Department of Energy, Chapter 330
Rule Caption: Establishing Alternative Fuel Vehicle Revolving Fund program; revising Small Scale Local Energy Loan Program rules.
Adm. Order No.: DOE 4-2013
Filed with Sec. of State: 12-12-2013
Certified to be Effective: 12-12-13
Notice Publication Date: 11-1-2013
Rules Adopted: 330-110-0060
Rules Amended: 330-110-0010, 330-110-0040
Rules Repealed: 330-110-0040(T)
Subject: These permanent rules implement the Alternative Fuel Vehicle Revolving Fund program established in Oregon Laws 2013, chapter 774, sections 1 through 7 (SB 583). The program provides loans to Oregon’s public bodies and federally recognized Indian tribes in Oregon. These loans assist in the purchase of new alternative fuel vehicles and help convert or modify existing gasoline or diesel vehicles to alternative fuels. The rules provide the policies and procedures for the Alternative Fuel Vehicle Revolving Fund program. The rules create procedures for the department to allocate monies for loans from the Alternative Fuel Vehicle Revolving Fund by outlining a prioritization process, if the program is oversubscribed. The rules adopt policies for establishing loan terms and interest rates to ensure that the objectives of SB 583 are met and adequate funds are maintained to meet future fund needs. The rules adopt procedures and standards necessary for the department to administer the Alternative Fuel Vehicle Revolving Fund program such as application contents, application processing procedures, reporting requirements and funding limits.
The rules amend the definition of “fleet” for the Small Scale Local Energy Loan Program to require a minimum of two (rather than three) vehicles and further adopt a temporary rule filed by the department on June 17, 2013 to clarify eligible uses of loan proceeds for Small Scale Local Energy Loan Program projects.
Rules Coordinator: Kathy Stuttaford—(503) 373-2127
As used in ORS Chapter 470 and in these rules, the following definitions apply:
(1) “Adequate security” means the pledge of real or personal property given to secure a loan against loss or credit enhancement, guaranty or other security of value authorized by ORS 470.170, given as assurance that the loan will be paid.
(2) “Alternative fuel project” means sub-sections (a) and (b):
(a) The purchase of a fleet of vehicles that are modified or acquired directly from a factory and that:
(A) Use an alternative fuel including electricity, gasohol with at least twenty percent denatured alcohol content, hydrogen, hythane, methane, methanol, natural gas, propane, biodiesel or any other fuel approved by the Director; and
(B) Produce lower exhaust emissions or are more energy efficient than those fueled by gasoline.
(b) A facility, including a fueling station, necessary to operate alternative fuel vehicles.
(3) “Alternative Fuel Vehicle Revolving Fund Program” means the loan program established by Oregon Laws 2013, chapter 774, sections 1 through 7 for public bodies defined in ORS 174.109 and federally recognized Indian tribes in Oregon.
(4) “Applicant” means a loan program applicant.
(5) “Application” means a completed loan application on a Department-approved form that contains all required information, is dated and signed by an authorized representative of the applicant, and is accompanied by the required documentation and the application and underwriting fees. The term “application” includes all documentation submitted in conjunction with a loan application, whether at the time of original submission of the loan application or later and all modifications of the application that was originally submitted.
(6) “Biomass” means plant and animal matter, but not fossil fuels.
(7) “Cogeneration” means the sequential production of electrical or mechanical energy and useful thermal energy from a primary source including but not limited to oil, natural gas or biomass. Cogeneration must qualify under the Small Scale Local Energy Loan Program Technical Requirements.
(8) “Committee” means the Small Scale Local Energy Project Advisory Committee.
(9) “Conservation measure” means a system, component of a system, mechanism or series of mechanisms, support service or combination thereof that:
(a) Reduces the use of energy at the project site;
(b) Directly avoids the loss of energy in the transmission of energy;
(c) Conserves energy used in transportation with the energy savings being substantially in Oregon;
(d) Is a cogeneration project; or
(e) Increases the production or efficiency of or extends operating life of a system or project otherwise described in OAR 330-110-0010, including but not limited to restarting a dormant project.
(10) “Conventional fuels” means purchased electricity or fossil fuels.
(11) “Creditworthy” means, in regard to an applicant, able to repay its debts as they become due, as evidenced by a satisfactory credit history, sufficient financial resources or other indication of financial strength as approved by the Department.
(12) “Delinquent account” means a loan that has not been paid in accordance with the terms of the underlying loan documents.
(13) “Demonstration project” means a project that showcases new or improved technologies or designs that promise cost-effective production or conservation of energy if adopted by the marketplace.
(14) “Department” means Oregon Department of Energy.
(15) “Director” means the Director of the Department or designee.
(16) “Energy need” means any of the energy demands forecasted by the Department under ORS 469.070 and the need to save energy to cut costs.
(17) “Financial feasibility” means that:
(a) The primary repayment source for the loan has been identified, the applicant is creditworthy and the project is financially viable; and
(b) Adequate security is offered to provide a secondary source of repayment.
(18) “Financial statement” means a report of a person’s financial operations or condition including but not limited to balance sheets, statements of financial condition, statements of financial position, income statements, statement of earnings, statements of revenues and expenses, statements of profit and loss, statements of operations, statements of retained income, statements of cash flows, statements of changes in financial position, pro forma statements, aging reports and any accounting reports, reviews, audits, tax returns or other financial information submitted as, or as a part of, a representation of financial condition in a Department approved format using Generally Accepted Accounting Principles (GAAP).
(19) “Fleet” means two or more vehicles used for commercial or governmental purposes primarily operated in Oregon.
(20) “Interim loan” means a disbursement of a program loan for the purpose of paying for pre-construction and other approved project costs prior to permanent funding.
(21) “Loan contract” means, in addition to the meaning set forth in ORS 470.050, the loan agreement and all other documentation required by the Director to make a loan or change its terms and conditions.
(22) “Local community or region” means one or more energy users in Oregon.
(23) “Municipal corporation” has the meaning assigned to that term by ORS 470.050.
(24) “Person” means a natural person or a validly existing entity that is duly organized under the laws of a state, including but not limited to a partnership.
(25) “Preference” means, in any choice between financially feasible projects or applicants, preference under ORS 470.080 and these rules.
(26) “Primary repayment source” means the business revenues produced by the borrower of a loan that is or will be used to pay the debt service on a loan.
(27) “Program” means the Small Scale Local Energy Loan Program.
(28) “Project” has the meaning given to “small scale local energy project” in ORS 470.050; including systems or devices that implement one or more conservation measures, use renewable resources to meet a local community or regional energy need in Oregon or are recycling or alternative fuel projects. The project may produce heat, electricity, mechanical action or alternative fuels. A project may also be an improvement that increases the production or efficiency of or extends the operating life of a system or device or project otherwise described in these rules, including but not limited to restarting a dormant project. A project also:
(a) Must be primarily in Oregon but can have a minor contiguous component in a neighboring state, or in the case of energy conservation the project can provide substantial benefits to Oregon. The components located in Oregon should exceed 70 percent of the portion of the project cost financed by the program;
(b) Can directly or indirectly conserve energy or enable the conservation of energy or use or enable the use of a renewable resource, by the applicant or another person, to produce energy, as, for example, power transmission or conditioning, energy storage or smart metering; and
(c) Can directly or indirectly reduce the amount of energy needed in the construction and operation of a facility, including the manufacture and transportation of construction materials, but the project or components must meet acceptable sustainability practices established in the Small Scale Local Energy Loan Program Technical Requirements.
(29) “Qualified” means, in regard to an applicant, able and eligible under the law to apply for a loan and enter into a loan contract.
(30) “Recycling project” means a facility or equipment that conserves energy by converting solid waste, as defined in ORS 459.005, into a new and usable product.
(31) “Renewable resource” means solar, wind, geothermal, biomass, waste heat or water resource.
(32) “Security value” means the value assigned by the Department, based upon an internal review or an appraisal by a qualified third party acceptable to the Department, to the project or security being offered as collateral for a loan.
(33) “Small business” has the meaning given in ORS 470.050.
(34) “Small Scale Local Energy Loan Program Technical Requirements” means the specific technical requirements of the Department for certain projects. An application will be subject to the Technical Requirements in effect on the date the Department receives a complete application.
(35) “Usable life” of a project means the number of years that a project can likely function without major repair or replacement.
(36) “Waste heat” means produced but unused heat that can be applied to an energy need.
Stat. Auth.: ORS 469 & 470.140
Stats. Implemented: ORS 470.050 - 470.310
Hist.: DOE 12-1980, f. & ef. 12-16-80; DOE 2-1981(Temp), f. & ef. 6-3-81; DOE 6-1982, f. & ef. 4-21-82; DOE 2-1983, f. & ef. 5-16-83; DOE 3-1983(Temp), f. & ef. 9-20-83; DOE 4-1984, f. & ef. 3-6-84; DOE 2-1986, f. & ef. 3-4-86; DOE 4-1988, f. & cert. ef. 7-26-88; DOE 1-1991(Temp), f. & cert. ef. 6-10-91; DOE 3-1991, f. & cert. ef. 12-3-91; DOE 1-1993, f. & cert. ef. 1-27-93; DOE 1-1994, f. & cert. ef. 4-1-94; DOE 2-1998, f. & cert. ef. 9-30-98; DOE 7-2004, f. & cert. ef. 12-20-04; DOE 1-2006, f. & cert. ef. 4-3-06; DOE 13-2012, f. & cert. ef. 12-20-12; DOE 4-2013, f. & cert. ef. 12-12-13
Loan Limits, Security, and Conditions
(1) The Director may limit the term and amount of any loan or loan approval. The Director may deny any application or set such terms and conditions in regard to any loan or loan approval as needed to assure a sound loan or to protect the fiscal integrity of the program.
(2) A loan secured by real property must be secured by a first lien on such real property in favor of the State of Oregon and must not exceed eighty percent of the security value of such real property. The real property that is collateral for the loan must have been appraised by a licensed appraiser, county assessor or Department appraiser, at the discretion of the director, no longer than six months prior to the date of the loan approval. The Department will consider junior liens only on a case-by-case basis.
(3) If a loan to a municipal corporation will be repaid from project income, the security package for the loan may include the project income.
(4) A loan to a state agency, an eligible federal agency or a public corporation may be secured by project income, in addition to the facility or equipment that make up the project, by a lease purchase contract or by other income or security in accordance with ORS 470.170. State agencies, eligible federal agencies or public corporation borrowers must provide resolutions or other official action of borrower’s governing body approving the loan and the other matters contemplated by the loan documents, and of all other documents evidencing any other necessary action by Applicant’s governing body.
(5) The Department generally requires an unconditional and absolute guaranty of the owners or the principal shareholder of the borrower or that of a person having sufficient resources to satisfy the borrower’s repayment obligation for the loan should the borrower default.
(6) The Director may consider savings in operation and maintenance costs in estimating the annual project cost savings. The Director may also, when calculating the estimated savings in fuel costs, consider reasonably expected increases in the cost of fuel.
(7) A project that primarily produces energy for sale must have:
(a) Secure sources of supply and contracts for the sale of output;
(b) Projected income, net of operating expenses and maintenance costs, of at least 125 percent of annual debt service for each year of the loan; and
(c) An identified secondary source of repayment apart from the project income.
(8) Unless the Director finds that mitigating financial factors warrant otherwise, a loan to a business for a project that saves or produces energy for use on site, is an alternative fuel project or is an energy-saving recycling project may be made only:
(a) Upon an identifiable and reasonable primary repayment source and the pledge of adequate security;
(b) For less than 80 percent of the security value of real property on which the Department has a first lien, the Department will consider junior liens on a case-by-case basis;
(c) To a business that has made a profit after taxes for at least the two years immediately preceding the loan application; and
(d) To a business that has a ratio of current assets to current liabilities of at least 1.75 to 1 and a ratio of total debt to owner’s equity of no more than 2 to 1. The Director may exempt a business from the requirements of OAR 330-110-0040 if it demonstrates to the satisfaction of the Director that sound businesses of similar type and size do not normally meet these standards.
(9) Loan proceeds must be used for the costs of a small scale local energy project, with the following limitations:
(a) Cost of acquisition of the project site must not exceed ten percent of the loan amount.
(b) Start-up costs must not exceed three percent of the loan amount.
(c) Reserves must not exceed fifteen percent of the loan amount.
(10) The loan proceeds of an alternative fuel project may only be used for the following purposes:
(a) Incremental costs of the project that are beyond the reasonable estimated minimum costs to construct or install a similar project without alternative fuel features. Incremental costs do not include the cost of equipment or devices that, in standard industry practice, are used to dispense gasoline or, in the case of vehicles, equipment or devices that use gasoline and that also allow use of an alternative fuel without modification. Alternative fueling stations with underground fuel tanks do not qualify for funding as alternative fuel projects.
(b) In the case of vehicles, products and installation of such products approved by and meeting or exceeding the emission standards of the Department of Environmental Quality.
(11) No more than fifty percent of loan proceeds may be used to refinance existing debt authorized by ORS 470.050(27)(g) unless such debt is with the Department. The refinancing must result in a significant increase in the security value of the loan security.
Stat. Auth.: ORS 469 & 470.140
Stats. Implemented: ORS 470.080, 470.120, 470.150 - 470.155, 470.170 & 470.210
Hist.: DOE 12-1980, f. & ef. 12-16-80; DOE 6-1982, f. & ef. 4-21-82; DOE 2-1983, f. & ef. 5-16-83; DOE 3-1983(Temp), f. & ef. 9-20-83; DOE 4-1984, f. & ef. 3-6-84; DOE 2-1986, f. & ef. 3-4-86; DOE 4-1988, f. & cert. ef. 7-26-88; DOE 1-1993, f. & cert. ef. 1-27-93; DOE 1-1994, f. & cert. ef. 4-1-94; DOE 2-1998, f. & cert. ef. 9-30-98; DOE 7-2004, f. & cert. ef. 12-20-04; DOE 13-2012, f. & cert. ef. 12-20-12; DOE 2-2013(Temp), f. & cert. ef. 6-17-13 thru 12-13-13; DOE 4-2013, f. & cert. ef. 12-12-13
Alternative Fuel Vehicle Revolving Fund Program; Loan Terms
(1) The department will use the moneys from the Alternative Fuel Vehicle Revolving Fund to provide loans to public bodies defined in ORS 174.109 and federally recognized Indian tribes in Oregon and may use the moneys to pay for the department’s expenses in administering the Alternative Fuel Vehicle Revolving Fund, Alternative Fuel Vehicle Revolving Fund Program and related costs.
(2) The loans must be used to:
(a) Assist in the purchase of new alternative fuel vehicles by providing funding for the incremental cost of purchasing alternative fuel vehicles that exceeds the cost of purchasing vehicles that are not alternative fuel vehicles; or
(b) Convert or modify existing vehicles that use gasoline or diesel to alternative fuel vehicles. A conversion or modification of a motor vehicle must include at least one eligible alternative fuel as described in OAR 330-110-0060(3).
(3) Alternative fuel vehicle means:
(a) A motor vehicle, as defined in ORS 801.360;
(b) That is manufactured or modified to use an alternative fuel, including but not limited to electricity, biofuel, gasohol with at least 20 percent denatured alcohol content, hydrogen, hythane, methane, methanol, natural gas, propane or any other fuel approved by the department;
(c) That produces lower exhaust emissions or is more energy efficient than equivalent equipment fueled by gasoline or diesel;
(d) Registered in Oregon in accordance with ORS 803; and
(e) If a conversion or modification, new equipment is installed by a qualified technician that is compliant with Environmental Protection Agency or California Air Resources Board standards.
(4) The terms and interest rate for these loans will be established by the department to recover the administrative cost of this loan program and to maintain a perpetual source of funding for the Alternative Fuel Vehicle Revolving Fund Program. A loan must be fully amortized not later than six years after the purchase of the new alternative fuel vehicle being financed by the loan or the conversion of a vehicle that uses gasoline or diesel to an alternative fuel vehicle.
(5) The department will convene a review committee to review and prioritize loans, as needed.
(6) The department may list the evaluation criteria for prioritizing loan applications. The department will give priority to loans for conversions or modifications. The additional criteria the department may consider for each vehicle covered by the application include, but are not limited to:
(a) Fuel displacement capacity,
(b) Geographical area or local economic conditions of the home base,
(c) Accelerated repayment schedule,
(d) Age of the vehicle,
(e) Estimated annual mileage,
(f) Gross weight of the vehicle, and
(7) A loan application must be made on department approved forms and in a manner set by the department. An applicant must designate the Alternative Fuel Vehicle Revolving Fund Program in the purpose section of the application. For each vehicle covered by the application, the application must include information needed for prioritization in OAR 330-110-0060(6) plus the following information:
(a) Vehicle Identification Number;
(b) Vehicle make, model, year and description;
(c) Current odometer reading;
(d) Name of titled owner;
(e) Gross vehicle weight;
(f) Fuel economy;
(g) Estimated annual mileage;
(h) Borrowing authority;
(i) Loan repayment information, identifying the dedicated source of revenue for repayment purposes; and
(j) Any other information requested by the department.
(8) Submitting a loan application does not guarantee the department will provide a loan to the applicant.
(9) The proceeds of loans made from the Alternative Fuel Vehicle Revolving Fund may be used for purchases or conversions as described in OAR 330-110-0060(2) no more than 60 days prior to the department receiving the loan application.
(10) No one borrower may obtain a loan for greater than 30 percent of the total available, uncommitted funds in the Alternative Fuel Vehicle Revolving Fund. The department may adjust the allowed percentage for a borrower based on program usage. The department may also set a maximum aggregate amount of all loans outstanding that a single public entity or tribe may have under the Alternative Fuel Vehicle Revolving Fund.
(11) Loans made from the Alternative Fuel Vehicle Revolving Fund will be subject to the department’s underwriting standards and the requirements in OAR Chapter 330, division 110. Loans require final approval by the Director.
(12) An Alternative Fuel Vehicle Revolving Fund borrower must report, on an annual basis for the term of the loan, the following:
(a) Miles driven,
(b) Amount of fuel consumed, and
(c) Other data as described in the loan agreement.
Stat. Auth.: ORS 469.040 & OL 2013, ch. 774, sec. 4, 7
Stats. Implemented: OL 2013, ch. 774, sec. 1 - 7
Hist.: DOE 4-2013, f. & cert. ef. 12-12-13
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