SOURCE: 43 FR 51956, Nov. 7, 1978, unless otherwise noted.

Subpart A-General Provisions, Purpose, and Objectives

§ 300.01 Purpose and objectives.

The coal loan guarantee program is designed to encourage and assist small- and medium-sized coal producers to increase the Nation's coal production from low-sulfur underground mines. These regulations provide the necessary information to apply for and obtain U.S. Government loan guarantees to develop new underground coal mines, to expand existing underground coal mines, and to reopen underground coal mines which had previously been closed.

§ 300.02

Definitions.

For the purpose of this part:

(a) "Act" means the Energy Policy and Conservation Act of 1975 (Pub. L. 94-163), as amended.

(b) "Affiliate" means a person who directly or indirectly, through one or more intermediaries, controls, or is controlled by, or is under common control with another specified person. For the purpose of this definition, control means direct or indirect possession of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract, or otherwise.

(c) "Applicant" means any person who applies to the Department of Energy (DOE) for a guarantee of a loan with respect to a coal project. The applicant is also the borrower.

(d) "Application" means the written request of an applicant for a loan guarantee in accordance with the requirements of this regulation.

(e) "Borrower" means any person directly liable for repayment of any part of a loan guaranteed by DOE.

(f) "Coal sales contract" means a written coal sales agreement or agreements for at least the duration of the period during which a guaranteed loan is required to be repaid, for the direct

and indirect sale or resale of coal to be produced from the subject mine to a person who the Administrator of the Environmental Protection Agency

(EPA) certifies will be able to burn such coal in compliance with all applicable requirements of the Clean Air Act (42 U.S.C. 1857 et seq.), and with any applicable implementation plan (as defined in section 110 of the Clean Air Act).

committment"

(g) "Conditional means that document, issued by DOE, which sets forth specifically or by reference, the terms and conditions under which DOE may issue a guarantee.

(h) “DOE” means the Department of Energy.

(i) "Guarantee" means the written guarantee agreement issued by DOE setting forth DOE's undertaking to pay the lender or holder, as applicable, in the event of a default, the principal and accrued interest on the guaranteed portion of the loan.

(j) "Holder" means the person other than the lender who has lawfully succeeded in due course to all or part of the right, title, and interest of the lender in the guaranteed portion of the loan.

(k) "Lender" means any person making and servicing a loan guaranteed by DOE.

(1) "Loan" means any note, bond, or other evidence of indebtedness.

(m) "Loan agreement" means the written contract between the borrower and the lender specifying the terms and conditions under which the lender provides financing to the borrower.

(n) "Low-sulfur coal" means coal which, in a quantity necessary to produce 1 million British thermal units, does not contain sulfur or sulfur compounds the elemental sulfur content of which exceeds 0.6 pound. Sulfur content shall be determined after the application of any coal preparation process which takes place before the sale of the coal by the borrower.

(o) "Person" means any individual, partnership, corporation, association, joint venture, or any other entity.

(p) "Project" means an undertaking by the borrower, to be financed in whole or in part by a loan for which a guarantee is hereunder applied for,

which will produce coal by the development of any new underground mine, expansion of any existing underground mine in a manner designed to increase production of such mine, or the reopening of any underground mine which had previously been closed.

(q) "Secretary" means the Secretary of DOE, or his duly designated representative.

§ 300.03 Full faith and credit provision.

Any guarantee issued by DOE under these regulations shall be conclusive evidence that the guaranteed loan qualifies for such guarantee, and the validity of such guarantee so made shall be incontestable in the hands of a holder, except for fraud or material misrepresentation on the part of such

holder.

§ 300.04 Department of the Treasury con

currence.

The Secretary shall consult with the Secretary of the Treasury concerning the terms and conditions of the guarantee. The Secretary shall obtain the concurrence of the Secretary of the Treasury with respect to the date of issue of any loan guarantee, except that this concurrence may not, without the consent of the Secretary, result in a delay in the issuance of a guarantee for more than 60 calendar days.

Subpart B-Applications

§ 300.20 Determination of eligibility.

(a) Each application must include a statement from the borrower representing that the borrower (including affiliates) did not, in the prior calendar year, meet any one of the following conditions:

(1) Produce more than 1,000,000 tons of coal;

(2) Produce more than 300,000 barrels of crude oil;

(3) Own an oil refinery; and

(4) Have gross revenues in excess of $50,000,000.

(b) The applicant must also submit a statement representing that there is no unsatisfied final judgment that holds the borrower (or affiliates)

liable for any fine or penalty under the Federal Mine Safety and Health Act of 1977 (Pub. L. 95-164).

§ 300.21 General application information requirements.

The applicant must provide, at the time of application, the following:

(a) Evidence that the borrower owns, leases, or otherwise controls sufficient economically recoverable coal reserves at the site described in the application to produce sufficient coal to permit the borrower to honor any obligation under the coal sales contract;

(b) A letter of intent to purchase coal, a coal sales contract, or a draft coal sales contract, for the sale or resale of the coal to be produced from the project, and, if appropriate, the Secretary may require sufficient financial information concerning the purchaser of such coal, showing that said purchaser has the capability to carry out the coal sales contract;

(c) An estimate of the sulfur content of the coal reserves, as mined and as sold, at the site described in the application;

(d) Adequate assurance that the mine will be constructed and operated in compliance with the Federal Mine Safety and Health Act of 1977;

(e) Evidence that the borrower has been unable to obtain adequate financing without such guarantee. Such evidence may consist of a signed statement from the lender representing that the lender would not provide financing under the proposed terms without a Federal guarantee;

(f) A statement from the lender disclosing whether any of its officers or directors, major stockholders, or other owners have a financial interest in the borrower. The lender will also disclose whether any of the borrower's officers or directors, stockholders, or other owners have a financial interest in the lender;

(g) A full description of the scope, nature, extent, and location of the project, and a copy of the mine development plan (normally the same plan submitted to Federal and State officials will suffice), which includes a description of the processes and methods the borrower plans to use in the project;

(h) A list of permits, licenses, and other authorizations required by local, State, or Federal authorities prior to opening of the proposed mine, with copies of any permits already issued, and a schedule of expected dates of application and expected approval dates for the remaining required permits; and

(i) Environmental data describing the environmental characteristics and impacts of the project.

§ 300.22 Financial and other application information requirements.

(a) The applicant shall provide information in support of the application, such as prescribed below. The Secretary may require additional information at his discretion in order to adequately evaluate the likelihood of repayment of the loan:

(1) A description of the borrower's organization and nature of activities, including a copy of the business certificate, partnership agreement or corporate charter, bylaws, and appropriate authorizing resolutions;

(2) A description of the affiliates of the borrower;

(3) Résumés of the borrower's key employees, which include, in reverse chronological order, their business and managerial experience, with emphasis on history of recent experience in the coal industry;

(4) A description of any other Federal financial assistance (e.g., direct loans, guaranteed loans, grants, or contracts) expected to be applied for or already obtained by the borrower in connection with the project;

(5) Itemized estimates of costs of the project;

(6) A summary of insurance coverage for the project;

(7) A schedule of salaries (and other financial remuneration, including profit sharing and stock options) to be paid to officers and key employees of the borrower who are, or will be, directly associated with the project;

(8) A technical and economical feasibility report, which includes:

(i) Coal reserve quantification;
(ii) Coal reserve quality;
(iii) Site inspection;
(iv) Assets value appraisal;