WORLD TRADE
ORGANIZATIONG/SCM/Q2/USA/25
29 October 2002
(02-5955)
Committee on Subsidies
and Countervailing MeasuresOriginal:  English
SUBSIDIES
Replies to Questions Posed by JAPAN1, AUSTRALIA2
and the EUROPEAN COMMUNITIES3 Regarding the
New and Full Notification of the UNITED STATES4
The following communication, dated 25 October 2002, has been received from the Permanent
Mission of the United States.
_______________
QUESTIONS FROM JAPAN
I. Aerospace & Aeronautics
-  Advanced Subsonic Technology Programme (p.2) and
-  High Speed Research Programme (p.5)
Q1. Could the United States explain what is meant by “other cooperative-type agreements”?
Reply
Cooperative-type agreements refer to arrangem ents between NASA and private industry firms
used to stimulate research to benefit the general public.  These agreements often involve arrangements
whereby the government and recipient share the cost of the research.
Q2. Please explain how many companies have been aided under these Programmes?
Reply
Given the large number of companies involved in both programmes and the availability of
some of the research within the public record, it is impossible to estimate how many companies, eitherfrom the United States or other countries have been aided by this research.
II. Metals, Minerals, and Extraction (Non-Fuel)
- Emergency Steel Loan Programme
Q1. Could the United States explain how many  companies exactly have received guarantee
under the Programme since 1999?
                                                     
1 G/SCM/Q2/USA/22
2 G/SCM/Q2/USA/24
3 G/SCM/Q2/USA/23
4 G/SCM/N/48/USA-G/SCM/N/60/USA-G/SCM/N/71/USAG/SCM/Q2/USA/25
Page 2
Reply
Since 1999 two companies have received guarantees under this programme.
Q2. You stated that there have been eight a pplications, totalling $592,643,620 in loans.  Does
this amount mean the total amount of guaran teed loans from 1999 through 2001?  Could the
United States please explain which steel companie s receive these loans?  Please explain what the
amount received by each company  was?   
Reply
The amount listed is the total amount of guaranteed loans for which applications were
received during the period 1999-2001.  Although Article 25 of the Subsidies and Countervailing
Measures Agreement does not require the identification of individual recipients in a subsidy
notification, the United States can, for the sake of  full transparency, report that only two companies
have received loans under this programme.  Geneva Steel received a loan in the amount of$110,000,000 and Hanna Steel received a loan in the amount of $42,118,120.
QUESTIONS FROM AUSTRALIA
Energy and Fuels (Energy Development, Storage and Transportation & other Related Sectors)
Q1. Could the United States please advise whether qualifying producers and blenders are
required to use domestic sourced feedstock?
Reply
There is no requirement that qualifying producers and blenders use domestically-sourced
feedstock
ATTACHMENT III:  Notification of State-Level Measures
Arkansas:  Emerging Technology DevelopmentQ1. What are the criteria for qualifying for a tax credit?
Reply
This programme is eligible to manufacturers of high-growth energy technologies that are on
the verge of rapid expansion into new markets.
Georgia:  Investment Tax Credit
Q1. Is this a discretionary programme?
Reply
No, the programme is not discretionary.  All manufacturers and telecommunication
companies are eligible to receive the tax credit.
Q2. What are the criteria for qualifying for a tax credit?G/SCM/Q2/USA/25
Page 3
Reply
This programme is available to manufacturers or telecommunications companies having a
presence in Georgia for at least 5 years.  The company must invest at least $50,000 on an expansion
project.
Kentucky:  Industrial Development Act (KIDA)
Q1. What type of manufacturing projects are eligible for tax credits?
Reply
The programme is open to all new and expanding manufacturing projects.
Nebraska:  Ethanol Tax Credit
Q1. What are the criteria for receipt of a tax credit?
Reply
The tax credit is only given to new ethanol producers.
QUESTIONS FROM THE EUROPEAN COMMUNITIES
Aerospace & Aeronautics
General Remarks:
Q1.  The notification omits any mention of financial expenditures by the US Department of
Defense that provides benefit to commercial entities ( e.g., US producers of civilian aircraft).
Please explain the reason for this omission and pr ovide a list of all applicable DoD subsidies and
their contents.  In particular, please identify and discuss subsidies granted under DoD’s
Research, Development, Testing & Evaluati on (RDT&E) and Independent Research &
Development (IR&D) programmes.
Reply
The relevant administering authorities for these programmes have been contacted.  An answer
will be provided as soon as possible.
Q2. The notification makes mention of only five aerospace and aeronautics programmes,
four of which, the US notes, were discontinued during the notification period.  It is the
understanding of the European Communities that, for example in US Fiscal Year 2001, the US
Government provided at least $747.6 million in aeronautics-related funding through the Officeof Aerospace Technology, at least $419.4 million in  funding for aeronautics-related Research &
Programme Management, and at least $50.6 million in funding for aeronautics-related
Construction of Facilities, for total NASA aeronautics funding of at least $1,217.6 million during
that 12-month period.  The notification, however, omits any mention of these financial
expenditures, which are focused, primarily or exclusively, on civilian ventures.  Please explainthe reason for this omission and provide a list of all applicable NASA subsidies and their
contents for each calendar year covered by the notification.G/SCM/Q2/USA/25
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Reply
Please note that several of the programmes discussed in the US notification are funded from
the budgeted amounts cited in the question.  However, the relevant administering authorities have
been contacted to determine if additional information needs to be provided.
Advanced Subsonic Technology Programme
Q3. As regards NASA’s Advanced Subsonic Technology programme, the notification states:
This programme was discontinued at the end of fiscal year 1999 as NASA refocused its
programme activities from an emphasis on strengthening industrial competitiveness to research
investments focused on the public good.  Please explain what this statement means and specifyhow this re-focusing was accomplished.  Plea se explain whether “research investments” of
NASA will be made in US firms only and whether the “public goods” NASA hopes to create will
be freely available to the general public or rather will be available only to US firms.
Reply
As a result of changes in the composition of the aviation market as well as a NASA
re-evaluation of the direction of its aerospace programme, a decision was reached to focus NASA’s
research programme on public good.  Public good, in this context, means those technologies which
when attained will lead to a enhanced quality of life (environmentally friendly, more mobile, and  safeand secure) for our society.  The research invest ments of NASA will in general, be made with US
firms, except for those cases where specific goods and services may be obtained from non-US firms.
Non-US firms may participate in NASA research programmes.
Q4. Please describe in detail all elements of the AST programme that have been transferred
to other programmes at NASA (or elsewhere in  the US Government) as a result of the
termination of the programme in FY 1999.
Reply
No programme elements were transferred to other NASA (or elsewhere in the US
Government) programmes.
Q5. Please indicate how many companies have benefitted from the programme and specify
in percentage of the total the three biggest recipients of the benefits granted.
Reply
A very large number of companies have directly participated in the programme.  Additionally,
because the research results are publicly available, many other companies – both inside and outside of
the United States – have benefitted indirectly.
High-Speed Research (HSR)
Q6. With regard to the high-speed research pr ogramme, the notification states: Due to the
nature and focus of the R&T activity, these contracts, grants and other cooperative-type
agreements were awarded to large civil aircraft and engine manufacturers, advanced aerospacematerial manufacturers, and other major subsystem developers for aircraft, engine and air
traffic management systems.  How many firms did receive subsidies under this programme
during the notification period?G/SCM/Q2/USA/25
Page 5
Reply
The primary firms that participated in th e HSR programme were two airframe and two
propulsion system companies.  Numerous other firms participated, based on specific expertise in a
technical area, but to a lesser degree.
Q7. What was the total expenditure concernin g the development of a high speed civil
transportation plane?
Reply
None of the HSR programme expenditures was applied to development of a high speed civil
transport.  All research investments were devoted to addressing technical challenges in the area of
environmental compatibility and economic viability.
Q8. On average how many projects were funded and how many firms received subsidies
under this programme?  Do enterprises have to re-submit a new application every year?  Whatare the criteria that enterprises must meet in order to receive the benefits from this
programme?
Reply
The primary firms that participated in the three main projects of the HSR programme were
two airframe and two propulsion system companies.  Numerous other firms participated, based on
specific expertise in a technical area, but to a lesser degree.  Private-sector participation was
determined through open solicitation (each having its own selection criteria) of a series of research
proposals with multi-year awards.  Programme funding was however, subject to annual evaluation aspart of the on-going NASA budget cycle within the United States government federal budget process.
Q9: Why was the programme ended?   
Reply
This programme was discontinued at the end of fiscal year 1999 following a decision by the
major aircraft manufacturer that the state of technology was insufficient to overcome the
environmental and economic challenges for the foreseeable future.
Q10. In light of the US’s notification that “the High Speed Research Programme had the
specific aim of improving, by 2005, the technology base for the possible future development ofan economically viable and environmentally frie ndly high speed civil transport by private
aerospace companies”, please describe what be nefits principal HSR/HSCT contractors received
from this programme.
Reply
As noted, the HSR programme was unsuccessful in achieving a technology base sufficient to
overcome the barriers necessary for future development of an environmentally acceptable and
economically viable high speed civil transport.
Q11. Please describe in detail all elements of the HSR/HSCT programme that have been
transferred to other programmes at NASA (or else where in the US Government) as a result of
the termination of the programme in FY 1999.G/SCM/Q2/USA/25
Page 6
Reply
No element of the HSR programme was transferred to other programmes at NASA (or
elsewhere in the US Government) as a result of the termination of the programme.
The X-33 Programme
Q12. Could the United States explain whether this programme is for the sole use of non-
commercial aerospace activities?  Are commercial activities benefitting from this programme,
and if so, what industries are the main beneficiaries?
Reply
The X-33 programme was cancelled in May, 2001.  The intent of the X-33 programme was to
demonstrate technologies necessary to reduce the cost and increase the safety of space access.  The
technology advancement would have benefitted both the US government and private industry in a
broad range of sectors of the economy; however,  we have no information that any commercialactivities received specific benefits from this programme.
Q13. Please indicate what percentage of X-33 programme participants were non-US
companies or organizations.
Reply
The X-33 programme had two non-US firms serving as subcontractors to US firms.
Q14. Please indicate to what extent the program me participants shared the full costs of the
programme.
Reply
The X-33 programme was a cooperative effort between NASA and private industry.  NASA
contributed approximately $912 million and Lock heed Martin contributed approximately $357
million.
Q15. What was the total budgeted amount for the X-33 during the programme’s life (FYs
1995–2000)?
Reply
As noted above, NASA contribut ed approximately $912 million.
The X-34 Programme:
Q16. Please describe the inter-relation of the X-33 and X-34 programmes and subsidies
conferred by the programmes.
Reply
The X-33 and X-34 programmes were managed by the same NASA Enterprise:  The Office of
Aerospace Technology.   The goal of each programme was similar – demonstrate technologies
necessary to reduce the cost and increase the safety  of space access systems.  Otherwise, there was no
relationship, technical or budgetary, between the two programmes.  The X-34 Programme was alsoG/SCM/Q2/USA/25
Page 7
cancelled in May, 2001.  We have no information that any commercial activities received specific
benefits from either programme.
Q17. Please identify who was “the” participating company in this programme.
Reply
Orbital Sciences Corporation
Q18. The notification states that since 1996 the programme has been “limited to the
construction of a flight demonstrator that would test a number of new launch vehicle
technologies including composite structures a nd advanced thermal protection systems”.  Does
“the” participating company in the X-34 program me obtain use of the flight demonstrator at
less than arm’s length fair market price?  Is use of this flight demonstrator open to all
competitors of “the” participating company on equal terms and conditions?
Reply
NASA retained complete control over the technologies to be demonstrated and any other use
of the X-34 technology demonstration vehicle.  Prior to programme cancellation, the Agency did not
plan for private use of the X-34 vehicle by Orbital Sciences Corporation or its competitors.
Q19. What was the total budgeted amount for the X-34 during the programme’s life (FYs
1995–2001)?
Reply
$205 million
The Spacecraft Technology Development Programme
Q20. Please indicate to what extent the program me participants shared the full costs of the
programme, explain how assistance is provided to industry and how technology know how
transfer from NASA is taken into account?
Reply
Industry participants shared the programme research cost by participation in cost-share
contracts.  The extent of the industry contract cost share was based upon several factors  (NASAFederal Acquisition Regulation Supplement §1816.303-70) including the extent to which the research
effort was likely to enhance the contractor’s capability, expertise, or competitive advantage.
“Know-how ” information was made available via professional interchanges between NASA and
contract/university researchers  as well as placement of NASA research results on Public Access
servers.
Q21. Was participation open to both U.S. and non-U.S. participants?
Reply
Yes.G/SCM/Q2/USA/25
Page 8
Agriculture
Q22. It is mentioned that several programmes  (EEP, DEIP) had been authorized in the
Uruguay Round Agreement Act of 1994 until the year 2001.  Since the notification mentions the
extension of fundings through the year 2002, will there be  any further extensions after the endof this year?
Reply
The authorities to operate the DEIP and EEP were extended by the Farm Security and Rural
Investment Act of 2002 through calendar ye ar 2007 and fiscal year 2007, respectively.
Q23. On page 11 of the notification "Mandated Export Sales of Dairy Stocks" the US indicate
under "Amount" that there were no export sales of CCC owned dairy products during fiscal
years 1998, 1999, 2000, 2001.  Then under "trade effects" the document refers to attachment I
for statistics. In attachment I the document show s the value of selected commodities exported by
the US.  These values concern poultry and, i ndeed, dairy products. Can the US explain the
relation between the statement under "amount" and the contents of "Attachment I"? Do the
values in Attachment I not contain any CCC dairy sale?  Why does attachment I not include
export values of other commodities than poultry and dairy products?
Reply
There were no direct US Government subsidized export sales of dairy products.  Reference to
Attachment I should not have been included under "trade effects" for the Mandated Export Sales of
Dairy Stocks.  Attachment I reflects sales made under the EEP and DEIP programmes for which only
poultry and dairy products were exported.
Q24. Where did the US include food aid in th e form of wheat, wheat flour and other
commodities subsidized under "Art 416 (b)" and the "PL 480" programmes in the current
notification?
Reply
These programmes were not included in our notification – they are food aid programmes
managed according to international food aid rules.
Q25. Where did the US include export credit  guarantees in the current notification?
Reply
US agricultural export credit guarantees were not included in our notification; such
guarantees are provided according to the commitments in the Agreement on Agriculture.
Q26. Where did the US notify subsidies for crop insurance payments in the current
notification?
Reply
As noted in the beginning of our notification, domestic agricultural subsidies were not
included in our notification.  We expect that this  information will be provided in the near future.G/SCM/Q2/USA/25
Page 9
Q27. Where did the US notify in the current noti fication the tax exemption for agricultural
products for Foreign Sales Corporations (FSC)?
Reply
In light of the dispute settlement proceedings, FSC was not notified.  The United States has
stated its intention to come into compliance with the rulings of the WTO Appellate Body.
Energy and Fuels
Partnership for a New Generation of Vehicles (PNGV)
Q28. It is mentioned that the PNGV commenced in 1993 and will end in September 2002.
Will there be any follow-up programmes?  Please explain in more detail the role of the USCAR
in the various mechanisms through which assistan ce is provided and participants are selected.
Reply
There will be no follow-programme to the Partnership for a New Generation of Vehicles.
USCAR is the Big-Three consortium for pre-competitive R&D and was the industry counterpart for
PNGV.
Solar and Renewable Energy Resources Technologies:
Q29: Please explain in more detail the functioning of partnerships including industry
co-investment.  Does industry have to repay any amounts after a successful commercial launch
of a product?
Reply
General
The missions of each of the Solar and Renewa ble Energy Resources sub-programmes include:
(1) working in partnership with US industry to establish geothermal energy as a sustainable,environmentally sound, economically competitive contributor to the US and world energy supply to
develop integrated energy storage systems that increase the value of electricity derived from
intermittent wind and solar sources by making the power available regardless of when it is generated;
(2) utilizing the core competency of the National Laboratories, universities, and industry to develop
and demonstrate the processes and technologies needed to produce, store, transport, and utilizehydrogen safely in various applications; and (3) improving the technical, societal, and environmental
benefits of hydropower resources by conducting coll aborative research and development with industry
and other Federal agencies.
Collaboration with industry partners allows the programme to leverage resources through
cost-shared cooperative agreements or CRADAs.  DOE laboratories have primarily used CRADAs.
Under a CRADA, a DOE laboratory and its public or private partner or partners agree that their
scientists will collaborate on a research project of mutual interest and consis tent with the laboratory’s
mission.  Both parties may contribute personnel, services, and property to the CRADA project, and
the partner(s) can provide funding for the laboratory’s research. However, the DOE laboratory cannotprovide funds to the partner(s) under a CRADA.  Laboratories may provide personnel, services,
facilities, equipment, or other resources to the partner.G/SCM/Q2/USA/25
Page 10
Under a grant or cooperative agreement, DOE provides funding directly to the grantee or
partner.  Under a grant, there is no substantial involvement in the activity by DOE.  Under a
cooperative agreement, there is substantial invo lvement, which exists if responsibility for the
management, control, or direction of the project (or for the performance of the project) is shared by
DOE and the recipient.  Providing technical assistance or programmatic guidance does not constitutesuch substantial involvement if: (1) the recipient is  not required to follow the guidance; or (2) the
assistance or guidance (a) is not expected to resu lt in continuing DOE involvement in the performance
of the project; or (b) pertains solely to the administrative requirements of the award.
Intellectual property rights to technology developed under the grant, cooperative agreement or
CRADA are negotiated in advance.  In general, the inventing partner retains ownership rights, while
the other partner receives appropriate licensing rights.
Cost-Sharing and Recoupment
Please refer to paragraphs 12-18 of the Attachment.  DOE does not require and will not seek
repayment or recoupment of government funding if inventions developed with the assistance of theSolar and Renewable Energy Resources Technologies programme are commercialized.
Electric Energy Systems and Storage
The programme works with a diverse group of partners to met end user needs. The
programme cooperates extensively with electricity users and providers, equipment manufacturers,
system integrators, academic and research organizations. This cooperation helps identify merging
trends, and supports development of energy storage systems that will play a vital role in a restructured
electricity marketplace.  In FY 1998, the pr ogramme received over $1,600,000 in cost-sharing
commitments from its industry partners.
Hydrogen Research and Development, and Hydrogen Generation from Electrolysis
Minimum qualifications include fulfilment of the minimum required cost share contribution
of 20 per cent of the total project cost for the Hydrogen R&D sub-programm e and 50 per cent of the
total project cost for the Hydrogen Generation from Electrolysis sub-programme.  If the minimum
requirements cannot be met, the financial assistance application will not be comprehensivelyevaluated or considered for Award.  In-kind contribut ions (e.g., contributions of services or property;
donated equipment, buildings, or land; donated supplies; or unrecovered allowable indirect costs) may
be considered as all or part of the cost share.
After the comprehensive evaluations are completed for all competing applications, DOE
applies Programme Policy Factors.  The purpose of considering these factors is to maximize the
effective use of available Government funding.  These factors are considered by the selection official
to ensure that the programme, as a whole, meets the goals of the issuing Programme Office and is
consistent with the programme mission.  The factors to be applied are:
-- Geographic distribution of Applicants
-- Technical diversity of Projects
-- Applicant cost share beyond the minimum required; and
-- For storage-related projects only, technical diversity of university teams.G/SCM/Q2/USA/25
Page 11
Hydrogen Generation From Electrolysis:
The programme policy factors to be applied are:
-- Geographic distribution of applicants;  and
-- Technical diversity of Projects.
Enhanced Geothermal Systems
Only those who own, have valid leases, or legal access to unproductive geothermal properties
in the US and are capable of providing the necessary cost-share could submit proposals.  Third party
consulting groups may be part of the project team, but were not eligible to submit proposals.
Two awards have been made under the solicitation.  During each phase of the project, as the
project progresses to the commercialization phase , the awarded must provide minimum non-federal
cost share in the amounts specified as follows:  Phase One: 20 per cent; Phase Two: 40 per cent;
Phase Three: 80 per cent; Phase Four: 100 per cent.
Manufacture, Installation, and Testing of New Environmentally Friendly Hydropower Turbine
Designs
DOE will provide up to 50 per cent of the total cost of the following items:
– Finalizing turbine design (this may include en vironmental/biological tests, if necessary to
finalize turbine design);
– Preparing the engineering testing criteria and plan;
– Preparing the biological testing criteria and plan;– Conducting engineering and biological tests;
– Conducting Operations & Maintenance monitoring tasks;  and
– Preparing the interim, final and topical reports.
No other tasks will be cost-shared by DOE.  Only costs incurred for the identified items after
the cooperative agreement is signed are eligible for reimbursement.  Applicant’s cost share must be
either cash or labour hours and can include items other than those listed above. In-kind costs are notaccepted.
Energy Conservation Programmes – Transportation Sector:
Q30. Please explain which companies are elig ible for various competitive procedures to
participate in this programme?  How and by whom is the selection made?
Reply
Please refer to the discussion of eligibility requirements in the paragraphs 4-11 of the
Attachment, for financial assistance awar ds (grants and cooperative agreements) and
paragraphs 19-20 of the Attachment for CRADAs.
Generally, under competitive award procedures for financial assistance, eligibility
requirements are determined by programme officials and are contained in programme solicitationsand in the Energy Policy Act and the Simpson-Craig Amendment.  Eligibility requirements for
financial assistance are applied by DOE contracting officers, and heads of programmes.  Eligibility
for CRADAs is determined by DOE national laboratories and is subject to the Stevenson-Wydler
Technology Innovation Act of 1980.  CRADAs are awarded by DOE national laboratories.G/SCM/Q2/USA/25
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Motor Control and Power Conversion Technologies
Please refer to the following solicitation for c ooperative agreements:   FY2002 Joint Office of
Energy Efficiency and Renewable Energy and Office of Fossil Energy Science Initiative,DE-PS26-02NT41432,  17 May 2002.
5
For competitive awards, a DOE Contracting Offi cer may award financial assistance under this
solicitation to those applicants whose applications are determined to be in the best interest of the
Department in achieving the programme objectives set forth in the solicitation.  Selection of an
application is achieved through a process of evaluating and comparing the relative merits of the
applicant’s complete applications, in accordance with all of the evaluation factors set forth in the
solicitation.  DOE accepted applications based on their potential in best achieving programme
objectives, rather than solely on evaluated technical merit or cost. The solicitation stated that DOEmay select for an award all, none, or any number or part, of an application, based on its decision as to
which meritorious applications best achieve the programme objectives.   Selection for negotiations are
made entirely on the basis of applications submitted.  Applicants were directed to address specifically
the factors mentioned in the evaluation criteria, and not depend upon the background knowledge of
the reviewer of the application.
Advanced Liquid Natural Gas Onboard Storage System
Please refer to solicitation DE-SC02-02CH 11108, 20 June 2002, for cooperative agreements
which states that:
Applications that do not meet the following Qualification Criteria will not be evaluated or
considered for award by the DOE Contracting Officer:
1. Teaming – The participation of a tank manufacturer is required.  The tank manufacturer must
have the resources to be able to successfully manufacture and market LNG tanks and be
committed to participating in any Phase II effort, if awarded;  and
2. Cost Share – In accordance with Section 3002 of the Energy Policy Act, applicants are
required to provide a minimum cost share of 20 per cent of the total project costs.  Cost sharemay be provided as cash or in-kind contributions.  Cost share may not be other federal
funding.  Cost share must originate from non-federal sources.  The stated minimum cost
sharing requirements will not be waived or adjusted during the negotiation of any award.  Fee
or profit will not be paid under any award result ing from this solicitation and foregone fee or
profit will not be accepted as cost sharing.
The Contracting Officer will eliminate any application from consideration if it does not meet
the Qualification Criteria or if it is so obviously deficient as to be totally unacceptable on its face.
Technical Proposals are numerically point scored in accordance with the evaluation criteria and
weights set forth in the solicitation.
Programme policy factors, while not indicative of an application’s individual merit, are
relevant and essential to the process of selecting applications which best achieve the Department’s
overall programmatic goals and objectives.  The Programme Policy Factors applicable to selecting
applications for award under this solicitation are set forth below.  All are of equal importance.  Upon
completion of the technical, business, and cost evaluations, these Programme Policy Factors will be
                                                     
5 Available at: http://www.pr.doe.gov/G/SCM/Q2/USA/25
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applied against those applications which are deemed potential candidates for award, before final
selections are made:
-- A diversity of methods and approaches to achieve high efficiency, reliability, and durability
of an Advanced Liquid Natural Gas (LNG) Onboard Storage Systems;
-- Supporting complementary efforts or projects which, when taken together, will best achieve
the programme goals;  and
-- Greatest potential to benefit the economy of the United States.
Energy Conservation – Industry Sector:
Q31. Please explain what are „other forms of cooperation“ in the context of assistance under
these programmes.
Reply
The United States notification states that DOE provides assistance through grants, CRADAs
and “other forms of collaboration accomplished through consortium-based activities between
government laboratories and private industry”.
These arrangements consist of CRADAs or subcontracts between DOE national laboratories
and private industry.  “R&D consortia” are defined by DOE as arrangements that involve multiplefederal and private parties working together for a common R&D objective.  Costs may be shared, but
usually no funds are exchanged between participants.
Industries of the Future:
Q32. Please explain how cost-shared RD&D works, which companies are eligible and how
“industry who lack funds and/or know how” are defined. After having “moved successfully
their technologies from the research bank to th e market place” do companies have to pay back
part or total of the assistance received throug h this programme. Does the integrated delivery
programme provide the new technologies to the receiving industrial firms free of charge?
Reply
The DOE/EERE Office of Industrial Technologies (OIT) invests in pre-competitive and
high-risk R&D that individual companies are unable to undertake without government support.  By
working with entire industries rather than indi vidual companies, OIT maximizes the energy benefits
of technology investments and fosters the formatio n of public-private partnerships.  Although the
Industries of the Future strategy focuses on nine key energy-intensive industries, it engages the
participation and expertise of many related industries.
With the exception of the Metals Initiative programme, repayment of the government
contribution has not been required with respect to Industries of the Future activities.  Appropriationslaws require repayment of up  to one and one-half times the total federal investment from the proceeds
of the commercial sale, lease, manufacture, or use of technologies developed under the programme.
Repayment or recoupment applies to domestic and foreign sales. (See paragraphs 16-18 of the
Attachment)
The programme does not provide technologies to industrial firms free of charge.
Please refer to the discussion of eligibility and cost sharing requirements in the Attachment
and to  the “Guide to Financial Assistance for Technology Innovators”, (January 2001) published byG/SCM/Q2/USA/25
Page 14
the Department of Energy, Office  of Energy Efficiency and Renewa ble Energy, Office of Industrial
Technologies.6
Industries of the Future
The Industries of the Future Programme uses open, competitive solicitations as the primary
mechanism to provide financial assistance to effective public-private partnerships, leverage funds, andobtain substantial reductions in energy intensity.  The solicitation process has been streamlined and is
now uniform across all Industrial Technologies programmes and sub-programmes.  Project
management efforts are centralized to provide greater uniformity and more effective delivery of
services.  Competitive solicitations require the national laboratories to work in partnership with the
private sector to submit proposals.  To facilitate these partnerships, the Laboratory Coordinating
Council works to inform the private sector about the unique and relevant capabilities of the national
laboratories.  The project selection process entails merit reviews by peer experts and carefulevaluation of projected energy and economic savings.  Prospective and retrospective peer review
exercises are used to evaluate project performance and progress and to adjust support.  To verify
programme performance and results, all commercialized technologies and the extent of their use by
industry are tracked.  Crosscutting RD&D enables energy improvements in multiple industries.  The
Industries of the Future strategy embraces efficiency enhancements to technologies that are widelyused in a broad cross-section of US industry.  Given the breadth of use of these technologies, even a
small improvement in their efficiency can mean substantial energy and cost savings.
The following conditions apply to solicitations for cooperative agreements for the following
sub-programmes:  Industrial Materials for the Future, Sensors and Controls, Supporting Industries,Agriculture Industry of the Future, Petroleum Industr y of the Future, Chemical Industry of the Future,
Glass Industry of the Future, Steel Industry Ironma king Research Challenge, Emerging Technologies
Deployment, and Emerging Technologies Deploy ment for the Chemical and Petroleum Industry:
For-profit, non-profit, state and local government s, Indian Tribes, and institutions of higher
education may submit applications, unless otherwise restricted by the Simpson-Craig
Amendment.  Multi-partner collaborations between industry, university, and National
Laboratory participants are encouraged.  Single organization awards are not considered.
Industrial partners must be included, either as primary applicants or as cost sharing partners.
For steel industry ironmaking research and development cooperative agreements ,  the cost
sharing participants must also include at least two steelmakers and at least one equipment supplier
and/or engineering firm to the steel industry.  The participants should be in position to deploy the
equipment innovations and processes to a broad segment of the steel industry.
For Glass Industry of the Future cooperative agreements , industrial partners must be
included, either as primary applicants or as lower tier subcontractors, or as cost share participants.
For Emerging Technologies Deployment for the Chemical and Petroleum Industry
cooperative agreements , any industrial company that owns and operates a petroleum refinery or
chemical plant where the technology will be installed a nd field-tested is eligible to apply.  Applicants
are encouraged to propose a teaming arrangement that includes technology developers (industry,university, and national laboratories), and a commercializing partner (i.e., equipment supplier,
technology vendor, etc.).
                                                     
6 Available at:  http://www.oit.doe.gov/inve ntions/pdfs/0101finasst.pdfG/SCM/Q2/USA/25
Page 15
For Sensors and Controls and Mining Industry of the Future/Mineral Processing Technology
cooperative agreements , any nonprofit or for-profit organization, university or other institution of
higher education, or non-federal agency or entity is eligible to apply.
The following conditions apply to solicitations for cooperative agreements for the following
programmes:  Industrial Materials for the Future, Sensors and Controls, Supporting Industries,
Agriculture Industry of the Future, Petroleum Industr y of the Future, Chemical Industry of the Future,
Glass Industry of the Future, Steel Industry Ironma king Research Challenge, Emerging Technologies
Deployment, and Emerging Technologies Deploy ment for the Chemical and Petroleum Industry:
National laboratories are not eligible for an award.  However, an application that includes
performance of a portion of the work by a National Laboratory may be considered for award providedthe applicant clearly identifies the unique capabilities, facilities and/or expertise the Laboratory offers
the primary applicant.  National Laboratories will receive their funding through their existing
arrangements with the Government.
Fifty per cent minimum non-federal cost-share is required for research and development
projects to ensure industrial involvement in each of the proposals and to ensure that the novel
materials or materials processing technologies developed by this R&D programme will be fully
implemented by industry.  This cost share requirement is not subject to waiver.  The first year cost
share can be as low as 30 per cent if subsequent years have sufficient cost share so that the
non-federal share of the total project is at least 50 per cent.
For Steel Industry Research Challenge cooperative agreements:  Cost share is encouraged,
but is not required.
For Sensors and Controls cooperative agreements,  In accordance with 10 CFR 600.30, the
DOE has determined that a minimum cost share for this project is 20 per cent; except for those
projects determined to be fundamental research.
University-Industry Partnerships for Aluminum Industry of the Future
Twenty per cent minimum non-federal cost share is required, and is not subject to waiver.  All
US institutions of higher learning, whether private or public, and their associated researchorganizations (collectively called universities) are eligible. Collaboration among relevant Departments
within each college or university is encouraged.  Applications from two or more collaborating
academic institutions will also be accepted.  Multi-partner collaborations between university and
industry participants are encouraged.  Industrial partners must be included in each application but will
not be considered as primary applicants.  Applications that do not include industry partners will not beevaluated and will not be eligible for an award under this solicitation.  Applications that fail to
quantify the projected energy savings of the proposed research will not be evaluated and will not be
eligible for award.  National laboratories are not eligible for an award.
Industrial Materials for the Future (Knowledge Base or Core Activities)
Proposals are solicited from universities, and not-for-profit research institutes for research and
development leading to new materials and processing methods for eventual use.  Universities, and
not-for-profits are required to form partnerships for technology development and to work with
industry to ensure that core activities will ultima tely lead to successful applications in industry.
National laboratories may partner in these activities  but cannot be the prime recipient.  Multi-partner
collaborations between industry, university, and National Laboratory participants are encouraged.
Cost share is not required, but evidence of industry interest in the proposed technology must be
provided.G/SCM/Q2/USA/25
Page 16
Inventions and Innovation Sub-Programme
Applicants must be:  (1) individuals that are US citizens, either native-born or naturalized;
(2) small businesses (as defined by Small Business Administration) that are incorporated andoperating in the US;  or (3) institutions of higher learning located in the US Individual inventors and
very small businesses (15 or fewer employees) are especially encouraged to participate.
US individual inventors, small businesses, universities and not-for-profit research institutes
can apply for grants of up to $40,000.  US individual inventors and small businesses can apply for
grants of up to $200,000.  The grants are for research and technical development of an innovation.
The programme does not fund commercialization (i.e., patent applications or advertising or marketingcosts).
Cost sharing is highly encouraged, but is not mandatory.  The level of cost share is one of the
programmatic selection considerations used by the selection official.  In conjunction with the
evaluation results and rankings of individual applications, the selection official will make selectionsfor negotiations and planned awards from among the highest-ranking applications using the following
programme policy factors:
-- Participation of independent inventors and very small businesses (15 or fewer
employees);
-- Degree to which the project aligns with the vision and roadmap documents of the OIT
focus industries;
-- Impact on national energy consumption;
-- Geographic distribution (considering past awards and current applications);
-- Diversified Industries of the Future portfolio of technologies;-- Level of cost share;
-- Justification for DOE funding;
-- Number and success of prior awards (as determined from government records); and
-- Amount of available DOE funding.
Industrial Assessment Centers Sub-Programme
Eligible applicants are the 26 current Industrial Assessment Centres.  To be eligible, applicant
institutions must be accredited by the Engineering Accreditation Commission of the Accreditation
Board for Engineering and Technology and a Fiel d Management Organization cannot also be an
Industrial Assessment Centre institution at any time during the project period (2003-2007).  Cost
sharing is not required.
NICE3 Sub-Programme
Applicants must  be state agencies on behalf of or in conjunction with industry or industry
who have coordinated state agency endorsement.
The DOE share for each award is up to $525,000.  Industry may receive a maximum of
$500,000 in federal funding.  A maximum of $25,000, or 10 per cent of the total amount to industry,
whichever is less, may be used to support a state agency’s costs associated with financial assistance
administration, technology transfer/dissemination, marketing, etc. (this portion of the federalcontribution is not required to be cost shared).  Non-federal cost share from industry or a combination
of state and industry sources for a single award must be at least 50 per cent of the total cost of the
project.  Support must be in the form of cost-sharing which demonstrates a substantial interest in the
proposed project to fully implement the technology in industry.  Cash, equipment, labour, and in-kindG/SCM/Q2/USA/25
Page 17
contributions are all allowable as cost share.  Participants cannot count funds derived from other
Federal funding sources as part of their required cost share.
Plant Wide Assessments
Only industrial "end-users" defined as those co mpanies who own and opera te a facility within
the OIT Industry of the Future strategic areas (Forest Products, Chemicals, Petroleum Refining, Steel,
Aluminum, Metal Castings, Glass, Mining, and Agriculture) are eligible.  In addition to end-user
participation, a project team may involve other partners including, but not limited to, design and
consulting engineering firms, manufacturers, distributors, utilities, energy service companies, state
energy offices, and research institutions.  End-user companies are encouraged to include such
participation.  Other non-end user entities are also encouraged to catalyze and support proposalsubmission by end-user companies.  This solicitation requires a 50 per cent cost share (which may not
be waived) to ensure industrial involvement in each of the proposals.
Oil Programme
Q33. Please describe in more detail who benefitted from this programme.  How much, in
percentage of the total amounts, was at tributed to major petroleum companies?
Reply
The programme provided support to universities, state geological surveys, independent
researchers, National Laboratories, oil field service companies, consulting firms and others in private
industry.  Less than 10 per cent of funding went to large, vertically integrated petroleum companies.
Excess of Percentage Over Cost Depletion for Oil, Gas and Other Fuels:
Q34 Please specify how “small scale producers” are defined.
Reply
Percentage depletion is allowed only for independent producers and royalty owners (as
contrasted to integrated oil companies).  An independent producer is any producer who is not aretailer or refiner.  A retailer is any person who directly, or through a related person, sells oil or
natural gas through a retail outlet operated by the taxpayer or a related person, or to any person that is
obligated to market or distribute such oil or natural gas under the name of the taxpayer or related
person or has the authority to occupy any retail outlet owned by the taxpayer or related person.  A
person is not a retailer if the combined gross receipts of that person and all related persons from theretail sale of oil and natural gas do not exceed $5 million per year. A refiner is any person who
directly or through a related person engages in the refining of crude oil, but only if such person or
related person has a refinery run in excess of 50,000 barrels per day on any day during the taxable
year.  Further, a taxpayer may claim percentage depletion with respect to only up to 1,000 barrels of
average daily production of crude oil or an equivalent amount of natural gas.  For producers of bothoil and natural gas, this limitation applies on a combined basis.  Small producers benefit from this
provision because of the limitations on refiners and qualifying production.
Alternative Fuel Production Credit:
Q35. Please describe the qualifying production of fuels eligible for credit.G/SCM/Q2/USA/25
Page 18
Reply
For purposes of this credit, qualified fuels include: (1) oil produced from shale and tar sands;
(2) gas produced from geopressured brine, Devonian shale, coal seams, a tight formation, or biomass
(i.e., any organic material other than oil, natural ga s, or coal (or any product thereof);  and (3) liquid,
gaseous, or solid synthetic fuels produced from co al (including lignite), including such fuels when
used as feedstocks.
Capital Gains Treatment of Royalties on Coal:
Q36 Please explain who benefi tted from this programme and what were the criteria for
eligibility.  Was the tax concession only allocated to the royalties received or also on the sales of
coal.
Reply
Coal royalties may be treated as long-term capital gain when the owner of coal or an
economic interest therein (including a lessee) disposes of it under a contract (which may include a
lease or a sublease) with a retained economic interest.  This treatment generally is not available in the
case of sales of coal.  Only non-corporate owners of coal properties receive income tax concessions.
For taxable corporations, net capital gains are included in income subject to tax and taxed at the same
rates as other income.
Various Fishing Vessel and Permit Buyback Programmes
Q37.Please indicate what happened to the bought  back vessels.  Were they wrecked or sold
again? Have any of the bought back permits been sold again?
Reply
With the exception of a couple of vessels that were authorized to be used for charitable,
humanitarian, scientific or law-enforcement purposes, all bought back vessels have been scrapped.
All bought back permits have been revoked.
Capital Gains Treatment of Certain Timber Income:
Q38. Please specify which kind of timber is meant by “certain timber”.  What are the criteria
for being eligible for those tax concessions?
Reply
The phrase “certain timber” in the original explanation means that not all disposals of timber
are accorded capital gains treatment.  Whether the disposal of timber generates capital or ordinary
income depends on the purpose for holding the timber and the method of disposal.  Timber that is held
primarily for sale to customers in the ordinary course of business would not receive capital gains
treatment upon disposal unless the taxpayer satisf ies one of the following two conditions:  (1) The
timber owner cuts standing timber and elects to cons ider such cutting as a sale or exchange of timber
and has owned the timber for at least one year (t he definition of timber owner for this purpose
includes those holding a contract right to cut timber);  or (2) the timber owner disposes of timber withretained economic interest.  To retain an econom ic interest, the timber owner would enter into a
contract that would specify the amount paid per unit of timber cut while retaining the legal title to the
timber until it is cut.  The definition of timber owner for this purpose includes sublessors and those
holding a contract to cut timber.G/SCM/Q2/USA/25
Page 19
Expensing of Multiperiod Timber Growing Costs
Q39. Please explain which timber owners are eligible to benefit from this tax concession and
which deductions they can expense?
Reply
Taxpayers generally must capitalize their direct costs and a properly allocable share of their
indirect costs to property produced or property acquired for resale.  However, timber raised, harvested
or grown by taxpayers is exempt from the capitalization provisions.  The type of costs timber
producers are allowed to deduct, rather than capi talize include the following:  management costs,
property taxes, insurance premiums, interest, fire, disease and insect protection costs, and thinning
costs.
Expensing of Exploration and Development Costs for Non-fuel Minerals:
Q40. Please specify which capital outlays are qualified to benefit from this tax concession.
What are the criteria for eligibility?
Reply
Exploration expenditures are expenditures for the purpose of ascertaining the existence,
location, extent, or quality of any deposit of ore or other mineral paid or incurred before the beginning
of the development stage of the mine or other natural deposit.  Such expenditures (but not including
expenditures for depreciable assets) are allowed as a deduction in computing taxable income.
Development expenditures are expenditures for the development of a mine or other natural deposit(but not including expenditures on depreciable assets) which are made after deposits of ore or other
minerals are shown to exist in sufficient quantity and quality to reasonably justify commercial
exploitation by the taxpayer.  Development expenditures must be for preparing a mineral deposit for
extraction of the mineral and not for equipment or fac ilities which relate solely to the extraction of the
mineral from the deposit.
Emergency Steel Loan Guarantee Programme
Q41. Please explain the criteria of eligibility for this programme.
Reply
To qualify for a loan guarantee, a company must produce steel mill products and must have
experienced layoffs, production losses, or financial losses since the beginning of the steel import crisis
in January 1998 or operate substantial assets of a company that meets these qualifications.
The AMTEX Programme
Q42. Please explain in more detail CRADA in context with this programme.  Is the technology
transfer for the receiving or partic ipating company  free of charge?
Reply
With the establishment of the AMTEX programme, a Cooperative Research and
Development Agreement (CRADA) was reached between US Department of Energy (DOE) and
industry.  The CRADA agreement is a contract that regulates industry-government interaction towardG/SCM/Q2/USA/25
Page 20
meeting the goals of AMTEX.  The four non-profit textile industry organizations represented in the
CRADA agreement in clude Cotton Inc., the Institute of Textile Technology, Textile/Clothing
Technology Corporation, and the Textile Research Institute/Princeton.  The agreement links these
industry organizations with eight DOE national  laboratories.  DOE and the textile industry
organizations provide matching funds towards AMTEX research.  Technologies developed under thiscollaboration was transferred to participating organizations, as well as to all interested parties, free of
charge.  (Please also note that the AMTEX programme was terminated in 2000.)
STATE LEVEL PROGRAMMES
Q43. We note that in some cases no programme authority is mentioned, in many cases the
information on the amounts of the subsidy is missing, in particular for tax subsidies no totalrevenue loss figures are given.  Please complete this information where missing.
Reply
We have provided a revised chart which includes much of the information not originally
provided.  We have had a particularly difficult time obtaining tax revenue loss figures.  This is not
unusual given the confidentiality of the information and the lack of specific databases tracking such
losses.
Alabama
Trico Steel CompanyQ44. Please explain this assistance programme in more detail?  Who was the programme
authority?  What is the nature of the ta x incentive and what determines the duration?
Reply
Under this programme the incentives include d, free land, block grant for the site, grading
excavation, tax incentives, and below- market interest bonds to finance the plant and equipment.  The
statutory authority is HB 438 TRICO Bill, which was passed in June 1995.
California
Employees in Economic Incentive AreasQ45. Please give more details on this credit.  What are the criteria for benefitting from this
programme, conditions of repayment, amounts?
Reply
This programme was mistakenly identified as a separate programme.  In fact, it is simply an
aspect of the Enterprise Zone programme (see description of “hiring credit for wages paid” in the
“Amount” column for Enterprise Zones).  This error has been corrected in our revised state
programme chart.G/SCM/Q2/USA/25
Page 21
Delaware
Enterprise ZonesQ46. Please specify the policy objective and which form of assistance, what are the criteria of
eligibility, amounts and repayment conditions.
Reply
The programme has a requirement of job creation associated with the project.  The form of
assistance can be tax exempt bond financing, which has a lower interest rate than conventional
financing, or tax abatement, at the following le vels: 75 per cent abated for 10 years for zones in
municipalities, and 60 per cent abated for 10 years in unincorporated areas.
Florida
High Impact Performance Incentive GrantQ47. Please give more details on qualification fo r high impact business.  What are the criteria
of eligibility?  How is high impact business certified?
Reply
In order to participate, the company must be in a designated high-impact sector, create at least
100 new full time jobs in Florida in a three-year period and make a cumulative investment in the state
of at least $100 million in the same time frame.  For research and development facilities, the
requirements are lower.  Seventy-five full time jobs need to be created and there should be acumulative capital investment of at least $75 million over a three-year period.
Idaho
Rural Community Block Grant ProgrammeQ48. Please specify the criteria of eligibilit y for the grant.  What is the average grant
awarded?  How many companies have benefitted?
Reply
This programme requires job creation within communities that have a population of 10,000 or
less.  Large cities are not eligible.  The project must address the needs of the residents of their
jurisdiction or impact area.
The average request is for $3 million.  To date, eight companies have benefitted from this
programme.
Illinois
Coal Demonstration Programme
Q49. Please specify what is mixed financing?  Do the firms have to repay any amounts?G/SCM/Q2/USA/25
Page 22
Reply
The Coal Demonstration Programme provides partial funding, while funding is also provided
through the Illinois Coal and Energy Development Bond Fund.  Companies do not have to repay the
grants.
Rail freight Programme
Q50. Please specify in percentage of the total how much of the programme consisted of grants
and how much is in loans?  Were th ere any special conditions for the loans?
Reply
This is primarily a loan-based programme.  On average the programme consists of 10 per cent
grants and 90-100 per cent loans.
Each loan is negotiable with the recipient.  Ho wever, the average interest rate is 3 per cent
and the repayment period is between 10-20 years.  Some type of collateral is required in order to
receive the loan.
Indiana
Steel Dynamics
Q51. Please give more details on this assistan ce.  How much of the amount was grants how
much was other assistance?  Please specify th e rate of tax credit and the duration, indicate
conditions of tax abatement and interest rates on bonds.
Reply
The purpose of this programme was to assist in the start-up of a $370 million mini-mill in
Butler, Indiana (November 1995).  The form of subsidy is tax credits; tax abatement; bonds; and
county economic development income tax revenues applied toward project.  The amount of the
subsidy is: DeKalb County tax incentives: $77.84 million; DeKalb County bonds that will produce$11.1 million for the project; DeKalb County bonds of $5.6 million to be repaid by property taxes;
DeKalb County grant from economic development income tax revenues: $12.5 million.  The total is
$107.4 million. The duration of the DeKalb County tax abatement is 10 years.
The purpose of the Spencer County programme was the construction of a  $285 million new
structural mill in Whitley County (August 1998).  The form of subsidy is Spencer County tax
abatements.  The amount of subsidy is up to $59 million.  The duration is 10 years.
Iowa
New Plate Mill Ipso
Q52. Please specify the details of the state in centive packet for this company, in particular
form, rate, conditions and duration.G/SCM/Q2/USA/25
Page 23
Reply
The incentives were provided by the State of Iowa to Ipso for the construction of a new plate
mill which cost $360 million.  The incentives included a direct cash outlay by the State of $3 million
and additional tax incentives of $70 million over a period of 20 years.
Kentucky
Coal Income Tax CreditQ53. Please explain what is meant by “Kentucky Coal”?  Does imported coal also fall under
this description and if not, can you please explain how this reconciles with Art. 3.1(b) of theWTO Subsidies Agreement?  Please specify the annual tax loss budgeted by the state.
Reply
For purposes of the Coal Income Tax Credit, “qualifying coal” is coal that is subject to the
coal severence tax, which is levied on every taxpayer in Kentucky engaged in severing or processing
coal.  Specific information on budgeted tax loss is unavailable.
Maryland
Smart Growth Economic Development Infrastructure and Assistance Fund
Q54. Please specify which companies are eligible, what are the criteria?  What are the
amounts involved?  Please provide information on loan conditions, equity investments and
amount of grants.
Reply
Eligible recipients include a local (county) government and MEDCO.  A qualified distressed
county is defined as a county, including Baltimore City, with an approved local strategic economic
development plan.  The jurisdiction must also have an unemployment rate, for the most recent
18 months, of at least 150 per cent of the State's unemployment rate for the same period; and anaverage per capita personal income, for the most recent 24 months, at or below 67 per cent of the
State's per capita personal income for the same period.  The site must be located in a Priority Funding
Area.  The programme was created in 1999, but had a sl ow start.  At the end of fiscal year 2001, over
$20 million was still in the fund.  However, due to increased activity during the first half of fiscal year
2002, $25.6 million was either disbursed or approved against $25.9 million of available funds.  Thestate legislature approved $7.7 million for the fund for fiscal year 2003.  No projects are currently
under consideration.  The fund will expire in 30 June 2004, unless extended.
Bethlehem Steel Corporation
Q55. Please give the exact details of this grant, whether these are one-off grants and if any
further grants will be given to this project.
Reply
The purpose of this programme was to support a new $300 million cold-rolling mill.  The
authority is the Economic Development Opportunities Programme and the Department of Business
and Economic Development/Baltimore County.  The form of the subsidy was a  grant.  The amount of
subsidy was funded as follows: Economic Development Opportunities Programme grant: $5.5G/SCM/Q2/USA/25
Page 24
million; Department of Business and Economic Development/Baltimore County: $300,000 workforce
training grant; and, Baltimore County Revolving Loan Fund Grant of $200,000.  The total is
$6 million.  This was a one-time grant.
Massachusetts
Seafood Revolving Loan FundQ56. Please give more details on the loan conditions.
Reply
These are direct loans for the expansion of offshore or shoreline seafood enterprises.  The
loan amounts range from $50,000 to $3,000,000.  They are provided to manufacturers and small
businesses including industrial, commercial and service firms.  Funds may be used for the acquisition,
renovation or construction of facilities and the purchase of machinery and equipment.  Funds cannot
be used for revolving lines of credit.
New York
Energy Products Centre
Q57. Please specify more details on eligibility for the programme.  Please explain marketing
and financial assistance.  Does this consist in grants or repayable favourable loans, what are the
conditions?
Reply
In order to receive a loan, persons should be a customer of one of the following utility
companies: Central Hudson Gas & Electric Corporation, Consolidated Edison Company of New
York, New York State Electric & Gas Corporatio n, Niagara Mohawk Power Corporation, or Orange
and Rockland Utilities, Inc.  Customers must have identified an eligible improvement project, have
the necessary documentation and a loan commitment from a participating lender.
Project funding is budgeted in advance by programme topic and specific in each “Programme
Opportunity Notice”.  The programme money is allocated among the chosen projects.  New York
State lenders provide loans with an interest rate of 4.5 per cent.  The average cost of a project being
funded is up to $200,000.
Ohio
Steel Development InitiativeQ58. Please specify how many companies benefitted from this initiative?  What are the
eligible project costs?  How much in total wa s provided so far in loans?  Please explain
Infrastructure Grants.  What was the exact amount granted? Conditions of the grant? How
many companies benefitted?
Reply
To date, ten companies have benefitted from this programme.  The programme includes:
$30 million over the next three years to assist with capital investment for expansion or restructuring
projects; $60 million tax-exempt financing of eligible pollution control equipment; $5 million inG/SCM/Q2/USA/25
Page 25
grants over the next three year for infrastructure improvements or key equipment acquisitions; and
$15 million in training grants to upgrade the skills of industry workers.
Infrastructure grants are allocated for public infrastructure improvements necessary to move a
project forward or make key equipment acquisitions.  The total amount that has been granted since2001 is $600,120.  Conditions for receiving the grant are job creation and retention.  Five companies
have benefitted from this programme.
Oklahoma
Enterprise Zones, Former Military Bases and High Impact Quality Jobs
Q59. Please specify the total amounts involved? What are the conditions for grants and mixed
financing.  What was the biggest amount granted to one single company?
Reply
We have contacted the administering authorities of this programme and are awaiting an
answer.
Tennessee
Economic Development Fund
Q60. Please give more details on the loan conditions.
Reply
To be eligible, the loan must be used for buildings, plant equipment, infrastructure, or
property, based on the capital investment leveraged, the number of jobs created, power generated, and
geographic diversity.  The notified maximum investment refers to a single project.  During 1999, five
loans were made and four in 2000.  No loans were dispersed in 2001.
Texas
Capital Fund Real Estate Development and Business ProgrammeQ61. Please specify the criteria of eligibility, conditions of grant, what are the maximum
amounts to single companies?
Reply
These grants are not made directly to a company, but are federal dollars provided by HUD to
municipalities for the creation of permanent jobs.  A total of $3 million, or three jumbo grants, areawarded each year. Approximately 20 smaller grants totaling $750,000 were awarded last year.  An
applicant must demonstrate that jobs will be created from the project; $25,000 is awarded for each job
created.  The applicant must also provide matching funds in order to be eligible.
Rural Economic Development Fund (Rural Development Finance Programme)
Q62. Please specify the conditions of loan guarantee, which areas were concerned, how many
companies benefitted from the programme, what are the amounts?G/SCM/Q2/USA/25
Page 26
Reply
Businesses must be interested in locating in Texas, or expanding their operations, adding new
locations, and putting in new equipment or hiring new employees.  The programme also assists rural
communities interested in attracting new business or retaining existing businesses, or working toimprove telecommunication infrastructure, housing or health care in the area to improve the
“livability” of the community.  An individual or business that may also be a prospect for the Texas
Agricultural Finance Authority (TAFA) programme.  Loans range from $100,000 to $1,000,000 and
must be repaid within a maximum of 20 years.  The base rate of the loans is a base rate as listed in the
Wall Street Journal, plus 2 per cent.  From 1999-2001, 46 companies benefitted from this programme.
Utah
Industrial Assistance Fund (IAF)Q63. Please specify the amounts and conditions.  How much of it is loans, how much grants,
maximum amount for one single company?
Reply
The ranges of incentive awards that have been given by the IAF vary from company to
company depending on the type of incentive being applied for, how many jobs will be created,financial history, and what the company is requesting.  Typically, awards range from $100,000 to
$1,000,000.
A company that applies to expand on the Wasatch Front would have to fall within a Targeted
Market or a Corporate Expansion.  The Target Markets are defined by the DBED Board, in line withthe Governor's efforts.  A Corporate Expansion has to have $10,000,000 in Utah expenditure and
spend $5.7 dollars to every $1 that is awarded.  (T his requirement may change in the near future.)
Companies that would apply under the Rural Incentive are those that are out of the Wasatch Front and
many types of companies can apply under this incentive.
Washington
Industrial Machinery and Equipment, Industri al Fuels and Raw Materials, Ships and Vessels
under Construction, Prototype of Aircraft Parts
Q64. Please explain these tax exemptions in mo re detail, what are the amounts involved (total
state tax loss)?
Reply
Industrial machinery and equipment receive tax exemptions under three laws.  The total
revenue foregone to the state for fiscal year 2003 is estimated to be $9.7 million.
There is also a sale and use tax exemption.  State tax foregone in fiscal year 2003 is
approximately $141 million.  Please note that the estimated tax loss revenue would not be realized if
the exemption was repealed because deliveries would simply be made out of the state to avoid the
sales tax.
There is also a tax exemption for motor fuel used by manufacturers in R&D.  There is no
current fiscal impact of this programme.G/SCM/Q2/USA/25
Page 27
Attachment
Forms of Cooperation, Eligibility, Cost-Sharing Requirements and Recoupment Issues
Applicable to All Department of Energy Programmes
The following regulations and policies apply to all programmes of the Department of Energy
(DOE), including the Energy Conservation – Transportation Sector programme, the Solar and
Renewable Energy Resources Technologies progra mme, the Energy Conservation – Industry Sector
programme;  and the Industries of the Future programme.
Forms of Cooperation
I. The Department of Energy (DOE) provides financial assistance through grants, cooperative
agreements, laboratory cooperative research and development agreements (CRADAs) and
other forms of collaboration accomplished through consortium-based activities between
government laboratories and private industry.  Section 3001 of the Energy Policy Act of 1992authorizes DOE to enter into contracts, cooperative agreements, CRADAs, grants, joint
ventures and any other type of agreement available to the Secretary of Energy.
Competitive and Noncompetitive Financial Assistance
II. The Department of Energy solicits applications for financial assistance in a manner which
provides for the maximum amount of compet ition feasible.  DOE may award financial
assistance on a noncompetitive basis only if the application satisfies the criteria set forth in
Title 10, Code of Federal Regulations, Subpart 600.6, paragraph (c).
III. The Assistant Secretary of Energy responsible for the programme that is awarding the
financial assistance, the Deputy Administrator, or another programme official of equivalent
determines whether or not a noncompetitive awar d is in the public interest.  Noncompetitive
awards of over $1 million must be approved prior to award by the initiating programme
official, and the Assistant Secretary of Energy responsible for the programme, an official of
equivalent authority or a designee, a contracting officer and legal counsel.  Noncompetitive
awards of $1 million or less must receive concurrence by the Head of Contracting Activity forthe programme, the contracting officer, and such awards must be approved by legal counsel
unless legal approval is waived.
Scope of Eligibility Requirements for Financial Assistance
IV. Eligibility for the award of financial assistance is determined by project solicitations and DOE
regulations published at Title 10 Code of Federal Regulations Subpart 600.6 and Section
600.500.  These regulations and DOE Financial Assistance Letter 96-02 contain additional
information concerning these eligibility requirements.
V. The eligibility requirements set forth in the regulations and DOE Financial Assistance Letter
96-02 apply to “financial assistance”, which is defined by the Federal Grants and Cooperative
Agreements Act as grants and cooperative agreements.  The term financial assistance does not
apply to government procurement contacts or CRADAs, which are subject to the conditions
set forth in the Stevenson-Wydler Technology Act, discussed below.G/SCM/Q2/USA/25
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Foreign Participation in Financial Assistance Programmes
VI. Section 2306 of the Energy Policy Act of 1992 (EPACT), implemented by 10 CFR Part
600.500 and DOE Financial Assistance Letter 96-02, imposes eligibility requirements on
companies seeking financial assistance under Titles XX through XXIII of the Act.  Thesetitles of the Act include the following programmes:  Solar and Renewable Energy Resources
Technologies; Energy Conservation – Transpor tation Sector; Energy Conservation – Industry
Sector; and Industries of the Future.
VII. In order for DOE to make an award to comp anies that apply for financial assistance under a
covered programme, the Secretary must make two determinations.  First, the Secretary must
determine that the applicant's participation will be in the economic interest of theUnited States.
VIII. If the applicant is not a United States-owned company, it must meet two additional tests:
– It must be incorporated or organized in the United States,  and– Its parent company must be incorporated or organized in a foreign country that
affords treatment to United States-owned co mpanies that is comparable to treatment
the United States affords foreign-owned companies in the following areas: access to
government-supported joint ventures in energy research and development, localinvestment opportunities, and protection of intellectual property rights.
IX. The Secretary of Energy has delegated the authority to make such eligibility determinations as
required by Section 2306 of EPACT to th e Deputy Assistant Secretary of Energy for
Procurement and Assistance Management.  The Deputy Assistant Secretary for Procurementand Assistance Management, by memorandum dated 11 April 1995, redelegated authority to
make these eligibility determinations to the Heads of Contracting Activities in individual
programme offices.
X. When an applicant submits evidence that it is a foreign-owned company, the DOE Office of
the Assistant General Counsel for Technology Transfer and the Office of the US Trade
Representative are contacted for assistance in determining whether the country of the parentcompany satisfies the eligibility requirements.  Upon approval, a copy of each determination
with the applicable representations is forwarded to the DOE Office of Procurement and
Assistance Management within 30 days of award.
Simpson-Craig Amendment
XI. Organizations which are described in section 501(c)(4) of the Internal Revenue Code of 1986
and engage in lobbying activities after 31 December 1995, are not eligible for the receipt of
Federal funds constituting an award, grant, or loan. Section 501(c)(4) of the Internal Revenue
Code of 1986 covers:
“Civic leagues or organizations not organized for profit but operated
exclusively for the promotion of social welfare, or local associations
of employees, the membership of which is limited to the employees
of a designated person or persons in a particular municipality, and thenet earnings of which re devoted exclusively to charitable,
educational or recreational purposes.”G/SCM/Q2/USA/25
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Lobbying activities are defined broadly to include, among other things, contacts on behalf of
an organization with specified employees of the Executive Branch and Congress with regard
to Federal legislative, regulatory and programme administrative matters.
Cost-Sharing Requirements for Financial Assistance
XII. Section 3002 of EPACT, as implemented in DOE regulations at Title 10 Code of Federal
Regulations Sections 600.123 and 600.127, governs cost-sharing requirements applicable to
all DOE programmes.  Except as otherwise provided in EPACT, DOE must require a
commitment from non-Federal sources of at least 20 per cent of the cost of the project for
research and development programmes.  DOE may reduce or eliminate the non-Federal
requirement if DOE finds that the research and development is of a basic or fundamentalnature.
XIII. Fundamental research is defined as, “basic and applied research in science and engineering,
the results of which ordinarily are published and shared broadly within the scientific
community, as distinguished from proprietary research and from industrial development,design, production, and product utilization, the results of which ordinarily are restricted for
proprietary or national security reasons.”
XIV. For demonstration projects and commercial application, except as otherwise provided in
EPACT, DOE must require at least 50 per cent of the costs directly and specifically related toany demonstration or commercial application project under this Act to be provided from
sources outside of the federal government.  DOE may reduce this requirement if DOE finds
that the reduction is necessary and appropriate considering the technological risks involved in
the project and is necessary to meet programme objectives.
XV. Section 3002 of EPACT provides that cost share may be provided as cash or as in-kind
contributions (personnel, services, equipment, and other resources).  Exceptions are
noted below.  Cost share may not be from other federal funding, including federal
funding of a national laboratory through another contract vehicle.
Recoupment of Government Funding
XVI. Currently, DOE does not have a general policy regarding the repayment of funds provided by
the government to industry after an invent ion developed with government funding is
commercialized.  The primary goal of DOE research, development and demonstration
programmes  is not to recover or recoup the government’s investment, but rather, is to further
the public purposes of such activities.  The public purposes include national security, energysecurity, environmental quality, and US leadership in science.
XVII. Recoupment has been required only with re spect to the following DOE programmes, only if
the technologies are commercialized:  the Clean Coal Technology programme, the Metals
Initiative programme (within the Industries of the Future programme), the Electric VehiclesAdvanced Battery Development programme (within the Energy Conservation --
Transportation Sector programme), and the Advanced Light Water Reactor programme.  The
four programmes that require repayment cover about 60 projects.
XVIII. DOE recoups its investment under all four programmes through royalties and fees paid under
licensing agreements.  A percentage of revenues from commercial sales of technologies is
also applied toward repayment in three of th e programmes and to a limited extent in the
Advanced Battery Programme.  The Metals Initiative Programme allows for the recovery ofG/SCM/Q2/USA/25
Page 30
150 per cent of the federal investment, while the other three programmes are limited to
100 per cent.
Selection of CRADA Participants
XIX. Section 12 of the Stevenson-Wydler Tech nology Innovation Act of 1980 (15 U.S.C. 3710a)
governs the selection of CRADA participants.  Please refer to this Act and to DOE Order
DOE O 483.1 and DOE M 483.1-1 for further information concerning DOE policies with
respect to CRADAs.  EPACT Section 2306 and cost sharing requirements do not apply to
CRADAs.
XX. Section 12 of the Stevenson-Wydler Technol ogy Innovation Act provides that in deciding
what cooperative research and  development agreements to enter into, laboratory directors
shall (a) give special consideration to  small business firms, and consortia involving small
business firms; and (b) give preference to business units located in the United States which
agree that products embodying inventions made under the cooperative research and
development agreement  or produced through the use of such inventions will be manufacturedsubstantially in the United States and, in the case of any industrial organization or other
person subject to the control of a foreign company or government, as appropriate, take into
consideration whether or not such foreign government permits United States agencies,
organizations, or other persons to enter into cooperative research and development
agreements and licensing agreements.  Small business firms are US firms that meet statutorysize criteria.
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