SW.,
Washington, DC 20585–0121, (202) 287–
5621, email: [email protected].
SUPPLEMENTARY INFORMATION:
SUMMARY:

I. Introduction and Background

I. Introduction and Background
II. Public Comments on the NOPR and DOE’s
Responses
A. Competition with Potential Future
Applications
B. Risk-Based Charge
C. Section 609.8(c)(2) and section
609.8(c)(3)
III. Regulatory Review

This final rule amends the regulations
implementing the loan guarantee
program authorized by Title XVII of the
Energy Policy Act of 2005 (42 U.S.C.
16511–16514) (referred to as Title XVII).
Section 1703 of Title XVII (section 1703)
authorizes the Secretary of Energy
(Secretary) to make loan guarantees for
projects that: (1) Avoid, reduce, or
sequester air pollutants or
anthropogenic emissions of greenhouse
gases; and (2) employ new or
significantly improved technologies as
compared to commercial technologies in
service in the United States at the time
the guarantee is issued. (42 U.S.C
16513(a)).
Section 1702 of Title XVII (section
1702) authorizes the Secretary, after
consultation with the Secretary of the
Treasury, to enter into loan guarantees
on such terms and conditions as he or
she determines to be appropriate, in
accordance with the provisions of
section 1702. Section 1702 also directs
the Secretary to include in loan
guarantees ‘‘such detailed terms and
conditions as the Secretary determines
appropriate to (i) protect the interests of
the United States in the case of a
default; and (ii) have available all the
patents and technology necessary for
any person selected, including the
Secretary, to complete and operate the
project.’’ (42 U.S.C. 16512(g)(2)(c)).
On October 3, 2016, the Department
published a proposed rule and request
for comment on amendments to the
regulations for the Title XVII loan
guarantee program. (81 FR 67924) The
proposed rule also provides additional
background on DOE’s experience in
implementing the loan guarantee
program and the history of its
implementing regulations. In this final
rule, DOE adopts the changes set forth
in the proposed rule, except where DOE
made changes in consideration of
comments received on the proposal. In
Section II of this final rule, DOE
summarizes the comments received, and
provides its responses to those
comments and a discussion of the
changes made to the proposal in this
final rule.
In this final rule, DOE adopts the
proposed rule changes that clarify the
circumstances under which potential
applicants may communicate with DOE
prior to submitting an application. DOE
expects that the changes will increase
transparency and result in more
applications by qualified applicants
with respect to potential eligible
projects.

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The final rule eliminates the preapplication process and codifies
procedures that divide the application
into two parts.
The final rule revises the definition of
Eligible Project to explicitly state that a
project may be located at two or more
locations in the United States if the
project is comprised of installations or
facilities employing a single New or
Significantly Improved Technology that
is deployed pursuant to an integrated
and comprehensive business plan.
The final rule provides for the use of
Risk-Based Charges. Use of Risk-Based
Charges is permitted pursuant to the
grant of authority to the Secretary in
Section 1702(a) to determine the terms
and conditions of the Title XVII loan
guarantee program.
The final rule increases clarity and
transparency. For example: Definitions
have been clarified, shortened where
possible, and added; specific references
to the Cargo Preference Act and the
Davis Bacon Act have been added; an
introductory section on how the rule is
to be interpreted has been added; and
various provisions of the existing rule
have been re-organized to moreappropriate places in the rule.
DOE received comments on the
proposed rule, which are summarized in
Section II of this final rule. DOE also
provides its responses and explains any
changes to the proposal made in
response to the comments received. (For
additional background on DOE’s
experience in implementing the loan
guarantee program and the history of its
implementing regulations, please see
the proposed rule.)
II. Public Comments on the NOPR and
DOE’s Responses
A. Competition With Potential Future
Applications
Public comment: One commenter
requests clarification and revision of the
proposed changes in § 609.5(a) to the
competitive process for evaluating
completed Applications, which would
require completed Applications to be
evaluated against potential projects that
may become the subject of an
Application. The commenter is
concerned that the proposed changed
will delay the Application process and
put otherwise qualified projects in
‘‘limbo’’ while the DOE awaits the filing
of Applications that may be filed on
other projects. In the commenter’s view,
this may result in a longer and more
opaque process, because fewer projects
would be able to withstand the
additional timing delays, as well as in
greater market uncertainty about the
DOE loan guarantee program.

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DOE Response: DOE notes that
applications are reviewed against all
other applications filed within the same
round. For that reason DOE does not
believe the proposed change would
delay the application process or put
otherwise qualified projects in ‘‘limbo.’’
Nevertheless, DOE agrees that the
proposed change could cause a more
opaque process and market uncertainty
regarding, among other matters, whether
a project will be competed against
potential projects that may become the
subject of an application. The proposal
to consider potential future
Applications is inconsistent with
competing filed Applications against all
other Applications filed within the same
round. For those reasons DOE has
decided to withdraw the proposed
change to the competitive process
which would allow consideration of
potential projects during the
competition.
B. Risk-Based Charge
Public comments: Both commenters
requested clarification regarding the
‘‘Risk-based-charge’’ which they believe
is duplicative of other existing fees. The
commenters urge DOE not to impose
this additional fee on recipients of
DOE’s Title XVII loan guarantees.
One commenter also pointed out that
the Title XVII loan guarantee program
currently charges two fees to
compensate DOE for the credit risk it
assumes. First, the program charges a
‘‘Credit-Based Interest Rate Spread’’
based on the credit rating of the
Applicant’s project. Second, the
program charges a ‘‘Credit Subsidy Fee’’
to directly compensate the United States
for the specific credit risk of the
applicant’s project. The commenter
requested clarification that the reference
to a ‘‘Risk-based charge’’ means the
‘‘Credit Based Interest Rate Spread’’,
and that the program is not intending to
impose a new fee and increase the
interest rate spreads beyond the current
spreads.
DOE Response: Section 1702(e) of
Title XVII requires the Secretary to
establish interest rates that do not
exceed a level that the Secretary
determines appropriate, taking into
account the prevailing rate of interest in
the private sector for similar loans and
risks. In the proposed rule, DOE
proposed a ‘‘Risk-Based Charge’’ that,
taking into account all interest and
interest-related costs, is intended to
make DOE’s charges and costs
consistent with the commercial markets
and other federal credit programs. Thus,
the Risk-Based Charge will be used only
to the extent the aggregate of other
interest-related charges do not

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sufficiently reflect creditworthiness or
specific risks arising from individual
transactions. The Risk-Based Charge,
while distinct from the fee for the Credit
Subsidy Cost, may incidentally affect
that fee by increasing expected inflows
to the United States that are considered
in calculating the amount of the fee. In
that respect, taking into account the
time value of money, the Risk-Based
Charge can be viewed as affecting the
time of payment rather than the amount
of payment based on the
creditworthiness of the borrower and
the expectations regarding probability of
repayment. After factoring in the RiskBased Charge, DOE does not expect the
present value of the interest amounts
expected to be paid by the borrower as
the cost of the loan should be
significantly different than the interest
amounts that would be paid without the
Risk-Based Charge.
C. Section 609.8(c)(2) and Section
609.8(c)(3)
Public comment: One commenter
requested clarification of what it views
as an apparent inconsistency between
§§ 609.8(c)(2) and 609.8(c)(3) of the
proposed rule. The commenter stated
that § 609.8(c)(2) appears to require that
the guaranteed and nonguaranteed
portions of a loan partially guaranteed
by DOE be repaid pro rata, and on the
same amortization schedule. Section
609.8(c)(3) appears to the commenter to
provide for exceptions to this
requirement under certain conditions.
The commenter also requested that
DOE modify § 609.8 to allow for
commercial co-lenders to provide
structured loan facilities that would
have the same amortization schedule as
the guaranteed portion of the facility but
with a shorter loan tenor and a related
refinancing requirement at maturity of
the structured loan facility.
DOE Response: DOE does not view
§§ 609.8(c)(2) and 609.8(c)(3) as
inconsistent. Section 609.8(c)(2) deals
with the guaranteed and nonguaranteed
portions of loans partially guaranteed by
DOE. Section 609.8(c)(3) deals with
financing or credit arrangements not
guaranteed by DOE.
The commenter’s request for a shorter
loan tenor in connection with certain
commercial loan products is similar to
a comment DOE received in response to
a proposed rule to amend the Title XVII
regulations published in 2009. (74 FR
39569, Aug. 7, 2009) In the final rule,
published on December 4, 2009, DOE
made adjustments, retained by the
proposed rulemaking and subject to the
same conditions set forth in the current
rule, to permit shorter or faster
amortization schedules for project-

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related financing or other credit
arrangements not guaranteed by DOE.
See 74 FR 63544, 63546, Section II.C.
Shorter Amortization of NonGuaranteed Obligations. DOE has
reviewed the issue in response to the
comment and has determined that the
provisions established in the 2009 rule
address the concern while at the same
time protecting the interests of the
United States. For that reason, DOE has
determined that no change in the
existing language of the final rule is
warranted.
Other Changes: While reviewing the
proposed rule in response to public
comments, DOE found certain areas in
the proposed rule that should be
modified consistent with DOE’s intent
to increase transparency and clarity. On
further consideration, DOE determined
that its treatment of the prohibition in
Section 149(b) of the Internal Revenue
Code in § 609.8(c)(4) created ambiguity
and made application of the provision
more complicated. Therefore, DOE
eliminated the changes in the proposed
rule and restored the language of the
existing rule to tie the rule to the
requirements of law as they related to
tax-exempt debt obligation financing.
Finally, DOE clarified a provision
relating to communications with
applicants by deleting a sentence that
was unclear and not required by law.
III. Regulatory Review
A. Executive Order 12866
This final rule has been determined to
be a 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
(OIRA) of the Office of Management and
Budget (OMB).
B. National Environmental Policy Act
DOE has determined that this final
rule is covered under the Categorical
Exclusion found in DOE’s National
Environmental Policy Act regulations at
paragraph A.5 of appendix A to subpart
D, 10 CFR part 1021, which applies to
rulemaking that amends an existing rule
or regulation which does not change the
environmental effect of the rule or
regulation being amended.
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

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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 General
Counsel’s Web site: http://
www.energy.gov/gc/downloads/
executive-order-13272-considerationsmall-entities-agency-rulemaking.
DOE is not obligated to prepare a
regulatory flexibility analysis for this
rulemaking because there is not a
requirement to publish a general notice
of proposed rulemaking for rules related
to loans under the Administrative
Procedure Act (5 U.S.C. 553(a)(2)).

governmental and private sector
applicants for loan guarantees, 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.
The final rule would establish
requirements that persons voluntarily
seeking loan guarantees for projects that
would use certain new and improved
energy technologies must satisfy as a
condition of a Federal loan guarantee.
Thus, the 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.
The Act does not apply to this
rulemaking.

D. Paperwork Reduction Act
Information collection requirements
for the DOE regulations at 10 CFR part
609 have been submitted for approval to
OMB pursuant to the Paperwork
Reduction Act of 1995 (44 U.S.C. 3501
et seq.) and the procedure implementing
that Act (5 CFR 1320.1 et seq.) under
OMB Control Number 1910–5134. The
revised recordkeeping and reporting
requirements associated with this
rulemaking are not mandatory until the
information collection is approved by
OMB.
Public reporting burden for the
revised requirements in this final rule is
estimated to average 130 hours per
response, including the time for
reviewing instructions, searching
existing data sources, gathering and
maintaining the data needed, and
completing and reviewing the collection
of information. All responses are
expected to be collected electronically.
Notwithstanding any other provision
of law, a person is not required to
respond to a collection of information
unless it displays a currently valid OMB
control number.

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. The final 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.

E. Unfunded Mandates Reform Act of
1995
The Unfunded Mandates Reform Act
of 1995 (Act) (Pub. L. 104–4) generally
requires Federal agencies to examine
closely the impacts of regulatory actions
on State, local, and tribal governments.
The term ‘‘Federal mandate’’ is defined
in the Act to mean a Federal
intergovernmental mandate or a Federal
private sector mandate. Although the
final rule would impose certain
requirements on non-Federal

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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
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. 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
new regulations, section 3(a) of
Executive Order 12988, ‘‘Civil Justice

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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, the final rule
meets the relevant standards of
Executive Order 12988.
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 this 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
‘‘significant energy action’’ is defined as
any action by an agency that

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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.
This regulatory action would not have a
significant adverse effect on the supply,
distribution, or use of energy and has
not been designated by OIRA as a
significant energy action, and is
therefore not a significant energy action.
Accordingly, DOE has not prepared a
Statement of Energy Effects.
K. Executive Order 12630
The Department has determined,
under Executive Order 12630,
‘‘Governmental Actions and Interference
with Constitutionally Protected Property
Rights,’’ 53 FR 8859 (March 18, 1988),
that this rule would not result in any
takings which might require
compensation under the Fifth
Amendment to the United States
Constitution.
L. Congressional Notification
As required by 5 U.S.C. 801, DOE will
report to Congress on the promulgation
of this rule prior to its effective date.
The report will state that it has been
determined that the rule is not a ‘‘major
rule’’ as defined by 5 U.S.C. 804(2).
IV. Approval of the Office of the
Secretary
The Secretary of Energy has approved
publication of this final rule.
List of Subjects in 10 CFR Part 609

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Administrative practice and
procedure, Energy, Loan programs, and
Reporting and recordkeeping
requirements.
Issued in Washington, DC, on December 6,
2016.
Mark A. McCall,
Executive Director, Loan Programs Office.

For the reasons stated in the
preamble, DOE revises part 609 of
chapter II of title 10 of the Code of
Federal Regulations as set forth below:

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PART 609—LOAN GUARANTEES FOR
PROJECTS THAT EMPLOY
INNOVATIVE TECHNOLOGIES
Sec.
609.1 Purpose and scope.
609.2 Definitions and interpretation.
609.3 Solicitations.
609.4 Submission of applications.
609.5 Programmatic, technical and financial
evaluation of applications.
609.6 Term sheets and conditional
commitments.
609.7 Closing on the loan guarantee
agreement.
609.8 Loan guarantee agreement.
609.9 Lender servicing requirements.
609.10 Project costs.
609.11 Fees and charges.
609.12 Full faith and credit and
incontestability.
609.13 Default, demand, payment, and
collateral liquidation.
609.14 Preservation of collateral.
609.15 Audit and access to records.
609.16 Deviations.
Authority: 42 U.S.C. 7254, 16511–16514.
§ 609.1

Purpose and scope.

(a) This part sets forth the policies
and procedures that DOE uses for
receiving, evaluating, and approving
applications for loan guarantees to
support Eligible Projects under section
1703 of the Energy Policy Act of 2005
(Act).
(b) This part applies to all
Applications, Conditional
Commitments, and Loan Guarantee
Agreements.
(c) 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 and interpretation.

(a) Definitions. When used in this part
the following words have the following
meanings.
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 an Application
for a loan guarantee;
(2) The negotiation and offer of a
Term Sheet;
(3) The negotiation of a Loan
Guarantee Agreement and related
documents, including the issuance of a
Guarantee; and
(4) 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 a Person, including a
prospective Borrower or Project

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Sponsor, that submits an Application
to DOE.
Application means a written submission
of materials responsive to a
Solicitation that satisfies § 609.4.
Application Fee means the fee or fees
required to be paid by an Applicant
in connection with submission of an
Application and specified in a
Solicitation. The Application Fee
does not include the Credit Subsidy
Cost.
Attorney General means the Attorney
General of the United States.
Borrower means any Person that enters
into a Loan Guarantee Agreement
with DOE and issues Guaranteed
Obligations.
Cargo Preference Act means the Cargo
Preference Act of 1954, 46 U.S.C.
55305, as amended.
Commercial Technology means a
technology in general use in the
commercial marketplace in the United
States at the time the Term Sheet is
offered by DOE. A technology is in
general use if it is being used in three
or more facilities that are in
commercial operation in the United
States for the same general purpose as
the proposed project, and has been
used in each such facility for a period
of at least five years. The five-year
period for each facility shall start on
the in-service date of the facility
employing that particular technology
or, in the case of a retrofit of a facility
to employ a particular technology, the
date the facility resumes commercial
operation following completion and
testing of the retrofit. For purposes of
this section, facilities that are in
commercial operation 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 offeree of the Term Sheet, all in
accordance with § 609.6(c); 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 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, which is
the net present value, at the time the

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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.
Davis-Bacon Act means the statute
referenced in section 1702(k) of the
Act.
DOE means the United States
Department of Energy.
Eligible Lender means either:
(1) Any Person formed for the purpose
of, or engaged in the business of,
lending money that, as determined by
DOE in each case, is:
(i) Not debarred or suspended from
participation in a Federal government
contract or participation in a nonprocurement activity (under a set of
uniform regulations implemented for
numerous agencies, such as DOE, at 2
CFR part 180);
(ii) Not delinquent on any Federal
debt or loan;
(iii) Legally authorized and
empowered to enter into loan guarantee
transactions authorized by the Act and
these regulations;
(iv) Able to demonstrate experience in
originating and servicing loans for
commercial projects similar in size and
scope to the Eligible Project, or able to
procure such experience through
contracts acceptable to DOE; and
(v) Able to demonstrate experience as
the lead lender or underwriter by
presenting evidence of its participation
in large commercial projects or energyrelated projects or other relevant
experience, or able to procure such
experience through contracts acceptable
to DOE; or
(2) The Federal Financing Bank.
Eligible Project means a project that:
(1) Is located in the United States at
one location, except that the project may
be located at two or more locations in
the United States if the project is
comprised of installations or facilities
employing a single New or Significantly
Improved Technology that is deployed
pursuant to an integrated and
comprehensive business plan. An
Eligible Project in more than one
location is a single Eligible Project;
(2) Deploys a New or Significantly
Improved Technology; and

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(3) Satisfies all applicable
requirements of section 1703 of the Act,
the applicable Solicitation, and this
part.
Equity means cash contributed to the
permanent capital stock (or
equivalent) of the Borrower or the
Eligible Project by the shareholders or
other owners of the Borrower or the
Eligible Project. Equity does not
include proceeds from the nonguaranteed portion of a Guaranteed
Obligation, proceeds from any other
non-guaranteed loan or obligation, or
the value of any government
assistance or support.
Facility Fee means the fee, to be paid in
the amount and in the manner
provided in the Term Sheet, to cover
the Administrative Cost of Issuing a
Loan Guarantee for the period from
the Borrower’s acceptance of the Term
Sheet through issuance of the
Guarantee.
Federal Financing Bank means an
instrumentality of the United States
government created by the Federal
Financing Bank Act of 1973, under
the general supervision of the
Secretary of the Treasury.
Guarantee means the undertaking of the
United States of America, acting
through the Secretary pursuant to
Title XVII of the Energy Policy Act of
2005, to pay in accordance with the
terms thereof, principal and interest
of a Guaranteed Obligation.
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 that holds a
promissory note made by the
Borrower evidencing the Guaranteed
Obligation (or his designee or agent).
Intercreditor Agreement means any
agreement or instrument (or
amendment or modification thereof)
among DOE and one or more other
Persons providing financing or other
credit arrangements to the Borrower
or an Eligible Project) or that
otherwise provides for rights of DOE
in respect of a Borrower or in respect
of an Eligible Project, in each case in
form and substance satisfactory to
DOE.
Loan Agreement means a written
agreement between a Borrower and an
Eligible Lender containing the terms
and conditions under which the
Eligible Lender will make a loan or
loans to the Borrower for an Eligible
Project.

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Loan Guarantee Agreement means a
written agreement that, when entered
into by DOE and a Borrower, and, if
applicable, an Eligible Lender,
establishes the obligation of DOE to
guarantee the payment of all or a
portion of the principal of, and
interest on, specified Guaranteed
Obligations, subject to the terms and
conditions specified in the Loan
Guarantee Agreement.
New or Significantly Improved
Technology means a technology, or a
defined suite of technologies,
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.
Person means any natural person or any
legally constituted entity, including a
state or local government, tribe,
corporation, company, voluntary
association, partnership, limited
liability company, joint venture, and
trust.
Project Costs mean those costs,
including escalation and
contingencies, that are to be expended
or accrued by a 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 § 609.10(a). Project Costs
do not include costs for the items set
forth in § 609.10(b).
Project Sponsor means any Person that
assumes substantial responsibility for
the development, financing, and
structuring of an Eligible Project 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, the Borrower or the
Applicant.
Risk-Based Charge means a charge that,
together with the principal and
interest on the guaranteed loan, or at
such other times as DOE may
determine, is payable on specified
dates during the term of a Guaranteed
Obligation.
Secretary means the Secretary of Energy
or a duly authorized designee or
successor in interest.

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Solicitation means an announcement
that DOE is accepting Applications
that is widely disseminated to the
public on the DOE Web site or
otherwise, and which satisfies the
requirements of § 609.3(b).
Term Sheet means a written offer for the
issuance of a loan guarantee, executed
by the Secretary (or a DOE official
authorized by the Secretary to execute
such offer), delivered to the offeree,
that sets forth the detailed terms and
conditions under which DOE and the
Applicant will execute a Loan
Guarantee Agreement.
United States means the several States,
the District of Columbia, the
Commonwealth of Puerto Rico, the
Virgin Islands, Guam, American
Samoa and any territory or possession
of the United States of America.
(b) Interpretations. This part shall be
interpreted using the following
guidelines.
(1) The word ‘‘discretion’’ when used
with reference to DOE, including the
Secretary, means ‘‘sole discretion.’’
(2) Defined terms in the singular shall
include the plural and vice versa, and
the masculine, feminine or neuter
gender shall include all genders.
(3) The word ‘‘or’’ is not exclusive.
(4) References to laws by name or
popular name are references to the
version of such law appearing in the
United States Code and include any
amendment, supplement or
modification of such law, and all
regulations, rulings, and other laws
promulgated thereunder.
(5) References to information or
documents required or allowed to be
submitted to DOE mean information or
documents that are marked as provided
in 10 CFR 600.15(b). A document or
information that is not marked as
provided in 10 CFR 600.15(b) will not
be considered as having been submitted
to or received by DOE.
(6) A reference to a Person includes
such Person’s successors and permitted
assigns.
(7) The words ‘‘include,’’ ‘‘includes’’
and ‘‘including’’ are not limiting and
mean include, includes and including
‘‘without limitation’’ and ‘‘without
limitation by specification.’’
(8) The words ‘‘hereof,’’ ‘‘herein’’ and
‘‘hereunder’’ and words of similar
import refer this part as a whole and not
to any particular provision of this part.
§ 609.3

Solicitations.

(a) DOE may invite the submission of
Applications for loan guarantees for
Eligible Projects pursuant to a
Solicitation.
(b) Each Solicitation must include, at
a minimum, the following information:

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(1) The dollar amount of loan
guarantee authority potentially being
made available by DOE in that
Solicitation;
(2) The place and deadline for
submission of Applications;
(3) The name and address of the DOE
representative whom a potential
Applicant may contact to receive further
information and a copy of the
Solicitation;
(4) The form, format, and page limits
applicable to the Application;
(5) The amount of the Application Fee
and any other fees that will be required;
(6) The programmatic, technical,
financial and other factors that DOE will
use to evaluate response submissions,
and their relative weightings in that
evaluation; and
(7) Such other information as DOE
may deem appropriate.
(c) Using procedures as may be
announced by DOE a potential
Applicant may request a meeting with
DOE to discuss its potential
Application. At its discretion, DOE may
meet with a potential Applicant, either
in person or electronically, to discuss its
potential Application. DOE may provide
a potential Applicant with a preliminary
response regarding whether its proposed
Application may constitute an Eligible
Project. DOE’s responses to questions
from potential Applicants and DOE’s
statements to potential Applicants are
pre-decisional and preliminary in
nature. Any such responses and
statements are subject in their entirety
to any final action by DOE with respect
to an Application submitted in
accordance with § 609.4.
§ 609.4

Submission of applications.

(a) In response to a Solicitation, an
Applicant must meet all requirements
and provide all information specified in
this part and the Solicitation in the
manner and on or before the date
specified therein. DOE may direct that
Applications be submitted in more than
one part; provided, that the parts of
such Application, taken as a whole,
satisfy the requirements of § 609.4(c)
and this part. In such event, subsequent
parts of an Application may be filed
only after DOE invites an Applicant to
make an additional submission. The
initial part of an Application may be
used by DOE to determine the
likelihood that the project proposed by
an Applicant will be an Eligible Project,
and to evaluate such project’s readiness
to proceed. If there have been any
material amendments, modifications or
additions made to the information
previously submitted by an Applicant,
the Applicant shall provide a detailed
description thereof, including any

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changes in the proposed project’s
financing structure or other terms,
promptly upon request by DOE. Where
DOE has directed that an Application be
submitted in parts, DOE may provide for
payment of the Application Fee in parts.
(b) An Applicant may submit only
one Application for one proposed
project using a particular technology.
An Applicant may not submit an
Application or Applications for
multiple Eligible Projects using the
same technology. An Applicant may
submit Applications for multiple
proposed projects using different
technologies. For purposes of this
paragraph (b), the term Applicant shall
include the Project Sponsor and any
subsidiaries or affiliates of the Project
Sponsor.
(c) 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,
including the commitments and
representations made in each part of the
Application;
(2) The applicable Application Fee;
(3) A description of how and to what
measurable extent the proposed project
avoids, reduces, or sequesters air
pollutants and/or anthropogenic
emissions of greenhouse gases,
including how to measure and verify
those effects;
(4) A description of the nature and
scope of the proposed project,
including:
(i) Key project milestones;
(ii) Location or locations of the
proposed project;
(iii) Identification and commercial
feasibility of the New or Significantly
Improved Technology to be deployed;
(iv) How the Applicant intends to
deploy such New or Significantly
Improved Technology in the proposed
project; and
(v) How the Applicant intends to
assure, to the extent possible, the further
commercial availability of the New or
Significantly Improved Technology in
the United States.
(5) An explanation of how the
proposed project qualifies as a project
within the category or categories of
projects referred to in the Solicitation;
(6) A detailed estimate of the total
Project Costs together with a description
of the methodology and assumptions
used;
(7) A detailed description of the
engineering and design contractor(s),
construction contractor(s), and
equipment supplier(s);

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(8) The construction schedules for the
proposed project, including major
activity and cost milestones;
(9) A description of the material terms
and conditions of the development and
construction contracts to include the
performance guarantees, performance
bonds, liquidated damages provisions,
and equipment warranties;
(10) 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;
(11) A description of the management
plan of operations to be employed in
carrying out the proposed project, and
information concerning the management
experience of each officer or key person
associated with the proposed project;
(12) A detailed description of the
proposed project decommissioning,
deconstruction, and disposal plan, and
the anticipated costs associated
therewith;
(13) An analysis of the market for any
product (including but not limited to
electricity and chemicals) to be
produced by, or services to be provided
by, the proposed project, including
relevant economics justifying the
analysis, and copies of
(i) Any contracts for the sale of such
products or the provision of such
services, or
(ii) Any other assurance of the
revenues to be generated from sale of
such products or provision of such
services;
(14) 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
proposed project over the term of the
Loan Guarantee Agreement;
(15) 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 proposed project;
(16) A copy of the financial closing
checklist for the equity and debt to the
extent available;
(17) The Applicant’s business plan on
which the proposed project is based and
Applicant’s financial model with
respect to the proposed project for the
proposed term of the Guaranteed
Obligations, including, as applicable,
pro forma income statements, balance
sheets, and cash flows. All such
information and data must include
assumptions made in their preparation

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and the range of revenue, operating cost,
and credit assumptions considered;
(18) Financial statements for the three
immediately preceding fiscal years of
the Applicant (or such shorter period as
the Applicant has been in existence)
that have been audited by an
independent certified public accounting
firm, including all associated
certifications, notes and letters to
management, as well as interim
financial statements and notes for the
current fiscal year for the Applicant and
all other Persons the credit of which is
material to the success of the
transactions described in the
Application;
(19) A copy of all legal opinions, and
other material reports, analyses, and
reviews related to the proposed project
that have been delivered prior to
submission of any part of the
Application;
(20) An independent engineering
report prepared by an engineer with
experience in the industry and
familiarity with similar projects. The
report should address the proposed
project’s siting and permitting
arrangements, engineering and design,
contractual requirements,
environmental compliance, testing,
commissioning and operations, and
maintenance;
(21) A credit history of the Applicant
and each Project Sponsor;
(22) A preliminary credit assessment
for the proposed project without a loan
guarantee from a nationally recognized
rating agency for projects where the
estimated total Project Costs exceed $25
million. For proposed 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;
(23) A list showing the status of and
estimated completion date of
Applicant’s required applications for
federal, state, and local permits,
authorizations or approvals to site,
construct, and operate the proposed
project;
(24) A report containing an analysis of
the potential environmental impacts of
the proposed project that will enable
DOE to—
(i) Assess whether the proposed
project will comply with all applicable
environmental requirements; and
(ii) Undertake and complete any
necessary reviews under the National
Environmental Policy Act of 1969;
(25) A listing and description of the
assets of or to be utilized for the benefit
of the proposed project, and of any other
asset that will serve as collateral
pledged in respect of the Guaranteed

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Obligations, including appropriate data
as to the value of such 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;
(26) 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)
according to their terms, and a complete
description of the operational and
financial assumptions and
methodologies on which this
demonstration is based; and
(27) If proposed project assets or
facilities are or will be jointly owned by
the Applicant and one or more other
Persons, each of which owns an
undivided ownership interest in such
proposed project assets or facilities, a
description of the Applicant’s rights and
obligations in respect of its undivided
ownership interest in such proposed
project assets or facilities.
(d) During the Application evaluation
process pursuant to § 609.5, DOE may
request additional information,
potentially including a preliminary
credit rating or credit assessment, with
respect to the proposed project.
(e) DOE will not consider any part of
any Application or the Application as a
whole complete unless the Application
Fee (or the required portion of the
Application Fee related to a particular
part of the Application) has been paid.
An Application Fee paid in connection
with one Application is not transferable
to another Application. Except in the
discretion of DOE, no portion of the
Application Fee is refundable;
(f) DOE has no obligation to evaluate
an Application that is not complete, and
may proceed with such evaluation, or a
partial evaluation, only in its discretion.
(g) Unless an Applicant requests an
extension and such an extension is
granted by DOE in its discretion, an
Application may be rejected if it is not
complete within four years from the
date of submission (or date of
submission of the first part thereof, in
the case of Applications made in more
than one part).
(h) Upon making a determination to
engage independent consultants or
outside counsel with respect to an
Application, DOE will proceed to
evaluate and process such Application
only following execution by an
Applicant or Project Sponsor, as
appropriate, of an agreement satisfactory

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to DOE to pay the fees and expenses
charged by the independent consultants
and outside legal counsel.

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§ 609.5 Programmatic, technical and
financial evaluation of applications.

(a) In reviewing completed
Applications, and in prioritizing and
selecting those as to which a Term Sheet
should be offered, DOE will apply the
criteria set forth in the Act, any
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. Applications will be
denied if:
(1) The proposed project is not an
Eligible Project;
(2) The applicable technology is not
ready to be deployed commercially in
the United States, cannot yield a
commercially viable product or service
in the use proposed in the Application,
does not have the potential to be
deployed in other commercial projects
in the United States, or is not or will not
be available for further commercial use
in the United States;
(3) The Person proposed to issue the
loan or purchase other debt obligations
constituting the Guaranteed Obligations
is not an Eligible Lender;
(4) The proposed project is for
demonstration, research, or
development;
(5) Significant Equity for the proposed
project will not be provided by the date
of issuance of the Guaranteed
Obligations, or such later time as DOE
in its discretion may determine; or
(6) The proposed project does not
present a reasonable prospect of
repayment of the Guaranteed
Obligations.
(b) If an Application has not been
denied pursuant to § 609.5(a), DOE will
evaluate the proposed Project based on
the criteria set forth in the Act, any
applicable Solicitation and the
following:
(1) To what measurable extent the
proposed project avoids, reduces, or
sequesters air pollutants or
anthropogenic emissions of greenhouses
gases, or contributes to the avoidance,
reduction or sequestration of air
pollutants or anthropogenic emissions
of greenhouse gases;
(2) To what extent the technology to
be deployed in the proposed project—
(i) Is ready to be deployed
commercially in the United States, can
be replicated, yields a commercially
viable product or service in the use
proposed in the proposed project, has
potential to be deployed in other
commercial projects in the United

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States, and is or will be available for
further commercial use in the United
States; and
(ii) Constitutes an important
improvement in technology, as
compared to available Commercial
Technologies, used to avoid, reduce or
sequester air pollutants or
anthropogenic emissions of greenhouse
gases;
(3) To what extent the Applicant has
a plan to advance or assist in the
advancement of that technology into the
commercial marketplace in the United
States;
(4) The extent to which the level of
proposed support in the Application is
consistent with a reasonable prospect of
repayment of the Guaranteed
Obligations by considering, among other
factors:
(i) 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
proposed project;
(ii) The total amount and nature of the
Project Costs and the extent to which
Project Costs are to be funded by
Guaranteed Obligations; and
(iii) The feasibility of the proposed
project and likelihood that it will
produce sufficient revenues to service
its debt obligations over the life of the
loan guarantee and assure timely
repayment of Guaranteed Obligations;
(5) The likelihood that the proposed
project will be ready for full commercial
operations in the time frame stated in
the Application;
(6) The amount of Equity committed
and to be committed to the proposed
project by the Borrower, the Project
Sponsor, and other Persons;
(7) Whether there is sufficient
evidence that the Borrower will
diligently implement the proposed
project, including initiating and
completing the proposed project in a
timely manner;
(8) Whether and to what extent the
Applicant will rely upon other Federal
and non-Federal Government assistance
such as grants, tax credits, or other loan
guarantees to support the financing,
construction, and operation of the
proposed project and how such
assistance will impact the proposed
project;
(9) 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;

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(10) The Applicant’s, or the relevant
contractor’s, capacity and expertise to
operate the proposed project
successfully, based on factors such as
financial soundness, management
organization, and the nature and extent
of corporate and individual experience;
(11) The ability of the proposed
Borrower to ensure that the proposed
project will comply with all applicable
laws and regulations, including all
applicable environmental statutes and
regulations;
(12) The levels of market, regulatory,
legal, financial, technological, and other
risks associated with the proposed
project and their appropriateness for a
loan guarantee provided by DOE;
(13) Whether the Application contains
sufficient information, including a
detailed description of the nature and
scope of the proposed project and the
nature, scope, and risk coverage of the
loan guarantee sought to enable DOE to
perform a thorough assessment of the
proposed project; and
(14) Such other criteria that DOE
deems relevant in evaluating the merits
of an Application.
(c) After DOE completes its review
and evaluation of a proposed project
pursuant to § 609.5(b) and this part,
DOE will notify the Applicant in writing
of its determination whether to proceed
with due diligence and negotiation of a
Term Sheet in accordance with § 609.6.
DOE will proceed only if it determines
that the proposed project is highly
qualified and suitable for a Guarantee.
Upon written confirmation from the
Applicant that it desires to proceed,
DOE and the Applicant will commence
negotiations.
(d) A determination by DOE not to
proceed with a proposed project
following evaluation pursuant to
§ 609.5(b) shall be final and nonappealable, but shall not prejudice the
Applicant or other affected Persons from
applying for a Guarantee in respect of a
different proposed project pursuant to
another, separate Application.
§ 609.6 Term sheets and conditional
commitments.

(a) DOE, after negotiation of a Term
Sheet with an Applicant, may offer such
Term Sheet to an Applicant or such
other Person that is an affiliate of the
Applicant and that is acceptable to DOE.
DOE’s offer of a Term Sheet shall be in
writing and signed by the Contracting
Officer. DOE’s negotiation of a Term
Sheet imposes no obligation on the
Secretary to offer a Term Sheet to the
Applicant.
(b) DOE shall terminate its
negotiations of a Term Sheet if it has not
offered a Term Sheet in respect of an

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Eligible Project within four years after
the date of the written notification set
forth in § 609.5(c), unless extended in
writing in the discretion of the
Contracting Officer.
(c) If and when the offeree specified
in a Term Sheet satisfies all terms and
conditions for acceptance of the Term
Sheet, including written acceptance
thereof and payment of all fees specified
in § 609.11(f) and therein to be paid at
or prior to acceptance of the Term
Sheet, the Term Sheet shall become a
Conditional Commitment. Each
Conditional Commitment shall include
an expiration date no more than two
years from the date it is issued, unless
extended in writing in the discretion of
the Contracting Officer. 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) If, subsequent to execution of a
Conditional Commitment, the financing
arrangements of the Borrower, or in
respect of an Eligible Project, change
from those described in the Conditional
Commitment, the Applicant shall
promptly provide updated financing
information in writing to DOE. All such
updated information shall be deemed to
be information submitted in connection
with an Application and shall be subject
to § 609.4(b). Based on such updated
information, DOE may take one or more
of the following actions:
(1) Determine that such changes are
not material to the Borrower, the
Eligible Project or DOE;
(2) Amend the Conditional
Commitment accordingly;
(3) Postpone the expected closing date
of the associated Loan Guarantee
Agreement; or
(4) Terminate the Conditional
Commitment.

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§ 609.7 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) Prior to or on the closing date of
a Loan Guarantee Agreement, DOE will
ensure that:
(1) One of the following has occurred:
(i) An appropriation for the Credit
Subsidy Cost has been made;
(ii) The Secretary has received from
the Borrower payment in full for the
Credit Subsidy Cost and deposited the
payment into the Treasury; or
(iii) A combination of one or more
appropriations under paragraph (b)(1)(i)
of this section and one or more

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payments from the Borrower under
paragraph (b)(1)(ii) of this section has
been made that is equal to the Credit
Subsidy Cost;
(2) Pursuant to section 1702(h) of the
Act, DOE has received from the
Applicant the remainder of the Facility
Fee referred to in § 609.11(b);
(3) OMB has reviewed and approved
DOE’s calculation of the Credit Subsidy
Cost of the 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;
(6) Each holder of the Guaranteed
Obligations is an Eligible Lender, and
the servicer of the Guaranteed
Obligations meets the servicing
performance requirements of § 609.9(b);
(7) DOE has determined the principal
amount of the Guaranteed Obligations
expected to be issued in respect of the
Eligible Project, as estimated at the time
of issuance, will not exceed 80 percent
of the Project Costs of the Eligible
Project;
(8) All conditions precedent specified
in the Conditional Commitment are
either satisfied or waived by the
Contracting Officer and all other
applicable contractual, statutory, and
regulatory requirements have been
satisfied or waived by the Contracting
Officer. If the counterparty to the
Conditional Commitment has not
satisfied all such terms and conditions
on or prior to the closing date of the
Loan Guarantee Agreement, the
Secretary may, in his discretion, set a
new closing date, or terminate the
Conditional Commitment; and
(9) 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, the Secretary
may, on a case-by-case basis, require a
credit rating. If a credit rating is
required, an updated rating must be
provided to the Secretary not later than
30 days prior to closing.
§ 609.8

Loan guarantee agreement.

(a) Only a Loan Guarantee Agreement
executed by the Contracting Officer can
obligate DOE to issue a Guarantee in
respect of Guaranteed Obligations.
(b) DOE is not bound by oral
representations.

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(c) Each Loan Guarantee Agreement
shall contain the following requirements
and conditions, and shall not be
executed until the Contracting Officer
determines that the following
requirements and conditions are
satisfied:
(1) The Federal Financing Bank shall
be the only Eligible Lender in
transactions where DOE guarantees 100
percent (but not less than 100 percent)
of the principal and interest of the
Guaranteed Obligations issued under a
Loan Guarantee Agreement.
(i) 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; and
(ii) Where DOE guarantees 90 percent
or less of the Guaranteed Obligation, the
guaranteed portion may be separated
from or ‘‘stripped’’ from the nonguaranteed portion of the Guaranteed
Obligation, if the loan is participated,
syndicated or otherwise resold in the
secondary debt market;
(2) The Borrower shall be obligated to
make full repayment of the principal
and interest on the Guaranteed
Obligations and other debt of a
Borrower over a period of up to the
lesser of 30 years or 90 percent of the
projected useful life of the Eligible
Project’s major physical assets, as
calculated in accordance with U.S.
generally accepted accounting
principles and practices. The nonguaranteed portion (if any) of any
Guaranteed Obligations must be repaid
pro rata, and on the same amortization
schedule, with the guaranteed portion.
(3) If any financing or credit
arrangement of the Borrower or relating
to the Eligible Project, other than the
Guaranteed Obligations, has an
amortization period shorter than that of
the Guaranteed Obligations, DOE shall
have determined that the resulting
financing structure allocates to DOE a
reasonably proportionate share of the
default risk, in light of:
(i) DOE’s share of the total debt
financing of the Borrower,
(ii) Risk allocation among the credit
providers to the Borrower, and
(iii) Internal and external credit
enhancements.
(4) The loan guarantee does not
finance, either directly or indirectly taxexempt debt obligations, consistent with
the requirements of section 149(b) of the
Internal Revenue Code;
(5) The principal amount of the
Guaranteed Obligations, when
combined with funds from other sources

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Federal Register / Vol. 81, No. 241 / Thursday, December 15, 2016 / Rules and Regulations
committed and available to the
Borrower, shall be sufficient to pay for
expected Project Costs (including
adequate contingency amounts), the
applicable items specified in
§ 609.10(b), and otherwise to carry out
the Eligible Project;
(6) There shall be a reasonable
prospect of repayment by the Borrower
of the principal of and interest on the
Guaranteed Obligations and all of its
other debt obligations;
(7) The Borrower shall pledge
collateral or surety determined by DOE
to be necessary to secure the repayment
of the Guaranteed Obligations. Such
collateral or security may include
Eligible Project assets and assets not
related to the Eligible Project;
(8) The Loan Guarantee Agreement
and related documents shall include
detailed terms and conditions that DOE
deems necessary and appropriate to
protect the interests of the United States
in the case of default, including
ensuring availability of all relevant
intellectual property rights, technical
data including software, and technology
necessary for DOE or any Person
selected by DOE, to complete, operate,
convey, and dispose of the defaulted
Borrower or the Eligible Project;
(9) The Guaranteed Obligations shall
not be subordinate to other financing.
Guaranteed Obligations are not
subordinate to other financing if the lien
on property securing the Guaranteed
Obligations, together with liens that are
pari passu with such lien, if any, take
priority or precedence over other
charges or encumbrances upon the same
property and must be satisfied before
such other charges are entitled to
participate in proceeds of the property’s
sale. In DOE’s discretion, Guaranteed
Obligations may share a lien position
with other financing;
(10) There is satisfactory evidence
that the Borrower will diligently pursue
the Eligible Project and is willing,
competent, and capable of performing
its obligations under the Loan Guarantee
Agreement and the loan documentation
relating to its other debt obligations;
(11) The Borrower shall have paid all
fees and expenses due to DOE or the
U.S. Government, including such
amount of the Credit Subsidy Cost as
may be due and payable from the
Borrower pursuant to the Conditional
Commitment, upon execution of the
Loan Guarantee Agreement;
(12) The Borrower, any Eligible
Lender, and each other relevant party
shall take, and be obligated to continue
to take, those actions necessary to
perfect and maintain liens on collateral
in respect of the Guaranteed
Obligations;

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(13) DOE or its representatives shall
have access to the offices of the
Borrower and the Eligible Project site at
all reasonable times in order to monitor
the—
(i) Performance by the Borrower of its
obligations under the Loan Guarantee
Agreement; and
(ii) Performance of the Eligible
Project;
(14) DOE and Borrower have reached
an agreement regarding the information
that will be made available to DOE and
the information that will be made
publicly available;
(15) The Borrower shall have filed
applications for or obtained any
required regulatory approvals for the
Eligible Project and is in compliance, or
promptly will be in compliance, where
appropriate, with all Federal, state, and
local regulatory requirements;
(16) The Borrower shall have no
delinquent Federal debt;
(17) The Project Sponsors have made
or will make a significant Equity
investment in the Borrower or the
Eligible Project, and will maintain
control of the Borrower or the Eligible
Project as agreed in the LGA; and
(18) The Loan Guarantee Agreement
and related agreements shall include
such other terms and conditions as DOE
deems necessary or appropriate to
protect the interests of the United
States.
(d) The Loan Guarantee Agreement
shall provide that, in the event of a
default by the Borrower:
(1) Interest on the Guaranteed
Obligations shall accrue at the rate
stated in the Loan Guarantee Agreement
or the Loan Agreement, until DOE
makes full payment of the defaulted
Guaranteed Obligations and, except
when such Guaranteed Obligations are
funded through the Federal Financing
Bank, DOE shall not be required to pay
any premium, default penalties, or
prepayment penalties; and
(2) The holder of collateral pledged in
respect of the Guaranteed Obligations
shall be 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.
(e)(1) An Eligible Lender or other
Holder may sell, assign or transfer a
Guaranteed Obligation to another
Eligible Lender that meets the
requirements of § 609.9. Such latter
Eligible Lender shall be required to
assume all servicing, monitoring and
reporting requirements as provided in
the Loan Guarantee Agreement. Any
transfer of the servicing, monitoring,

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90709

and reporting functions shall be subject
to the prior written approval of DOE.
(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
Guaranteed Obligations, shall include in
the Loan Guarantee Agreement or
related documents a procedure for
tracking and identifying Holders of
Guaranteed Obligations. Any
contractual agent approved by the
Secretary to perform this function may
transfer or assign this responsibility
only with the Secretary’s prior written
approval.
(f) Each Loan Guarantee Agreement
shall require the Borrower to make
representations and warranties, agree to
covenants, and satisfy conditions
precedent to closing and to each
disbursement that, in each case, relate to
its compliance with the Davis-Bacon
Act and the Cargo Preference Act.
(g) The Applicant, the Borrower or the
Project Sponsor must estimate,
calculate, record, and provide to DOE
any time DOE requests such information
and at the times provided in the Loan
Guarantee Agreement all costs incurred
in the design, engineering, financing,
construction, startup, commissioning
and shakedown of the Eligible Project in
accordance with generally accepted
accounting principles and practices.
§ 609.9

Lender servicing requirements.

(a) When reviewing and evaluating a
proposed Eligible Project, all Eligible
Lenders (other than the Federal
Financing Bank) shall at all times
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.
(b) Loan servicing duties shall be
performed by an Eligible Lender, DOE,
or another qualified loan servicer
approved by DOE. When performing its
servicing duties, the loan servicer shall
at all times 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:
(1) During the construction period,
monitoring the satisfaction of all of the
conditions precedent to all loan
disbursements, as provided in the Loan
Guarantee Agreement, Loan Agreement
or related documents;
(2) During the operational phase,
monitoring and servicing the
Guaranteed Obligations and collection
of the outstanding principal and
accrued interest as well as undertaking
to ensure that the collateral package

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securing the Guaranteed Obligations
remains uncompromised; and
(3) Until the Guaranteed Obligation
has been repaid, 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 its other debt
obligations.

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§ 609.10

Project costs.

(a) 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;
(3) Costs of equipment purchases,
including a reasonable reserve of spare
parts to the extent required;
(4) Costs to provide facilities and
services related to safety and
environmental protection;
(5) Costs of financial, legal, and other
professional services, including services
necessary to obtain required licenses
and permits and to prepare
environmental reports and data;
(6) Costs of issuing Eligible Project
debt, such as fees, transaction, and costs
referred to in § 609.10(a)(5), and other
customary charges imposed by Eligible
Lenders;
(7) Costs of necessary and appropriate
insurance and bonds of all types
including letters of credit and any
collateral required therefor;
(8) Costs of design, engineering,
startup, commissioning and shakedown;
(9) Costs of obtaining licenses to
intellectual property necessary to
design, construct, and operate the
Eligible Project;
(10) To the extent required by the
Loan Guarantee Agreement and not
intended or available for any cost
referred to in § 609.10(b), costs of
funding any reserve fund, including
without limitation, a debt service
reserve, a maintenance reserve, and a
contingency reserve for cost overruns
during construction; provided that
proceeds of a Guaranteed Loan
deposited to any reserve fund shall not
be removed from such fund except to
pay Project Costs, to pay principal of the
Guaranteed Loan, or otherwise to be

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used as provided in the Loan Guarantee
Agreement;
(11) Capitalized interest necessary to
meet market requirements and other
carrying costs during construction; and
(12) Other necessary and reasonable
costs.
(b) 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 nonEligible 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;
(5) Research, development, and
demonstration costs of readying an
innovative technology for employment
in a commercial project;
(6) Costs that are excessive or are not
directly required to carry out the
Eligible Project, as determined by DOE;
(7) Expenses incurred after startup,
commissioning, and shakedown before
the facility, or, in DOE’s discretion, any
portion of the facility, has been placed
in service;
(8) Borrower-paid Credit Subsidy
Costs, the Administrative Cost of Issuing
a Loan Guarantee, and any other fee
collected by DOE; and
(9) Operating costs.
§ 609.11

Fees and charges.

(a) Unless explicitly authorized by
statute, 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 the Credit Subsidy Cost, the
Application Fee, the Facility Fee, the
Guarantee Fee, the maintenance fee and
any other fees charged by or paid to
DOE relating to the Act or any
Guarantee thereunder.
(b) DOE may charge Applicants a nonrefundable Facility Fee, with a portion
being payable on or prior to the date on
which the Applicant executes the
Commitment Letter and the remainder
being payable on or prior to the closing
date for the Loan Guarantee Agreement.
(c) In order to encourage and
supplement private lending activity
DOE may collect from Borrowers for
deposit in the United States Treasury a
non-refundable Risk-Based Charge
which, together with the interest rate on
the Guaranteed Obligation that LPO
determines to be appropriate, will take
into account the prevailing rate of
interest in the private sector for similar

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loans and risks. The Risk-Based Charge
shall be paid at such times and in such
manner as may be determined by DOE,
but no less frequently than once each
year, commencing with payment of a
pro-rated payment on the date the
Guarantee is issued. The amount of the
Risk-Based Charge will be specified in
the Loan Guarantee Agreement.
(d) DOE may collect a maintenance
fee to cover DOE’s administrative
expenses, other than extraordinary
expenses, incurred in servicing and
monitoring a Loan Guarantee
Agreement. The maintenance fee shall
accrue from the date of execution of the
Loan Guarantee Agreement through the
date of payment in full of the related
Guaranteed Obligations. If DOE
determines to collect a maintenance fee,
it shall be paid by the Borrower each
year (or portion thereof) in advance in
the amount specified in the applicable
Loan Guarantee Agreement.
(e) In the event a Borrower or an
Eligible Project experiences difficulty
relating to technical, financial, or legal
matters or other events (e.g., engineering
failure or financial workouts), the
Borrower shall be liable as follows:
(1) If such difficulty requires DOE to
incur time or expenses beyond those
customarily expended to monitor and
administer performing loans, DOE may
collect an extraordinary expenses fee
from the Borrower that will reimburse
DOE for such time and expenses, as
determined by DOE; and
(2) For all fees and expenses of DOE’s
independent consultants and outside
counsel, to the extent that such fees and
expenses are elected to be paid by DOE
notwithstanding the provisions of
paragraphs (f) and (g) of this section.
(f) Each Applicant, Borrower or
Project Sponsor, as applicable, shall be
responsible for the payment of all fees
and expenses charged by DOE’s
independent consultants and outside
legal counsel in connection with an
Application, Conditional Commitment
or Loan Guarantee Agreement, as
applicable. Upon making a
determination to engage independent
consultants or outside counsel with
respect to an Application, DOE will
proceed to evaluate and process such
Application only following execution by
an Applicant or Project Sponsor, as
appropriate, of an agreement satisfactory
to DOE to pay the fees and expenses
charged by the independent consultants
and outside legal counsel. Appropriate
provisions regarding payment of such
fees and expenses shall also be included
in each Term Sheet and Loan Guaranty
Agreement or, upon a determination by
DOE, in other appropriate agreements.

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(g) Notwithstanding payment by
Applicant, Borrower or Project Sponsor,
all services rendered by an independent
consultant or outside legal counsel to
DOE in connection with an Application,
Conditional Commitment or Loan
Guarantee Agreement shall be solely for
the benefit of DOE (and such other
creditors as DOE may agree in writing).
DOE may require, in its discretion, the
payment of an advance retainer to such
independent consultants or outside
legal counsel as security for the
collection of the fees and expenses
charged by the independent consultants
and outside legal counsel. In the event
an Applicant, Borrower or Project
Sponsor fails to comply with the
provisions of such payment agreement,
DOE in its discretion, may stop work on
or terminate an Application, a
Conditional Commitment or a Loan
Guarantee Agreement, or may take such
other remedial measures in its
discretion as it deems appropriate.
(h) DOE shall not be financially liable
under any circumstances to any
independent consultant or outside
counsel for services rendered in
connection with an Application,
Conditional Commitment or Loan
Guarantee Agreement except to the
extent DOE has previously entered into
an express written agreement to pay for
such services.
§ 609.12 Full faith and credit and
incontestability.

The full faith and credit of the United
States is pledged to the payment of
principal and interest of Guaranteed
Obligations pursuant to Guarantees
issued in accordance with the Act and
this Part. The issuance by DOE of a
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 shall be legal,
valid, binding and enforceable against
DOE in accordance with its terms.

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§ 609.13 Default, demand, payment, and
foreclosure on collateral.

(a) If a Borrower defaults in making a
required payment of principal or
interest on a Guaranteed Obligation and
such default has not been cured within
the applicable grace period, the Holder
may make written demand for payment
upon the Secretary in accordance with
the terms of the applicable Guarantee. If
a Borrower defaults in making a
required payment of principal or
interest on a Guaranteed Obligation and
such default has not been cured within
the applicable grace period, the

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Secretary shall notify the Attorney
General.
(b) Subject to the terms of the
applicable Guarantee, the Secretary
shall make payment within 60 days after
receipt of written demand for payment
from the Holder, provided that the
demand for payment complies in all
respects with the terms of the applicable
Guarantee. Interest shall accrue to the
Holder at the rate stated in the
promissory note evidencing the
Guaranteed Obligation, without giving
effect to the Borrower’s default in
making a required payment of principal
or interest on the applicable Guarantee
Obligation or any other default by the
Borrower, until the Guaranteed
Obligation has been fully paid by DOE.
Payment by the Secretary on the
applicable Guarantee does not change
Borrower’s obligations under the
promissory note evidencing the
Guaranteed Obligation, Loan Guarantee
Agreement, Loan Agreement or related
documents, including an obligation to
pay default interest.
(c) Following payment by the
Secretary pursuant to the applicable
Guarantee, upon demand by DOE, the
Holder shall transfer and assign to the
Secretary (or his designee or agent) the
promissory note evidencing the
Guaranteed Obligation, all rights and
interests of the Holder in the
Guaranteed Obligation, and all rights
and interests of the Holder in respect of
the Guaranteed Obligation, except to the
extent that the Secretary determines that
such promissory note or any of such
rights and interests shall not be
transferred and assigned to the
Secretary. Such transfer and assignment
shall include, without limitation, all of
the liens, security and collateral rights
of the Holder (or his designee or agent)
in respect of the Guaranteed Obligation.
(d) Following payment by the
Secretary pursuant to a Guarantee or
other default of a Guaranteed
Obligation, the Secretary is authorized
to protect and foreclose on the
collateral, take action to recover costs
incurred by, and all amounts owed to,
the United States as a result of the
defaulted Guarantee Obligation, and
take such other action necessary or
appropriate to protect the interests of
the United States. In respect of any such
authorized actions that involve a
judicial proceeding or other judicial
action, the Secretary shall act through
the Attorney General. The foregoing
provisions of this paragraph shall not
relieve the Secretary from its obligations
pursuant to any applicable Intercreditor
Agreement. Nothing in this paragraph
shall limit the Secretary from exercising

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90711

any rights or remedies pursuant to the
terms of the Loan Guarantee Agreement.
(e) The cash proceeds received as a
result of any foreclosure on the
collateral, or other action, shall be
distributed in accordance with the Loan
Guarantee Agreement (subject to any
applicable Intercreditor Agreement).
(f) The Loan Guarantee Agreement
shall provide that cash proceeds
received by the Secretary (or his
designee or agent) as a result of any
foreclosure on the collateral or other
action shall be applied in the following
order of priority:
(1) Toward the pro rata payment of
any costs and expenses (including
unpaid fees, fees and expenses of
counsel, contractors and agents, and
liabilities and advances made or
incurred) of the Secretary, the Attorney
General, the Holder, a collateral agent or
other responsible person of any of them
(solely in their individual capacities as
such and not on behalf of or for the
benefit of their principals), incurred in
connection with any authorized action
following payment by the Secretary
pursuant to a Guarantee or other default
of a Guaranteed Obligation, or as
otherwise permitted under the Loan
Agreement or Loan Guarantee
Agreement.
(2) To pay all accrued and unpaid fees
due and payable to the Secretary, the
Attorney General, the Holder, a
collateral agent or other responsible
person of any of them on a pro rata basis
in respect of the Guaranteed Obligation;
(3) To pay all accrued and unpaid
interest due and payable to the
Secretary, the Attorney General, the
Holder, a collateral agent or other
responsible person of any of them on a
pro rata basis in respect of the
Guaranteed Obligation;
(4) To pay all unpaid principal of the
Guaranteed Obligation;
(5) To pay all other obligations of the
Borrower under the Loan Guarantee
Agreement, the Loan Agreement and
related documents that are remaining
after giving effect to the preceding
provisions and are then due and
payable; and;
(6) To pay to the Borrower, or its
successors and assigns, or as a court of
competent jurisdiction may direct, any
cash proceeds then remaining following
the application of all payment described
above.
(g) No action taken by the Holder or
its agent or designee in respect of any
collateral will affect the rights of any
person, including the Secretary, having
an interest in the Guaranteed
Obligations or other debt obligations, to
pursue, jointly or severally, legal action
against the Borrower or other liable

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Federal Register / Vol. 81, No. 241 / Thursday, December 15, 2016 / Rules and Regulations

persons, for any amounts owing in
respect of the Guaranteed Obligation or
other applicable debt obligations.
(h) In the event that the Secretary
considers it necessary or desirable to
protect or further the interest of the
United States in connection with
exercise of rights as a lien holder or
recovery of deficiencies due under the
Guaranteed Obligation, the Secretary
may take such action as he determines
to be appropriate under the
circumstances.
(i) Nothing in this part precludes, nor
shall any provision of this part be
construed to preclude, the Secretary
from purchasing any collateral or
Holder’s or other Person’s interest in the
Eligible Project upon foreclosure of the
collateral.
(j) Nothing in this part precludes, nor
shall any provision of this part be
construed to preclude, forbearance by
any Holder with the consent of the
Secretary for the benefit of the Borrower
and the United States.
(k) The Holder and the Secretary may
agree to a formal or informal plan of
reorganization in respect of the
Borrower, to include a restructuring of
the Guaranteed Obligation and other
applicable debt of the Borrower on such
terms and conditions as the Secretary
determines are in the best interest of the
United States.

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§ 609.14

Preservation of collateral.

(a) If the Secretary exercises his right
under the Loan Guarantee Agreement to
require the holder of pledged collateral
to 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 collateral, the Secretary shall,
subject to compliance with the
Antideficiency Act, 31 U.S.C. 1341 et
seq., reimburse the holder of such
collateral for reasonable and appropriate
expenses incurred in taking actions
required by the Secretary (unless
otherwise provided in applicable
agreements). Except as provided in
§ 609.13, no party may waive or
relinquish, without the consent of the
Secretary, any such collateral 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 he determines are required or
appropriate, taking into account the
term of any applicable Intercreditor
Agreement, to care for, preserve, protect
or maintain collateral pledged in respect

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of Guaranteed Obligations. The cost of
such contracts may be charged to the
Borrower.
§ 609.15

Audit and access to records.

Each Loan Guarantee Agreement and
related documents shall provide that:
(a) 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 Eligible Project as are
necessary, including the 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 Eligible Project assets
and non-Eligible Project assets pledged
in respect of the Guaranteed
Obligations, all off-take and other
revenue producing agreements,
documentation for all Eligible Project
indebtedness, income tax returns,
technology agreements, documentation
for all permits and regulatory approvals
and all other documents and records
relating to the Borrower or the Eligible
Project, as determined by the Secretary,
to facilitate an effective audit and
performance evaluation of the Eligible
Project; and
(b) 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.
§ 609.16

Deviations.

(a) To the extent that the requirements
under this part are not specified by the
Act or other applicable statutes, DOE
may authorize deviations from the
requirements of this part upon:
(1) Either receipt from the Applicant,
Borrower or Project Sponsor, as
applicable, of—
(i) A written request that the Secretary
deviate from one or more requirements;
and
(ii) A supporting statement briefly
describing one or more justifications for
such deviation; or

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(iii) A determination by the Secretary
in his discretion to undertake a
deviation;
(2) A finding by the Secretary that
such deviation supports program
objectives and the special circumstances
stated in the request make such
deviation clearly in the best interest of
the Government; and
(3) If the waiver would constitute a
substantial change in the financial terms
of the Loan Guarantee Agreement and
related documents, consultation by DOE
with OMB and the Secretary of the
Treasury.
(b) If a deviation under this section
results in an increase in the applicable
Credit Subsidy Cost, such increase shall
be funded either by additional fees paid
by or on behalf of the Borrower or, if an
appropriation is available by means of
an appropriations act. The Secretary has
discretion to determine how the cost of
a deviation is funded.
[FR Doc. 2016–30006 Filed 12–14–16; 8:45 am]
BILLING CODE 6450–01–P

DEPARTMENT OF COMMERCE
Bureau of Industry and Security
15 CFR Part 744
[Docket No. 161110999–6999–01]
RIN 0694–AH21

Addition of Certain Persons to the
Entity List
Bureau of Industry and
Security, Commerce.
ACTION: Final rule.
AGENCY:

This final rule amends the
Export Administration Regulations
(EAR) by adding seven persons to the
Entity List. The seven persons who are
added to the Entity List have been
determined by the U.S. Government to
be acting contrary to the national
security or foreign policy interests of the
United States. These seven persons will
be listed on the Entity List under the
destination of Pakistan.
DATES: This rule is effective December
15, 2016.
FOR FURTHER INFORMATION CONTACT:
Chair, End-User Review Committee,
Office of the Assistant Secretary, Export
Administration, Bureau of Industry and
Security, Department of Commerce,
Phone: (202) 482–5991, Email: ERC@
bis.doc.gov.
SUPPLEMENTARY INFORMATION:
SUMMARY:

Background
The Entity List (Supplement No. 4 to
part 744) identifies entities and other

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