Rural Energy for America Program

Published date27 April 2021
Citation86 FR 22304
Record Number2021-05286
SectionRules and Regulations
CourtRural Business-cooperative Service
Federal Register, Volume 86 Issue 79 (Tuesday, April 27, 2021)
[Federal Register Volume 86, Number 79 (Tuesday, April 27, 2021)]
                [Rules and Regulations]
                [Pages 22304-22338]
                From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
                [FR Doc No: 2021-05286]
                [[Page 22303]]
                Vol. 86
                Tuesday,
                No. 79
                April 27, 2021
                Part IIDepartment of Agriculture-----------------------------------------------------------------------Rural Business-Cooperative Service-----------------------------------------------------------------------7 CFR Part 4280Rural Energy for America Program; Final Rule
                Federal Register / Vol. 86 , No. 79 / Tuesday, April 27, 2021 / Rules
                and Regulations
                [[Page 22304]]
                -----------------------------------------------------------------------
                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:
                [email protected].
                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 (Sec. 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 (Sec. 4280.106). Conformed language in
                Sec. 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 (Sec. 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 (Sec. 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 (Sec.
                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 (Sec. 4280.111). Removed reference to lender
                notifications.
                 H. Applicant eligibility (Sec. 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 (Sec. 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
                [[Page 22305]]
                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 (Sec. 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 (Sec. 4280.115). Renamed section from
                former ``Grant applications--general'' and inserted text previously
                found in Sec. 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 (Sec. 4280.116). Renamed section
                from former ``Determination of technical merit'' and inserted text
                previously found in Sec. 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 (Sec. 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 Sec. 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 (Sec. 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 Sec. 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 (Sec. 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 Sec. 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 (Sec. 4280.120). Renamed section from former
                ``Scoring RES and EEI Grant Applications'' and inserted text previously
                found in Sec. 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 (Sec. 4280.121). Renamed
                section from former ``Selecting RES and EEI Grant Applications for
                Award'' and inserted text previously found in Sec. 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 (Sec.
                4280.122).
                [[Page 22306]]
                Renamed section from former ``Awarding and Administering RES and EEI
                Grants'' and inserted text previously found in Sec. 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 (Sec. 4280.123).
                Renamed section from former ``Servicing RES and EEI Grants'' and
                inserted text previously found in Sec. 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 (Sec. 4280.124). Renamed section
                from former ``Construction Planning and Performing Development '', and
                inserted text previously found in Sec. 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 (Sec.
                4280.125). Renamed section from former ``Compliance with Sec. Sec.
                4279-29 through 4279.99 of this chapter '' and inserted text previously
                found in Sec. 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 (Sec.
                4280.137). Renamed section from former ``Application and
                Documentation''. Text formerly found in Sec. 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 (Sec. 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 Sec. 4280.186.
                Clarified that the term ``council'' is to be defined as a Resource
                Conservation & Development (RC&D) council.
                 X. Project eligibility (Sec. 4280.150). Renamed section from
                former ``Reserved'' and inserted text formerly found in Sec. 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 (Sec. 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 (Sec. 4280.152). Renamed section
                from former ``Servicing Guaranteed Loans'' and inserted text formerly
                found in Sec. 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 (Sec. 4280.153).
                Renamed section from former ``Reserved'' and inserted text formerly
                found in Sec. 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 (Sec. 4280.154).
                Renamed section from former ``Reserved'' and inserted text formerly
                referenced in Sec. 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 Sec. 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 (Sec. 4280.155).
                Renamed section from former ``Reserved'' and inserted text formerly
                found in Sec. 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
                [[Page 22307]]
                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 (Sec.
                4280.156). Renamed section from former ``Reserved'' and inserted text
                formerly found in Sec. 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 (Sec. 4280.158).
                Renamed section from former ``Reserved'', inserted text formerly found
                in Sec. 4280.195, and updated references.
                 FF. Servicing EA and REDA grants (Sec. 4280.159). Renamed section
                from former ``Reserved'', inserted text formerly found in Sec.
                4280.196, and updated references.
                 GG. Reserved `` '' (Sec. 4280.165). Renamed section from former
                ``Combined Grant and Guaranteed Loan Funding Requirements''.
                 HH. OMB control Number (Sec. 4280.166). Renamed section from
                former ``Reserved'' and inserted text formerly found in Sec. 4280.200.
                 II. Former Sections (Sec. Sec. 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 (Sec. 4280.126).
                 Borrower Eligibility (Sec. 4280.127).
                 Project Eligibility (Sec. 4280.128).
                 Guaranteed Loan Funding (Sec. 4280.129).
                 Loan Processing (Sec. 4280.130).
                 Credit Quality (Sec. 4280.131).
                 Financial Statements (Sec. 4280.132).
                 Personal and Corporate Guarantees (Sec. 4280.134).
                 Scoring RES and EEI Guaranteed Loan-Only Applications (Sec.
                4280.135).
                 Evaluation of RES and EEI Guaranteed Loan Applications (Sec.
                4280.138).
                 Selecting RES and EEI Guaranteed Loan-Only Applications for Award
                (Sec. 4280.139).
                 Reserved (Sec. 4280.140).
                 Changes in Borrower (Sec. 4280.141).
                 Conditions Precedent to Issuance of Loan Note Guarantee (Sec.
                4280.142).
                 Requirements After Project Construction (Sec. 4280.143).
                 Combined Grant and Guaranteed Loan Funding Requirements. (Sec.
                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,
                [[Page 22308]]
                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: [email protected] 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.
                [[Page 22309]]
                 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,
                [email protected].
                 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
                0
                1. The authority citation for part 4280 continues to read as follows:
                 Authority: 5 U.S.C. 301; 7 U.S.C. 8107.
                0
                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
                Sec. 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.
                Sec. 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
                [[Page 22310]]
                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
                Sec. 4280.120.
                 (f) Appendix D covers contents of feasibility study.
                Sec. 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.
                [[Page 22311]]
                 (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
                [[Page 22312]]
                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
                [[Page 22313]]
                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 Sec.
                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
                [[Page 22314]]
                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).
                Sec. 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.
                Sec. 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.
                Sec. 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.
                Sec. 4280.107 [Reserved]
                Sec. 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.
                [[Page 22315]]
                 (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.
                Sec. 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.
                Sec. 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 Sec. Sec. 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
                Sec. Sec. 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 Sec.
                4280.120(b)(3), Sec. 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 Sec. 4280.117;
                 (ii) Allow the calculation of simple payback as defined in Sec.
                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
                [[Page 22316]]
                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.
                Sec. 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
                Sec. 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.
                Sec. 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
                [[Page 22317]]
                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 Sec. 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.
                Sec. 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.
                Sec. 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.
                [[Page 22318]]
                 (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 Sec. 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.
                Sec. 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 Sec. 4280.118
                unless the requirements of either Sec. 4280.119(a) or Sec.
                4280.120(a) are met. If the requirements of Sec. 4280.119(a) are met,
                the application may contain the information specified in Sec.
                4280.119(b). If the requirements of Sec. 4280.120(a) are met, the
                application may contain the information specified in Sec. 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 Sec. 4280.103;
                 (2) The Applicant is eligible according to Sec. 4280.112;
                 (3) The project is eligible according to Sec. 4280.113; and
                 (4) The proposed project has technical merit as determined under
                Sec. 4280.117.
                Sec. 4280.117 Determination of technical merit.
                 The Agency will determine the technical merit of all proposed
                projects for which complete applications are submitted under Sec. Sec.
                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
                [[Page 22319]]
                 (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.
                Sec. 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 Sec. 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 Sec.
                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 Sec. 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-
                [[Page 22320]]
                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 Sec.
                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 Sec. 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 Sec. 4280.125 for
                planning, designing, bidding, contracting, and constructing RES and EEI
                projects as applicable.
                Sec. 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 Sec. 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 Sec.
                4280.112.
                 (2) The project must be eligible in accordance with Sec. 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 Sec.
                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 Sec. 4280.121.
                 (1) Forms and certifications. The application must contain the
                items identified in Sec. 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 Sec.
                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 Sec. 4280.118(b), except that the information specified
                in Sec. 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 Sec. 4280.118(c).
                 (4) Technical report. Each application must contain a technical
                report in accordance with Sec. 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 Sec. 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
                [[Page 22321]]
                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.
                Sec. 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 Sec. Sec. 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 Sec.
                4280.112.
                 (2) The project must be eligible in accordance with Sec. 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 Sec.
                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 Sec.
                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 Sec. 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 Sec. 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 Sec. 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.
                [[Page 22322]]
                 (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 Sec.
                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 Sec.
                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 Sec. 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
                [[Page 22323]]
                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.
                Sec. 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 x 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 x 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.
                [[Page 22324]]
                 (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)) x 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 Sec. 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
                Sec. 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.
                Sec. 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
                [[Page 22325]]
                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 Sec. 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.
                Sec. 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.
                [[Page 22326]]
                 (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 6 months of obligation of funds or grant funds may be
                de-obligated by the Agency. The grantee must abide by all requirements
                contained in the Financial Assistance Agreement, this subpart, and any
                other applicable Federal statutes or regulations. Failure to follow
                these requirements might result in termination of the grant and
                adoption of other available remedies.
                 (g) Grant approval. The grantee will be sent a copy of the executed
                Form RD 1940-1 and the Financial Assistance Agreement.
                 (h) Power purchase agreement. Where applicable, the grantee shall
                provide to the Agency a copy of the executed power purchase agreement
                within 12 months from the date that the Financial Assistance Agreement
                is executed, unless otherwise approved by the Agency.
                Sec. 4280.124 Servicing RES and EEI grants.
                 The Agency will service RES and EEI grants in accordance with the
                requirements specified in Departmental Regulations; 7 CFR part 3; 7 CFR
                1951 Subparts E and O; the Financial Assistance Agreement; and
                paragraphs (a) through (k) of this section.
                 (a) Inspections. Grantees must permit periodic inspection of the
                project records and operations by a representative of the Agency.
                 (b) Programmatic changes. Grantees may make changes to an approved
                project's costs, scope, contractor, or vendor subject to the provisions
                specified in paragraphs (b)(1) through (3) of this section. If the
                changes result in lowering the project's score to below what would have
                qualified the application for award, the Agency will not approve the
                changes.
                 (1) Prior approval. The grantee must obtain prior Agency approval
                for any change to the scope, contractor, or vendor of the approved
                project. Changes in project cost will require Agency approval as
                outlined in paragraph (b)(1)(iii) of this section.
                 (i) Grantees must submit requests for programmatic changes in
                writing to the Agency for Agency approval.
                 (ii) Failure to obtain prior Agency approval of any such change
                could result in such remedies as suspension, termination, and recovery
                of grant funds.
                 (iii) Prior Agency approval is required for all increases in
                project costs. Prior Agency approval is required for a decrease in
                project cost only if the decrease would have a negative effect on the
                long-term viability of the project. A decrease in project cost that
                does not have a negative impact on long-term viability requires Agency
                review and approval prior to disbursement of funds.
                 (2) Changes in project cost or scope. If there is a significant
                change in project cost or any change in project scope, then the
                grantee's funding needs, eligibility, and scoring, as applicable, will
                be reassessed. Decreases in Agency funds will be based on revised
                project costs and other factors, including Agency regulations used at
                the time of grant approval.
                 (3) Change of contractor or vendor. When seeking a change, the
                grantee must submit to the Agency a written request for approval. The
                proposed contractor or vendor must have qualifications and experience
                acceptable to the Agency. The written request must contain sufficient
                information, which may include a revised technical report as required
                under Sec. 4280.118(e), 4280.119(b)(4), 4280.120(b)(3), or
                4280.120(b)(4), as applicable, to demonstrate to the Agency's
                satisfaction that such change maintains project integrity. If the
                Agency determines that project integrity continues to be demonstrated,
                the grantee may make the change. If the Agency determines that project
                integrity is no longer demonstrated, the change will not be approved
                and the grantee has the following options: Continue with the original
                contractor or vendor; find another contractor or vendor that has
                qualifications and experience acceptable to the Agency to complete the
                project; or terminate the grant by providing a written request to the
                Agency. No additional funding will be available from the Agency if
                costs for the project have increased. The Agency decision will be
                provided in writing.
                 (c) Transfer of ownership. After the Financial Assistance Agreement
                for the project has been executed, the grantee may request, in writing,
                a transfer of the Financial Assistance Agreement to another entity.
                Subject to Agency approval provided in writing, the Financial
                Assistance Agreement may be transferred to another entity provided:
                 (1) The entity is determined by the Agency to be an eligible entity
                under this subpart; and
                 (2) The type of RES or EEI technology and the scope of the project
                for which the Agency funds will be used remain unchanged.
                 (d) Disposition of acquired property. Grantees must abide by the
                disposition requirements outlined in Departmental Regulations.
                 (e) Financial management system and records. The grantee must
                provide for financial management systems and maintain records as
                specified in paragraphs (f)(1) and (2) of this section.
                 (1) Financial management system. The grantee will provide for a
                financial system that will include:
                 (i) Accurate, current, and complete disclosure of the financial
                results of each grant;
                 (ii) Records that identify adequately the source and application of
                funds for grant-supporting activities, together with documentation to
                support the records. Those records must contain information pertaining
                to grant awards and authorizations, obligations, unobligated balances,
                assets, liabilities, outlays, and income; and
                 (iii) Effective control over and accountability for all funds. The
                grantee must adequately safeguard all such assets and must ensure that
                funds are used solely for authorized purposes.
                 (2) Records. The grantee will retain financial records, supporting
                documents, statistical records, and all other records pertinent to the
                grant for a period of at least 3 years after completion of grant
                activities except that the records must be retained beyond the 3-year
                period if audit findings have not been resolved or if directed by the
                United States. The Agency and the Comptroller General of the United
                States, or any of their duly authorized representatives, must have
                access to any books, documents, papers, and records of the grantee that
                are pertinent to the specific grant for the purpose of making audit,
                examination, excerpts, and transcripts.
                 (f) Audit requirements. If applicable, grantees must provide an
                annual audit in accordance with 7 CFR part 3052. The Agency may
                exercise its right to do a program audit after the end of the project
                to ensure that all funding supported eligible project costs.
                 (g) Grant disbursement. As applicable, grantees must disburse grant
                funds as scheduled in accordance with the appropriate construction and
                inspection requirements in Sec. Sec. 4280.119, 4280.120 or 4280.125 as
                applicable. Unless required by third parties providing cost sharing
                payments to be provided on a pro-rata basis with other funds, grant
                funds will be disbursed after all other funds have been expended.
                 (1) Unless authorized by the Agency to do so, grantees may submit
                requests for reimbursement no more frequently than monthly. Ordinarily,
                payment will
                [[Page 22327]]
                be made within 30 days after receipt of a proper request for
                reimbursement.
                 (2) Grantees must not request reimbursement for the Federal share
                of amounts withheld from contractors to ensure satisfactory completion
                of work until after it makes those payments.
                 (3) Payments will be made by electronic funds transfer.
                 (4) Grantees must use SF-271, ``Outlay Report and Request for
                Reimbursement for Construction Programs,'' or other format prescribed
                by the Agency to request grant reimbursements. Fund requests must at a
                minimum include documentation of costs and evidence of payment(s),
                including payment date(s). Failure to provide sufficient documentation
                of costs and evidence of payment, including payment date, may result in
                denied reimbursement.
                 (5) For a grant awarded to a project with total project costs of
                $200,000 and greater, grant funds will be disbursed in full after the
                project is completed, is operational, and has met or exceeded the
                steady state operating level as set out in the grant award
                requirements. Grant funds may also be disbursed through 90 percent of
                grant disbursement. The final 10 percent of grant funds will be held by
                the Agency until construction of the project is completed, the project
                is operational, and the project has met or exceeded the steady state
                operating level as set out in the grant award requirements. In
                addition, the Agency reserves the right to request additional
                information or testing if upon a final site visit or review of
                documentation, the 30-day steady state operating level is not found
                acceptable to the Agency.
                 (h) Monitoring of project. Grantees are responsible for ensuring
                that all activities are performed within the approved scope of work and
                that funds are only used for approved purposes.
                 (1) Grantees shall constantly monitor performance to ensure that:
                 (i) Time schedules are being met;
                 (ii) Projected work is being accomplished by projected time
                periods;
                 (iii) Financial resources are being appropriately expended by
                contractors (if applicable); and
                 (iv) Any other performance objectives identified in the scope of
                work are being achieved.
                 (2) To the extent that resources are available, the Agency will
                monitor grantees to ensure that activities are performed in accordance
                with the Agency-approved scope of work and to ensure that funds are
                expended for approved purposes. The Agency's monitoring of grantees
                neither:
                 (i) Relieves the grantee of its responsibilities to ensure that
                activities are performed within the scope of work approved by the
                Agency and that funds are expended for approved purposes only; nor
                 (ii) Provides recourse or a defense to the grantee should the
                grantee conduct unapproved activities, engage in unethical conduct,
                engage in activities that are or that give the appearance of a conflict
                of interest, or expend funds for unapproved purposes.
                 (i) Reporting requirements. Financial and project performance
                reports must be provided by grantees and contain the information
                specified in paragraphs (i)(1) through (3) of this section.
                 (1) Federal financial reports. Between grant approval and
                completion of project (i.e., construction), SF-425, ``Federal Financial
                Report'' will be required of all grantees as applicable on a semiannual
                basis. The grantee will complete the project within the total sums
                available to it, including the grant, in accordance with the scope of
                work and any necessary modifications thereof prepared by grantee and
                approved by the Agency.
                 (2) Project performance reports. Between grant approval and
                completion of project (i.e., construction), grantees must provide
                semiannual project performance reports and a final project development
                report containing the information specified in paragraphs (i)(2)(i) and
                (ii) of this section. These reports are due 30 working days after June
                30 and December 31 of each year.
                 (i) Semiannual project performance reports. Each semiannual project
                performance report must include the following:
                 (A) A comparison of actual accomplishments to the objectives for
                that period;
                 (B) Reasons why established objectives were not met, if applicable;
                 (C) Reasons for any problems, delays, or adverse conditions which
                will affect attainment of overall program objectives, prevent meeting
                time schedules or objectives, or preclude the attainment of particular
                objectives during established time periods. This disclosure must be
                accompanied by a statement of the action taken or planned to resolve
                the situation; and
                 (D) Objectives and timetables established for the next reporting
                period.
                 (ii) Final project development report. The final project
                development report must be submitted 90 days after project completion
                and include:
                 (A) A detailed project funding and expense summary; and
                 (B) A summary of the project's installation/construction process,
                including recommendations for development of similar projects by future
                Applicants to the program.
                 (3) Project completion requirements. Once the project has been
                constructed, the grantee must provide the Agency as applicable via form
                RD 4280-3D ``Annual Outcome Project Performance Certification'', a
                certification that their system has for the past year performed at the
                steady operating level as described in the technical report of their
                application, and whether projected jobs created or saved have occurred,
                or certify that it has not performed as described. If it has not
                performed, a description of the circumstances which have occurred and
                affected system performance must be reported, along with the actual
                performance of the subject REAP project, and the actual number of jobs
                created or saved as a direct result of the REAP project.
                 (i) RES. Three total annual outcome project performance
                certifications or reports are required for RES projects. The first is
                due at the completion of the first full calendar year following the
                year in which the project was completed. The remaining are required for
                subsequent calendar years.
                 (ii) EEI. Two total annual outcome performance certifications or
                reports are required for EEI projects. The first is due at completion
                of the first full calendar year following the year in which the project
                was completed. The second is required for the subsequent calendar year.
                 (j) Grant close-out. Grant close-out must be performed in
                accordance with the requirements specified in 2 CFR part 200.
                Sec. 4280.125 Construction planning and performing development.
                 (a) General. The following requirements are applicable to all
                procurement methods specified in paragraph (f) of this section.
                 (1) Maximum open and free competition. All procurement
                transactions, regardless of procurement method and dollar value, must
                be conducted in a manner that provides maximum open and free
                competition. Procurement procedures must not restrict or eliminate
                competition. Competitive restriction examples include, but are not
                limited to, the following: Placing unreasonable requirements on firms
                in order for them to qualify to do business; noncompetitive practices
                between firms; organizational conflicts of interest; and unnecessary
                experience or excessive bonding requirements. In specifying
                [[Page 22328]]
                material(s), the grantee and its consultant will consider all materials
                normally suitable for the project commensurate with sound engineering
                practices and project requirements. The Agency will consider any
                recommendation made by the grantee's consultant concerning the
                technical design and choice of materials to be used for such a project.
                If the Agency determines that a design or material, other than those
                that were recommended, should be considered by including them in the
                procurement process as an acceptable design or material in the project,
                the Agency will provide such applicant or grantee with a comprehensive
                justification for such a determination. The justification will be
                documented in writing.
                 (2) Equal employment opportunity. For all construction contracts
                and grants in excess of $10,000, the contractor must comply with
                Executive Order 11246, as amended by Executive Order 11375 and
                Executive Order 13672, and as supplemented by applicable Department of
                Labor regulations (41 CFR part 60). The applicant, or the lender and
                borrower, as applicable, is responsible for ensuring that the
                contractor complies with these requirements.
                 (3) Surety. The Agency will require surety on any contract for
                procurement exceeding $100,000, except as provided for in paragraph
                (a)(3)(iv) of this section. For contracts of lesser amounts, the
                grantee may require surety.
                 (i) Surety covering both performance and payment will be required.
                The United States, acting through the Agency, will be named as co-
                obligee on all surety unless prohibited by State or Tribal law. Surety
                may be provided as specified in paragraphs (a)(3)(i)(A) or (B) of this
                section.
                 (A) Surety in the amount of 100 percent of the contract cost may be
                provided using either:
                 (1) A bank letter of credit; or
                 (2) Performance bonds and payment bonds. Companies providing
                performance bonds and payment bonds must hold a certificate of
                authority as an acceptable surety on Federal bonds as listed in
                Treasury Circular 570 as amended and be legally doing business in the
                State where the project is located.
                 (B) Cash deposit in escrow of at least 50 percent of the contract
                amount. The cash deposit cannot be from funds awarded under this
                subpart.
                 (ii) The surety will normally be in the form of performance bonds
                and payment bonds; however, when other methods of surety are necessary,
                bid documents must contain provisions for such alternative types of
                surety. The use of surety other than performance bonds and payment
                bonds requires concurrence by the Agency after submission of a
                justification to the Agency together with the proposed form of escrow
                agreement or letter of credit.
                 (iii) When surety is not provided, contractors must furnish
                evidence of payment in full for all materials, labor, and any other
                items procured under the contract in an Agency-approved form.
                 (iv) The Agency may make exceptions to surety for any of the
                situations identified in paragraphs (a)(3)(iv)(A) through (E) of this
                section.
                 (A) Small acquisition and construction procedures as specified in
                Sec. 4280.119(c) and (d) or Sec. 4280.120(c) and (d) as applicable
                are used.
                 (B) The proposed project is for equipment purchase and installation
                only and the contract costs for the equipment purchase and installation
                are $200,000 or less.
                 (C) The proposed project is for equipment purchase and installation
                only and the contract costs for the equipment purchase and installation
                are more than $200,000 and the following requirements can be met:
                 (1) The project involves two or fewer subcontractors; and
                 (2) The equipment manufacturer or provider must act as the general
                contractor.
                 (D) Other construction projects that have only one contractor
                performing work.
                 (E) The grantee agrees to request reimbursement of grant funds only
                after the contractors have furnished evidence of payment in full and
                evidence there are no outstanding liens regarding any materials, labor,
                and any other items procured under the contract, and the systems are
                deemed operational.
                 (4) Grantees accomplishing work. In some instances, grantees may
                wish to perform a part of the work themselves. Grantees may accomplish
                construction by using their own personnel and equipment, provided the
                grantees possess the necessary skills, abilities, and resources to
                perform the work and there is not a negative impact to their business
                operation. For a grantee to provide a portion of the work, with the
                remainder to be completed by a contractor:
                 (i) A clear understanding of the division of work must be
                established and delineated in the contract;
                 (ii) Grantees are not eligible for payment for their own work as it
                is not an eligible project cost;
                 (iii) Warranty requirements applicable to the technology must cover
                the grantee's work; and
                 (iv) Inspection and acceptance of the grantee's work must be
                completed by either:
                 (A) An inspector that will:
                 (1) Inspect, as applicable, and accept construction; and
                 (2) Furnish inspection reports; or
                 (B) A licensed engineer that will:
                 (1) Prepare design drawings and specifications;
                 (2) Inspect, as applicable, and accept construction; and
                 (3) Furnish inspection reports.
                 (b) Forms used. Technical service and procurement documents must be
                approved by the Agency and may be used only if they are customarily
                used in the area and protect the interest of the applicant and the
                Government with respect to compliance with items such as the drawings,
                specifications, payments for work, inspections, completion,
                nondiscrimination in construction work and acceptance of the work. The
                Agency will not become a party to a construction contract or incur any
                liability under it. No contract will become effective until concurred
                in writing by the Agency. Such concurrence statement must be attached
                to and made a part of the contract.
                 (c) Technical services. Unless the requirements of paragraph (c)(4)
                of this section can be met, all RES and EEI projects with total project
                costs greater than $1,000,000 require:
                 (1) The design, installation monitoring, testing prior to
                commercial operation, and project completion certification be completed
                by a licensed professional engineer (PE) or team of licensed PEs.
                Licensed PEs may be ``in-house'' PEs or contracted PEs.
                 (2) Any contract for design services must be subject to Agency
                concurrence.
                 (3) Engineers must be licensed in the State where the project is to
                be constructed.
                 (4) The Agency may grant an exception to the requirements of
                paragraphs (c)(1) through (3) of this section if the following
                requirements are met:
                 (i) State or Tribal law does not require the use of a licensed PE;
                and
                 (ii) The project is not complex, as determined by the Agency, and
                can be completed to meet the requirements of this program without the
                services of a licensed PE.
                 (d) Design policies. Unless the applicant plans to request a lump
                sum reimbursement of grant funds at the end of construction and 30 days
                of successful operation, regardless of total project costs, final plans
                and specifications must be reviewed by the Agency and approved prior to
                the start of construction. Facilities funded by the
                [[Page 22329]]
                Agency must meet the following design requirements, as applicable:
                 (1) Environmental requirements. Actions taken under this subpart
                must comply with the environmental review requirements in accordance
                with 7 CFR part 1970. Project planning and design must not only be
                responsive to the grantee's needs but must consider the environmental
                consequences of the proposed project. Project design must incorporate
                and integrate, where practicable, mitigation measures that avoid or
                minimize adverse environmental impacts. Environmental reviews serve as
                a means of assessing environmental impacts of project proposals, rather
                than justifying decisions already made. Applicants may not take any
                action on a project proposal that will have an adverse environmental
                impact or limit the choice of reasonable project alternatives being
                reviewed prior to the completion of the Agency's environmental review.
                If such actions are taken, the Agency has the right to withdraw and
                discontinue processing the application.
                 (2) Architectural barriers. All facilities intended for or
                accessible to the public or in which physically handicapped persons may
                be employed must be developed in compliance with the Architectural
                Barriers Act of 1968 (42 U.S.C. 4151 et seq.) as implemented by 41 CFR
                101-196, section 504 of the Rehabilitation Act of 1973 (42 U.S.C. 1474
                et seq.) as implemented by 7 CFR parts 15 and 15b, and Titles II and
                III of the Americans with Disabilities Act of 1990 (42 U.S.C. 12101 et
                seq.).
                 (3) Energy/environment. Project design shall consider cost
                effective energy-efficient and environmentally-sound products and
                services.
                 (4) Seismic safety. All new structures, fully or partially
                enclosed, used or intended for sheltering persons or property will be
                designed with appropriate seismic safety provisions in compliance with
                the Earthquake Hazards Reduction Act of 1977 (42 U.S.C. 7701 et seq.),
                and E.O. 12699, Seismic Safety of Federal and Federally Assisted or
                Regulated New Building Construction. Designs of components essential
                for system operation and substantial rehabilitation of structures that
                are used for sheltering persons or property shall incorporate seismic
                safety provisions to the extent practicable as specified in 7 CFR part
                1792, subpart C.
                 (e) Contract methods. This paragraph identifies the three types of
                contract methods that can be used for projects funded under this
                subpart. The procurement methods, which are applicable to each of these
                contract methods, are specified in paragraph (f) of this section.
                 (1) Traditional method or design-bid-build. The services of the
                consulting engineer or architect and the general construction
                contractor must be procured in accordance with the following
                paragraphs.
                 (i) Solicitation of offers. Solicitation of offers must:
                 (A) Incorporate a clear and accurate description of the technical
                requirements for the material, product, or service to be procured. The
                description must not, in competitive procurements, contain features
                that unduly restrict competition. The description may include a
                statement of the qualitative nature of the material, product or service
                to be procured, and when necessary will set forth those minimum
                essential characteristics and standards to which it must conform if it
                is to satisfy its intended use. When it is impractical or uneconomical
                to make a clear and accurate description of the technical requirements,
                a ``brand name or equal'' description may be used to define the
                performance or other salient requirements of a procurement. The
                specific features of the named brands which must be met by offerors
                must be clearly stated.
                 (B) Clearly specify all requirements which offerors must fulfill
                and all other factors to be used in evaluating bids or proposals.
                 (ii) Contract pricing. Cost plus a percentage of cost method of
                contracting must not be used.
                 (iii) Unacceptable bidders. The following will not be allowed to
                bid on, or negotiate for, a contract or subcontract related to the
                construction of the project:
                 (A) An engineer or architect as a person who has prepared plans and
                specifications or who will be responsible for monitoring the
                construction;
                 (B) Any entity in which the grantee's architect or engineer is an
                officer, employee, or holds or controls a substantial interest in the
                grantee;
                 (C) The grantee's governing body officers, employees, or agents;
                 (D) Any member of the grantee's immediate family or partners in
                paragraphs (e)(1)(iii)(A), (B), or (C) of this section; or
                 (E) An entity which employs, or is about to employ, any person in
                paragraph (e)(1)(iii)(A), (B), (C), or (D) of this section.
                 (iv) Contract award. Contracts must be made only with responsible
                parties possessing the potential ability to perform successfully under
                the terms and conditions of a proposed procurement. Consideration must
                include, but not be limited to, matters such as integrity, record of
                past performance, financial and technical resources, and accessibility
                to other necessary resources. Contracts must not be made with parties
                who are suspended or debarred.
                 (2) Design/build method. The design/build method, where the same
                person or entity provides design and engineering work, as well as
                construction or installation, may be used with Agency written approval.
                 (i) Concurrence information. The applicant will request Agency
                concurrence by providing the Agency at least the information specified
                in paragraphs (e)(2)(i)(A) through (H) of this section.
                 (A) The grantee's written request to use the design/build method
                with a description of the proposed method.
                 (B) A proposed scope of work describing in clear, concise terms the
                technical requirements for the contract. It shall include a
                nontechnical statement summarizing the work to be performed by the
                contractor, the results expected, and a proposed construction schedule
                showing the sequence in which the work is to be performed.
                 (C) A proposed firm-fixed-price contract for the entire project
                which provides that the contractor will be responsible for any extra
                cost which result from errors or omissions in the services provided
                under the contract, as well as compliance with all Federal, State,
                local, and Tribal requirements effective on the contract execution
                date.
                 (D) Where noncompetitive negotiation is proposed and found, by the
                Agency, to be an acceptable procurement method, then the Agency will
                evaluate documents indicating the contractor's performance on previous
                similar projects in which the contractor acted in a similar capacity.
                 (E) A detailed listing and cost estimate of equipment and supplies
                not included in the construction contract but which are necessary to
                properly operate the project.
                 (F) Evidence that a qualified construction inspector who is
                independent of the contractor has or will be hired.
                 (G) Preliminary plans and outline specifications. However, final
                plans and specifications must be completed and reviewed by the Agency
                prior to the start of construction.
                 (H) The grantee's attorney's opinion and comments regarding the
                legal adequacy of the proposed contract documents and evidence that the
                grantee has the legal authority to enter into and fulfill the contract.
                [[Page 22330]]
                 (ii) Agency concurrence of design/build method. The Agency will
                review the material submitted by the applicant. When all items are
                acceptable, the Agency approval official will concur in the use of the
                design/build method for the proposal.
                 (iii) Forms used. Agency approved contract documents must be used
                provided they are customarily used in the area and protect the interest
                of the applicant and the Agency with respect to compliance with items
                such as the drawings, specifications, payments for work, inspections,
                completion, nondiscrimination in construction work, and acceptance of
                the work. The Agency will not become a party to a construction contract
                or incur any liability under it. No contract shall become effective
                until concurred, in writing, by the Agency. Such concurrence statement
                must be attached to and made a part of the contract.
                 (iv) Contract provisions. Contracts will have a listing of
                attachments and must contain the following:
                 (A) The contract sum;
                 (B) The dates for starting and completing the work;
                 (C) The amount of liquidated damages, if any, to be charged;
                 (D) The amount, method, and frequency of payment;
                 (E) Surety provisions that meet the requirements of paragraph
                (a)(3) of this section;
                 (F) The requirement that changes or additions must have prior
                written approval of the Agency as identified in the letter of
                conditions;
                 (G) Contract review and concurrence. The grantee's attorney will
                review the executed contract documents, including performance and
                payment bonds, and will certify that they are in compliance with
                Federal, State, or Tribal law, and that the persons executing these
                documents have been properly authorized to do so. The contract
                documents, engineer's recommendation for award, and bid tabulation
                sheets will be forwarded to the Agency for concurrence prior to
                awarding the contract. All contracts will contain a provision that they
                are not effective until they have been concurred, in writing, by the
                Agency;
                 (H) This part does not relieve the grantee of any responsibilities
                under its contract. The grantee is responsible for the settlement of
                all contractual and administrative issues arising out of procurement
                entered into in support of Agency funding. These include, but are not
                limited to, source evaluation, protests, disputes, and claims. Matters
                concerning violation of laws are to be referred to the applicable
                local, State, Tribal, or Federal authority; and
                 (3) Construction management. Construction managers as a constructor
                (CMc) acts in the capacity of a general contractor and is financially
                and professionally responsible for the construction. This type of
                construction management is also referred to as construction manager
                ``At Risk.'' The construction contract is between the grantee and the
                CMc. The CMc in turn subcontracts for some or all of the work. The CMc
                will need to carry the Agency required 100 percent surety and
                insurance, as required under paragraph (a)(3) of this section. Projects
                using construction management must follow the requirements of (e)(2)(i)
                through (iv) of this section.
                 (f) Procurement methods. Procurement must be made by one of the
                following methods: Competitive sealed bids (formal advertising);
                competitive negotiation; or noncompetitive negotiation. Competitive
                sealed bids (formal advertising) are the preferred procurement method
                for construction contracts.
                 (1) Competitive sealed bids. In competitive sealed bids (formal
                advertising), sealed bids are publicly solicited and a firm-fixed-price
                contract (lump sum or unit price) is awarded to the responsible bidder
                whose bid, conforming with all the material terms and conditions of the
                invitation for bids, is lowest, price and other factors considered.
                When using this method, the following will apply:
                 (i) At a sufficient time prior to the date set for opening of bids,
                bids must be solicited from an adequate number of qualified sources. In
                addition, the invitation must be publicly advertised.
                 (ii) The invitation for bids, including specifications and
                pertinent attachments, must clearly define the items or services needed
                in order for the bidders to properly respond to the invitation under
                paragraph (f)(1) of this section.
                 (iii) All bids must be opened publicly at the time and place stated
                in the invitation for bids.
                 (iv) A firm-fixed-price contract award must be made by written
                notice to that responsible bidder whose bid, conforming to the
                invitation for bids, is lowest. When specified in the bidding
                documents, factors such as discounts and transportation costs will be
                considered in determining which bid is lowest.
                 (v) The applicant, with the concurrence of the Agency, will
                consider the amount of the bids or proposals, and all conditions listed
                in the invitation. On the basis of these considerations, the applicant
                will select and notify the lowest responsible bidder. The contract will
                be awarded using an Agency-approved form.
                 (vi) Any or all bids may be rejected by the grantee when it is in
                their best interest.
                 (2) Competitive negotiation. In competitive negotiations, proposals
                are requested from a number of sources. Negotiations are normally
                conducted with more than one of the sources submitting offers
                (offerors). Competitive negotiation may be used if conditions are not
                appropriate for the use of formal advertising and where discussions and
                bargaining with a view to reaching agreement on the technical quality,
                price, other terms of the proposed contract and specifications are
                necessary. If competitive negotiation is used for procurement, the
                following requirements will apply:
                 (i) Proposals must be solicited from two qualified sources, unless
                otherwise approved by the Agency, to permit reasonable competition
                consistent with the nature and requirements of the procurement.
                 (ii) The request for proposal must identify all significant
                evaluation factors, including price or cost where required, and their
                relative importance.
                 (iii) The grantee must provide mechanisms for technical evaluation
                of the proposals received, determination of responsible offerors for
                the purpose of written or oral discussions, and selection for contract
                award.
                 (iv) Award may be made to the responsible offeror whose proposal
                will be most advantageous to the grantee, price and other factors
                considered. Unsuccessful offerors must be promptly notified.
                 (v) Owners may utilize competitive negotiation procedures for
                procurement of architectural/engineering and other professional
                services, whereby the offerors' qualifications are evaluated, and the
                most qualified offeror is selected, subject to negotiations of fair and
                reasonable compensation.
                 (3) Noncompetitive negotiation. Noncompetitive negotiation is
                procurement through solicitation of a proposal from only one source.
                Noncompetitive negotiation may be used when the award of a contract is
                not feasible under small acquisition and construction procedures,
                competitive sealed bids (formal advertising) or competitive negotiation
                procedures. Circumstances under which a contract may be awarded by
                noncompetitive negotiations are limited to the following:
                [[Page 22331]]
                 (i) After solicitation of a number of sources, competition is
                determined inadequate; or
                 (ii) No acceptable bids have been received after formal
                advertising.
                 (4) Additional procurement methods. The grantee may use additional
                innovative procurement methods provided the grantee receives prior
                written approval from the Agency. Contracts will have a listing of
                attachments and the minimum provisions of the contract will include:
                 (i) The contract sum;
                 (ii) The dates for starting and completing the work;
                 (iii) The amount of liquidated damages to be charged;
                 (iv) The amount, method, and frequency of payment;
                 (v) Whether or not surety bonds will be provided; and
                 (vi) The requirement that changes or additions must have prior
                written approval of the Agency.
                 (g) Contracts awarded prior to applications. Owners awarding
                construction or other procurement contracts prior to filing an
                application, must provide evidence that is satisfactory to the Agency
                that the contract was entered into without intent to circumvent the
                requirements of Agency regulations.
                 (1) Modifications. The contract shall be modified to conform to the
                provisions of this subpart. Where this is not possible, modifications
                will be made to the extent practicable and, as a minimum, the contract
                must comply with all State and local laws and regulations as well as
                statutory requirements and executive orders related to the Agency
                financing.
                 (2) Consultant's certification. Provide a certification by an
                engineer, licensed in the State where the facility is constructed, that
                any construction performed complies fully with the plans and
                specifications.
                 (3) Owner's certification. Provide a certification by the owner
                that the contractor has complied with applicable statutory and
                executive requirements related to Agency financing.
                 (h) Contract administration. Contract administration must comply
                with 7 CFR 1780.76. If another authority, such as a Federal, State, or
                Tribal agency, is providing funding and requires oversight of
                inspections, change orders, and pay requests, the Agency will accept
                copies of their reports or forms as meeting oversight requirements of
                the Agency.
                Sec. Sec. 4280.126-4280.136 [Reserved]
                Combined Funding for Renewable Energy Systems and Energy Efficiency
                Improvements
                Sec. 4280.137 Combined grant and guaranteed loan funding
                requirements.
                 The requirements for a RES or EEI project for which an applicant is
                seeking a combined grant and guaranteed loan are specified in this
                section.
                 (a) Eligibility. All applicants must be eligible under the
                requirements specified in Sec. 4280.112. If the applicant is seeking a
                loan, the applicant must also meet the borrower eligibility
                requirements specified in 7 CFR 5001.126. Lenders must meet eligibility
                requirements specified in 7 CFR 5001.130-132. Projects must meet the
                project eligibility requirements specified in Sec. Sec. 4280.113, 7
                CFR parts 5001.102 (b) and (c) and 5001.106-107, as applicable. For
                projects that include New Markets Tax Credits, the guaranteed loan
                portion of the combined funding request must meet provisions found in
                5001.141.
                 (b) Funding. Funding provided under this section is subject to the
                limits described in paragraphs (b)(1) through (2) of this section.
                 (1) The amount of any combined grant and guaranteed loan shall not
                exceed 75 percent of eligible project costs and the grant portion shall
                not exceed 25 percent of eligible project costs. Loan amount provisions
                of 7 CFR part 5001.406(d) apply, except for (d)(2). For purposes of
                combined funding requests, eligible project costs are based on the
                total costs associated with those items specified in Sec. 4280.115(c)
                and 7 CFR part 5001.121(d), except for (d)(2). The applicant must
                provide the remaining total funds needed to complete the project.
                 (2) The minimum guaranteed loan request allowed is $5,000, with the
                grant portion of the funding request being at least $1,500 for EEI
                projects and at least $2,500 for RES projects.
                 (c) Loan origination provisions. Provisions found in 7 CFR parts
                5001.201 through 5001.208 apply to the guaranteed loan portion of a
                combined grant and guaranteed loan funding request.
                 (d) Application provisions and documentation. When applying for
                combined funding, the applicant/borrower must provide all documentation
                outlined in this section and the lender must submit grant and
                guaranteed loan application information simultaneously.
                 (1) Applications must include the following documentation,
                including the requisite forms and certifications, specified in
                Sec. Sec. 4280.118, 4280.119, or 4280.120 as applicable, for the grant
                request, except that applicants submitting a properly completed 5001-1
                form only need to submit the applicable RD 4280-3 form containing the
                applicant's CAGE code and properly signed certifications. The
                guaranteed loan applications are filed in accordance with 7 CFR part
                5001.301 where they will be processed in accordance with 7 CFR parts
                5001.303 and 5001.307, and as follows:
                 (2) Where both the grant application and the guaranteed loan
                application provisions request the same documentation, form, or
                certification, such documentation, form, or certification may be
                submitted once; the combined application does not need to contain
                duplicate documentation, forms, and certifications.
                 (e) Loan provisions. Provisions found in 7 CFR parts 5001.401
                through 5001.408 apply to the guaranteed loan portion of a combined
                funding request.
                 (f) Guarantee provisions. Provisions found in 7 CFR parts 5001.450
                through 5001.459 apply to the guarantee on the guaranteed loan portion
                of a combined funding request.
                 (g) Servicing provisions. Provisions found in 7 CFR parts 5001.501
                through 5001.524 apply to the guaranteed loan portion of a combined
                funding request.
                 (h) Evaluation, scoring, and award. The Agency will evaluate each
                combined application according to Sec. 4280.116(c) and 7 CFR part
                5001.315 (a) and (b). The Agency will select applications according to
                applicable procedures specified in Sec. 4280.122(a) and (b) unless
                modified by this section. A combination loan and grant request will be
                selected based upon the grant score of the project. The Agency will
                score combined funding applications based upon the grant score as noted
                in Sec. 4280.121. Projects will be ranked and selected for award
                according to applicable competition procedures specified in Sec.
                4280.122 (c), unless modified by this section or via a Federal Register
                notification.
                 (i) Interest rate and terms of loan. The interest rate and terms of
                the guaranteed loan for the loan portion of the combined funding
                request will be determined based on the procedures specified in 7 CFR
                parts 5001.401 and 5001.402.
                 (j) Other provisions. In addition to the requirements specified in
                paragraphs (a) through (i) of this section, the combined funding
                request is subject to the other requirements specified in this subpart,
                including, but not limited to, processing and servicing requirements,
                as applicable, as described in paragraphs (j)(1) through (4) of this
                section.
                [[Page 22332]]
                 (1) All other provisions of Sec. Sec. 4280.101 through 4280.111
                apply to the grant portion of the combined funding request and all
                other provisions as applicable of 7 CFR parts 5001.1 through 5001.10
                apply to the guaranteed loan portion of the combined funding request.
                 (2) All other provisions of Sec. Sec. 4280.112 through 4280.124
                apply to the grant portion of the combined funding request and Sec.
                4280.125 applies if the project for which the grant is sought has a
                total project cost of $200,000 and greater.
                 (3) All guarantee loan and grant combination applications that are
                ranked, but not funded, will be processed in accordance with provisions
                found in Sec. 4280.122(d), (e), and (f).
                 (4) Applicants whose combination applications are approved for
                funding must utilize both the loan and the grant. The guaranteed loan
                will be closed prior to grant funds being disbursed. The Agency
                reserves the right to reduce the total loan guarantee and grant award,
                as appropriate, if construction costs are less than projected or if
                funding sources differ from those provided in the application.
                 (5) Ineligible project provisions of Sec. Sec. 5001.115 and
                5001.119, and ineligible use of funds provision of Sec. 5001.122 apply
                to the guaranteed loan portion of the combined funding request.
                Borrower ineligibility provisions of Sec. 5001.127 are also
                applicable.
                Sec. Sec. 4280.138-4280.148 [Reserved]
                Energy Audit and Renewable Energy Development Assistance Grants
                Sec. 4280.149 Applicant eligibility.
                 To be eligible for an EA grant or a REDA grant under this subpart,
                the applicant must meet each of the criteria, as applicable, specified
                in paragraphs (a) through (d) of this section. The Agency will
                determine an applicant's eligibility.
                 (a) The applicant must be one of the following:
                 (1) A unit of State, Tribal, or local government;
                 (2) A land-grant college or university, or other institution of
                higher education;
                 (3) A rural electric cooperative;
                 (4) A public power entity;
                 (5) An instrumentality of a State, Tribal, or local government; or
                 (6) A council, as defined under the Resource Conservation and
                Development Program, at 16 U.S. C. 3451.
                 (b) The applicant must have sufficient capacity to perform the EA
                or REDA activities proposed in the application to ensure success. The
                Agency will make this assessment based on the information provided in
                the application.
                 (c) The applicant must have the legal authority necessary to apply
                for and carry out the purpose of the grant.
                 (d) 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 until final fund disbursement has been made.
                 (3) Provide its UEI number in each application it submits to the
                Agency. Generally, the UEI number is included on SF-424.
                Sec. 4280.150 Project eligibility.
                 To be eligible for an EA or a REDA grant, the grant funds for a
                project must be used by the grantee to assist agricultural producers or
                rural small businesses in one of the purposes specified in paragraphs
                (a) and (b) of this section, and must also comply with paragraphs (c)
                through (f) of this section.
                 (a) Conducting and promoting energy audits as defined in 4280.103.
                 (b) Conducting and promoting REDA by providing to agricultural
                producers and rural small businesses recommendations and information on
                how to improve the energy efficiency of the operations and to use
                renewable energy technologies and resources in their operations.
                 (c) EA and REDA can be provided only to a project located in a
                rural area unless the grantee of such project is an agricultural
                producer. If the project is owned by an agricultural producer, the
                project for which such services are being provided may be located in
                either a rural or non-rural area and the EA or REDA can only be for an
                EEI or RES on components that support the production, processing,
                vertical integration, or marketing of agricultural products. If the
                agricultural producer's operation is in a non-rural area, then the
                Energy Audit or REDA 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.
                 (d) The EA or REDA must be provided to a recipient in a State.
                 (e) The applicant must have a place of business in a State.
                 (f) 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.
                Sec. 4280.151 Ineligible projects.
                 Ineligible projects for EA and REDA grants include, but are not
                limited to:
                 (a) Research related projects.
                 (b) Feasibility studies of any nature.
                 (c) Projects where funding is not targeted directly to assisting
                agricultural producers or rural small businesses.
                 (d) Projects to develop computer software or programs.
                 (e) Projects where 50 percent or more of the costs are in-eligible
                or where project costs as defined in the application do not meet the
                definition of providing energy audits or renewable energy development
                assistance.
                 (f) Projects which propose to provide energy audits or renewable
                energy development assistant for residential purposes.
                Sec. 4280.152 Grant funding for Energy Audit and Renewable Energy
                Development Assistance.
                 (a) Maximum grant amount. The maximum aggregate amount of EA and
                REDA grants awarded to any one recipient under this subpart cannot
                exceed $100,000 in a Federal fiscal year. Grant funds awarded for EA
                and REDA projects may be used only to pay eligible project costs, as
                described in paragraph (b) of this section. Ineligible project costs
                are listed in paragraph (c) of this section. Provisions for EA
                applications are listed in paragraph (d)of this section.
                 (b) Eligible project costs. Eligible project costs for EA and REDA
                are those costs incurred after the date a complete application has been
                received by the Agency and that are directly related to conducting and
                promoting EA and REDA, which include but are not limited to:
                 (1) Salaries;
                 (2) Travel expenses;
                 (3) Office supplies (e.g., paper, pens, file folders); and
                 (4) Expenses charged as a direct cost or as an indirect cost of up
                to a maximum of 5 percent for administering the grant.
                 (c) Ineligible project costs. Ineligible project costs for EA and
                REDA grants include, but are not limited to:
                 (1) Payment for any construction-related activities;
                 (2) Purchase or lease of equipment;
                 (3) Payment of any judgment or debt owed to the United States;
                 (4) Any goods or services provided by a person or entity who has a
                conflict of interest as provided in Sec. 4280.106;
                [[Page 22333]]
                 (5) Any costs of preparing the application package for funding
                under this subpart; and
                 (6) Funding of political or lobbying activities.
                 (7) Funding to train individuals to become qualified to perform EA
                or REDA assistance.
                 (8) Payment or waiver of student tuition.
                 (d) EA. A grantee that conducts energy audits must require that, as
                a condition of providing the EA assistance, the agricultural producer
                or rural small business pay at least 25 percent of the cost of the
                energy audit. Further, the amount paid by the agricultural producer or
                rural small business will be retained by the grantee as a contribution
                towards the cost of the energy audit and considered program income. The
                grantee may use the program income to further the objectives of their
                project or EA services offered during the grant period in accordance
                with Departmental Regulations. The 25% to be paid by an agricultural
                producer or rural small business does not count towards the commitment
                of funds scoring criteria noted in 4280.155(f).
                Sec. 4280.153 EA and REDA grant applications--content.
                 (a) Unless otherwise specified in a Federal Register notice,
                applicants may only submit one EA grant application and one REDA grant
                application each Federal fiscal year. No combination (EA and REDA)
                applications will be accepted.
                 (b) Applicants must submit complete applications consisting of the
                elements specified in paragraphs (b)(1) through (7) of this section,
                except that paragraph (b)(3), is optional. Applications will be
                evaluated based only on information submitted by the applicant in the
                application.
                 (1) Form SF-424.
                 (2) Form SF-424A, ``Budget Information--Non Construction
                Programs.''
                 (3) Identify the ethnicity, race, and gender of the applicant. This
                information is optional and is not required for a complete application.
                 (4) 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 where the applicant has a place of business.
                 (5) 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.
                 (6) A proposed scope of work to include the following items:
                 (i) A brief summary including a project title describing the
                proposed project;
                 (ii) Goals of the proposed project;
                 (iii) Geographic scope or service area of the proposed project and
                the method and rationale used to select the service area;
                 (iv) Identification of the specific needs for the service area and
                the target audience to be served. The number of agricultural producers
                and/or rural small businesses to be served must be identified including
                name and contact information, if available, as well as the method and
                rationale used to select the agricultural producers and/or rural small
                businesses;
                 (v) Timeline describing the proposed tasks to be accomplished and
                the schedule for implementation of each task. Include whether
                organizational staff, consultants, or contractors will be used to
                perform each task. If a project is located in multiple States,
                resources must be sufficient to complete all projects;
                 (vi) Marketing strategies to include a discussion on how the
                applicant will be marketing and providing outreach activities to the
                proposed service area ensuring that agricultural producers and/or rural
                small businesses are served;
                 (vii) Applicant's experience as follows:
                 (A) If applying for a REDA grant, the applicant's experience in
                completing similar REDA activities, such as renewable energy site
                assessments and renewable energy technical assistance provided directly
                to agricultural producers and rural small businesses, including the
                number of similar projects the applicant has performed and the number
                of years the applicant has been performing a similar service.
                 (B) If applying for an EA grant, the number of energy audits the
                applicant has completed and the number of years the applicant has been
                performing those services;
                 (C) For all applicants, the amount of experience in administering
                EA, REDA, or similar activities as applicable to the purpose of the
                proposed project. Provide discussion if the applicant has any existing
                programs that can demonstrate the achievement of energy savings or
                energy generation with the agricultural producers and/or rural small
                businesses the applicant has served. If the applicant has received one
                or more awards within the last 5 years in recognition of its renewable
                energy, energy savings, or energy-based technical assistance, please
                describe the achievement;
                 (viii) Itemized budget; and
                 (ix) Identify the amount of matching funds and other funds and the
                source(s) the applicant is proposing to use for the project. Provide
                written commitments for matching funds and other funds at the time 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 to the
                project, 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 being provided and any
                applicable rates and terms.
                Sec. 4280.154 Evaluation of EA and REDA grant applications.
                 The Agency will evaluate EA and REDA grant applications, based only
                upon information submitted in the application, to determine if:
                 (a) The application is complete, as defined in Sec. 4280.103 and
                as per Sec. 4280.153;
                 (b) The applicant is eligible according to Sec. 4280.149;
                 (c) The project is eligible according to Sec. 4280.150 and
                4280.151, including 50% or more of proposed project costs are eligible;
                and
                 (d) Grant funding provisions according to Sec. 4280.152 are met.
                Sec. 4280.155 Scoring EA and REDA grant applications.
                 The Agency will score each EA and REDA application using the
                criteria specified in paragraphs (a) through (f) of this section, with
                a maximum score of 100 points possible. Unless otherwise altered via a
                Federal Register notification, the project must score a minimum of 40
                points to be eligible to compete for funding.
                 (a) Geographic scope of project in relation to identified need. A
                maximum of 20 points can be awarded.
                 (1) If the applicant's proposed or existing service area is state-
                wide or includes all or parts of multiple states, and the scope of work
                has identified needs throughout that service area, 20 points will be
                awarded.
                 (2) If the applicant's proposed or existing service area consists
                of multiple counties in a single state and the scope of work has
                identified needs throughout that service area, 15 points will be
                awarded.
                 (3) If the applicant's service area consists of a single county or
                municipality and the scope of work has
                [[Page 22334]]
                identified needs throughout that service area, 10 points will be
                awarded.
                 (b) Number of agricultural producers/rural small businesses to be
                served. A maximum of 20 points will be awarded for this criterion based
                on the proposed number of ultimate recipients to be assisted and if the
                applicant has provided the names and contact information for the
                ultimate recipients to be assisted.
                 (1) If the applicant plans to provide EA or REDA to:
                 (i) Up to 10 ultimate recipients, 2 points will be awarded.
                 (ii) Between 11 and up to and including 25 ultimate recipients, 5
                points will be awarded.
                 (iii) More than 25 ultimate recipients, 10 points will be awarded.
                 (2) If the applicant provides a list with at least 50 percent of
                the total number of proposed ultimate recipients ready to be assisted,
                including their name and contact information, an additional 10 points
                may be awarded.
                 (c) Marketing and outreach plan. A maximum of 5 points will be
                awarded for this criterion. If the scope of work included in the
                application provides a satisfactory discussion of each of the following
                criteria, one point for each can be awarded.
                 (1) The goals of the project;
                 (2) Identified need;
                 (3) Targeted ultimate recipients;
                 (4) Timeline and action plan; and
                 (5) Marketing and outreach strategies and supporting data for
                strategies.
                 (d) Applicant's organizational experience in completing the EA or
                REDA proposed activity. A maximum of 25 points will be awarded for this
                criterion based on the experience of the organization in providing EA
                or REDA as applicable to the purpose of the proposed project. The
                organization must have been in business and provided services for the
                number of years as identified in the paragraphs below. Experience of
                contractors proposed in the application to perform the services may be
                applied to this scoring criteria as long as the experience relates to
                the same type of activity, e.g., energy audit experience for an EA
                application.
                 (1) More than 10 years of experience, 25 points will be awarded.
                 (2) At least 5 years and up to and including 10 years of
                experience, 20 points will be awarded.
                 (3) At least 2 years and up to and including 5 years of experience,
                10 points will be awarded.
                 (4) Less than 2 years of experience, no points will be awarded.
                 (e) Potential of project to produce energy savings or generation
                and its attending environmental benefits. A maximum of 10 points will
                be awarded for this criterion under both paragraphs (e)(1) and (2) of
                this section
                 (1) If the applicant (does not include entities the applicant will
                contract with) has an existing program that can demonstrate the
                achievement of energy savings or energy generation with the
                agricultural producers and/or rural small businesses it has served, 5
                points will be awarded.
                 (2) If the applicant (does not include entities the applicant will
                contract with) provides evidence that it has received one or more
                awards (e.g., recognition, not funding awards) within the last 5 years
                in recognition of its renewable energy, energy savings, or energy-based
                technical assistance, up to a maximum of 5 points will be awarded as
                follows:
                 (i) International/national--3 points for each.
                 (ii) Regional/State--2 points for each.
                 (iii) Local--1 point for each.
                 (f) Commitment of funds. A maximum of 20 points will be awarded for
                this criterion if written documentation from each source providing
                matching funds and other funds are submitted with the application.
                Compare eligible commitment of funds to the amount of grant requested
                to derive percentage to be used for scoring.
                 (1) If the applicant proposes to match 50 percent or more of the
                grant funds requested, 20 points will be awarded.
                 (2) If the applicant proposes to match 20 percent or more but less
                than 50 percent of the grant funds requested, 15 points will be
                awarded.
                 (3) If the applicant proposes to match 5 percent or more but less
                than 20 percent of the grant funds requested, 10 points will be
                awarded.
                 (4) If the applicant proposes to match less than 5 percent of the
                grant funds requested, no points will be awarded.
                Sec. 4280.156 Selecting EA and REDA grant applications for award.
                 Unless otherwise provided for in a Federal Register notice, EA and
                REDA grant applications will be processed in accordance with this
                section. EA and REDA grant funding is maintained at the National Office
                and applications compete for funds only once in a nationwide
                competition.
                 (a) Application competition. Complete EA and REDA applications
                received by the Agency by 4:30 p.m. local time on January 31 will be
                competed against each other. If January 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 January 31,
                regardless of the postmark on the application, will be processed in the
                subsequent fiscal year. Unless otherwise specified in a Federal
                Register notice, the two highest scoring applications from each State,
                based on the scoring criteria established under Sec. 4280.155, will
                compete for initial funding. If undersubscribed on eligible
                applications, the third highest scoring application from each state
                shall be requested for National Office review and potential
                competition, ranking and funding, until funds are expended.
                 (b) Ranking of applications. All applications submitted to the
                National Office under paragraph (a) of this section will be ranked in
                priority score order. All applications that are ranked and meet the
                minimum scoring threshold will be considered for selection for funding.
                 (c) Selection of applications for funding. Using the ranking
                created under paragraph (a) of this section, the Agency will consider
                the score an application has received compared to the scores of other
                ranked applications, with higher scoring applications receiving first
                consideration for funding. If two or more applications score the same
                and if remaining funds are insufficient to fund each such application,
                the Agency will distribute the remaining funds to each such application
                on a pro-rata basis. At its discretion, the Agency may also elect to
                redirect unused funds into the RES/EEI program or allow any remaining
                multi-year funds to be carried over to the next fiscal year rather than
                funding on a pro-rata basis.
                 (d) Handling of ranked applications not funded. Based on the
                availability of funding, a ranked application submitted for EA or REDA
                funds may not be funded. Such ranked applications will not be carried
                forward into the next Federal fiscal year's competition.
                Sec. 4280.157 [Reserved]
                Sec. 4280.158 Awarding and administering EA and REDA grants.
                 The Agency will award and administer EA and REDA grants in
                accordance with Departmental Regulations and with the procedures and
                requirements specified in Sec. 4280.123, except as specified in
                paragraphs (a) through (b) of this section.
                 (a) Instead of complying with Sec. 4280.123(b), the grantee must
                provide satisfactory evidence to the Agency that all officers of
                grantee organization authorized to receive and/or disburse Federal
                funds are covered by such
                [[Page 22335]]
                bonding and/or insurance requirements as are normally required by the
                grantee.
                 (b) The power purchase agreement specified in Sec. 4280.123 (h) is
                not required.
                Sec. 4280.159 Servicing EA and REDA grants.
                 The Agency will service EA and REDA grants in accordance with the
                requirements specified in Departmental Regulations, the Financial
                Assistance Agreement, 7 CFR part 3, 7 CFR 1951 Subparts E and O, and
                the requirements in Sec. 4280.124, except as specified in paragraphs
                (a) through (d) of this section.
                 (a) Grant disbursement. The Agency will determine, based on the
                applicable Departmental Regulations, whether disbursement of a grant
                will be by advance or reimbursement. Form SF-270, Request for Advance
                or Reimbursement, must be completed by the grantee and submitted to the
                Agency no more often than monthly to request either advance or
                reimbursement of funds.
                 (b) Semiannual performance reports. Project performance reports
                shall include, but not be limited to, the following:
                 (1) A comparison of actual accomplishments to the objectives
                established for that period (e.g., the number of EA performed, number
                of recipients assisted, and the type of assistance provided for REDA);
                 (2) A list of recipients, each recipient's location, and each
                recipient's NAICS code;
                 (3) Problems, delays, or adverse conditions, if any, that have in
                the past or will in the future affect attainment of overall project
                objectives, prevent meeting time schedules or objectives, or preclude
                the attainment of particular project work elements during established
                time periods. This disclosure shall be accompanied by a statement of
                the action taken or planned to resolve the situation;
                 (4) Objectives and timetable established for the next reporting
                period.
                 (c) Final performance report. A final performance report will be
                required with the final Federal financial report within 90 days after
                project completion. The final performance report must contain the
                information specified in paragraphs (c)(1)(i) or (ii) of this section,
                as applicable.
                 (1) For EA projects, the final performance report must provide
                complete information regarding:
                 (i) The number of audits conducted,
                 (ii) A list of recipients (agricultural producers and rural small
                businesses) with each recipient's NAICS code,
                 (iii) The location of each recipient,
                 (iv) The cost of each audit and documentation showing that the
                recipient of the EA provided 25 percent of the cost of the audit, and
                 (v) The expected energy saved for each audit conducted if the audit
                is implemented.
                 (2) For REDA projects, the final performance report must provide
                complete information regarding:
                 (i) The number of recipients assisted, and the type of assistance
                provided,
                 (ii) A list of recipients with each recipient's NAICS code,
                 (iii) The location of each recipient, and
                 (iv) The expected renewable energy that would be generated if the
                projects were implemented.
                 (d) Outcome project performance report. One year after submittal of
                the final performance report, the grantee will provide the Agency a
                final status report on the number of projects that are proceeding with
                the grantee's recommendations, including the amount of energy saved and
                the amount of renewable energy generated, as applicable.
                Sec. Sec. 4280.160-4280.165 [Reserved]
                Sec. 4280.166 OMB control number.
                 The report and recordkeeping requirements contained in this part
                have been approved by the Office of Management and Budget and have been
                assigned OMB control number 0570-0067
                Appendix A to Subpart B of Part 4280--Technical Reports for Energy
                Efficiency Improvement (EEI) Projects
                 For all EEI projects with total project costs of more than
                $80,000, provide the information specified in Sections A and D and
                in Section B or Section C, as applicable. If the application is for
                an EEI project with total project costs of $80,000 or less, please
                see Sec. 4280.120 (b)(3) for the technical report information to be
                submitted with your application.
                 If the application is for an EEI project with total project
                costs of $200,000 and greater, you must conduct an energy audit.
                However, if the application is for an EEI project with a total
                project costs of less than $200,000, you may conduct either an
                energy assessment or an energy audit.
                 Section A--Project Information. Describe how all the
                improvements to or replacement of an existing building and/or
                equipment meet the requirements of being commercially available.
                Describe how the design, engineering, testing, and monitoring are
                sufficient to demonstrate that the proposed project will meet its
                intended purpose, ensure public safety, and comply with applicable
                laws, regulations, agreements, permits, codes, and standards.
                Describe how all equipment required for the EEI(s) is available and
                able to be procured and delivered within the proposed project
                development schedule. In addition, present information regarding
                component warranties and the availability of spare parts.
                 Section B--Energy audit. If conducting an energy audit, provide
                the following information.
                 (1) Situation report. Provide a narrative description of the
                existing building and/or equipment, its energy system(s) and usage,
                and activity profile. Also include average price per unit of energy
                (electricity, natural gas, propane, fuel oil, renewable energy,
                etc.) paid by the customer for the most recent 12 months, or an
                average of 2, 3, 4, or 5 years, for the building and equipment being
                audited. Any energy conversion should be based on use rather than
                source.
                 (2) Potential improvement description. Provide a narrative
                summary of the potential improvement and its ability to reduce
                energy consumption or improve energy efficiency, including a
                discussion of reliability and durability of the improvements.
                 (i) Provide preliminary specifications for critical components.
                 (ii) Provide preliminary drawings of project layout, including
                any related structural changes.
                 (iii) Identify significant changes in future related operations
                and maintenance costs.
                 (iv) Describe explicitly how outcomes will be measured.
                 (3) Technical analysis. Give consideration to the interactions
                among the potential improvements and the current energy system(s).
                 (i) For the most recent 12 months, or an average of 2, 3, 4, or
                5 years, prior to the date the application is submitted, provide
                both the total amount and the total cost of energy used for the
                original building and/or equipment, as applicable, for each
                improvement identified in the potential project. In addition,
                provide for each improvement identified in the potential project an
                estimate of the total amount of energy that would have been used and
                the total cost that would have been incurred if the proposed project
                were in operation for this same time period.
                 (ii) Calculate all direct and attendant indirect costs of each
                improvement;
                 (iii) Rank potential improvements measures by cost-
                effectiveness; and
                 (iv) Provide an estimate of Simple Payback, including all
                calculations, documentation, and any assumptions.
                 (4) Qualifications of the auditor. Provide the qualifications of
                the person which completed the energy audit.
                 Section C--Energy Assessment. If conducting an Energy
                Assessment, provide the following information.
                 (1) Situation report. Provide a narrative description of the
                existing building and/or equipment, its energy system(s) and usage,
                and activity profile. Also include average price per unit of energy
                (electricity, natural gas, propane, fuel oil, renewable energy,
                etc.) paid by the customer for the most recent 12 months, or an
                average of 2, 3, 4, or 5 years, for the building and equipment being
                evaluated. Any energy conversion shall be based on use rather than
                source.
                [[Page 22336]]
                 (2) Potential improvement description. Provide a narrative
                summary of the potential improvement and its ability to reduce
                energy consumption or improve energy efficiency.
                 (3) Technical analysis. Giving consideration to the interactions
                among the potential improvements and the current energy system(s),
                provide the information specified in section C(3)(i) through (iii)
                of this appendix.
                 (i) For the most recent 12 months, or an average of 2, 3, 4, or
                5 years, prior to the date the application is submitted, provide
                both the total amount and the total cost of energy used for the
                original building and/or equipment, as applicable, for each
                improvement identified in the potential project. In addition,
                provide for each improvement identified in the potential project an
                estimate of the total amount of energy that would have been used and
                the total cost that would have been incurred if the proposed project
                were in operation for this same time period.
                 (ii) Document baseline data compared to projected consumption,
                together with any explanatory notes on source of the projected
                consumption data. When appropriate, show before-and-after data in
                terms of consumption per unit of production, time, or area.
                 (iii) Provide an estimate of Simple Payback, including all
                calculations, documentation, and any assumptions.
                 (4) Qualifications of the assessor. Provide the qualifications
                of the person that completed the assessment. If the energy
                assessment for a project with total project costs of $80,000 or less
                is not conducted by Energy Auditor or Energy Assessor, then the
                person must have at least 3 years of experience and completed at
                least five energy assessments or energy audits on similar type
                projects.
                 Section D--Qualifications. Provide a resume or other evidence of
                the contractor or installer's qualifications and 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
                qualified installer/contractor.
                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
                 Provide the information specified in Sections A through D for
                each technical report prepared under this appendix. A renewable
                energy site assessment may be used in lieu of Sections A through C
                if the renewable energy site assessment contains the information
                requested in Sections A through C. In such instances, the technical
                report would consist of Section D and the renewable energy site
                assessment.
                 NOTE: If the total project cost for the RES project is $80,000
                or less, this appendix does not apply. Instead, for such projects,
                please provide the information specified in Sec. 4280.120 (b)(4).
                 Section A--Project Description. Provide a description of the
                project, including its intended purpose and a summary of how the
                project will be constructed and installed. Describe how the system
                meets the definition of commercially available. Identify the
                project's location and describe the project site.
                 Section B--Resource Assessment. Describe the quality and
                availability of the renewable resource to the project. Identify the
                amount of renewable energy generated that will be generated once the
                proposed project is operating at its steady state operating level.
                If applicable, also identify the percentage of energy being replaced
                by the system.
                 If the application is for a bioenergy project, provide
                documentation that demonstrates that any and all woody biomass
                feedstock from National Forest System land or public lands cannot be
                used as a higher value wood-based product.
                 Section C--Project Economic Assessment. Describe the projected
                financial performance of the proposed project. The description must
                address total project costs, energy savings, and revenues, including
                applicable investment and other production incentives accruing from
                Government entities. Revenues to be considered shall accrue from the
                sale of energy, offset or savings in energy costs, and byproducts.
                Provide an estimate of Simple Payback, including all calculations,
                documentation, and any assumptions.
                 Section D--Project Construction and Equipment Information.
                Describe how the design, engineering, testing, and monitoring are
                sufficient to demonstrate that the proposed project will meet its
                intended purpose, ensure public safety, and comply with applicable
                laws, regulations, agreements, permits, codes, and standards.
                Describe how all equipment required for the RES is available and
                able to be procured and delivered within the proposed project
                development schedule. In addition, present information regarding
                component warranties and the availability of spare parts.
                 Section E--Qualifications of Key Service Providers. Describe the
                key service providers, including the number of similar systems
                installed and/or manufactured previously, professional credentials,
                licenses, and relevant experience. When specific numbers are not
                available for similar systems, estimations will be acceptable.
                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
                 Provide the information specified in Sections A through G for
                each technical report prepared under this appendix. Provide the
                resource assessment under Section C that is applicable to the
                project. For hybrid projects, technical reports must be prepared for
                each technology that comprises the hybrid project.
                 Section A--Qualifications of the Project Team. Describe the
                project team, their professional credentials, and relevant
                experience. The description shall support that the project team key
                service providers have the necessary professional credentials,
                licenses, certifications, and relevant experience to develop the
                proposed project.
                 Section B--Agreements and Permits. Describe the necessary
                agreements and permits (including any for local zoning requirements)
                required for the project and the anticipated schedule for securing
                those agreements and permits. For example, interconnection
                agreements and power purchase agreements are necessary for all
                renewable energy projects electrically interconnected to the utility
                grid.
                 Section C--Resource Assessment. Describe the quality and
                availability of the renewable resource and the amount of renewable
                energy generated through the deployment of the proposed system. For
                all bioenergy projects, except anaerobic digesters projects,
                complete Section C.3 of this appendix. For anaerobic digester
                projects, complete Section C.6 of this appendix.
                 1. Wind. Provide adequate and appropriate data to demonstrate
                the amount of renewable resource available. Indicate the source of
                the wind data and the conditions of the wind monitoring when
                collected at the site or assumptions made when applying nearby wind
                data to the site.
                 2. Solar. Provide adequate and appropriate data to demonstrate
                the amount of renewable resource available. Indicate the source of
                the solar data and assumptions.
                 3. Bioenergy/Biomass Project. Provide adequate and appropriate
                data to demonstrate the amount of renewable resource available.
                Indicate the type, quantity, quality, and seasonality of the
                renewable biomass resource, including harvest and storage, where
                applicable. Where applicable, also indicate shipping or receiving
                method and required infrastructure for shipping. For proposed
                projects with an established resource, provide a summary of the
                resource. Document that any and all woody biomass feedstock from
                National Forest System land or public lands cannot be used as a
                higher value wood-based product.
                 4. Geothermal Electric Generation. Provide adequate and
                appropriate data to demonstrate the amount of renewable resource
                available. Indicate the quality of the geothermal resource,
                including temperature, flow, and sustainability and what conversion
                system is to be installed. Describe any special handling of cooled
                geothermal waters that may be necessary. Describe the process for
                determining the geothermal resource, including measurement setup for
                the collection of the geothermal resource data. For proposed
                projects with an established resource, provide a summary of the
                resource and the specifications of the measurement setup.
                 5. Geothermal Direct Generation. Provide adequate and
                appropriate data to demonstrate the amount of renewable resource
                available. Indicate the quality of the geothermal resource,
                including temperature, flow, and sustainability and what direct use
                system is to be installed. Describe any special handling of cooled
                geothermal waters that may be necessary. Describe the process for
                determining the geothermal resource, including measurement setup for
                the collection of the geothermal resource data. For proposed
                projects with an established resource, provide a summary of the
                resource and the specifications of the measurement setup.
                [[Page 22337]]
                 6. Anaerobic Digester Project/Biogas. Provide adequate and
                appropriate data to demonstrate the amount of renewable resource
                available. Indicate the substrates used as digester inputs,
                including animal wastes or other Renewable Biomass in terms of type,
                quantity, seasonality, and frequency of collection. Describe any
                special handling of feedstock that may be necessary. Describe the
                process for determining the feedstock resource. Provide either
                tabular values or laboratory analysis of representative samples that
                include biodegradability studies to produce gas production estimates
                for the project on daily, monthly, and seasonal basis. If an
                anerobic digester project, identify the type of operation (e.g.,
                dairy, swine, layer, etc.), along with breed, herd population size
                and demographics, and the type of waste collection method and
                frequency information available. For the biogas produced, identify
                the type of digester (e.g., mixed, plug-flow, attached film, covered
                lagoon, etc.), if applicable, or the method of capture (landfill,
                sewage waste treatment, etc.) and treatment. Identify the system
                designer and determine the digester design assumptions such as the
                number and type of animals, the bedding type and estimated annual
                quantity used, the manure and wastewater volumes, and the treatment
                of digester effluent (e.g., none, solids separation by screening,
                etc. with details including use or method of disposal).
                 7. Hydrogen Project. Provide adequate and appropriate data to
                demonstrate the amount of renewable resource available. Indicate the
                type, quantity, quality, and seasonality of the renewable biomass
                resource. For solar, wind, or geothermal sources of energy used to
                generate hydrogen, indicate the renewable resource where the
                hydrogen system is to be installed. Local resource maps may be used
                as an acceptable preliminary source of renewable resource data. For
                proposed projects with an established renewable resource, provide a
                summary of the resource.
                 8. Hydroelectric/Ocean Energy Projects. Provide adequate and
                appropriate data to demonstrate the amount of renewable resource
                available. Indicate the quality of the resource, including
                temperature (if applicable), flow, and sustainability of the
                resource, including a summary of the resource evaluation process and
                the specifications of the measurement setup and the date and
                duration of the evaluation process and proximity to the proposed
                site. If less than 1 year of data is used, a qualified consultant
                must provide a detailed analysis of the correlation between the site
                data and a nearby, long-term measurement site.
                 (9) RES with storage components. Provide adequate and
                appropriate data to demonstrate the amount of renewable resource
                available. Indicate the type, quantity, quality, and seasonality of
                the renewable energy resource, where applicable. Indicate the
                storage system specifications and the integrity of the system in
                conjunction with the RES it is integrated with, including
                application, size, lifetime, response time, capital and maintenance
                costs associated with the operation as well as the distribution of
                the stored resource(s).
                 Section D--Design and Engineering. Describe the intended purpose
                of the project and the design, engineering, testing, and monitoring
                needed for the proposed project. The description shall support that
                the system will be designed, engineered, tested, and monitored so as
                to meet its intended purpose, ensure public safety, and comply with
                applicable laws, regulations, agreements, permits, codes, and
                standards. In addition, identify that all major equipment is
                commercially available, including proprietary equipment, and justify
                how this unique equipment is needed to meet the requirements of the
                proposed design. In addition, information regarding component
                warranties and the availability of spare parts must be presented.
                 Section E--Project Development. Describe the overall project
                development method, including the key project development activities
                and the proposed schedule, including proposed dates for each
                activity. The description shall identify each significant historical
                and projected activity, its beginning and end, and its relationship
                to the time needed to initiate and carry the activity through to
                successful project completion. The description shall address
                applicant project development cash flow requirements. Details for
                equipment procurement and installation shall be addressed in Section
                F of this appendix.
                 Section F--Equipment Procurement and Installation. Describe the
                availability of the equipment required by the system. The
                description shall support that the required equipment is available
                and can be procured and delivered within the proposed project
                development schedule. Describe the plan for site development and
                system installation, including any special equipment requirements.
                In all cases, the system or improvement shall be installed in
                conformance with manufacturer's specifications and design
                requirements, and comply with applicable laws, regulations,
                agreements, permits, codes, and standards.
                 Section G--Operations and Maintenance. Describe the operations
                and maintenance requirements of the system, including major rebuilds
                and component replacements necessary for the system to operate as
                designed over its useful life. The warranty must cover and provide
                protection against both breakdown and a degradation of performance.
                The performance of the RES or EEI shall be monitored and recorded as
                appropriate to the specific technology.
                Appendix D to Subpart B of Part 4280--Feasibility Study Components
                 Executive Summary
                ------------------------------------------------------------------------
                
                -------------------------------------------------------------------------
                Provide an overview to describe the nature and scope of the proposed
                 project, including the purpose, project location, design features,
                 capacity, and estimated capital costs. Include a summary of the
                 feasibility determinations made for each applicable component.
                ------------------------------------------------------------------------
                 Economic
                ------------------------------------------------------------------------
                
                ------------------------------------------------------------------------
                What is it?.................. Cost benefit analysis.
                What are the factors to Minimum amount of inputs (labor,
                 consider?. infrastructure, utilities, renewable
                 resources, feedstocks) to operate
                 successfully.
                 Contracts in place and contracts to be
                 negotiated, including terms and
                 renewals.
                 Environmental risks.
                 Cost of project relative to the increase
                 in revenues or benefits provided.
                 Overall economic impact of project
                 including new markets created and
                 economic development.
                ------------------------------------------------------------------------
                 Market
                ------------------------------------------------------------------------
                
                ------------------------------------------------------------------------
                What is it?.................. Analysis of the current and future market
                 potential, competition, sales or service
                 estimations including current and
                 prospective buyers or users.
                What are the factors to Competition.
                 consider?.
                 Type of project: Service, product or
                 commodity based.
                 Target market, new versus established.
                 End user analysis, captive versus
                 competitive.
                 By-product revenue streams.
                 Industry risk.
                ------------------------------------------------------------------------
                [[Page 22338]]
                 Technical
                ------------------------------------------------------------------------
                
                ------------------------------------------------------------------------
                What is it?.................. Analyzing the reliability of the
                 technology to be used and/or the
                 analysis of the delivery of goods or
                 services, including transportation,
                 business location, and the need for
                 technology, materials, and labor.
                What are the factors to Commercial availability.
                 consider?.
                 Product and process success record and
                 duplication of results.
                 Experience of the service providers.
                 Roads, rail, airport infrastructure.
                 Need for local transportation.
                 Labor market.
                 Availability of materials.
                 Use, age, and reliability of technology.
                 Construction risk.
                ------------------------------------------------------------------------
                 Financial
                ------------------------------------------------------------------------
                
                ------------------------------------------------------------------------
                What is it?.................. Analysis of the operation to achieve
                 sufficient income, credit, and cashflow
                 to financially sustain the project over
                 the long term and meet all debt
                 obligations.
                What are the factors to Commercial or project underwriting.
                 consider?.
                 Management's assumptions.
                 Accounting policies.
                 Source of repayment.
                 Dependency on other entities.
                 Equity contribution.
                 Market demand forecast.
                 Peer industry comparison.
                 Cost-accounting system.
                 Availability of short-term credit.
                 Adequacy of raw materials and supplies.
                 Sensitivity analysis.
                ------------------------------------------------------------------------
                 Management
                ------------------------------------------------------------------------
                
                ------------------------------------------------------------------------
                What is it?.................. Analysis of the legal structure of the
                 business or operation; ownership, board
                 and management analysis.
                What are the factors to History of the business or organization.
                 consider?.
                 Professional and educational background.
                 Experience.
                 Skills.
                 Qualifications necessary to implement the
                 project.
                ------------------------------------------------------------------------
                 Recommendation
                ------------------------------------------------------------------------
                
                -------------------------------------------------------------------------
                Conclude with an opinion and recommendation presented by the consultant.
                ------------------------------------------------------------------------
                 Qualifications
                ------------------------------------------------------------------------
                
                -------------------------------------------------------------------------
                Provide a resume or statement of qualifications of the author of the
                 feasibility study, including prior experience.
                ------------------------------------------------------------------------
                Mark Brodziski,
                Acting Administrator, Rural Business-Cooperative Service.
                [FR Doc. 2021-05286 Filed 4-26-21; 8:45 am]
                BILLING CODE 3410-XY-P
                

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT