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###### Department of Energy

# AGENCY:

U.S. Department of Energy.

# ACTION:

Notice of Variance.

# SUMMARY:

                        This notice announces the Department of Energy's (DOE's) decision, pursuant to 10 CFR 1021.343(c), that it is in the interest of public welfare to grant a variance from certain requirements of its National Environmental Policy Act (NEPA) Implementing Procedures (10 CFR part 1021) in regard to the review of applications under the Deployment of Combined Heat and Power, District Energy Systems, Waste Energy Recovery Systems, and Efficient Industrial Equipment Initiative funded by the American Recovery and Reinvestment Act of 2009 (Recovery Act). The variance is limited to certain requirements identified in 10 CFR 1021.216,                         *Procurement, Financial Assistance, and Joint Ventures*. The variance in no way affects the requirement to prepare an environmental assessment or environmental impact statement, as applicable, for projects selected for funding. The merit review of applications in response to this funding opportunity will include consideration of the potentially significant environmental impacts of the projects proposed for funding that are within the competitive range. By providing this variance, DOE can reduce the time needed to select projects for possible future funding consistent with the sense of urgency underpinning the Recovery Act.                    

# DATES:

*Effective date:*                         August 18, 2009.                    

# FOR FURTHER INFORMATION CONTACT:

                        Dr. R. Paul Detwiler, Director, Office of Project Facilitation and Compliance, National Energy Technology Laboratory, 626 Cochrans Mill Road, P.O. Box 10940, Pittsburgh, PA 15236-0940 or                         *Ralph.Detwiler@netl.doe.gov*.                    

# SUPPLEMENTARY INFORMATION:

## Background

                    The purposes of the Recovery Act are to: (1) Preserve and create jobs and promote economic recovery; (2) assist those most impacted by the recession; (3) provide investments needed to increase economic efficiency by                           ( print page 41694)                        spurring technological advances in science and health; (4) invest in transportation, environmental protection, and other infrastructure that will provide long-term economic benefits; and (5) stabilize State and local government budgets, in order to minimize and avoid reductions in essential services and counterproductive State and local tax increases. Federal departments must manage and expend funds made available through the Recovery Act to achieve these purposes, “including commencing expenditures and activities as quickly as possible consistent with prudent management.” (Recovery Act, section 3)                

                    In the Recovery Act, the Congress appropriated $16.8 billion for DOE to further energy efficiency and renewable energy. (Recovery Act, Division A, Title IV) DOE decided to make $156 million of these funds available for grants to entities that will deploy sustainable energy infrastructure projects and energy efficient industrial technologies in four areas: combined heat and power systems; district energy systems; industrial waste energy recovery; and efficient industrial equipment. To implement this decision, DOE issued a competitive financial assistance funding opportunity announcement on June 1, 2009. (                    *Recovery Act: Deployment of Combined Heat and Power (CHP) Systems, District Energy Systems, Waste Energy Systems, and Efficient Industrial Equipment*, DE-FOA-0000044).                

This funding opportunity is critical to the deployment of new and replacement systems and equipment that are highly efficient and that make use of energy that would otherwise be wasted. In the areas of combined heat and power systems and district energy systems, new systems must have a thermal efficiency of at least 60 percent; replacement systems must provide an efficiency increase of at least 25 percent compared to the system being replaced. In the area of waste energy recovery systems, new systems must have a minimum efficiency of 30 percent; replacement systems must provide a 25 percent increase over the replaced system. As to energy efficient industrial equipment, applicants must deploy technologies that result in a minimum efficiency improvement of 25 percent. Deployment of these systems and equipment will produce substantial energy savings and aid in the nation's economic recovery by creating or retaining jobs in the United States.

The funding opportunity announcement is a competitive solicitation. DOE has received more than 225 applications, which is more than it expects to be able to fund. DOE is now reviewing the merits of the applications in order to select those to which it may provide funding. One aspect of the merit review process is consideration of potential adverse environmental impacts. As part of the application process, each applicant was required to complete an environmental questionnaire; the environmental information in these questionnaires will be considered during the merit review. Consideration of potential environmental impacts will be facilitated by the participation of DOE NEPA Compliance Officers, who will assist the merit review panel in preparation of the Merit Review Report, and the selection official in his consideration of the report and of the proposals deemed suitable for funding.

                    DOE's NEPA implementing procedures, at 10 CFR 1021.216, establish a process for the consideration of potential environmental impacts prior to selection. The central element of this process is preparation by DOE of an environmental critique containing, among other things, a “brief comparative evaluation of the potential environmental impacts of the offers, which will address direct and indirect effects, short-term and long-term effects, proposed mitigation measures, adverse effects that cannot be avoided, areas where important environmental information is incomplete and unavailable, unresolved environmental issues and practicable mitigating measures not included in the offeror's proposal.” (10 CFR 1021.216(g)(3)) This environmental critique forms the basis for an environmental synopsis, which is made available to the public and is incorporated into any environmental assessment or environmental impact statement prepared. (10 CFR 1021.216(h)) Another feature of the environmental critique is that, in addition to information provided by the applicant, “it may also evaluate supplemental information developed by DOE as necessary for a reasoned decision.” (10 CFR 1021.216(f)) This contrasts with the merit review process, which is limited to information provided in the application. Some other components of an environmental critique (                    *e.g.*, brief discussion of the purpose of the funding opportunity and of the applicants' proposals) repeat information that is already part of the Merit Review Report that is prepared for the selection official. (The Merit Review Report is not publicly available.)                

                    DOE's existing NEPA regulations provide for certain variances “soundly based on the interests of national security or the public health, safety, or welfare.” (10 CFR 1021.343(c)) Any such variance must have the advance written approval of the General Counsel,[1]                                          and DOE must publish a notice in the                     **Federal Register**                     specifying the variance granted and the reasons.                

## Variance

Pursuant to 10 CFR 1021.343(c), I have determined that granting a variance from the requirements of 10 CFR 1021.216(c) through (h) with respect to the Department's funding opportunity for the Deployment of Combined Heat and Power Systems, District Energy Systems, Waste Energy Systems, and Efficient Industrial Equipment (DE-FOA-0000044) is soundly based on the interests of public welfare. Expediting the award of funding to promising proposals will accelerate deployment of sustainable energy infrastructure and energy efficient industrial technologies that will reduce energy use. In addition, it will facilitate the nation's economic recovery by creating and retaining jobs.

I have concluded that the Department's process for making these funding awards will provide the selecting official with sufficient information regarding potential environmental impacts in the Merit Review Report, which will summarize the strengths and weaknesses of the proposals according to the merit review criteria and discuss the potential environmental impacts of the proposals under consideration for selection. This report also will provide certain other information called for in 10 CFR 1021.216(g).

This variance does not affect the requirements imposed by 10 CFR 1021.216(i). If projects selected for funding require preparation of an environmental assessment or environmental impact statement, these NEPA reviews will be completed before DOE takes any action that would have an adverse environmental impact or limit the choice of reasonable alternatives. In addition, consistent with the openness provisions of 10 CFR 1021.216(h), any such environmental assessment or environmental impact statement will describe the environmental factors noted in the Merit Review Report that are relevant to the proposal being analyzed.

      ( print page 41695)    
Issued in Washington, DC, on August 12, 2009.

Eric J. Fygi,

Acting General Counsel.

# Footnotes

1.                             DOE's NEPA regulations state at 10 CFR 1021.343(c) that the Secretary of Energy must provide written approval of any variance under that section. However, this authority has been delegated to the General Counsel pursuant to                         *Department of Energy Delegation Order No. 00-015.00A to the General Counsel*.                    
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[FR Doc. E9-19763 Filed 8-17-09; 8:45 am]

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