Rural Energy for America Program

DEPARTMENT OF AGRICULTURE

Rural Business-Cooperative Service

7 CFR Part 4280

[Docket No. RBS-20-BUSINESS-0027]

RIN 0570-AA98

Rural Energy for America Program

AGENCY:

Rural Business-Cooperative Service, USDA.

ACTION:

Final rule; request for comment.

SUMMARY:

The Rural Business-Cooperative Service (RBCS and/or Agency), a Rural Development agency of the United States Department of Agriculture (USDA), hereinafter referred to as the Agency, is publishing this final rule for the Rural Energy for America Program (REAP). The intent of this rule is to remove the provisions relating to guaranteed loans and to make other revisions to enhance program delivery and customer service for the REAP program. Program enhancements that support a greater distribution of funds as well as processing and servicing clarifications are also being incorporated into this update.

DATES:

Effective date:

This final rule is effective July 26, 2021.

Comment date:

Comments are due June 28, 2021.

ADDRESSES:

You may submit comments, identified by docket number RBS-20-Business-0027 and Regulatory Information Number (RIN) number 0570-AA98 through

https://www.regulations.gov.

Instructions:

All submissions received must include the Agency name and docket number or RIN for this rulemaking. All comments received will be posted without change to

https://www.regulations.gov,

including any personal information provided.

Docket:

For access to the docket to read background documents or comments received, go to

https://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT:

Sami Zarour, Program Management Division, U.S. Department of Agriculture, 1400 Independence Avenue SW, Washington, DC 20250-3201; telephone (202) 720-9549; email:

sami.zarour@usda.gov.

SUPPLEMENTARY INFORMATION:

I. Background

Rural Development administers a multitude of programs, ranging from housing and community facilities to infrastructure and business development. Its mission is to increase economic opportunity and improve the quality of life in rural communities by providing leadership, infrastructure, capital, and technical support that can support rural communities, helping them to prosper.

To achieve its mission, Rural Development provides financial support (including direct loans, grants, loan guarantees, and direct payments) and technical assistance to help enhance the quality of life and provide support for economic development in rural areas.

On July 14, 2020, at 85 FR 42494, the Agency promulgated 7 CFR part 5001, the OneRD guaranteed loan regulation, which combined four Agency guaranteed loan program regulations, including REAP, into one comprehensive guaranteed loan processing and servicing regulation. This final rule amends 7 CFR part 4280, subpart B accordingly to remove references to the guaranteed loan provisions of REAP; these references have become superfluous in light of the promulgation of 7 CFR part 5001. Furthermore, program modifications required by the Agriculture Improvement Act of 2018 (2018 Farm Bill), as well as provisions that have been previously published via funding opportunities in

Federal Register

publications, have been incorporated into this final rule to eliminate the need for annual notification and to enhance program delivery.

II. Summary of Changes to the Rule

This section presents the major changes to the existing REAP regulation.

A. General changes.

All guaranteed loan references were removed from Subpart B, of Part 4280, and it now contains appropriate language for the updated grant rule.

References were updated according to section modifications.

B. Definitions (§ 4280.103).

The definition section was revised to add new definitions to conform to 7 CFR part 5001 and to remove reference to 7 CFR part 4279.

C. Conflict of interest (§ 4280.106).

Conformed language in § 4280.106 (a) to the definition of conflict of interest found in 7 CFR part 5001 as applicable. Removes specific language from prior rule regarding award of project construction contracts and language regarding recipient retaining ownership in the applicant's project. Revisions will bring consistency to RBCS regarding conflict of interest determinations.

D. U.S. Department of Agriculture Departmental Regulations and laws that contain other compliance requirements (§ 4280.108).

Clarified in paragraph (c)(1) that compliance reviews apply only to programs where grantees extend federal assistance to ultimate beneficiaries and modified text in paragraph (c)(2) accordingly. Updated environmental regulation reference.

E. Ineligible applicants, borrowers, and owners (§ 4280.109).

Renamed section “Ineligible applicants, grantees, and owners.” Removed references to borrowers and inserted reference to grantees.

F. General applicant, application, and funding provisions (§ 4280.110).

Removed reference to guaranteed loan only applications and updated environmental regulation reference. Clarified that satisfactory progress in paragraph (a) may include a review of compliance with Agency reporting, and for the energy audits (EA) program and renewable energy development assistance (REDA) program it means at least 50 percent of previous EA/REDA awards expended at time Agency determines eligibility of new applications, as was previously clarified via annual program notices. Streamlined language on application and type of funding limits in paragraphs (c) and (d) and merged text into one new paragraph (c), clarifying that like RES or EEI updates to multiple facilities may be submitted as one application. Updated technical report language in paragraph (g) (including list of technologies that must submit a technical report) to conform to 7 CFR part 5001. Previous rule required a technical report for all technologies. Clarified grant extension language in paragraph (h). Re-lettered paragraphs accordingly.

G. Notifications (§ 4280.111).

Removed reference to lender notifications.

H. Applicant eligibility (§ 4280.112).

Clarified in paragraph (a) that applicant eligibility is determined by the Agency at the time of application, removed prospective owner language in paragraph (b) since this applied to the feasibility study program only which no longer exists, separated into two paragraphs the Unique Entity Identifier (UEI) ID number (e) and the System for Awards Management (SAM) (f) provisions since they are separate processes.

I. Project eligibility (§ 4280.113).

Revised introductory text to reference subsequent improvements and to include Agency caution to the applicant regarding compliance with environmental requirements, both provisions were previously included in this section of the rule and are being relocated to enhance readability. Added hydroelectric source size restriction previously found in definition to

paragraph (a) and removed examples as these will be provided in instruction. Revised RES residential language in paragraph (e) to clarify documentation required for a RES project where a residence is closely associated with an agricultural operation or rural small business. Applicant certification will no longer be accepted as an option for RES projects with residential ties, because a certification alone does not provide adequate documentation that 50% or greater of the energy to be generated will benefit the rural small business or agricultural producer operation. Added provision recognizing that recipients may use up to 10 percent of funds to construct, improve, or acquire broadband infrastructure related to the project financed, pursuant to 7 CFR 1980, Subpart M Special Authority to Enable Funding of Broadband and Smart Utility Facilities Across Select Rural Development programs.

J. Ineligible projects (§ 4280.114).

Renamed section from former “RES and EEI grant funding” and created a list of ineligible projects as previous rule had ineligible projects scattered throughout various sections of the rule. Added farm labor housing and owner occupied bed and breakfast projects, because these are considered residential since long-term living accommodations are provided. Added projects where ineligible project costs equal or exceed 50 percent of the total project costs since these projects do not carry out the intent of the statute.

K. RES and EEI grant funding (§ 4280.115).

Renamed section from former “Grant applications—general” and inserted text previously found in § 4280.114. Added fees as required by interconnection agreements and vendor/installer certification provision to EEI eligible project costs in paragraph (c). Added clarification to ineligible project costs that lease to own and capitalized leases are not eligible. Modified provisions to remove loan-only request language.

L. Grant applications—general (§ 4280.116).

Renamed section from former “Determination of technical merit” and inserted text previously found in § 4280.115. Removed guaranteed loan reference and revised RES feasibility study requirement in paragraph (b) to be required based on the scope of the project or lack of other application documentation. Previously a feasibility study was required for all RES projects with total costs of $200,000 or greater.

M. Determination of technical merit (§ 4280.117).

Renamed section from former “Grant Applications for RES and EEI Projects with Total Project Costs of $200,000 and Greater” and inserted text previously found in § 4280.116. Conformed technical merit language to 7 CFR part 5001 language including reverting back to include a “pass with conditions” assignment and determination. Added language in paragraph (e) on further processing of applications after technical merit determination.

N. Grant applications for RES and EEI projects with total project costs of $200,000 and greater (§ 4280.118).

Renamed section from former “Grant Applications for RES and EEI Projects with Total Project Costs of Less than $200,000, but More Than $80,000”, and inserted text previously found in § 4280.117. Removed reference to Form RD 1940-20 which is no longer relevant and inserted reference to 7 CFR part 1970. Added reference to Form 4280-3C. In paragraph (b), conformed applicant eligibility certification language as presented in 7 CFR part 5001. Previously, all applicants were required to submit documentation to justify eligibility versus being able to certify. Required financial statements language also conforms to 7 CFR part 5001. Referenced conforming technical report language from 7 CFR part 5001 which identifies technologies which must submit technical reports, versus requiring for all applications.

O. Grant applications for RES and EEI projects with total project costs of Less than $200,000, but more than $80,000 (§ 4280.119).

Renamed section from former “Grant Applications for RES and EEI Projects with Total Project Costs of $80,000 or Less” and inserted text previously found in § 4280.118. Added reference to application Form RD 4280-3B. Removed reference to Form RD 1940-20 which is no longer relevant and inserted reference to 7 CFR part 1970. Conformed applicant eligibility certification language as presented in 7 CFR part 5001. Previously, all applicants were required to submit documentation to justify eligibility versus being able to certify. Removed requirement for applicants to submit self-score documentation. Referenced conforming technical report language from 7 CFR part 5001 which identifies technologies which must submit technical reports, versus requiring for all applications.

P. Grant applications for RES and EEI projects with total project costs of $80,000 or less (§ 4280.120).

Renamed section from former “Scoring RES and EEI Grant Applications” and inserted text previously found in § 4280.119. Removed reference to Form RD 1940-20 which is no longer relevant and inserted reference to 7 CFR part 1970. Added reference to application Form RD 4280-3A. Conformed applicant eligibility certification language and technical merit language to language as presented in 7 CFR part 5001.

Q. Scoring RES and EEI grant applications (§ 4280.121).

Renamed section from former “Selecting RES and EEI Grant Applications for Award” and inserted text previously found in § 4280.120. Recast and simplified language under energy generated, replaced or saved scoring criteria by removing equations and renumbering section accordingly. Added “or replaced” to (b)(1)(i) and clarified that energy for residential use is excluded. Clarified under (b)(2)(i)(A) that proposed energy use, such as that contributed to an expansion, is not considered in an energy replacement calculation. Clarified that retrofitting of an existing RES which increases the amount of energy generated, is scored as energy generation and will receive 10 points under this scoring criteria. Clarified that energy savings of less than 20 percent will receive no points under sub-criterion (b)(2).

Commitment of funds scoring criteria was reduced from a maximum of 20 points to 15. Recast language into two paragraphs, calculation and awarding of points, for clarity.

Inserted reference to 7 CFR part 5001 under previous grantees and borrowers scoring criteria to reference new REAP guaranteed loan regulation.

Added new “existing business” scoring criteria with maximum of 5 points, points sourced from reduction under commitment of funds criteria.

Updated criteria, as previously published in Notice of Solicitation of Applications (NOSAs), for “size of grant request,” which replaces the “size of business as compared to the Small Business Administration (SBA) size standard” criteria. Maximum points remain at 10 and therefore applications requesting $250,000 or less for RES and $125,000 or less for EEI projects, have total points possible of 100. All other applications have a maximum possible score of 90 points.

Amended State Director/Administrator priority point text to conform with 7 CFR part 5001 which includes adding the newly defined terms underserved community(ies)and veteran. Language clarifying unserved or under-served population as previously published in REAP NOSAs was added. Points for projects located in Federal disaster areas, as previously published via REAP NOSAs, were added as a separate criteria under State Director/Administrator priority points.

R. Selecting RES and EEI grant applications for award (§ 4280.122).

Renamed section from former “Awarding and Administering RES and EEI Grants” and inserted text previously found in § 4280.121. Added language in introductory paragraph to clarify state allocations of restricted and unrestricted funds, amended RES/EEI application deadline to March 31 as previously noted in annual NOSA, added language regarding pro-rating applications with tied scores, and amended maximum competitions to up to five within a Federal fiscal year, versus allowing for five consecutive competitions which may roll into the next fiscal year.

S. Awarding and administering RES and EEI grants (§ 4280.123).

Renamed section from former “Servicing RES and EEI Grants” and inserted text previously found in § 4280.122. Clarified SAM Registration provisions and added a 6-month timeframe from obligation of funds for execution of the Financial Assistance Agreement to better manage grants.

T. Servicing RES and EEI grants (§ 4280.124).

Renamed section from former “Construction Planning and Performing Development ”, and inserted text previously found in § 4280.123. Removed transfer of obligation provisions as previously published in REAP NOSAs given transactions are not fully supported by the Agency's data systems,

e.g.

Guarantee Loan System (GLS), PLAS, and CLSS. Each transaction requires multiple complex manual actions by numerous staff which is burdensome and inefficient given limited resources. Amended transfer of ownership provisions to clarify that financial assistance agreement must be executed prior to transfer.

Clarified minimum requirements for all grant fund reimbursement requests.

Clarified that fund disbursement in full is acceptable for grants with total project costs of $200,000 or greater if project is completed in full, is operational, and has met or exceeded steady state operating levels. Clarified language regarding site visits.

Amended outcome project performance criteria to comply with REAP Office of Inspector General (OIG) audit closure requirements. Annual certification will be accepted if project was installed as presented in the application, and if project installation differed, actual outcomes must be reported to the Agency.

U. Construction planning and performing development (§ 4280.125).

Renamed section from former “Compliance with §§ 4279-29 through 4279.99 of this chapter ” and inserted text previously found in § 4280.124.

Clarified that the Agency may note exceptions to surety requirements to avoid placing the burden of requesting an exception on the applicant who is not familiar with Agency surety provisions. Added provision to allow surety exception when the grantee agrees to reimbursement in full only after the system is operational, all costs are paid in full, and there is evidence of no liens.

Increased threshold for technical services required under paragraph (c) from $400,000 to $1,000,000.

Added language under paragraph (d) that removes Agency review and approval of final plans and specifications if the applicant agrees to a lump sum reimbursement of grant funds at the end of construction and 30 days of successful operation.

V. Combined Grant and Guaranteed Loan Funding Requirements (§ 4280.137).

Renamed section from former “Application and Documentation”. Text formerly found in § 4280.165 was inserted in part, removing specific guaranteed loan language and instead referencing 7 CFR part 5001 requirements for the loan portion of a combination funding request.

W.

Applicant eligibility

(§ 4280.149).

Sections 4280.144-4280.148 remain “Reserved”.

Begins the Energy Audit (EA) and Renewable Energy Development Assistance Grants (REDA) provisions. Renamed section from former “Reserved” and inserted text formerly found in § 4280.186. Clarified that the term “council” is to be defined as a Resource Conservation & Development (RC&D) council.

X. Project eligibility (§ 4280.150).

Renamed section from former “Reserved” and inserted text formerly found in § 4280.187. Removed “or both” in introductory sentence to ensure understanding that each application must focus on either EA or REDA assistance. Referenced definition of energy audits to ensure quality of documents completed. Modified language for agricultural producers in non-rural areas to conform to language in 7 CFR part 5001.

Y.

Ineligible Projects

(§ 4280.151).

Renamed section from former “Reserved” and inserted a list of projects which are not eligible for EA or REDA funding to include: Research related projects; feasibility studies of any nature; projects where funding is not targeted directly to assisting agriculture producers or rural small businesses; projects to develop computer software or programs; and projects where 50 percent or more of proposed grant funding will support in-eligible project costs.

Z. Grant funding for EA and REDA (§ 4280.152).

Renamed section from former “Servicing Guaranteed Loans” and inserted text formerly found in § 4280.188. Added to list of ineligible project costs, funding to train individuals to become qualified to perform EA or REDA assistance and payment or waiver of student tuition, given program desires experienced resource providers at time of application. Clarified in paragraph (d) that the 25 percent contribution from agricultural producers and rural small businesses does not count towards commitment of funds for scoring.

AA. EA and REDA grant applications—content (§ 4280.153).

Renamed section from former “Reserved” and inserted text formerly found in § 4280.190. Clarified applicant's experience under REDA to include renewable energy site assessments and renewable energy technical assistance provided directly to agriculture producers and rural small businesses. Removed reference to energy assessments under applicant's EA experience given eligible project purpose references only energy audits.

BB. Evaluation of EA and REDA grant applications (§ 4280.154).

Renamed section from former “Reserved” and inserted text formerly referenced in § 4280.191. Added language to clarify that only information submitted in the application would be used to evaluate EA and REDA proposals. Added reference to ineligible project provisions as found in § 4280.151 as this is also a part of the project eligibility evaluation. Updated reference to sections which were amended.

CC. Scoring EA and REDA grant applications (§ 4280.155).

Renamed section from former “Reserved” and inserted text formerly found in § 4280.192. Rearranged order of scoring criteria to align with 7 CFR 5001.153, application content. Placed minimum score of 40 points to compete for EA/REDA funding, unless later altered via a

Federal Register

notification. This aligns with minimum score of the REAP guaranteed loan program and provides flexibility for states to build REAP capacity, yet not compete very low scoring applications over others that better align with program requirements. Clarified that in addition to applicant experience, contractor experience related to the same type of activity, would qualify under scoring criteria (d). Clarified in (b)(2) that the ultimate recipient list must include at least 50 percent of total number proposed to be served in order to receive an additional 10 points under this scoring criteria. Clarified in (e) that existing programs

and awards do not include those of contractors, and that awards are referring to recognition, not funding awards. Clarified in (f) the calculation for commitment of funds.

DD. Selecting EA and REDA grant applications for award (§ 4280.156).

Renamed section from former “Reserved” and inserted text formerly found in § 4280.193. Added language regarding funds held at National Office for one nationwide competition and added to paragraph (a) a provision for a third application from each state if program is undersubscribed on eligible requests. Reference to the minimum score threshold was added to paragraph (b). Added option to redirect unused EA/REDA funds into the RES/EEI program in paragraph (c).

EE. Awarding and administering EA and REDA grants (§ 4280.158).

Renamed section from former “Reserved”, inserted text formerly found in § 4280.195, and updated references.

FF. Servicing EA and REDA grants (§ 4280.159).

Renamed section from former “Reserved”, inserted text formerly found in § 4280.196, and updated references.

GG. Reserved “ ” (§ 4280.165).

Renamed section from former “Combined Grant and Guaranteed Loan Funding Requirements”.

HH. OMB control Number (§ 4280.166).

Renamed section from former “Reserved” and inserted text formerly found in § 4280.200.

II. Former Sections (§§ 4280.186-4280.200).

Sections are no longer utilized in this regulation. Text has been relocated to sections as noted above.

JJ.

The following sections were removed in their entirety and are now reserved:

Guaranteed/Annual Renewal Fee (§ 4280.126).

Borrower Eligibility (§ 4280.127).

Project Eligibility (§ 4280.128).

Guaranteed Loan Funding (§ 4280.129).

Loan Processing (§ 4280.130).

Credit Quality (§ 4280.131).

Financial Statements (§ 4280.132).

Personal and Corporate Guarantees (§ 4280.134).

Scoring RES and EEI Guaranteed Loan-Only Applications (§ 4280.135).

Evaluation of RES and EEI Guaranteed Loan Applications (§ 4280.138).

Selecting RES and EEI Guaranteed Loan-Only Applications for Award (§ 4280.139).

Reserved (§ 4280.140).

Changes in Borrower (§ 4280.141).

Conditions Precedent to Issuance of Loan Note Guarantee (§ 4280.142).

Requirements After Project Construction (§ 4280.143).

Combined Grant and Guaranteed Loan Funding Requirements. (§ 4280.165).

Appendix A to Subpart B of Part 4280—Technical Reports for Energy Efficiency Improvement (EEI) Projects.

Updated regulatory references.

Appendix B to Subpart B of Part 4280—Technical Reports for Renewable Energy System (RES) Projects with Total Project Costs of Less Than $200,000, but More Than $80,000.

Updated regulatory references.

Appendix C to Subpart B of Part 4280—Technical Reports for Renewable Energy System (RES) Projects with Total Project Costs of $200,000 and Greater.

Updated regulatory references and added language for biogas projects, renewable energy systems with storage components, and provisions for hybrid applications.

Appendix D to Subpart B of Part 4280—Feasibility Study Components.

Added appendix which conforms to feasibility study component appendix found in 7 CFR 5001.

III. Executive Orders/Acts

Executive Orders 12866 and 13563

Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches to maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility.

This rule has been determined to be significant and was reviewed by the Office of Management and Budget under Executive Order 12866. In accordance with Executive Order 12866, the Agency conducted a Regulatory Impact Analysis, outlining the costs and benefits of implementing this program in rural America. The complete analysis is available in Docket No. RBS-20-Business-0027. This analysis consists a statement of need for the final rule, a discussion of the current provisions for the Rural Energy for America Program (REAP) and how the final rule changes those provisions, and an analysis of the benefits and costs of the changes.

Much of the analysis is necessarily descriptive of the anticipated effects of this final rule. Benefits are described qualitatively, with some indication of the relative potential size. Most of the costs are quantified. Consequently, the analysis does not provide the exact magnitude of the resulting benefits and costs. Despite this, the Agency expects this final rule will provide cost savings and net benefits compared to the current situation by improved program and Agency management.

Congressional Review Act

Pursuant to the Congressional Review Act (5 U.S.C. 801

et seq.

), the Office of Information and Regulatory Affairs designated this rule as not a major rule, as defined by 5 U.S.C. 804(2).

Unfunded Mandates Reform Act

This final rule contains no Federal mandates (under the regulatory provisions of Title II of the UMRA) for State, local, and tribal governments or the private sector. Thus, this rule is not subject to the requirements of sections 202 and 205 of the UMRA.

Environmental Impact Statement

This final rule has been reviewed in accordance with 7 CFR part 1970 (“Environmental Policies and Procedures”). The Agency has determined that (i) this action meets the criteria established in 7 CFR 1970.53(f); (ii) no extraordinary circumstances exist; and (iii) the action is not “connected” to other actions with potentially significant impacts, is not considered a “cumulative action” and is not precluded by 40 CFR 1506.1. Therefore, the Agency has determined that the action does not have a significant effect on the human environment, and therefore neither an Environmental Assessment nor an Environmental Impact Statement is required.

Executive Order 13132, Federalism

The policies contained in this final rule do not have a substantial direct effect on 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. Nor does this rule impose substantial direct compliance costs on state and local governments. Therefore, consultation with the states is not required.

Regulatory Flexibility Act

The Regulatory Flexibility Act (5 U.S.C. 601-602) (RFA) generally requires an agency to prepare a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements under the Administrative Procedure Act (“APA”) or any other statute. The Administrative Procedures Act exempts from notice and comment requirements rules “relating to agency management or personnel or to public property, loans, grants, benefits,

or contracts” (5 U.S.C. 553(a)(2)), so therefore an analysis has not been prepared for this rule.

Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use

The Rural Energy for America Program helps offset the costs associated with renewable energy systems and energy efficiency improvements. Renewable energy systems can be installed for direct use to replace existing fossil fuel use where the behind-the-meter applications only affect on-site use and have no negative impact on the energy supply or distribution systems. Renewable energy systems can also be installed for distributed energy systems to help ensure a reliable source of energy in the event of natural disasters. Projects which produce energy for sale, or net-meter energy, are typically interconnected to existing energy distribution systems. These projects are required to meet all federal and state regulatory provisions as set by local utilities, state statutes and federal regulations, thus ensuring no adverse impacts to energy supply or distribution systems. For large REAP projects, applicants often incur the cost for generation and transmission studies to ensure no adverse impacts to energy supply or distribution systems. The additional infrastructure becomes a benefit to the utility or other parties interested in developing their own renewable energy projects. Energy efficiency improvement projects reduce the consumption of fossil fuel based energy and assist many utilities with management of their demand loads. It is for these reasons that the REAP program is not likely to have an adverse impact to the energy supply or distribution systems. Accordingly, this action is not likely to have a significant adverse effect on the supply, distribution, or use of energy. Moreover, the action has not otherwise been designated by the Administrator of the Office of Information and Regulatory Affairs as a significant energy action.

Executive Order 12372, Intergovernmental Review of Federal Programs

This final rule is excluded from the scope of Executive Order 12372 (Intergovernmental Consultation), which may require a consultation with State and local officials. See the final rule related notice entitled, “Department Programs and Activities Excluded from Executive Order 12372” (50 FR 47034).

Executive Order 13175, Consultation and Coordination With Indian Tribes

This executive order imposes requirements on RBS in the development of regulatory policies that have tribal implications or preempt tribal laws. RBS has determined that the rule does not have a substantial direct effect on one or more Indian tribe(s) or on either the relationship or the distribution of powers and responsibilities between the Federal Government and Indian tribes. Thus, this rule is not subject to the requirements of Executive Order 13175. If tribal leaders are interested in consulting with RBS on this rule, they are encouraged to contact USDA's Office of Tribal Relations or the Agency's Native American Coordinator at:

AIAN@.usda.gov

to request such a consultation.

Catalog of Federal Domestic Assistance

REAP is listed in the Catalog of Federal Domestic Assistance (CFDA) under Number 10.868.

All active CFDA programs and the CFDA Catalog can be found at the following website:

https://beta.sam.   gov/.

The website also contains a PDF file version of the Catalog that, when printed, has the same layout as the printed document that the Government Publishing Office (GPO) provides. GPO prints and sells the CFDA to interested buyers. For information about purchasing the Catalog of Federal Domestic Assistance from GPO, call the Superintendent of Documents at 202- 512-1800 or toll free at 866-512-1800, or access GPO's online bookstore.

Paperwork Reduction and Recordkeeping Requirements

In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35, as amended), the Agency invites comments on this information collection, which has been submitted for approval from the Office of Management and Budget (OMB) under OMB Control Number 0570-0067.

Written comments and recommendations for the proposed information collection should be sent within 60 days of publication of this notice to

www.reginfo.gov/public/do/PRAMain.

Find this particular information collection by selecting “Currently under 60-day Review—Open for Public Comments” or by using the search function.

Comments are invited on (a) whether the collection of information is necessary for the proper performance of the functions of the Agency, including whether the information will have practical utility; (b) the accuracy of the Agency's estimate of burden including the validity of the methodology and assumption used; (c) ways to enhance the quality, utility and clarity of the information to be collected; and (d) ways to minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques on other forms of information technology.

Title:

7 CFR 4280, Rural Energy for America Program.

OMB Control Number:

0570-0067.

Abstract:

The Rural Energy for America Program, which supersedes the Renewable Energy Systems and Energy Efficiency Improvements Program under Title IX, Section 9006 of the Farm Security and Rural Investment Act of 2002, is designed to help agricultural producers and rural small business reduce energy cost and consumption, develop new income streams, and help meet the nation's critical energy needs by requiring the Secretary of Agriculture to provide grants and/or guaranteed loans for several types of projects as follows:

• Grants and grants and loan guarantees (combined funding) to agricultural producers and rural small businesses to purchase renewable energy systems and make energy efficiency improvements.

• Grants to eligible entities to provide energy audits and renewable energy development assistance to enable agricultural producers and rural small businesses to become more energy efficient and to use renewable energy technologies and resources. Entities eligible to receive grants under this program are State, tribal and local governments; land-grant colleges and universities or other institutions of higher learning; rural electric cooperatives; public power entities; Resource Conservation and Development Councils and instrumentalities of local, state, and federal governments. These grant funds may be used to conduct and promote energy audits; provide recommendations and information on how to improve the energy efficiency of the operations of the agricultural producers and rural small businesses; and provide recommendations and information on how to use renewable energy technologies and resources in the operations. No more than five (5) percent of the grant can be used for administrative purposes. Agricultural producers and rural small businesses for which a grantee is conducting an energy audit must pay at least 25 percent of the cost of the energy audit.

The following estimates are based on the average over the first 3 years the program is in place.

Estimate of Burden:

Public reporting burden for this collection of information is estimated to average 2.10 hours per response.

Respondents:

Rural developers, farmers and ranchers, rural businesses, public bodies, local governments, lenders.

Estimated Number of Respondents:

1,434.

Estimated Number of Responses per Respondent:

28.28.

Estimated Number of Responses:

40,560.

Estimated Total Annual Burden (hours) on Respondents:

85,178.00.

Copies of this information collection may be obtained from Thomas P. Dickson, Regulatory Division Team 2, Rural Development Innovation Center, U.S. Department of Agriculture, 1400 Independence Ave. SW, Washington, DC 20250; telephone, 202-690-4492; email,

thomas.dickson@usda.gov.

All responses to this information collection and recordkeeping notice will be summarized and included in the request for OMB approval. All comments will also become a matter of public record.

E-Government Act Compliance

Rural Development is committed to complying with the E-Government Act of 2002, which requires Government agencies in general to provide the public the option of submitting information or transacting business electronically to the maximum extent possible.

List of Subjects in 7 CFR Part 4280

Business and industry, Energy, Grant programs—business, Loan programs—business, Rural areas.

For the reasons set forth in the preamble, under the authority at 5 U.S.C. 301, 7 U.S.C 8107, Chapter XLII of Title 7 of the Code of Federal Regulations is amended as follows:

PART 4280—LOAN AND GRANTS

1. The authority citation for part 4280 continues to read as follows:

Authority:

5 U.S.C. 301; 7 U.S.C. 8107.

2. Revise subpart B to read as follows:

Subpart B—Rural Energy for America Program General

Sec.

4280.101

Purpose.

4280.102

Organization of subpart.

4280.103

Definitions.

4280.104

Exception authority.

4280.105

Review or appeal rights.

4280.106

Conflict of interest.

4280.107

[Reserved]

4280.108

U.S. Department of Agriculture departmental regulations and laws that contain other compliance requirements.

4280.109

Ineligible applicants, grantees, and owners.

4280.110

General applicant, application, and funding provisions.

4280.111

Notifications.

Renewable Energy System and Energy Efficiency Improvement Grants

4280.112

Applicant eligibility.

4280.113

Project eligibility.

4280.114

Ineligible projects.

4280.115

RES and EEI grant funding.

4280.116

Grant applications—general.

4280.117

Determination of technical merit.

4280.118

Grant applications for RES and EEI projects with total project costs $200,000 and greater.

4280.119

Grant applications for RES and EEI projects with total project costs of less than $200,000, but more than $80,000.

4280.120

Grant applications for RES and EEI projects with total project costs of $80,000 or less.

4280.121

Scoring RES and EEI grant applications.

4280.122

Selecting RES and EEI grant applications for award.

4280.123

Awarding and administering RES and EEI grants.

4280.124

Servicing RES and EEI grants.

4280.125

Construction planning and performing development.

4280.126-4280.136

[Reserved]

Combined Funding for Renewable Energy Systems and Energy Efficiency Improvements

4280.137

Combined grant and guaranteed loan funding requirements.

4280.138-4280.148

[Reserved]

Energy Audit and Renewable Energy Development Assistance Grants

4280.149

Applicant eligibility.

4280.150

Project eligibility.

4280.151

Ineligible projects.

4280.152

Grant funding for EA and REDA.

4280.153

EA and REDA grant applications—content.

4280.154

Evaluation of EA and REDA grant applications.

4280.155

Scoring EA and REDA grant applications.

4280.156

Selecting EA and REDA grant applications for award.

4280.157

[Reserved]

4280.158

Awarding and administering EA and REDA grants.

4280.159

Servicing EA and REDA grants.

4280.160-4280.165

[Reserved]

4280.166

OMB control number.

Appendix A to Subpart B of Part 4280—Technical Reports for Energy Efficiency Improvement (EEI) Projects

Appendix B to Subpart B of Part 4280—Technical Reports for Renewable Energy System (RES) Projects With Total Project Costs of Less Than $200,000, but More Than $80,000

Appendix C to Subpart B of Part 4280—Technical Reports for Renewable Energy System (RES) Projects With Total Project Costs of $200,000 and Greater

Appendix D to Subpart B of Part 4280—Contents of Feasibility Study

Subpart B—Rural Energy for America Program General

§ 4280.101

Purpose.

This subpart contains the procedures and requirements for providing the following financial assistance under the Rural Energy for America Program (REAP):

(a) Grants, or a combination grant and guaranteed loan, for the purpose of purchasing and installing Renewable Energy Systems (RES) and Energy Efficiency Improvements (EEI);

(b) Grants to assist agricultural producers and rural small businesses by conducting Energy Audits (EA) and providing recommendations and information on Renewable Energy Development Assistance (REDA); and

(c) Grants or guaranteed loans, or a combination grant and guaranteed loan to an applicant or borrower pursuant to 7 CFR 1980, Subpart M Special Authority to Enable Funding of Broadband and Smart Utility Facilities Across Select Rural Development Programs. A Borrower or applicant receiving funding as referenced in paragraphs (a) or (b) of this section is permitted to use up to 10 percent of the amount provided under this subpart to construct, improve, or acquire broadband infrastructure related to the project financed, subject to the requirements of 7 CFR 1980, Subpart M.

§ 4280.102

Organization of subpart.

(a) Sections 4280.103 through 4280.111 discuss definitions; exception authority; review or appeal rights; conflict of interest; USDA Departmental Regulations; other applicable laws; ineligible applicants, grantees, and owners; general applicant, application, and funding provisions; and notifications, which are applicable to all of the funding programs under this subpart.

(b) Sections 4280.112 through 4280.125 discuss the requirements specific to RES and EEI grants. Sections 4280.112 and 4280.113 discuss, respectively, applicant and project eligibility. Section 4280.114 addresses ineligible projects. Section 4280.115 addresses funding provisions for these grants. Sections 4280.116 through 4280.120 address grant application content, technical merit determination, and required documentation. Sections 4280.121 through 4280.124 address the scoring, selection, awarding and administering, and servicing of these grant applications. Section 4280.125

addresses construction planning and development.

(c) Section 4280.137 presents the process by which the Agency will make combined loan guarantee and grant funding available for RES and EEI projects.

(d) Sections 4280.149 through 4280.159 present the process by which the Agency will make EA and REDA grant funding available. These sections cover applicant and project eligibility, grant funding, application content, evaluation, scoring, selection, awarding and administering, and servicing.

(e) Appendices A through C cover technical report requirements. Appendix A applies to EEI projects; Appendix B applies to RES projects with Total Project Costs of Less Than $200,000, but more than $80,000; and Appendix C applies to RES projects with Total Project Costs $200,000 and Greater. Appendices A and B do not apply to RES and EEI projects with Total Project Costs of $80,000 or less, respectively. Instead, technical report requirements for these projects are found in § 4280.120.

(f) Appendix D covers contents of feasibility study.

§ 4280.103

Definitions.

The following definitions are applicable to the capitalized terms used in this part.

Administrator.

The Administrator of Rural Business-Cooperative Service within the Rural Development Mission Area of the U.S. Department of Agriculture (USDA).

Agency.

The Rural Business-Cooperative Service or successor agency assigned by the Secretary of Agriculture to administer the Rural Energy for America Program. References to the National Office, Finance Office, State Office, or other Agency offices or officials should be read as prefaced by “Agency” or “Rural Development” as applicable.

Agricultural producer.

A person, including non-profits, directly engaged in the production of agricultural products through labor management and operations, including the cultivating, growing, and harvesting of plants and crops (including farming); breeding, raising, feeding, or housing of livestock (including ranching); forestry products; hydroponics; nursery stock; or aquaculture, whereby 50 percent or greater of their gross income is derived from the operations. The percentage is calculated as the average of gross agricultural operations income of the concern divided by the gross total income of the concern for the five most recent years. If the concern has been in operation for less than 60 months, use average gross agricultural operations income and gross total income for as long as the concern has been in operation.

Anaerobic digester.

A Renewable Energy System that uses animal waste or other renewable biomass and may include other organic substrates to produce digestate and biogas that may be sold in a gaseous or compressed liquid state or used to produce thermal or electrical energy.

Applicant.

(1) Except for EA and REDA grants, the agricultural producer or rural small business that is seeking a grant, or a combination of a grant and guaranteed loan, under this subpart.

(2) For EA and REDA grants, a unit of State, Tribal, or local government; a land-grant college or university or other institution of higher education; a rural electric cooperative; a public power entity; council; or an Instrumentality of a State, Tribal, or local government that is seeking an EA or REDA grant under this subpart.

Bioenergy project.

A RES that produces fuel, biogas, thermal energy, or electric power from a renewable biomass source only.

Biofuel.

A fuel derived from renewable biomass.

Biogas.

Gaseous fuel (including landfill and sewage waste treatment gas) derived from the degradation and decomposition of renewable biomass.

Byproduct.

An incidental or secondary product, regardless of whether it has a readily identifiable commercial use or value, generated under normal operations of the proposed project that can be reasonably measured and monitored.

Commercially available.

A system that meets the requirements of either paragraph (1) or (2) of this definition.

(1) A domestic or foreign system that:

(i) Has both a proven and reliable operating history and proven performance data for at least 1 year specific to the use and operation to the proposed application;

(ii) Is based on established design and installation procedures and practices and is replicable;

(iii) Has professional service providers, trades, large construction equipment providers, and laborers who are familiar with installation procedures and practices;

(iv) Has proprietary and balance of system equipment and spare parts that are readily available;

(v) Has service that is readily available to properly maintain and operate the system; and

(vi) Has an existing established warranty that is valid in the United States for major parts and labor; or

(2) A domestic or foreign system that has been certified by a recognized industry organization whose certification standards are acceptable to the Agency.

Complete application.

An application that contains all parts necessary for the Agency to determine applicant and project eligibility, the financial feasibility and technical merit of the project, and contains sufficient information to determine a priority score for the application, if applicable.

Costs incurred.

A cost will be considered incurred when payment for costs associated with the project have been issued. If payment was in the form of a check, the date of the check will be considered the date the cost was incurred. If payment was in the form of an electronic payment, the date that the payment was issued from the grantee/producer/borrower account will be considered the date the cost was incurred.

Council.

As defined, under the Resource Conservation and Development Program, at 16 U.S.C. 3451.

Departmental regulations.

The regulations of the Agency's Office of Chief Financial Officer (or successor office) as codified in 2 CFR chapter IV.

Design/Build method.

A method of project development whereby all design, engineering, procurement, construction, and other related project activities are performed under a single contract. The contractor is solely responsible and accountable for successful delivery of the project to the grantee as applicable.

Eligible project costs.

Those expenses approved by the Agency for the project as eligible uses of funds.

Energy assessment.

An Agency-approved report assessing energy use, cost, and efficiency by analyzing energy bills and surveying the target building and/or equipment sufficiently to provide an Agency-approved energy assessment.

(1) If the project's total project cost is greater than $80,000, the energy assessment must be conducted by either an energy auditor or an energy assessor or an individual supervised by either an energy assessor or energy auditor. The final energy assessment must be validated and signed by the energy assessor or energy auditor who conducted the energy assessment or by the supervising energy assessor or energy auditor of the individual who conducted the assessment, as applicable.

(2) If the project's total project cost is $80,000 or less, the energy assessment may be conducted in accordance with paragraph (1) of this definition or by an individual or entity that has at least 3 years of experience and completed at least five energy assessments or energy audits on similar type projects.

Energy assessor.

A qualified consultant who has at least 3 years of experience and completed at least five energy assessments or energy audits on similar type projects and who adheres to generally recognized engineering principles and practices.

Energy audit.

A comprehensive report that meets an Agency-approved standard prepared by an energy auditor or an individual supervised by an energy auditor that documents current energy usage; recommended potential improvements (typically called energy conservation measures) and their costs; energy savings from these improvements; dollars saved per year; and simple payback. The methodology of the energy audit must meet professional and industry standards. The final energy audit must be validated and signed off by the energy auditor who conducted the audit or by the supervising energy auditor of the individual who conducted the audit, as applicable.

Energy auditor.

A qualified consultant that meets one of the following criteria:

(1) A certified energy auditor certified by the Association of Energy Engineers;

(2) A certified energy manager certified by the Association of Energy Engineers;

(3) A licensed professional engineer in the State in which the audit is conducted with at least 1-year experience and who has completed at least two similar type energy audits; or

(4) An individual with a 4-year engineering or architectural degree with at least 3 years of experience and who has completed at least five similar type energy audits.

Energy efficiency improvement (EEI).

Improvements to or replacement of an existing building or systems and/or equipment, owned by the applicant, that reduces energy consumption on an annual basis.

Existing business.

A business that has been in operation for at least 1 full year. The following will be treated as existing businesses provided there is not a significant change in operations of the existing business: Mergers by an existing business with a new or existing business, a change in the business name, or a new business and an existing business applying as co-applicants.

Feasibility study.

A report including an opinion or finding conducted by an independent qualified consultant(s) evaluating the economic, market, technical, financial, and management feasibility of a proposed project or operation in terms of its expectation for success as outlined in Appendix D of this Subpart.

Federal fiscal year.

The 12-month period beginning October 1 of each year and ending on September 30 of the following year; it is designated by the calendar year in which it ends.

Financial Assistance Agreement (Form RD 4280-2, Rural Business-Cooperative Service Financial Assistance Agreement).

An agreement between the Agency and the grantee setting forth the provisions under which the grant will be administered.

Financial feasibility.

The ability of a project to achieve sufficient income, credit, and cash flow to financially sustain a project over the long term and meet all debt obligations.

Geothermal direct generation.

A system that uses thermal energy directly from a geothermal source.

Geothermal electric generation.

A system that uses thermal energy from a geothermal source to produce electricity.

Hybrid.

A combination of two or more renewable energy technologies that are incorporated into a unified system to support a single project.

Hydroelectric source.

A RES producing electricity using various types of moving water including, but not limited to, diverted run-of-river water, in-stream run-of-river water, and in-conduit water.

Hydrogen project.

A system that produces hydrogen derived from a renewable biomass or water using wind, solar, ocean (including tidal, wave, current, and thermal) geothermal or hydroelectric sources as an energy transport medium in the production of mechanical or electric power or thermal energy.

Immediate family(ies).

Individuals who live in the same household or who are closely related by blood, marriage, or adoption, such as a spouse, domestic partner, parent, child, sibling, aunt, uncle, grandparent, grandchild, niece, nephew, or first cousin.

Inspector.

A qualified consultant who has at least 3 years of experience and has completed at least five inspections on similar type projects.

Institution of Higher Education.

As defined in 20 U.S.C. 1002(a).

Instrumentality.

An organization recognized, established, and controlled by a State, Tribal, or local government, for a public purpose or to carry out special purposes.

Interconnection agreement.

A contract containing the terms and conditions governing the interconnection and parallel operation of the grantee's electric generation equipment and the utility's electric power system or a grantee's biogas production system and gas pipeline.

Matching funds.

Those project funds required by 7 U.S.C. 8107 to be made available by the applicant in order to be eligible to receive the grant, or combined grant and guaranteed loan. Funds provided by the applicant in excess of matching funds are not matching funds. Unless authorized by statute, other Federal grant funds cannot be used to meet a matching funds requirement.

Ocean energy.

Energy created by use of various types of moving water in the ocean and other large bodies of water (

e.g.,

Great Lakes) including, but not limited to, tidal, wave, current, and thermal changes.

Passive investor.

An equity investor that does not actively participate in management and operation decisions of the applicant or any affiliate of the applicant as evidenced by a contractual agreement.

Person.

An individual or entity organized under the laws of a State or a Tribe.

Power purchase agreement.

The terms and conditions governing the sale and transportation of power produced by the applicant to another party.

Public Power Entity.

Is defined using the definition of “State utility” as defined in section 217(A)(4) of the Federal Power Act (16 U.S.C. 824q(a)(4)). As of this writing, the definition “means a State or any political subdivision of a State, or any agency, authority, or Instrumentality of any one or more of the foregoing, or a corporation that is wholly owned, directly or indirectly, by any one or more of the foregoing, competent to carry on the business of developing, transmitting, utilizing, or distributing power.”

Qualified Consultant(s).

An independent third-party person possessing the knowledge, expertise, and experience to perform the specific task required.

Rated Power.

The maximum amount of energy that can be created at any given time.

Refurbished.

Refers to a piece of equipment or RES that has been brought into a commercial facility, thoroughly inspected, and worn parts replaced and has a warranty that is approved by the Agency or its designee.

Renewable biomass.

(1) Materials, pre-commercial thinnings, or invasive

species from National Forest System land or public lands (as defined in section 103 of the Federal Land Policy and Management Act of 1976 (43 U.S.C. 1702)) that:

(i) Are byproducts of preventive treatments that are removed to reduce hazardous fuels; to reduce or contain disease or insect infestation; or to restore ecosystem health;

(ii) Would not otherwise be used for higher-value products; and

(iii) Are harvested in accordance with applicable law and land management plans and the requirements for old-growth maintenance, restoration, and management direction of paragraphs (2), (3), and (4) of subsection (e) of section 102 of the Healthy Forests Restoration Act of 2003 (16 U.S.C. 6512) and large-tree retention of subsection (f) of Section 102; or

(2) Any organic matter that is available on a renewable or recurring basis from non-Federal land or land belonging to an Indian or Indian Tribe that is held in trust by the United States or subject to a restriction against alienation imposed by the United States, including the following items:

(i) Renewable plant material (including feed grains; other agricultural commodities; other plants and trees; and algae); and

(ii) Waste material including crop residue; other vegetative waste material (including wood waste and wood residues); animal waste and byproducts (including fats, oils, greases, and manure); and food waste and yard waste.

Renewable energy.

Energy derived from:

(1) A wind, solar, renewable biomass, ocean (including tidal, wave, current, and thermal), geothermal or hydroelectric Source; or

(2) Hydrogen derived from renewable biomass or water using an energy source described in paragraph (1).

Renewable energy development assistance (REDA).

Assistance provided by eligible grantees to agricultural producers and rural small businesses including education, applicability, and implementation of renewable energy technologies and resources. The REDA may consist of renewable energy site assessments or renewable energy technical assistance.

Renewable energy site assessment.

A report provided to an agricultural producer or rural small business providing information regarding and recommendations for the use of commercially available renewable energy technologies in its operation. The report must be prepared by a qualified consultant and must contain the information specified in Sections A through C of Appendix B.

Renewable Energy System (RES).

A system that produces usable energy from a renewable energy source and may include:

(1) Distribution components necessary to move energy produced by such system to initial point of sale; and

(2) other components and ancillary infrastructure of such system, such as a storage system; however, such system may not include a mechanism for dispensing energy at retail.

Renewable energy technical assistance.

Assistance provided to agricultural producers and rural small businesses on how to use renewable energy technologies and resources in their operations.

Retrofitting.

A modification to an existing building or installed equipment that incorporates a function or feature(s)not included in the original design when built or for the replacement of existing components with components that improve the original design and does not impact original warranty if the warranty is still in existence.

Rural and rural area.

Any area of a State not in a city or town that has a population of more than 50,000 inhabitants, and which excludes certain populations pursuant to 7 U.S.C. 1991(a)(13)(H), according to the latest decennial census of the United States and not in the urbanized area contiguous and adjacent to a city or town that has a population of more than 50,000 inhabitants. In making this determination, the Agency will use the latest decennial census of the United States. The following exclusions apply:

(1) Any area in the urbanized area contiguous and adjacent to a city or town that has a population of more than 50,000 inhabitants that has been determined to be “rural in character” as follows:

(i) The determination that an area is “rural in character” will be made by the Under Secretary of Rural Development. The process to request a determination under this provision is outlined in paragraph (1)(ii) of this definition. The determination that an area is “rural in character” under this definition will apply to areas that are within:

(A) An urbanized area that has two points on its boundary that are at least 40 miles apart, which is not contiguous or adjacent to a city or town that has a population of greater than 150,000 inhabitants or the urbanized area of such a city or town; or

(B) An urbanized area contiguous and adjacent to a city or town of greater than 50,000 inhabitants that is within

1/4

mile of a rural area.

(ii) Units of local government may petition the Under Secretary of Rural Development for a “rural in character” designation by submitting a petition to the appropriate Rural Development State Director for recommendation to the Administrator on behalf of the Under Secretary. The petition shall document how the area meets the requirements of paragraph (1)(i)(A) or (B) of this definition and discuss why the petitioner believes the area is “rural in character,” including, but not limited to, the area's population density, demographics, and topography and how the local economy is tied to a rural economic base. Upon receiving a petition, the Under Secretary will consult with the applicable Governor or leader in a similar position and request comments to be submitted within 5 business days, unless such comments were submitted with the petition. The Under Secretary will release to the public a notice of a petition filed by a unit of local government not later than 30 days after receipt of the petition by way of publication in a local newspaper and posting on the Agency's website at

https://www.rd.usda.gov,

and the Under Secretary will make a determination not less than 15 days, but no more than 60 days, after the release of the notice. Upon a negative determination, the Under Secretary will provide to the petitioner an opportunity to appeal a determination to the Under Secretary, and the petitioner will have 10 business days to appeal the determination and provide further information for consideration. The Under Secretary will make a determination of the appeal in not less than 15 days, but no more than 30 days.

(iii) Rural Development State Directors may also initiate a request to the Under Secretary to determine if an area is “rural in character.” A written recommendation should be sent to the Administrator, on behalf of the Under Secretary, that documents how the area meets the statutory requirements of paragraph (1)(i)(B) of this definition and discusses why the State Director believes the area is “rural in character,” including, but not limited to, the area's population density, demographics, topography, and how the local economy is tied to a rural economic base. Upon receipt of such a request, the Administrator will review the request for compliance with the “rural in character” provisions and make a recommendation to the Under Secretary. Provided a favorable determination is made, the Under Secretary will consult with the applicable Governor or leader

in a similar position and request comments within 10 business days, unless the comments were submitted with the request. A public notice will be published by the State Office in accordance with paragraph (1)(ii) of this definition. There is no appeal process for requests made on the initiative of the State Director.

(2) An area that is attached to the urbanized area of a city or town with more than 50,000 inhabitants by a contiguous area of urbanized census blocks that is not more than two census blocks wide. Applicants from such an area should work with their Rural Development State Office to request a determination of whether their project is located in a rural area under this provision.

(3) For the Commonwealth of Puerto Rico, the island is considered rural and eligible except for the San Juan Census Designated Place (CDP) and any other CDP with greater than 50,000 inhabitants. Areas within CDPs with greater than 50,000 inhabitants, other than the San Juan CDP, may be determined to be rural if they are “not urban in character.”

(4) For the State of Hawaii, all areas within the State are considered rural and eligible except for the Honolulu CDP within the County of Honolulu and any other CDP with greater than 50,000 inhabitants. Areas within CDPs with greater than 50,000 inhabitants, other than the Honolulu CDP, may be determined to be rural if they are “not urban in character.”

(5) For the purpose of defining a rural area in the Republic of Palau, the Federated States of Micronesia, and the Republic of the Marshall Islands, the Agency shall determine what constitutes rural and rural area based on available population data.

Rural small business.

A small business that is located in a rural area or that can demonstrate the proposed project for which assistance is being applied for under this part is located in a rural area.

Simple payback.

The estimated simple payback of a project funded under this part as calculated using paragraphs (1) or (2), as applicable, of this definition.

(1) EEI projects simple payback = (total project costs) ÷ (dollar value of energy saved).

(i) Energy saved will be determined by subtracting the projected energy (determined by the method in paragraph (1)(i)(B) of this definition) to be consumed from the historical energy consumed (determined by the method in paragraph (1)(i)(A) of this definition), and converting the result to a monetary value using a constant value or price of energy (determined by the method in paragraph (1)(i)(C) of this definition).

(A) Actual energy used in the original building and/or equipment, as applicable, prior to the EEI project, must be based on the actual average annual total energy used in British thermal units (BTU) over the most recent 12, 24, 36, 48, or 60 consecutive months of operation. Attach utility bills to document applicant entity's historical energy consumption quantity.

(B) Projected energy use if the proposed EEI project had been in place for the original building and/or equipment, as applicable, for the same time period used to determine that actual energy use under paragraph (1)(i)(A) of this definition.

(C) Value or price of energy must be the actual average price paid over the same time period used to calculate the actual energy used under paragraph (1)(i)(A) of this definition. When calculating the actual average price of energy, only include energy charges directly reduced by the unit of energy being replaced or saved. Attach utility bills to document applicant entity's average price of energy.

(ii) The EEI projects simple payback calculation does not allow applicants to monetize EEI benefits other than the dollar amount of the energy savings the agricultural producer or rural small business realizes as a result of the improvement.

(2) RES projects simple payback = (total project costs) ÷ (dollar value of energy units replaced, credited, sold, or used and fair market value of byproducts as applicable in a typical year).

(i) Value of energy replaced will be calculated based on the applicant entity's historical energy consumption with actual average price paid for the energy replaced, following the methodology outlined in paragraph (1)(i) of this definition. Attach utility bills to document applicant entity's historical energy consumption quantity and actual average price of energy.

(ii) Value of energy credited or sold will be calculated based on the amount of energy units to be credited or sold at the proposed rate per unit, as documented in utility net metering or crediting policies and/or a power purchase agreement. Attach utility net metering or crediting policies and/or a power purchase agreement to document energy quantity and proposed rate for energy credited or sold.

(iii) If proposed energy will be used in a new facility, value of energy used will be calculated based on the amount of energy units to be used at the documented price per unit of conventional fuel alternative. Attach documentation of market price per unit of conventional fuel alternative.

(iv) Value of byproducts produced by and used in the project or related enterprises should be documented at the fair market value to be received for the byproducts in a typical year. Attach documentation of market value price to be received for byproducts and documentation to support byproduct sales or direct use.

(v) The RES projects simple payback calculation does not include any one-time benefits such as but not limited to construction and investment-related benefits, nor credits which do not provide annual income to the project, such as tax credits.

Small business

means,

(1) An entity or utility, as applicable, as further defined in subparagraphs (i) through (iv) and paragraph (2) of this definition. With the exception of the entities identified in this paragraph, all other non-profit entities are not small businesses for the purposes of REAP program eligibility:

(i) A private for-profit entity, including a sole proprietorship, partnership, or corporation;

(ii) A cooperative (including a cooperative qualified under section 501(c)(12) of the Internal Revenue Code);

(iii) An electric utility (including a Tribal or governmental electric utility) that provides service to rural consumers and operates independent of direct government control; or

(iv) A Tribal corporation or other Tribal business entities that are chartered under Section 17 of the Indian Reorganization Act (25 U.S.C. 477) or have similar structures and relationships with their Tribal governments and are acceptable to the Agency. The Agency will determine the small business status of such Tribal entity without regard to the resources of the Tribal government; and

(2) An entity that meets Small Business Administration size standards in accordance with 13 CFR part 121 and criteria of § 121.301 as applicable to financial assistance programs, including (i) or (ii) below. The size of the concern alone and the size of the concern combined with other entity(ies) it controls or entity(ies) it is controlled by, must not exceed the size standard thresholds designated for the industry in which the concern alone or the concern and its controlling entity(ies), whichever is higher, is primarily engaged.

(i) The concern's tangible net worth is not in excess of $15 million and average

net income (excluding carry-over losses) for the preceding two completed fiscal years is not in excess of $5.0 million; or

(ii) The size of the concern does not exceed the Small Business Administration (SBA) size standard thresholds designated for the industry in which it is primarily engaged, as measured by number of employees or annual receipts. Industry size standard designations to be utilized are listed in the Small Business Administration's (SBA) table of size standards found in 13 CFR part 121.201. Number of employees and annuals receipts are calculated as follows:

(A) Number of employees is calculated as the average number of all individuals employed by a concern on a full-time, part-time, or other basis, based upon numbers of employees for each of the pay periods for the preceding completed 12 calendar months. If a concern has not been in business for 12 months, the average number of employees is used for each of the pay periods during which it has been in business.

(B) Annual receipts are calculated as average total income plus cost of goods sold for the for the five most recent years. If a concern has been in operation for less than 60 months, average annual receipts for as long as the concern has been in operation are used.

Smart Utility.

The use of broadband facilities and equipment that is only available internally by a recipient during the economic life of the assets financed by an Agency loan, grant, or loan guarantee.

State.

Any of the 50 States of the United States, the Commonwealth of Puerto Rico, the District of Columbia, the U.S. Virgin Islands, Guam, American Samoa, the Commonwealth of the Northern Mariana Islands, the Republic of Palau, the Federated States of Micronesia, and the Republic of the Marshall Islands.

Steady state operating level

means that there is an adequate and consistent supply of the applicable renewable energy resource(s) for the project, both on a short-term (current) and long-term basis, and the renewable energy system and process(es) are operating at projected capacity, consistently yielding an adequate quantity and quality of renewable energy.

Total eligible project costs.

The sum of all eligible project costs.

Total project costs.

The sum of all costs associated with a completed project.

Underserved community(ies).

Communities (including urban or rural communities and Indian tribal communities) that have limited access to affordable, healthy foods, including fresh fruits and vegetables, in grocery retail stores or farmer-to-consumer direct markets and that have either a high rate of hunger or food insecurity or a high poverty rate as reflected in the most recent decennial census or other Agency-approved census.

Used equipment.

Any equipment that has been used and is provided in an “as is” condition.

Useful life

means estimated durations of utility placed on a variety of assets, including buildings, machinery, equipment, vehicles, electronics, and furniture. Useful life estimations terminate at the point when assets are expected to become obsolete, require major repairs, or cease to deliver economical results.

Veteran.

A veteran is a person who served in the active military, naval, or air service, and who was discharged or released therefrom under conditions other than dishonorable as defined in title 38 U.S.C. 101(2).

§ 4280.104

Exception authority.

The Administrator may, on a case-by-case basis, grant an exception to any requirement or provision of this subpart provided that such an exception is in the best financial interests of the Federal Government. Exercise of this authority cannot be in conflict with applicable law.

§ 4280.105

Review or appeal rights.

Agency Applicants or grantees may have appeal or review rights for Agency decisions made under this part. Agency decisions that are adverse to the individual participant are appealable, while matters of general applicability are not subject to appeal; however, such decisions are reviewable for appealability by the National Appeals Division (NAD). All appeals will be conducted by NAD and will be handled in accordance with 7 CFR part 11. The applicant or grantee can appeal any Agency decision that directly and adversely affects them.

§ 4280.106

Conflict of interest.

(a)

General.

No conflict of interest or appearance of conflict of interest will be allowed. Conflict of interest means a situation in which a person has personal, professional, or financial interests that prevent, or appears to prevent the person from acting impartially. For purposes of this subpart, conflict of interest includes, but is not limited to, distribution or payment of grant, guaranteed loan funds, and matching funds to a beneficiary or immediate family member of the applicant.

(b)

Assistance to employees, relatives, and associates.

The Agency will process any requests for assistance under this subpart in accordance with 7 CFR part 1900, subpart D.

(c)

Member/delegate clause.

No member of or delegate to Congress shall receive any share or part of this grant or any benefit that may arise there from; but this provision shall not be construed to bar, as a contractor under the grant, a publicly held corporation whose ownership might include a member of Congress.

§ 4280.107

[Reserved]

§ 4280.108

U.S. Department of Agriculture departmental regulations and laws that contain other compliance requirements.

(a)

Departmental regulations.

All projects funded under this subpart are subject to the provisions of the Departmental regulations, as applicable, which are incorporated by reference herein.

(b)

Equal opportunity and nondiscrimination.

The Agency will ensure that equal opportunity and nondiscrimination requirements are met in accordance with the Equal Credit Opportunity Act, 15 U.S.C. 1691

et seq.

and 7 CFR part 15d, Nondiscrimination in Programs and Activities Conducted by the United States Department of Agriculture. The Agency will not discriminate against applicants on the basis of race, color, religion, national origin, sex, marital status, disability, or age (provided that the applicant has the capacity to contract); because all or part of the applicant's income derives from any public assistance program; or because the applicant has in good faith exercised any right under the Consumer Credit Protection Act, 15 U.S.C. 1601

et seq.

(c)

Civil rights compliance.

Recipients of grants must comply with the Americans with Disabilities Act of 1990, 42 U.S.C. 12101

et seq.,

Title VI of the Civil Rights Act of 1964,

42 U.S.C. 2000d et seq.,

and Section 504 of the Rehabilitation Act of 1973, 29 U.S.C. 794. This includes collection and maintenance of data on the race, sex, and national origin of the recipient's membership/ownership and employees. These data must be available to conduct compliance reviews in accordance with 7 CFR 1901.204.

(1) Initial compliance reviews will be conducted by the Agency prior to funds being obligated for programs.

(2) When compliance reviews are applicable to the grant, one subsequent compliance review following project completion is required. This will occur after the last disbursement of grant funds has been made.

(d)

Environmental analysis.

Actions taken under this subpart must comply with 7 CFR part 1970. Prospective applicants are advised to contact the Agency to determine environmental requirements as soon as practicable after they decide to pursue any form of financial assistance directly or indirectly available through the Agency.

(1) Any required environmental review must be completed by the Agency prior to the Agency obligating any funds.

(2) The applicant will be notified of all specific compliance requirements, including, but not limited to, the publication of public notices, and consultation with State or Tribal Historic Preservation Offices and the U.S. Fish and Wildlife Service.

(3) A site visit by the Agency may be scheduled, if necessary, to determine the scope of the review.

(e)

Discrimination complaints—

(1)

Who may file.

Persons or a specific class of persons believing they have been subjected to discrimination prohibited by this section may file a complaint personally, or by an authorized representative with USDA, Director, Office of Adjudication, 1400 Independence Avenue SW, Washington, DC 20250.

(2)

Time for filing.

A complaint must be filed no later than 180 days from the date of the alleged discrimination, unless the time for filing is extended by the designated officials of USDA or Rural Development.

§ 4280.109

Ineligible applicants, grantees, and owners.

Applicants, grantees, and owners will be ineligible to receive funds under this subpart as discussed in paragraphs (a) and (b) of this section.

(a) If an applicant, grantee, or owner has an outstanding judgment obtained by the U.S. in a Federal Court (other than in the United States Tax Court), is delinquent in the payment of Federal income taxes, or is delinquent on a Federal debt, the applicant, grantee, or owner is not eligible to receive a grant or combined grant and guaranteed loan until the judgment is paid in full or otherwise satisfied or the delinquency is resolved.

(b) If an applicant, grantee, or owner is debarred from receiving Federal assistance, the applicant, grantee, or owner is not eligible to receive a grant or combined grant and guaranteed loan under this subpart.

§ 4280.110

General applicant, application, and funding provisions.

(a)

Satisfactory progress.

An applicant that has received one or more grants and/or guaranteed loans under this program must make satisfactory progress, as determined by the Agency, toward completion of any previously funded projects before the applicant will be considered for subsequent funding. This may include a review of the applicant compliance with Agency reporting requirements. Satisfactory progress for EA and REDA grants is defined as at least 50 percent of previous EA or REDA awards expended at the time the Agency makes its eligibility determination.

(b)

Application submittal.

Applications must be submitted in accordance with the provisions of this subpart unless otherwise specified in a

Federal Register

notice. Grant applications and combined grant and guaranteed loan applications for financial assistance under this subpart may be submitted at any time.

(1)

Grant applications.

Complete grant applications will be accepted on a continuous basis, with awards made based on the application's score and subject to available funding.

(2)

Combined grant and guaranteed loan applications.

Applications requesting a RES or EEI grant and a guaranteed loan under this subpart will be accepted on a continuous basis, with awards made based on the grant application's score and subject to available funding.

(c)

Application limits.

An applicant applying for a grant or a combined grant and guaranteed loan is limited to competing one RES application and one EEI application under this subpart in any one Federal fiscal year. An applicant that proposes to install the same EEI or RES (including hybrid) across multiple facilities can be considered one project and be submitted in one application.

(d)

Application modification.

Once submitted and prior to Agency award, if an applicant modifies the scope of the project described in its application, the application will be treated as a new application. The submission date of record for such modified applications will be the date the Agency receives the modified information, and the application will be processed and scored by the Agency as a new application under this subpart.

(e)

Incomplete applications.

Applicants must submit complete applications in order to be considered for funding. If an application is incomplete, the Agency will identify those parts of the application that are incomplete and provide a written explanation to the applicant for possible future resubmission. Upon receipt of a complete application by the appropriate Agency office, the Agency will complete its evaluation and will compete the application in accordance with the procedures specified in §§ 4280.122 or 4280.156 as applicable.

(f)

Application withdrawal.

During the period between the submission of an application and the execution of award documents for an application selected for funding, the applicant must notify the Agency, in writing, if the project is no longer viable or the applicant no longer is requesting financial assistance for the project. When the applicant notifies the Agency, the selection will be rescinded and/or the application withdrawn.

(g)

Technical report.

The following technologies: Hydrogen, ocean energy, geothermal electric generation, anaerobic digesters and biogas, biomass, hybrid applications, RES with storage components, and EEI or technologies as amended via

Federal Register

notification or posted on the Agency's website, must provide a technical report as specified in §§ 4280.118(d) 4280.119(b)(4), and 4280.120(b)(3) and 4280.120(b)(4), and must comply with the provisions specified in paragraphs (g)(1) through (3), as applicable, of this section:

(1)

Technical report format and detail.

The information in the technical report must follow the format specified in § 4280.120(b)(3), § 4280.120(b)(4), and Appendices A through C of this subpart, as applicable. Supporting information may be submitted in other formats. Design drawings and process flowcharts are encouraged as exhibits. In addition, information must be provided, in sufficient detail, to:

(i) Allow the Agency to determine the technical merit of the applicant's project under § 4280.117;

(ii) Allow the calculation of simple payback as defined in § 4280.103;

(iii) For RES Projects, enable the calculation of the percentage of historical use of energy compared to the amount of renewable energy that will be generated once the project is operating at its steady state operating level. If the project is closely associated with a residence, demonstration must be made that 50 percent or more of the projected renewable energy will benefit the agricultural operation or rural small business; and

(iv) Demonstrate that the RES or EEI will operate or perform over the project's useful life in a reliable, safe, and a cost-effective manner, which may include but is not limited to addressing project design, installation, operation, maintenance, and warranties.

(2)

Technical report modifications.

If a technical report is prepared prior to

the applicant's selection of a final design, equipment vendor, or contractor, or other significant decision, it may be modified and resubmitted to the Agency, provided that the overall scope of the project is not materially changed as determined by the Agency. Changes in the technical report may require additional environmental documentation in accordance with 7 CFR part 1970.

(3)

Hybrid projects.

If the application is for a hybrid project, technical reports as applicable must be prepared for each technology that comprises the hybrid project.

(h)

Time limit on use of grant funds.

Except as provided in paragraph (h)(1) of this section, grant funds not expended within 2 years from the date the Financial Assistance Agreement was signed by the Agency will be returned to the Agency.

(1)

Time extensions.

The Agency may extend the 2-year time limit for a period not to exceed 24 months if the Agency determines, at its sole discretion, that the grantee is unable to complete the project for reasons beyond the grantee's control. Grantees must submit a request for the no-cost extension no later than 30 days before the two-year anniversary of executing the Financial Assistance Agreement. This request must describe the extenuating circumstances that were beyond their control to complete the project for which the grant was awarded, and why an approval is in the government's best interest.

(2)

Return of funds to the Agency.

Funds remaining after grant closeout that exceed the amount the grantee is entitled to receive under the Financial Assistance Agreement will be returned to the Agency.

§ 4280.111

Notifications.

(a)

Eligibility.

If an applicant and/or their application are determined by the Agency to be eligible for participation, the Agency will notify the applicant or lender in writing of the eligibility determination.

(b)

Ineligibility.

If an applicant and/or their application are determined to be ineligible at any time, the Agency will inform the applicant or lender, as applicable, in writing of the decision, reasons therefore, and any appeal rights, if applicable. No further processing of the application will occur.

(c)

Funding determinations.

Each applicant and/or lender, as applicable, will be notified of the Agency's decision on their application. If unfunded in a competition, the application will compete in the next available competition and will continue competing until either awarded or the application has competed in the maximum number of competitions in a fiscal year. The Agency will then issue an adverse funding determination for the unsuccessful application. If the Agency's decision is not to fund an application, the Agency will include in the notification any applicable appeal or review rights.

Renewable Energy System and Energy Efficiency Improvement Grants

§ 4280.112

Applicant eligibility.

To receive a RES or EEI grant under this subpart, an applicant must meet the requirements specified in paragraphs (a) through (g) of this section.

(a)

Type of applicant.

The applicant must be an agricultural producer or rural small business at the time of application.

(b)

Ownership and control.

The applicant must at the time of application and, if an award is made, for the useful life of the project as described in the Financial Assistance Agreement:

(1) Own the project; and

(2) Own or control the site for the project. If the grantee does not maintain ownership of the project and ownership or control of the site, then grant funds may be recovered from the grantee by the Agency in accordance with Departmental Regulations.

(c)

End Users.

If the controlling interest in the applicant entity is otherwise eligible and a legal transaction between two parties for the sale of energy in an open market is being proposed, the Agency will not consider the energy end-users as part of the analysis of the eligibility of the applicant. If the proposed end-user would be an ineligible applicant, such as an entity which is residential in nature or a non-profit entity, and the REAP applicant entity is a newly formed special-purpose entity with substantially the same ownership as the sole proposed end-user, then the REAP applicant entity is not eligible.

(d)

Revenues and expenses.

The applicant must have available at the time of application satisfactory sources of revenue in an amount sufficient to provide for the operation, management, maintenance, and any debt service of the project for the useful life of the project. In addition, the applicant must control the revenues and expenses of the project, including its operation and maintenance. Notwithstanding the provisions of this paragraph, the applicant may employ a qualified consultant under contract to manage revenues and expenses of the project and its operation and/or maintenance.

(e)

Legal authority and responsibility.

Each applicant must have the legal authority necessary to apply for and carry out the purpose of the grant.

(f)

Unique Entity Identifier (UEI).

All applicants must register for a UEI as part of the registration process. Generally, the UEI number is included on Standard Form-424, “Application for Federal Assistance.”

(g)

System for Awards Management (SAM).

Unless exempt under 2 CFR 25.110, the applicant must:

(1) Be registered in the SAM prior to submitting an application;

(2) Maintain an active SAM registration with current information at all times while an application is pending and until final fund disbursement has been made.

§ 4280.113

Project eligibility.

For a project to be eligible to receive a RES or EEI grant under this subpart, the proposed project must meet each of the requirements specified in paragraphs (a) through (e) of this section. Subsequent EEI projects must meet the requirements specified in paragraph (a)(5)(ii) of this section. The applicant is cautioned against taking any actions or incurring any obligations prior to the Agency completing the environmental review that would either limit the range of alternatives to be considered or that would have an adverse effect on the environment, such as the initiation of construction. If the applicant takes any such actions or incurs any such obligations, it could result in project ineligibility.

(a) The project must be for:

(1) The purchase of a new RES;

(2) The purchase of a refurbished RES;

(3) The retrofitting of an existing RES;

(4) For the purposes of this subpart, only those hydroelectric sources with a rated power of 30 megawatts or less are eligible, or

(5) Making an EEI that will allow less energy to be used on an annual basis than the original building and/or equipment being improved or replaced as provided in a vendor/installer certification or as demonstrated in an energy assessment or energy audit as applicable.

(i)

Types of improvements.

Eligible EEI include, but are not limited to:

(A) Efficiency improvements to existing RES; and

(B) Construction of a new energy efficient building only when the building is used for the same purpose as the existing building, and, based on an energy assessment or energy audit, as applicable, it will be more cost effective to construct a new building and will use less energy on annual basis than improving the existing building.

(ii)

Subsequent EEI projects.

A proposed EEI project that replaces an

EEI project previously funded under this subpart may or may not be eligible for funding.

(A) If the proposed EEI project would replace the same specific EEI equipment that had previously received funds under this subpart prior to the end of the useful life, as specified in the Financial Assistance Agreement, then the proposed improvement project, even if it is more energy efficient than the previously funded improvement, is ineligible.

(B) If the proposed EEI project would replace the same specific EEI equipment that had previously received funds under this subpart at or after the end of the useful life, as specified in the Financial Assistance Agreement, then the proposed improvement is eligible for funding under this subpart provided the EEI is more energy efficient than the previously funded improvement. If the proposed EEI is not more energy efficient than the previously funded improvement, then it is not eligible for funding under this subpart.

(b) The project must utilize commercially available technology;

(c) The project must have technical merit, as determined using the procedures specified in § 4280.117; and

(d) The project must be located in a rural area in a State if the type of applicant is a rural small business, or in a rural or non-rural area in a State if the type of applicant is an agricultural producer and the application supports the production, processing, vertical integration, or marketing of agricultural products. If the agricultural producer's operation is in a non-rural area, then the application can only be for RES or EEI components of the business operation that are directly related to and their use and purpose is limited to the agricultural production operation, such as vertically integrated operations, and are part of and co-located with the agricultural production operation.

(e) For a RES project, where a residence is closely associated with and shares an energy metering device with an agricultural operation or rural small business to be served by the RES project, 50 percent or more of the energy to be generated by the RES project must be used by the agricultural operation or rural small business. This also includes projects which will virtually net meter or credit energy to be generated by the RES project to a residence off-site from the project and owned by the applicant. The application must contain sufficient documentation to evaluate this provision which may include using either of the methods identified in paragraphs (e)(1) through (2) of this section.

(1) Provide a renewable energy site assessment or other documentation including calculations that demonstrate, based on historical energy use, that 50 percent or more of the energy to be produced by the RES project will be used in the agricultural operation or rural small business. This includes documentation on historical residential energy use. The Agency may request additional data to determine residential versus business or agricultural operation usage. The actual percentage of energy determined to benefit the rural small business or agricultural operation will be used to determine eligible project costs; or

(2) The applicant may install, or elect to conditionalize funding upon the installation of, a device (such as a second meter) that restricts 100 percent of the energy generated by the RES project to be used only by the agricultural operation or rural small business.

(f) An applicant is permitted to use up to 10 percent of the amount provided under this subpart to construct, improve, or acquire broadband infrastructure, subject to the requirements of 7 CFR 1980, Subpart M, Special Authority to Enable Funding of Broadband and Smart Utility Facilities Across Select Rural Development Programs.

§ 4280.114

Ineligible projects.

The Agency will not award funding under this part for any projects identified in this section, unless otherwise noted.

(a) Research and development projects and projects that involve technology that is not commercially available;

(b) Business operations that derive more than 10 percent of annual gross revenue from gambling activity. Gambling activities include any lease income from space or machines used for gambling activities. State or Tribal-authorized lottery proceeds, as approved by the Agency, conducted for the purpose of raising funds for the approved project are excluded;

(c) Business operations deriving income from activities of a sexual nature or illegal activities;

(d) Residential RES or EEI projects, including farm labor housing, apartment complexes, and owner-occupied bed and breakfasts, except for-profit nursing homes and assisted living facilities that provide full-time medical care for residents, and for-profit hotels that provide short-term housing;

(e) Racetracks or facilities for conducting either professional or amateur races of animals, or by professional or amateur drivers or jockeys, or any other type of racing;

(f) RES projects that co-fire with fossil fuels, natural gas or petroleum-based products or materials such as coal and other non-renewable fuels, oils, and chemicals, and tires or plastic;

(g) Projects where 50 percent or more of the costs are ineligible or where project costs as defined in the application do not meet the definition of a renewable energy system or energy efficiency improvement, including projects submitted for labor costs only. Project costs associated with an EEI that are not clearly identified in the energy assessment or audit will be considered ineligible costs; and

(h) Projects proposing two or more different types of RES technologies that are not incorporated into a unified system and projects proposing two or more different types of RES technologies at two or more locations.

§ 4280.115

RES and EEI grant funding.

(a)

Grant amounts.

The amount of grant funds that will be made available to an eligible RES or EEI project under this subpart will not exceed 25 percent of eligible project costs. Eligible project costs are specified in paragraph (c) of this section.

(1)

Minimum request.

Unless otherwise specified in a

Federal Register

notice, the minimum request for a RES grant application is $2,500 and the minimum request for an EEI grant application is $1,500.

(2)

Maximum request.

Unless otherwise specified in a

Federal Register

notice, the maximum request for a RES grant application is $500,000 and the maximum request for an EEI grant application is $250,000.

(3)

Maximum grant assistance.

Unless otherwise specified in a

Federal Register

notice, the maximum amount of grant assistance to one person or entity under this subpart will not exceed $750,000 per Federal fiscal year.

(b)

Matching funds and other funds.

The applicant is responsible for securing the remainder of the total project costs not covered by grant funds.

(1) Without specific statutory authority, other Federal grant funds cannot be used to meet the matching funds requirement. A copy of the statutory authority must be provided to the Agency to verify if the other Federal grant funds can be used to meet the matching funds requirement under this subpart.

(2) Passive third-party equity contributions are acceptable for RES projects, including equity raised from the sale of Federal tax credits.

(c)

Eligible Project Costs.

Eligible project costs are only those costs incurred after a complete application has been received by the Agency and are associated with the items identified in paragraphs (c)(1) through (6) of this section. Each item identified in paragraphs (c)(1) through (6) of this section is only an eligible project cost if it is directly related to and its use and purpose is limited to the RES or EEI.

(1) Purchase and installation of new or refurbished equipment.

(2) Construction, retrofitting, replacement, and improvements.

(3) EEI identified by vendor/installer certification or in the applicable energy assessment or energy audit.

(4) Fees for construction permits and licenses and fees required by an interconnection agreement.

(5) Professional service fees related to the project for qualified consultants, contractors, installers, and other third-party services.

(6) For an eligible RES in which a residence is closely associated with the rural small business or agricultural operation the installation of a second meter to separate the residence from the portion of the project that benefits the rural small business or agricultural operation, as applicable.

(d)

Ineligible project costs.

Ineligible project costs for RES and EEI projects include, but are not limited to:

(1) Costs for agricultural tillage equipment, used equipment, and vehicles;

(2) Construction or equipment costs that would be incurred regardless of the installation of a RES or EEI.

(3) Lease payments, including lease to own or capitalized leases;

(4) Any project cost that creates a conflict of interest or an appearance of a conflict of interest as provided in § 4280.106;

(5) Funds used for political or lobbying activities; and

(6) Funds used to pay off any Federal direct or guaranteed loans or other Federal debts.

(e)

Award amount considerations.

In determining the amount of a RES or EEI grant awarded, the Agency will take into consideration the following six criteria:

(1) The type of RES to be purchased;

(2) The estimated quantity of energy to be generated by the RES;

(3) The expected environmental benefits of the RES;

(4) The quantity of energy savings expected to be derived from the activity, as certified by the vendor/installer as applicable, or demonstrated by an energy audit or energy assessment;

(5) The estimated period of time for the energy savings generated by the activity to equal the cost of the activity; and

(6) The expected energy efficiency of the RES.

§ 4280.116

Grant applications—general.

(a)

General.

Separate applications must be submitted for RES and EEI projects. An original, hardcopy or electronic, of each application is required.

(b)

Application content.

Applications for RES projects or EEI projects must contain the information specified in § 4280.118 unless the requirements of either § 4280.119(a) or § 4280.120(a) are met. If the requirements of § 4280.119(a) are met, the application may contain the information specified in § 4280.119(b). If the requirements of § 4280.120(a) are met, the application may contain the information specified in § 4280.120(b). For RES Projects only, the Agency may require a feasibility study based on the scope of the project to the applicant's overall operations, including new facilities with significant impacts on an existing operation, or when the application information or technical report does not provide sufficient documentation and analysis of the project's engineering, technical, financial, or market feasibility, or the economic viability of the project including any feedstock or off-take agreements, that are needed to evaluate whether a project will be successful. The elements of an acceptable feasibility study may vary by project scope and should be prepared by a qualified and independent third party.

(c)

Evaluation of applications.

The Agency will evaluate each RES and EEI grant application and make a determination as to whether the application meets the criteria specified in paragraphs (c)(1) through (4).

(1) The application is complete, as defined in § 4280.103;

(2) The Applicant is eligible according to § 4280.112;

(3) The project is eligible according to § 4280.113; and

(4) The proposed project has technical merit as determined under § 4280.117.

§ 4280.117

Determination of technical merit.

The Agency will determine the technical merit of all proposed projects for which complete applications are submitted under §§ 4280.118, 4280.119, and 4280.120 under this subpart using the procedures specified in this section. Only projects that have been determined by the Agency to have technical merit are eligible for funding under this subpart.

(a)

General.

The Agency will use the information provided in the applicant's application and/or technical report to determine whether or not the project has technical merit. In making this determination, the Agency may engage the services of other Government agencies or other recognized industry experts in the applicable technology field, at its discretion, to evaluate and rate the technical report. The technical report can also be provided in the technical feasibility section of the feasibility study, when required, instead of completing a separate technical report.

(b)

Technical report areas.

The areas that the Agency will evaluate in the technical reports when making the technical merit determination are specified in paragraphs (b)(1) through (5) of this section.

(1)

EEI whose total project costs are $80,000 or less.

The following areas will be evaluated in making the technical merit determination:

(i) Project description;

(ii) Qualifications of EEI provider(s); and

(iii) Vender/Installer certification, energy assessment, or energy audit.

(2)

RES whose total project costs are $80,000 or less.

The following areas will be evaluated in making the technical merit determination:

(i) Project description;

(ii) Resource assessment;

(iii) Project economic assessment; and

(iv) Qualifications of key service providers.

(3)

EEI whose total project costs are greater than $80,000.

The following areas will be evaluated in making the technical merit determination:

(i) Project information;

(ii) Energy assessment or energy audit; and

(iii) Qualifications of the contractor or installers.

(4)

RES whose total project costs are less than $200,000, but more than $80,000.

The following areas will be evaluated in making the technical merit determination:

(i) Project description;

(ii) Resource assessment;

(iii) Project economic assessment;

(iv) Project construction and equipment; and

(v) Qualifications of key service providers.

(5)

RES whose total project costs are $200,000 and greater.

The following areas will be evaluated in making the technical merit determination:

(i) Qualifications of the project team;

(ii) Agreements and permits;

(iii) Resource assessment;

(iv) Design and engineering;

(v) Project development;

(vi) Equipment procurement and installation; and

(vii) Operations and maintenance.

(c)

Pass/Pass with conditions/fail assignments.

The Agency will assign each area of the technical report, as specified in paragraph (b) of this section, a “pass,” “pass with conditions,” or “fail.” An area will receive a “pass” if the information provided for the area has no weaknesses and meets or exceeds any requirements specified for the area. An area will receive a “pass with conditions” if the information provided for the area has minor weaknesses which could be conditionalized and reasonably resolved by the applicant. Otherwise, if the information provided for the area is conclusively deemed to be a major weakness or if the area has not been addressed by the applicant, the area will receive a “fail.”

(d)

Determination.

The Agency will compile the results for each area of the technical report to determine if the project has technical merit.

(1) A project whose technical report receives a “pass” in each of the applicable technical report areas will be considered to have “technical merit.”

(2) A project whose technical report receives a “pass with conditions” in one or more the applicable areas will be considered to have “conditional technical merit.”

(3) A project whose technical report receives a “fail” in any one technical report area will be considered to be without technical merit.

(e)

Further processing of applications.

A project that is determined to have “technical merit” or “conditional technical merit” is eligible for further consideration for funding. Projects with “conditional technical merit” would be subject to funding conditions that would need to be met to ensure full technical merit prior to completion of the project. A project that is determined to be “without technical merit” is considered to be an incomplete application and therefore is not eligible to compete for funding.

§ 4280.118

Grant applications for RES and EEI projects with total project costs of $200,000 and greater.

Grant applications for RES and EEI projects with total project costs of $200,000 and greater must provide the information specified in paragraphs (a) through (c) of this section, as applicable. Each applicant is encouraged, but is not required, to self-score the project using the evaluation criteria in § 4280.121.

(a)

Forms and certifications.

Each application must contain the forms and certifications specified in paragraphs (a)(1) through (10), as applicable, of this section, except paragraph (a)(5) is optional.

(1) Form RD 4280-3C, “Application for Renewable Energy Systems and Energy Efficiency Improvement Projects Total Project Costs of $200,000 or Greater”.

(2) Form SF-424, “Application for Federal Assistance.”

(3) Form SF-424C, “Budget Information—Construction Programs.”

(4) Form SF-424D, “Assurances—Construction Programs.”

(5) Identify the ethnicity, race, and gender of the applicant. Identify if the borrower is a veteran. This information is optional and is not required for a complete application but may be used by the Agency to award priority points.

(6) Environmental documentation in accordance with 7 CFR part 1970. The applicant should contact the Agency to determine what documentation is required to be provided.

(7) The applicant must identify whether or not the applicant has a known relationship or association with an Agency employee. If there is a known relationship, the applicant must identify each Agency employee with whom the applicant has a known relationship.

(8) Certification that the applicant is a legal entity in good standing (as applicable) and operating in accordance with the laws of the State(s) or Tribe(s) where the applicant has a place of business.

(9) Certification by the applicant that the equipment required for the project is available, can be procured and delivered within the proposed project development schedule, and will be installed in conformance with manufacturer's specifications and design requirements. This would not be applicable when equipment is not part of the project.

(10) Certification by the applicant that the project will be constructed in accordance with applicable laws, regulations, agreements, permits, codes, and standards.

(b)

Applicant information.

Provide information specified in paragraphs (b)(1) through (4) of this section to allow the Agency to determine the eligibility of the applicant.

(1)

Type of applicant.

Eligible applicants must meet the definition of agricultural producer or rural small business as defined in § 4280.103. Agricultural producers seeking funding for a RES or EEI project may apply as either a rural small business or as an agricultural producer, provided they meet the applicable eligibility requirements. The applicant must provide the primary North American Industry Classification System (NAICS) code applicable to the applicant's business concern and certify on the Agency approved application form that they meet the definition of agricultural producer or rural small business. The Agency reserves the right to request supporting documentation to verify applicant eligibility.

(2)

Applicant description.

Describe the ownership of the applicant, including the information specified in paragraphs (b)(2)(i) and (ii) of this section as applicable. Include a description of the applicant's farm/ranch/business operation, including how long the applicant has been in operation.

(i) Describe how the applicant meets the ownership and control requirements as identified in § 4280.112(b).

(ii) For each entity(ies) it controls or entity(ies) it is controlled by, provide a list of the individual owners with their contact information. Describe the relationship between the applicant and the other entity(ies), including percent ownership and control, management, passive investor ownership, and as applicable products exchanged. Organizational charts to demonstrate structure should be submitted when applicable.

(3)

Financial information.

Financial information is required on the total operation of the applicant and all entity(ies) it controls or entity(ies) that control the applicant.

(i) All financial information (

e.g.,

financial statements, balance sheets, financial projections, income statements) must be submitted in accordance with accounting practices acceptable to the Agency. Such practices can include, but are not limited to, Generally Accepted Accounting Principles (GAAP) and the industry's standard accounting practice.

(ii) For sole proprietorships and other situations where business assets are held personally, financial statements must be prepared using only the assets and liabilities directly attributable to the business. Assets, plus any improvements must be valued at the lower of cost or market value.

(iii) The Agency may request additional financial statements, financial models, cash flow information, updated financial statements, and other related financial information to determine the financial feasibility of a Project. Required financial statements:

(A)

Historical financial statements.

Provide Agency-acceptable historical balance sheets and income statements the lesser of the last 3 fiscal years or all years of operation.

(B)

Current balance sheet and income statement.

Provide a current Agency-

acceptable balance sheet and year-to-date income statement dated within 90 days of submission of the complete application.

(C)

Pro forma financial statements.

Provide balance sheets, income statements, and cash flow statements or financial model starting from the current financial statements through a minimum of 2 years of the project performing at full operational capacity or stable operations. Financial projections must be supported by a list of assumptions showing the basis for the projections.

(4)

Previous grants and loans.

State whether the applicant has received and accepted any grants or guaranteed loan commitments under this subpart or any guaranteed loans under 7 CFR 5001. If the applicant has, identify each such grant award or guaranteed loan commitment and describe the progress the applicant has made on each project for which the grant or loan was received, including projected schedules and actual completion dates.

(c)

Project information.

Provide information concerning the proposed project as a whole and its relationship to the applicant's operations, including the following:

(1) Identification as to whether the project is for a RES or an EEI project. Include a description and the location of the project.

(2) A description of the process that will be used to conduct all procurement transactions to demonstrate compliance with § 4280.125(a)(1).

(3) Indicate if the proposed project will have a positive effect on resource conservation (

e.g.,

water, soil, forest), public health (

e.g.,

potable water, air quality), and the environment (

e.g.,

compliance with the U.S. Environmental Protection Agency's (EPA) renewable fuel standard(s), greenhouse gases, emissions, particulate matter).

(4) Identify the amount of funds and the source(s) the applicant is proposing to use for the project. Provide written commitments for funds at the time the application is submitted to receive points under this scoring criterion.

(i) If financial resources come from the applicant, documentation may include bank statements that demonstrates availability of funds.

(ii) If a third party is providing financial assistance, the applicant must submit a commitment letter signed by an authorized official of the third party. The letter must be specific to the project and must identify the dollar amount and any applicable rates and terms. If the third-party commitment is a loan, the commitment must be firm; a letter-of-intent or pre-qualification letter subject to underwriting requirements or contingencies are not acceptable. An acceptable condition may be based on the receipt of the REAP grant or an appraisal.

(d)

Technical report.

Each application must contain a technical report prepared in accordance with § 4280.110(g) and Appendix A or C, as applicable, of this subpart.

(e)

Construction planning and performing development.

Each application submitted must be in accordance with § 4280.125 for planning, designing, bidding, contracting, and constructing RES and EEI projects as applicable.

§ 4280.119

Grant applications for RES and EEI projects with total project costs of less than $200,000, but more than $80,000.

Grant applications for RES and EEI projects with total project costs of less than $200,000, but more than $80,000, may provide the information specified in this section or, if the applicant elects to do so, the information specified in § 4280.118. In order to submit an application under this section, the criteria specified in paragraph (a) of this section must be met. The content for applications submitted under this section is specified in paragraph (b) of this section. Unless otherwise specified in this subpart, the construction planning and performing development procedures and the payment process that will be used for awards for applications submitted under this section are specified in paragraphs (c) and (d), respectively, of this section.

(a)

Criteria for submitting applications for projects with total project costs of less than $200,000, but more than $80,000.

In order to submit an application under this section, each of the conditions specified in paragraphs (a)(1) through (7) of this section must be met.

(1) The applicant must be eligible in accordance with § 4280.112.

(2) The project must be eligible in accordance with § 4280.113.

(3) Total project costs must be less than $200,000, but more than $80,000.

(4) Construction planning and performing development must be performed in compliance with paragraph (c) of this section. The applicant or the applicant's prime contractor assumes all risks and responsibilities of project development.

(5) The applicant or the applicant's prime contractor is responsible for all interim financing, including during construction.

(6) The applicant agrees not to request reimbursement from funds obligated under this program until after project completion and is operating in accordance with the information provided in the application for the project.

(7) The applicant must maintain insurance as required under § 4280.123(b), except business interruption insurance is not required.

(b)

Application content.

Applications submitted under this section must contain the information specified in paragraphs (b)(1) through (4) of this section. Each applicant is encouraged, but is not required, to self-score the project using the evaluation criteria in § 4280.121.

(1)

Forms and certifications.

The application must contain the items identified in § 4280.118(a), except that Form RD 4280-3B, “Application for Renewable Energy Systems and Energy Efficiency Improvement Projects Total Project Costs of Less than $200,000, But More Than $80,000” may be used instead of the form noted in § 4280.118 (a)(1). In addition, the applicant must submit a certification that the applicant meets each of the criteria for submitting an application under this section as specified in paragraph (a) of this section.

(2)

Applicant information.

The application must contain the items identified in § 4280.118(b), except that the information specified in § 4280.118(b)(3) is not required. The Agency reserves the right to request supporting documentation to verify applicant eligibility.

(3)

Project information.

The application must contain the items identified in § 4280.118(c).

(4)

Technical report.

Each application must contain a technical report in accordance with § 4280.110(g) and Appendix A or B, as applicable, of this subpart.

(c)

Construction planning and performing development.

Applicants submitting applications under this section must comply with the requirements specified in paragraphs (c)(1) through (3) of this section for construction planning and performing development.

(1)

General.

Paragraphs (a)(1), (2), and (4) of § 4280.125 apply.

(2)

Small acquisition and construction procedures.

Small acquisition and construction procedures are those relatively simple and informal procurement methods that are sound and appropriate for a procurement of services, equipment, and construction of a RES or EEI project with a total project cost of not more than $200,000. The applicant is solely responsible for the execution of all contracts under this

procedure, and Agency review and approval is not required.

(3)

Contractor forms.

Applicants must have each contractor sign, as applicable:

(i) Form RD 400-6, “Compliance Statement,” for contracts exceeding $10,000; and

(ii) Form AD-1048, “Certification Regarding Debarment, Suspension, Ineligibility and Voluntary Exclusion—Lower Tier Covered Transactions,” for contracts exceeding $25,000.

(d)

Payment process for applications for RES and EEI projects with total project costs of less than $200,000, but more than $80,000.

(1) Upon completion of the project, the grantee must submit to the Agency a copy of the contractor's certification of final completion for the project and a statement that the grantee accepts the work completed. At its discretion, the Agency may require the applicant to have an inspector certify that the project is constructed and installed correctly.

(2) The RES or EEI project must be constructed, installed, and operating as described in the technical report prior to disbursement of funds. For RES, the system must be operating at the steady state operating level described in the technical report for a period of not less than 30 days, unless this requirement is modified by the Agency, prior to disbursement of funds. Any modification to the 30-day steady state operating level requirement will be based on the Agency's review of the technical report and will be incorporated into the Letter of Conditions.

(3) Prior to making payment, the Agency will be provided with Form RD 1924-9, “Certificate of Contractor's Release,” and Form RD 1924-10, “Release by Claimants,” or similar forms, executed by all persons who furnished materials or labor in connection with the contract.

§ 4280.120

Grant applications for RES and EEI projects with total project costs of $80,000 or less.

Grant applications for RES and EEI projects with total project costs of $80,000 or less must provide the information specified in this section or, if the applicant elects to do so, the information specified in either §§ 4280.118 or 4280.119. In order to submit an application under this section, the criteria specified in paragraph (a) of this section must be met. The content for applications submitted under this section is specified in paragraph (b) of this section. Unless otherwise specified in this subpart, the construction planning and performing development procedures and the payment process that will be used for awards for applications submitted under this section are specified in paragraphs (c) and (d), respectively, of this section.

(a)

Criteria for submitting applications for RES and EEI projects with total project costs of $80,000 or less.

In order to submit an application under this section, each of the conditions specified in paragraphs (a)(1) through (7) of this section must be met.

(1) The applicant must be eligible in accordance with § 4280.112.

(2) The project must be eligible in accordance with § 4280.113.

(3) Total project costs must be $80,000 or less.

(4) Construction planning and performing development must be performed in compliance with paragraph (c) of this section. The applicant or the applicant's prime contractor assumes all risks and responsibilities of project development.

(5) The applicant or the applicant's prime contractor is responsible for all interim financing, including during construction.

(6) The applicant agrees not to request reimbursement from funds obligated under this program until after the project has been completed and is operating in accordance with the information provided in the application for the project.

(7) The applicant must maintain insurance as required under § 4280.123(b), except business interruption insurance is not required.

(b)

Application content.

Applications submitted under this section must contain the information specified in paragraphs (b)(1) through (4), as applicable. Each applicant is encouraged, but is not required, to self-score the project using the evaluation criteria in § 4280.121.

(1)

Forms and certifications.

Each application must contain the forms and certifications specified in paragraphs (b)(1)(i) through (x), as applicable, of this section except that paragraph (b)(1)(v) is optional.

(i) Form RD 4280-3A, “Application for Renewable Energy Systems and Energy Efficiency Improvement Projects Total Project Costs of $80,000 or Less”.

(ii) Form SF-424, “Application for Federal Assistance”.

(iii) Form SF-424C, “Budget Information for Construction Programs”.

(iv) Form SF-424D, “Assurances for Construction Programs”.

(v) Identify the ethnicity, race, and gender of the applicant. Identify if the borrower is a veteran. This information is optional and is not required for a complete application but may be used by the Agency to award priority points.

(vi) Environmental documentation in accordance with 7 CFR part 1970. The applicant should contact the Agency to determine what documentation is required to be provided.

(vii) Certification by the applicant that:

(A) The applicant meets each of the applicant eligibility criteria found in § 4280.112. The Agency reserves the right to request supporting documentation to verify applicant eligibility;

(B) The proposed project meets each of the project eligibility requirements found in § 4280.113;

(C) The design, engineering, testing, and monitoring will be sufficient to demonstrate that the proposed project will meet its intended purpose;

(D) The equipment required for the project is available, can be procured and delivered within the proposed project development schedule, and will be installed in conformance with manufacturer's specifications and design requirements. This would not be applicable when equipment is not part of the project;

(E) The project will be constructed in accordance with applicable laws, regulations, agreements, permits, codes, and standards;

(F) The applicant meets the criteria for submitting an application for projects with total project costs of $80,000 or less;

(G) The applicant will abide by the open and free competition requirements in compliance with § 4280.125(a)(1); and

(H) For bioenergy projects, any and all woody biomass feedstock from National Forest System land or public lands cannot be otherwise used as a higher value wood-based product.

(viii) State whether the applicant has received any grants and/or guaranteed loans under this subpart, or any guaranteed loans under 7 CFR part 5001. If the applicant has, identify each such grant and/or loan and describe the progress the applicant has made on each project for which the grant and/or loan was received, including projected schedules and actual completion dates.

(ix) The applicant must identify whether or not the applicant has a known relationship or association with an Agency employee. If there is a known relationship, the applicant must identify each Agency employee with whom the applicant has a known relationship.

(x) The applicant is a legal entity in good standing (as applicable) and operating in accordance with the laws of the State(s) or Tribe where the applicant has a place of business.

(2)

General.

For both RES and EEI project applications:

(i) Identify whether the project is for a RES or an EEI project;

(ii) Identify the primary NAICS code applicable to the applicant's operation if known or a description of the operation in enough detail for the Agency to determine the primary NAICS code;

(iii) Indicate if the proposed project will have a positive effect on resource conservation (

e.g.,

water, soil, forest), public health (

e.g.,

potable water, air quality), and the environment (

e.g.,

compliance with the EPA's renewable fuel standard(s), greenhouse gases, emissions, particulate matter); and

(iv) Identify the amount of matching funds and other funds and the source(s) the applicant is proposing to use for the project. In order to receive points under this scoring criterion, written commitments for funds (

e.g.,

a Letter of commitment, bank statement) must be submitted when the application is submitted.

(A) If financial resources come from the applicant, documentation may include a bank statement that demonstrates availability of funds.

(B) If a third party is providing financial assistance, the applicant must submit a commitment letter signed by an authorized official of the third party. The letter must be specific to the project, identify the dollar amount and any applicable rates and terms. If the third-party commitment is a loan, the commitment must be firm, a letter-of-intent or pre-qualification letter, subject to underwriting requirements or contingencies are not acceptable. An acceptable condition may be based on the receipt of the REAP grant or an appraisal.

(3)

Technical report for EEI.

Each EEI application submitted under this section must include a technical report in accordance with § 4280.110(g) and paragraphs (b)(3)(i) through (iv) of this section.

(i)

Project description.

Provide a description of the proposed EEI, including its intended purpose and a vendor/installer certification that the EEI project meets the requirements for being commercially available.

(ii)

Qualifications of EEI provider(s).

Provide a certification by the vendor/installer that:

(A) They are qualified to complete the project as intended, including the number of years of experience with the proposed EEI technology. Any contractor or installer with less than 2 years of experience may be required to provide additional information in order for the Agency to determine if they are a qualified installer/contractor.

(B) The EEI system will operate and perform over the project's useful life in a reliable and cost-effective manner; and

(iii)

Energy assessment.

Provide a copy of the energy assessment (or energy audit) performed for the project as required under Section C of Appendix A to this subpart and the qualifications of the person which completed the energy assessment.

(iv)

Simple payback.

Provide an estimate of simple payback, including all calculations, documentation, and any assumptions.

(4)

Technical report for RES.

Each RES application submitted under this section must include a technical report in accordance with § 4280.110(g) and paragraphs (b)(4)(i) through (iv) of this section.

(i)

Project description.

Provide a description of the project, including its intended purpose and a vendor/installer certification that the RES project meets the requirements for being commercially available. Appendix B contains instructions for how a project is to be constructed and installed. Identify the project's location and describe the project site.

(ii)

Resource assessment.

Provide vendor/installer certified projections on energy to be replaced and/or generated once the proposed system is operating at its steady state operating level, including the quality and availability of the renewable resource to the project. If there is a residence closely associated with the RES project, include the historical amount of energy used by the residence and the historical amount of energy used by the agricultural operation or rural small business, as applicable, to satisfactorily demonstrate 50% or more of proposed generation will benefit the agricultural operation or rural small business;

(iii)

Project economic assessment.

Describe the projected financial performance of the proposed project. The description must address total project costs, revenues accrued from the sale or crediting of energy, quantity and value of energy offset, and revenue from byproducts. Include applicable investment and other production incentives and indicate if they are a one time or reoccurring incentive. Provide an estimate of simple payback, including all calculations, documentation, and any assumptions; and

(iv)

Qualifications of key service providers.

Provide a certification by the vendor/installer that:

(A) They are qualified to complete the project as intended, including the number of similar systems installed previously and any professional credentials, licenses, and relevant experience. If specific numbers are not available for similar systems, you may submit an estimation of the number of similar systems; and

(B) The RES system will operate and perform over the project's useful life in a reliable and cost-effective manner.

(c)

Construction planning and performing development for applications submitted under this section.

All applicants submitting applications under this section must comply with the requirements specified in paragraphs (c)(1) through (3) of this section for construction planning and performing development.

(1)

General.

Paragraphs (a)(1), (2), and (4) of § 4280.125 apply.

(2)

Small acquisition and construction procedures.

Small acquisition and construction procedures are those relatively simple and informal procurement methods that are sound and appropriate for a procurement of services, equipment and construction of a RES or EEI project with a total project cost of not more than $80,000. The applicant is solely responsible for the execution of all contracts under this procedure, and Agency review and approval is not required.

(3)

Contractor forms.

Applicants must have each contractor sign, as applicable:

(i) Form RD 400-6, “Compliance Statement” for contracts exceeding $10,000; and

(ii) Form AD-1048, “Certification Regarding Debarment, Suspension, Ineligibility and Voluntary Exclusion lower Tier Covered Transactions” for contracts exceeding $25,000.

(d)

Payment process for applications for RES and EEI projects with total project costs of $80,000 or less.

(1) Upon completion of the project, the grantee must submit to the Agency a copy of the contractor's certification of final completion for the project and a statement that the grantee accepts the work completed. At its discretion, the Agency may require the applicant to have an inspector certify that the project is constructed and installed correctly.

(2) The RES or EEI project must be constructed, installed, and currently be operating as described in the technical report prior to disbursement of funds. For RES, the system must be operating at the steady state operating level described in the technical report for a period of not less than 30 days, unless this requirement is modified by the Agency, prior to disbursement of funds. Any modification to the 30-day steady state operating level requirement will be based on the Agency's review of the technical report and will be

incorporated into the Letter of Conditions.

(3) Prior to making payment, the grantee must provide the Agency with Form RD 1924-9 and Form RD 1924-10, or similar forms, executed by all persons who furnished materials or labor in connection with the contract.

§ 4280.121

Scoring RES and EEI grant applications.

Agency personnel will score each complete and eligible RES and EEI application based on the scoring criteria specified in this section, unless otherwise specified in a

Federal Register

notice, with a maximum score of 100 points possible.

(a)

Environmental benefits.

A maximum of 5 points will be awarded for this criterion based on whether the applicant has indicated in the application that the proposed project will have a positive effect on resource conservation (

e.g.,

water, soil, forest), public health (

e.g.,

potable water, air quality), and the environment (

e.g.,

compliance with EPA's renewable fuel standard(s), greenhouse gases, emissions, particulate matter). If the project will have a positive impact on:

(1) Any one of the three impact areas, 1 point will be awarded.

(2) Any two of the three impact areas, 3 points will be awarded.

(3) All three impact areas, 5 points will be awarded.

(b)

Energy generated, replaced, or saved.

A maximum of 25 points will be awarded for this criterion. Applications for RES and EEI projects are eligible for points under both paragraphs (b)(1) and (2) of this section.

(1)

Quantity of energy generated or saved per REAP grant dollar requested.

A maximum of 10 points will be awarded for this sub-criterion. For RES and EEI projects, points will be awarded for either the amount of renewable energy generation per grant dollar requested, which includes those projects that are replacing energy usage with a renewable source; or the actual annual average energy savings over the most recent 12, 24, 36, 48, or 60 consecutive months of operation per grant dollar requested. Points will not be awarded for more than one category.

(i)

RES.

The quantity of energy generated or replaced per grant dollar requested will be determined by dividing the projected total annual energy generated or replaced by the RES or RES retrofit (minus energy for residential use), which will be converted to BTUs, by the grant dollars requested. Points will be awarded based on the annual amount of energy generated or replaced (minus energy for residential use) per grant dollar requested for the proposed RES project. In cases where there are ineligible pre-application costs, the entire quantity of energy produced by the system is utilized for this scoring criteria as long as the use of energy produced is eligible. The Agency will award up to 10 points as determined using paragraphs (b)(1)(i)(A) and (B) of this section. If the annual amount of energy generated or replaced per grant dollar requested is:

(A) 50,000 BTUs average annual energy generated or replaced per grant dollar requested or higher, 10 points will be awarded; or

(B) Less than 50,000 BTUs annual energy generated or replaced per grant dollar requested, points will be awarded according to the results of taking the energy generated or replaced per grant dollar requested/50,000 × 10 points. The points awarded are rounded to the nearest hundredth of a point.

(ii)

EEI.

The Agency will award up to 10 points under this sub-criterion based on the average annual energy saved per grant dollar requested for the EEI project. The Agency will award up to 10 points as determined under paragraph (b)(1)(ii)(A) and (B) of this section. If the average annual energy saved per grant dollar requested is:

(A) 50,000 BTUs average annual energy saved per grant dollar requested or higher, 10 points will be awarded; or

(B) Less than 50,000 BTUs average annual energy saved per grant dollar requested, points will be awarded according to the result of taking the energy saved per grant dollar requested/50,000 × 10 points. The points awarded are rounded to the nearest hundredth of a point.

(2)

Quantity of energy replaced, generated, or saved.

A maximum of 15 points will be awarded for this sub-criterion. Points will be awarded on the basis of whether the project is for energy replacement, energy savings, or energy generation; points will not be awarded for more than one category.

(i)

Energy replacement.

The Agency will award points under this sub-criterion for a RES project based on the amount of energy replaced by the project compared to the amount of energy used by the applicable process(es) over a 12-month period. If the estimated energy produced is more than 150 percent of the energy used by the applicable process(es), the project will be scored as an energy generation project under paragraph (b)(2)(ii) of this section.

(A)

Documentation for energy replacement.

For a RES project to qualify as energy replacement, the applicant must provide documentation in its application on prior energy use incurred by the applicant. Proposed energy use, such as that attributed to an expansion, is not considered in the replacement calculation. For a RES project involving new construction and being installed to serve the new facility, the project can be classified as energy replacement only if the applicant can document prior energy use from a facility that is within plus or minus 10 percent of the size of the facility it is replacing. The estimated quantities of energy must be converted to either BTUs, watts, or similar energy equivalents to facilitate scoring.

(B)

Calculation.

Energy replacement is determined by dividing the quantity of renewable energy that the RES project is estimated would have been generated if it were in place over the most recent 12-month period by the quantity of energy actually consumed over the same period by the applicable energy process(es) that is(are) consuming energy.

(C)

Awarding of points.

Using the results from paragraph (b)(2)(i)(B) of this section, if the percentage of energy replacement is:

(

1

) Greater than 50 percent, 15 points will be awarded;

(

2

) Greater than 25 percent, but equal to or less than 50 percent, 10 points will be awarded; or

(

3

) Equal to or less than 25 percent, 5 points will be awarded.

(ii)

Energy generation.

If the proposed RES is intended for production of energy or is a proposed retrofitting of an existing RES which increases the amount of energy generated, the Agency will award 10 points.

(iii)

Energy saved.

The Agency will award up to 15 points under this sub-criterion for an EEI project based on the percentage of estimated energy saved by the installation of the project as determined by the projections in the applicable energy assessment or energy audit. If the estimated energy expected to be saved over the same period used in the energy assessment or energy audit, as applicable, will be:

(A) 50 percent or greater, 15 points will be awarded;

(B) 35 percent up to, but not including 50 percent, 10 points will be awarded;

(C) 20 percent up to, but not including 35 percent, 5 points will be awarded; or

(D) Less than 20 percent, no points will be awarded.

(c)

Commitment of funds.

A maximum of 15 points will be awarded for this criterion based on the percentage of written commitment an applicant has from its fund sources that are documented with a complete application.

(1)

Calculation.

The percentage of written commitment is calculated as follows: Percentage of written commitment = total amount of funds for which written commitments have been submitted with the application/total amount of matching funds and other funds required.

(2)

Awarding of points.

Using the result from paragraph (c)(1) of this section, the Agency will award points as shown in paragraphs (c)(2)(i) through (iii) of this section.

(i) If the percentage of written commitments is 100 percent of the matching funds, 15 points will be awarded.

(ii) If the percentage of written commitments is less than 100 percent, but more than 50 percent, points will be awarded as follows: ((Percentage of written commitments −50 percent)/(50 percent)) × 15 points, where points awarded are rounded to the nearest hundredth of a point.

(iii) If the percentage of written commitments is 50 percent or less, no points will be awarded.

(d)

Previous grantees and borrowers.

A maximum of 15 points will be awarded for this criterion based on whether the applicant has received and accepted a REAP grant award or guaranteed loan commitment under 7 CFR part 4280 of this title or a guaranteed loan commitment under either this part or 7 CFR part 5001 of this title.

(1) If the applicant has never received and accepted a grant award or a guaranteed loan commitment under either this part or 7 CFR part 5001 of this title, 15 points will be awarded.

(2) If the applicant has not received and accepted a grant award or guaranteed loan commitment under this subpart, or a guaranteed loan commitment under 7 CFR part 5001 of this title within the 2 previous Federal fiscal years, 5 points will be awarded.

(3) If the applicant has received a grant award or guaranteed loan commitment under this subpart, or a guaranteed loan commitment under 7 CFR part 5001 of this title within the 2 previous Federal fiscal years, no points will be awarded.

(e)

Existing business.

A maximum of 5 points will be awarded for an existing agricultural producer business or rural small business that meets the definition of existing business in § 4280.103 of this part.

(f)

Simple payback.

A maximum of 15 points will be awarded for this criterion based on the simple payback of the project as defined in § 4280.103. Points will be awarded for either RES or EEI; points will not be awarded for more than one category.

(1)

RES.

If the simple payback of the proposed project is:

(i) Less than 10 years, 15 points will be awarded;

(ii) 10 years up to but not including 15 years, 10 points will be awarded;

(iii) 15 years up to and including 25 years, 5 points will be awarded; or

(iv) Longer than 25 years, no points will be awarded.

(2)

EEI.

If the simple payback of the proposed project is:

(i) Less than 4 years, 15 points will be awarded;

(ii) 4 years up to but not including 8 years, 10 points will be awarded;

(iii) 8 years up to and including 12 years, 5 points will be awarded; or

(iv) Longer than 12 years, no points will be awarded.

(g)

Size of request.

For grant applications requesting $250,000 or less for RES, or $125,000 or less for EEI, an additional 10 points may be awarded such that a maximum score of 100 points is possible. All other applications will have a maximum possible score of 90 points.

(h)

State Director and Administrator priority points.

A maximum of 10 points are available for this criterion. A State Director, for its State allocation under this subpart, or the Administrator, for making awards from the National Office reserve, may award up to 10 points to an application based on the conditions specified in paragraphs (h)(1) through (5) of this section. In no case shall an application receive more than 10 points under this criterion.

(1) The application is for an under-represented technology.

(2) Selecting the application helps achieve geographic diversity, which may include points based upon the size of the funding request.

(3) The applicant is a member of an unserved or under-served population described as follows:

(i) Owned by a veteran, including but not limited to individuals as sole proprietors, members, partners, stockholders, etc., of not less than 20 percent. In order to receive points, applicants must provide a statement in their applications to indicate that owners of the project have Veteran status; or

(ii) Owned by a member of a socially-disadvantaged group, which are groups whose members have been subjected to racial, ethnic, or gender prejudice because of their identity as members of a group without regard to their individual qualities. In order to receive points, the application must include a statement to indicate that the owners of the project are members of a socially disadvantaged group.

(4) Selecting the application helps further a Presidential initiative or a Secretary of Agriculture priority.

(5) The proposed project is located in a Federally declared disaster area. Declarations must be within the last 2 calendar years.

(6) The proposed project is located in an area where 20 percent or more of its population is living in poverty, as defined by the United States Census Bureau, underserved community(ies) or has experienced long-term population decline, or loss of employment.

§ 4280.122

Selecting RES and EEI grant applications for award.

Unless otherwise provided for in a

Federal Register

notice, RES and EEI grant applications will be processed in accordance with this section. Complete applications will be evaluated, processed, and subsequently ranked, and will compete for funding, subject to the availability of grant funding. Each State will receive two grant allocations, an allocation of grant funds restricted to funding requests of $20,000 or less, and an allocation of grant funds which are unrestricted and can fund any size funding request.

(a)

RES and EEI grant applications.

Complete RES and EEI grant applications, including combination grant and guaranteed loan requests, regardless of the amount of funding requested, are eligible to compete in two competitions within a Federal fiscal year—a State competition and a National competition.

(1) To be competed in the State and National competitions, complete applications must be received by the applicable State Office by 4:30 p.m. local time no later than March 31. If March 31 falls on a non-business day or a federally-observed holiday, the next Federal business day will be considered the last day for receipt of a complete application. Complete applications received after this date and time will be processed in the subsequent fiscal year.

(2) All eligible RES and EEI grant applications that remain unfunded after completion of the State competition will be competed in a National competition.

(b)

RES and EEI grant applications requesting $20,000 or less.

Complete RES and EEI grant applications, including combination grant and guaranteed loan requests, requesting $20,000 or less are eligible to compete in up to five competitions—two State competitions and a National set-aside competition for grants of $20,000 or less, as well as the two competitions

referenced in paragraph (a) of this section.

(1) For complete RES and EEI grant applications for grants requesting $20,000 or less, there will be two State competitions each Federal fiscal year. Complete applications for $20,000 or less that are received by the Agency by 4:30 p.m. local time on October 31 of the Federal fiscal year will be competed against each other. Complete applications for $20,000 or less that are received by the Agency by 4:30 p.m. local time on March 31 of the Federal fiscal year and any applications for $20,000 or less that were not ready to compete or were not funded from the prior competition, will be competed against each other. If either October 31 or March 31 falls on a weekend or a federally observed holiday, the next Federal business day will be considered the last day for receipt of a complete application. Complete applications received after 4:30 p.m. local time on March 31, regardless of the postmark on the application, will be processed in the subsequent fiscal year.

(2) All eligible RES and EEI grant applications requesting $20,000 or less that remain unfunded after completion of the State competition for applications received by March 31 will be competed in the National competition.

(c)

Ranking of applications.

The Agency will rank complete eligible applications using the scoring criteria specific in § 4280.121. Higher scoring applications will receive first consideration.

(d)

Funding selected applications.

As applications are funded, if insufficient funds remain to fund the next highest scoring application, the Agency may elect to fund a lower scoring application. Before this occurs, the Agency will provide the applicant of the higher scoring application the opportunity to reduce the amount of the applicant's grant request to the amount of funds available. If the applicant agrees to lower its grant request, the applicant must certify that the purposes of the project will be met and provide the remaining total funds needed to complete the project. If two or more applications score the same and if remaining funds are insufficient to fund each such application, the Agency will notify the applicants that they may either accept a proportional amount of funds or submit their total request for the next available competition. At its discretion, the Agency may also elect to allow any remaining multi-year funds to be carried over to the next fiscal year rather than selecting a lower scoring application.

(e)

Handling of ranked applications not funded.

Based on the availability of funding, a ranked application might not be funded. Handling of unfunded applications depends on whether the request is more or less than $20,000.

(1) All complete and eligible applications requesting $20,000 or less may be competed in up to five competitions within a Federal fiscal year and if not selected for funding, the Agency will discontinue consideration of the applications.

(2) The Agency will discontinue consideration for funding all complete and eligible applications requesting more than $20,000 that are not selected for funding after the State and National competitions for the Federal fiscal year.

(f)

Commencement of the project.

Not all grant applications that compete for funding will receive an award. Thus, the applicant assumes all risks if the applicant chooses to purchase the proposed equipment or start construction of the proposed project after the complete application has been received by the Agency, but before the applicant is notified as to whether or not they have been selected for an award.

§ 4280.123

Awarding and administering RES and EEI grants.

The Agency will award and administer RES and EEI grants in accordance with Departmental Regulations and with paragraphs (a) through (h) of this section.

(a)

Letter of Conditions.

A Letter of Conditions will be prepared by the Agency, establishing conditions that must be agreed to by the applicant before any obligation of funds can occur. Upon reviewing the conditions and requirements in the Letter of Conditions, the applicant must complete, sign, and return the Form RD 1942-46, “Letter of Intent to Meet Conditions,” and Form RD 1940-1, “Request for Obligation of Funds,” to the Agency if they accept the conditions of the grant; or if certain conditions cannot be met, the applicant may propose alternate conditions to the Agency. The Agency must concur with any changes proposed to the Letter of Conditions by the applicant before the application will be further processed.

(b)

Insurance requirements.

Agency approved insurance coverage must be maintained for 3 years after the Agency has approved the final performance report unless this requirement is waived or modified by the Agency in writing. Insurance coverage shall include, but is not limited to:

(1) Property insurance, such as fire and extended coverage, will normally be maintained on all structures and equipment.

(2) Liability.

(3) National flood insurance is required in accordance with 7 CFR part 1806, subpart B, if applicable.

(4) Business interruption insurance for projects with total project costs of more than $200,000.

(c)

Forms and certifications.

The forms specified in paragraphs (c)(1) through (5) of this section will be attached to the Letter of Conditions referenced in paragraph (a) of this section. The forms specified in paragraphs (c)(1) through (4) of this section and all of the certifications must be submitted prior to grant approval. The form specified in paragraph (c)(5) of this section, which is to be completed by contractors, does not need to be returned to the Agency, but must be kept on file by the grantee.

(1) Form RD 1942-46, “Letter of Intent to Meet Conditions.”

(2) Form RD 1940-1.

(3) Form SF-LLL, “Disclosure of Lobbying Activities,” if the grant exceeds $100,000 and/or if the grantee has made or agreed to make payment using funds other than Federal appropriated funds to influence or attempt to influence a decision in connection with the application.

(4) Form RD 400-4, “Assurance Agreement,” or successor form.

(5) Form AD-1048, as signed by the contractor or other lower tier party.

(d)

Evidence of matching funds and other funds.

If an applicant submitted written evidence of matching funds and other funds with the application, the applicant is responsible for ensuring that such written evidence is still in effect (

i.e.,

not expired) when the grant is executed. If the applicant did not submit written evidence of matching funds and other funds with the application, the applicant must submit such written evidence that is in effect before the Agency will execute the Financial Assistance Agreement. In either case, written evidence of matching funds and other funds needed to complete the project must be provided to the Agency before execution of the Financial Assistance Agreement and must be in effect (

i.e.,

must not have expired) at the time Financial Assistance Agreement is executed.

(e)

System for Award Management (SAM) registration.

Before the Financial Assistance Agreement can be executed, the applicant's UEI number must be registered in the SAM and a valid (

e.g.

non-expired) Commercial and Government Entity (CAGE) code must be submitted to the Agency.

(f)

Financial Assistance Agreement.

Once the requirements specified in paragraphs (a) through (e) of this section have been met, the Financial Assistance Agreement can be executed by the grantee and the Agency. The Agreement should be signed as soon as possible, but no later than within

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