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contains regulatory documents having general

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are keyed to and codified in the Code of

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Rules and Regulations Federal Register

46383 

Vol. 71, No. 156 

Monday, August 14, 2006 

DEPARTMENT OF ENERGY 

Office of Energy Efficiency and 

Renewable Energy 

10 CFR Part 451 

RIN 1904–AB62 

Renewable Energy Production 

Incentives 

AGENCY: Office of Energy Efficiency and 

Renewable Energy, Department of 

Energy. 

ACTION: Final rule. 

SUMMARY: The Department of Energy 

(DOE) Office of Energy Efficiency and 

Renewable Energy is publishing 

amendments to its regulations for the 

Renewable Energy Production 

Incentives (REPI) program to 

incorporate changes made by section 

202 of the Energy Policy Act of 2005 

(EPACT 2005). The REPI program 

provides for production incentive 

payments to owners or operators of 

qualified renewable energy facilities, 

subject to the availability of 

appropriations. The statutory changes in 

these amendments to part 451 relate to 

allocation of available funds between 

owners or operators of two categories of 

qualified facilities, incorporation of 

additional ownership categories, 

extension of the eligibility window and 

program termination date, and 

expansion of applicable renewable 

energy technologies. In addition to the 

changes specified by EPACT 2005, this 

final rule modifies the method for 

accrued energy accounting. Other minor 

changes are made to update the 

regulations. 

DATES: This rule is effective on August 

14, 2006. 

FOR FURTHER INFORMATION CONTACT: 

Daniel Beckley, U.S. Department of 

Energy, Office of Renewable Energy and 

Energy Efficiency, EE–2K, 1000 

Independence Avenue, SW., 

Washington, DC 20585, (202) 586–7691. 

SUPPLEMENTARY INFORMATION: 

I. Background 

II. Discussion of Comments 

III. Effective Date 

IV. Regulatory Review 

V. Approval of the Office of the Secretary 

I. Background 

The Energy Policy Act of 1992, Public 

Law 102–486, established the REPI 

program to encourage production of 

electric energy from facilities owned by 

a State, a political subdivision of a State, 

or a non-profit electric cooperative 

using certain renewable energy 

resources. Subject to availability of 

appropriations, DOE was authorized to 

pay 1.5 cents, adjusted annually for 

inflation, to facility owners or operators 

for each kilowatt-hour of electric energy 

produced by qualified renewable energy 

facilities. As specified in the statute as 

originally enacted, the first energy 

production year was fiscal year 1994 

and a ten-year eligibility window was 

prescribed. Therefore, DOE did not 

accept applications for the REPI 

program after September 30, 2003. 

Qualified facility owners are eligible for 

payment for ten successive years 

beginning with the first year for which 

an energy payment is made. As a result, 

incentive payments were expected to 

continue through 2013. DOE has 

continued to make incentive payments, 

based on available appropriations, to 

those applicants whose ten successive 

years of participation in the program 

have not expired. 

Section 202 of EPACT 2005, Public 

Law 109–58, modifies the REPI program 

by (a) extending the eligibility window, 

(b) extending the termination date for 

the program, (c) increasing the number 

of renewable energy technologies 

eligible under the program, (d) 

broadening the category of qualified 

owners, and (e) altering the procedure 

for determining payment distributions if 

insufficient funds are appropriated to 

make full incentive payments for all 

approved applications. On June 26, 

2006, DOE proposed revisions to the 

REPI program regulations at 10 CFR part 

451 to implement the EPACT 2005 

amendments and to revise provisions 

that had become outdated since DOE 

initially implemented the program in 

1995 (71 FR 36225). This final rule 

amends the REPI program regulations as 

proposed with only minor changes. 

DOE included a discussion of each 

proposed amendment in the June 26 

notice of proposed rulemaking (NOPR). 

The most extensive discussion relates to 

implementation of the statutory 60:40 

distribution between the two categories 

of eligible renewable energy facilities 

and the method DOE will use to 

incorporate accrued energy into pro rata 

calculations when insufficient funds are 

appropriated to cover all qualified 

kilowatt-hours. See 71 FR 36227. 

II. Discussion of Comments 

DOE received 6 comments in response 

to the NOPR, summarized as follows. 

One commenter suggested modifications 

to the proposed definition of ‘‘ocean.’’ 

Two utilities currently participating in 

the REPI program objected to certain 

features of the proposed revisions to the 

pro rata calculation method. Two 

national organizations representing 

utility interests broadly endorsed the 

proposed revisions to the program 

regulations. Lastly, a private party 

offered comments in support of 

renewable energy projects, but unrelated 

to the specifics of the proposed rule. 

In regard to the definition of ‘‘ocean,’’ 

DOE proposed a definition because the 

ocean was made an eligible renewable 

energy source by EPACT 2005. DOE 

proposed to define ‘‘ocean’’ to mean the 

parts of the Atlantic Ocean (including 

the Gulf of Mexico) and the Pacific 

Ocean that are contiguous to the United 

States coastline and from which energy 

may be derived through application of 

tides, waves, currents, thermal 

differences, or other means. The 

commenter noted that the term 

‘‘contiguous,’’ while usually meaning 

adjacent or touching, also has been used 

in certain legal descriptions to refer to 

specific ocean areas and that DOE’s use 

of the term in its definition could create 

confusion. The commenter also 

questioned the use of the term ‘‘parts’’ 

as potentially adding further confusion 

and suggested substitution of the term 

‘‘waters.’’ DOE agrees with both of these 

comments and has made modifications 

to the definition. Having made these 

changes, DOE has made a corresponding 

change to the location specification in 

the section titled ‘‘What is a Qualified 

Renewable Energy Facility’’ so that it is 

consistent with the revised ocean 

definition. The effect of this latter 


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change is to avoid restricting the 

location of a renewable energy facility to 

the territorial sea (0–12 nautical miles) 

and to allow placement in any part of 

the ocean over which the U.S. claims 

jurisdiction. 

In regard to methods of pro rata 

calculations, DOE proposed to amend 

the provisions dealing with incentive 

payments when there are insufficient 

funds to make payments for all 

qualifying energy. Under both the 

original rule and today’s amended rule, 

the total qualified electrical energy 

consists of (1) the energy produced in 

the most recent year and (2) the accrued 

energy (which is the qualified energy 

produced in all preceding years for 

which payment was not made). To 

conform to EPACT 2005, DOE proposed 

to allocate available funds into two 

categories on a 60:40 basis (as specified 

at 42 U.S.C. 13317(a)(4)(A)) and to 

calculate potential payments initially 

based on the prior year’s energy 

production and, if funds are not 

exhausted, secondarily based on 

accrued energy. 

Two previously qualified utilities 

participating in the same wind project 

disagreed with this modified approach. 

Both commenters stated that (a) existing 

participants should be ‘‘grandfathered,’’

i.e., be exempt from the new 60:40 

funding allocation and be paid before 

new entrants assigned to the 60:40 

funding groups, and that (b) accrued 

energy from the former Tier 1 group 

should continue to be assigned status 

second only to prior year produced Tier 

1 energy and therefore have priority 

over the new 40 percent (or former Tier 

2) group. One of the commenters further 

asserted that DOE has no mandate to 

apply the 60:40 funding division 

‘‘retroactively’’ to participants who 

entered under the original rule and has 

done so on an arbitrary basis. DOE has 

not made the changes recommended by 

these commenters. The EPACT 2005 

amendments to 42 U.S.C. 13317 provide 

that when there is insufficient funding 

to make full incentive payments to all 

qualified participants, DOE must make 

payments to two groups of qualified 

facilities with a 60:40 division of funds. 

The two groups roughly correspond to 

the Tier 1 and Tier 2 categories of 

qualified facilities under the original 

statute and regulations. EPACT 2005 

does not include any provision that 

allows DOE to continue the program 

under the original regulations—under 

which funding of Tier 1 facilities takes 

precedence over funding of Tier 2 

facilities—for previously qualified 

renewable energy facilities. Although 42 

U.S.C. 13317(4)(B) permits the Secretary 

to alter the 60:40 percentage 

requirements after submitting the 

reasons for the alteration to Congress, 

this provision does not authorize 

grandfathering of previously qualified 

facilities under the original rule or the 

exemption of any group of participants 

from the 60:40 distribution. Thus, DOE 

may not ‘‘grandfather’’ a group of 

recipients that would receive payment 

under the old rule before payment to the 

newly required 60:40 participant groups 

as requested by the commenter. DOE 

further rejects the argument that the 

60:40 division of REPI funds would 

apply retroactively under this rule. This 

final rule will apply prospectively to 

incentive payments made on or after the 

effective date set forth in this notice of 

final rulemaking. 

The issue of accrued energy and its 

status in the payment priority hierarchy 

(point (b) in the summary of 

commenters’ points above) merits 

further discussion. DOE recognizes that 

the effect of EPACT 2005 is to shift 

payout funds from the former Tier 1 

group to the former Tier 2 group. As 

previously explained, DOE’s rule must 

implement the 60:40 distribution 

division. DOE also recognizes, as these 

commenters imply, that the removal of 

accrued energy from equal status with 

energy produced in the prior fiscal year 

has the effect of further reducing the pro 

rata payment that might otherwise be 

received by former Tier 1 recipients. 

The statute (as originally enacted and as 

amended by EPACT 2005) contemplates 

an annual appropriation to support an 

annual payment for annual energy 

production. Although not expressly 

required by statute, DOE created an 

accrued energy account under its 

program regulations because it 

recognized that unpaid energy could 

result from insufficient appropriations, 

and it viewed payment for accrued 

energy as permissible under the statute. 

DOE continues to provide for payments 

for accrued energy under today’s final 

rule. However, DOE believes that 

making payment for accrued energy 

secondary to annual energy in the 

determination of pro rata payments is 

most consistent with the policy choice 

reflected in the statute as amended by 

EPACT 2005, and is fairer to all eligible 

participants. Consequently, DOE has 

made no changes in the final rule 

regarding accrued energy calculations. 

III. Effective Date 

The Administrative Procedure Act 

(APA) requires that agencies publish a 

rule not less than 30 days before the rule 

will become effective, unless an 

exception from this requirement applies 

(5 U.S.C. 553(d)(3)). Under the APA, 

agencies may bypass this 30-day delay 

for ‘‘good cause.’’ DOE is invoking the 

‘‘good cause’’ exception in this instance 

and making these regulations effective 

immediately upon publication. The 

final rule published today updates but 

does not substantially change the 

existing rules for REPI in 10 CFR part 

451, except as required by section 202 

of EPACT 2005. The established REPI 

procedures specify an application 

period of October 1–December 31 (the 

first 3 months of the Federal fiscal year) 

for applicants to provide data on REPI 

energy produced during the prior fiscal 

year and to request payment for this 

energy. There are currently applicants 

awaiting payment out of FY06 funds for 

energy produced in FY05. However, 

payment has not yet been made because 

EPACT 2005 opened the FY06 funding 

to new applicants. The new applicants 

are unable to apply until the final rule 

is published. With a 30-day delay in 

effectiveness, there would be 

insufficient time remaining in FY06 for 

participants to apply for FY06 funds 

and for DOE to process those 

applications. In addition, DOE 

published a NOPR on June 26, 2006, 

that included notice of a possible 

August 31 deadline for applications for 

FY05 payments. Both EPACT 2005 and 

the NOPR have given potential REPI 

participants adequate notice to adjust 

their behavior. Moreover, DOE foresees 

little, if any, harm done by bypassing 

the 30-day delay in effectiveness, and 

only by making the rule effective upon 

publication can DOE fulfill the statute’s 

objective of encouraging the production 

of renewable energy by providing 

incentive funding to the renewable 

energy producers. 

IV. Regulatory Review 

A. Executive Order 12866 

This rule has been determined to not 

be a ‘‘significant regulatory action’’

under Executive Order 12866, 

‘‘Regulatory Planning and Review,’’ 58 

FR 51735 (October 4, 1993). 

Accordingly, this action is not subject to 

review under that Executive Order by 

the Office of Information and Regulatory 

Affairs of the Office of Management and 

Budget. 

B. National Environmental Policy Act 

DOE has determined that this rule is 

covered under the Categorical Exclusion 

found in the Department’s National 

Environmental Policy Act regulations at 

paragraph A.6 of appendix A to subpart 

D, 10 CFR part 1021, which applies to 

rulemakings that are strictly procedural. 

Accordingly, neither an environmental 

assessment nor an environmental 

impact statement is required. 


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C. Regulatory Flexibility Act 

The Regulatory Flexibility Act (5 

U.S.C. 601 et seq.) requires preparation 

of an initial regulatory flexibility 

analysis for any rule that by law must 

be proposed for public comment, unless 

the agency certifies that the rule, if 

promulgated, will not have a significant 

economic impact on a substantial 

number of small entities. As required by 

Executive Order 13272, ‘‘Proper 

Consideration of Small Entities in 

Agency Rulemaking,’’ 67 FR 53461 

(August 16, 2002), DOE published 

procedures and policies on February 19, 

2003, to ensure that the potential 

impacts of its rules on small entities are 

properly considered during the 

rulemaking process (68 FR 7990). DOE 

has made its procedures and policies 

available on the Office of General 

Counsel’s Web site: http:// 

www.gc.doe.gov. 

DOE has reviewed this rule under the 

provisions of the Regulatory Flexibility 

Act and the procedures and policies 

published on February 19, 2003. These 

amendments revise DOE’s regulations 

for its program for making production 

incentive payments to owners or 

operators of qualified renewable energy 

facilities, subject to the availability of 

appropriations. The regulations are 

procedural in nature and affect only 

entities that choose to apply for 

incentive payments under the program. 

The rule’s procedures will not have a 

significant economic impact on any 

class of entities. On the basis of the 

foregoing, DOE certifies that the rule 

does not have a significant economic 

impact on a substantial number of small 

entities. Accordingly, DOE has not 

prepared a regulatory flexibility analysis 

for this rulemaking. DOE’s certification 

and supporting statement of factual 

basis has been provided to the Chief 

Counsel for Advocacy of the Small 

Business Administration pursuant to 5 

U.S.C. 605(b). 

D. Paperwork Reduction Act 

This rule does not impose any new 

collection of information subject to 

review and approval by the Office of 

Management and Budget (OMB) under 

the Paperwork Reduction Act (PRA), 44 

U.S.C. 3501 et seq. 

E. Unfunded Mandates Reform Act of 

1995 

The Unfunded Mandates Reform Act 

of 1995 (Pub. L. 104–4) generally 

requires Federal agencies to examine 

closely the impacts of regulatory actions 

on State, local, and tribal governments. 

Subsection 101(5) of title I of that law 

defines a Federal intergovernmental 

mandate to include any regulation that 

would impose upon State, local, or 

tribal governments an enforceable duty, 

except a condition of Federal assistance 

or a duty arising from participating in a 

voluntary Federal program. Title II of 

that law requires each Federal agency to 

assess the effects of Federal regulatory 

actions on State, local, and tribal 

governments, in the aggregate, or to the 

private sector, other than to the extent 

such actions merely incorporate 

requirements specifically set forth in a 

statute. Section 202 of that title requires 

a Federal agency to perform a detailed 

assessment of the anticipated costs and 

benefits of any rule that includes a 

Federal mandate which may result in 

costs to State, local, or tribal 

governments, or to the private sector, of 

$100 million or more. Section 204 of 

that title requires each agency that 

proposes a rule containing a significant 

Federal intergovernmental mandate to 

develop an effective process for 

obtaining meaningful and timely input 

from elected officers of State, local, and 

tribal governments. 

This rule does not impose a Federal 

mandate on State, local or tribal 

governments. The rule does not result in 

the expenditure by State, local, and 

tribal governments in the aggregate, or 

by the private sector, of $100 million or 

more in any one year. Accordingly, no 

assessment or analysis is required under 

the Unfunded Mandates Reform Act of 

1995. 

F. Treasury and General Government 

Appropriations Act, 1999 

Section 654 of the Treasury and 

General Government Appropriations 

Act, 1999 (Pub. L. 105–277) requires 

Federal agencies to issue a Family 

Policymaking Assessment for any 

proposed rule that may affect family 

well being. The proposed rule would 

not have any impact on the autonomy 

or integrity of the family as an 

institution. Accordingly, DOE has 

concluded that it is not necessary to 

prepare a Family Policymaking 

Assessment. 

G. Executive Order 13132 

Executive Order 13132, ‘‘Federalism,’’

64 FR 43255 (August 4, 1999) imposes 

certain requirements on agencies 

formulating and implementing policies 

or regulations that preempt State law or 

that have federalism implications. 

Agencies are required to examine the 

constitutional and statutory authority 

supporting any action that would limit 

the policymaking discretion of the 

States and carefully assess the necessity 

for such actions. DOE has examined this 

rule and has determined that it would 

not preempt State law and would not 

have a substantial direct effect on the 

States, on the relationship between the 

national government and the States, or 

on the distribution of power and 

responsibilities among the various 

levels of government. No further action 

is required by Executive Order 13132. 

H. Executive Order 12988 

With respect to the review of existing 

regulations and the promulgation of 

new regulations, section 3(a) of 

Executive Order 12988, ‘‘Civil Justice 

Reform,’’ 61 FR 4729 (February 7, 1996), 

imposes on Executive agencies the 

general duty to adhere to the following 

requirements: (1) Eliminate drafting 

errors and ambiguity; (2) write 

regulations to minimize litigation; and 

(3) provide a clear legal standard for 

affected conduct rather than a general 

standard and promote simplification 

and burden reduction. With regard to 

the review required by section 3(a), 

section 3(b) of Executive Order 12988 

specifically requires that Executive 

agencies make every reasonable effort to 

ensure that the regulation: (1) Clearly 

specifies the preemptive effect, if any; 

(2) clearly specifies any effect on 

existing Federal law or regulation; (3) 

provides a clear legal standard for 

affected conduct, while promoting 

simplification and burden reduction; (4) 

specifies the retroactive effect, if any; (5) 

adequately defines key terms; and (6) 

addresses other important issues 

affecting clarity and general 

draftsmanship under any guidelines 

issued by the Attorney General. Section 

3(c) of Executive Order 12988 requires 

Executive agencies to review regulations 

in light of applicable standards in 

section 3(a) and section 3(b) to 

determine whether they are met or it is 

unreasonable to meet one or more of 

them. DOE has completed the required 

review and determined that, to the 

extent permitted by law, the rule meets 

the relevant standards of Executive 

Order 12988. 

I. Treasury and General Government 

Appropriations Act, 2001 

The Treasury and General 

Government Appropriations Act, 2001 

(44 U.S.C. 3516 note) provides for 

agencies to review most disseminations 

of information to the public under 

guidelines established by each agency 

pursuant to general guidelines issued by 

OMB. 

OMB’s guidelines were published at 

67 FR 8452 (February 22, 2002), and 

DOE’s guidelines were published at 67 

FR 62446 (October 7, 2002). DOE has 

reviewed this rule under the OMB and 

DOE guidelines and has concluded that 


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it is consistent with applicable policies 

in those guidelines. 

J. Executive Order 13211 

Executive Order 13211, ‘‘Actions 

Concerning Regulations That 

Significantly Affect Energy Supply, 

Distribution, or Use,’’ 66 FR 28355 (May 

22, 2001), requires Federal agencies to 

prepare and submit to the OMB, a 

Statement of Energy Effects for any 

proposed significant energy action. A 

‘‘significant energy action’’ is defined as 

any action by an agency that 

promulgated or is expected to lead to 

promulgation of a final rule, and that: 

(1) Is a significant regulatory action 

under Executive Order 12866, or any 

successor order; and (2) is likely to have 

a significant adverse effect on the 

supply, distribution, or use of energy, or 

(3) is designated by the Administrator of 

the Office of Information and Regulatory 

Affairs (OIRA), as a significant energy 

action. For any proposed significant 

energy action, the agency must give a 

detailed statement of any adverse effects 

on energy supply, distribution, or use 

should the proposal be implemented, 

and of reasonable alternatives to the 

action and their expected benefits on 

energy supply, distribution, and use. 

Today’s regulatory action would not 

have a significant adverse effect on the 

supply, distribution, or use of energy 

and is therefore not a significant energy 

action. Accordingly, DOE has not 

prepared a Statement of Energy Effects. 

K. Congressional Notification 

As required by 5 U.S.C. 801, DOE will 

submit to Congress a report regarding 

the issuance of today’s final rule prior 

to the effective date set forth at the 

outset of this rulemaking. The report 

will state that it has been determined 

that the rule is not a ‘‘major rule’’ as 

defined by 5 U.S.C. 801(2). 

V. Approval of the Office of the 

Secretary 

The Secretary of Energy has approved 

publication of today’s final rule. 

List of Subjects in 10 CFR Part 451 

Electric utilities, Energy, Power 

sources, Renewable energy. 

Issued in Washington, DC, on August 8, 

2006. 

Alexander A. Karsner, 

Assistant Secretary, Energy Efficiency and 

Renewable Energy. 

■ For the reasons set forth in the 

preamble, part 451 of title 10, chapter II 

of the Code of Federal Regulations, is 

amended as follows: 

PART 451—RENEWABLE ENERGY 

PRODUCTION INCENTIVES 

■ 1. The authority citation for part 451 

is revised to read as follows: 

Authority: 42 U.S.C. 7101, et seq.; 42 

U.S.C. 13317. 

■ 2. Section 451.1(a) is revised to read 

as follows: 

§ 451.1 Purpose and scope. 

(a) The provisions of this part cover 

the policies and procedures applicable 

to the determinations by the Department 

of Energy (DOE) to make incentive 

payments, under the authority of 42 

U.S.C. 13317, for electric energy 

generated and sold by a qualified 

renewable energy facility owned by a 

State or political subdivision thereof; a 

not-for-profit electric cooperative; a 

public utility described in section 115 of 

the Internal Revenue Code of 1986; an 

Indian tribal government or subdivision 

thereof; or a Native corporation. 

* * * * * 

■ 3. Section 451.2 is amended by: 

■ a. Adding in alphabetical order 

definitions of ‘‘Biomass,’’ ‘‘Date of first 

use,’’ ‘‘Indian tribal government,’’

‘‘Native corporation,’’ ‘‘Not-for-profit 

electrical cooperative,’’ and ‘‘Ocean’’. 

■ b. Revising the definitions of ‘‘Closed 

loop biomass,’’ ‘‘Deciding Official,’’

‘‘Renewable energy source’’ and ‘‘State.’’

■ c. Removing the definition of 

‘‘Nonprofit electrical cooperative.’’

The revisions and additions read as 

follows: 

§ 451.2 Definitions. 

* * * * * 

Biomass means biologically generated 

energy sources such as heat derived 

from combustion of plant matter, or 

from combustion of gases or liquids 

derived from plant matter, animal 

wastes, or sewage, or from combustion 

of gases derived from landfills, or 

hydrogen derived from these same 

sources. 

Closed-loop biomass means any 

organic material from a plant which is 

planted exclusively for purposes of 

being used at a qualified renewable 

energy facility to generate electricity. 

Date of first use means, at the option 

of the facility owner, the date of the first 

kilowatt-hour sale, the date of 

completion of facility equipment 

testing, or the date when all approved 

permits required for facility 

construction are received. 

Deciding Official means the Manager 

of the Golden Field Office of the 

Department of Energy (or any DOE 

official to whom the authority of the 

Manager of the Golden Field Office may 

be redelegated by the Secretary of 

Energy). 

* * * * * 

Indian tribal government means the 

governing body of an Indian tribe as 

defined in section 4 of the Indian SelfDetermination and Education 

Assistance Act (25 U.S.C. 450b). 

Native corporation has the meaning 

set forth in the Alaska Native Claims 

Settlement Act (25 U.S.C. 1602). 

* * * * * 

Not-for-profit electrical cooperative 

means a cooperative association that is 

legally obligated to operate on a not-forprofit basis and is organized under the 

laws of any State for the purpose of 

providing electric service to its 

members. 

Ocean means the waters of the 

Atlantic Ocean (including the Gulf of 

Mexico) and the Pacific Ocean within 

the jurisdiction of the United States 

from which energy may be derived 

through application of tides, waves, 

currents, thermal differences, or other 

means. 

* * * * * 

Renewable energy source means solar 

heat, solar light, wind, ocean, 

geothermal heat, and biomass, except 

for—

(1) Heat from the burning of 

municipal solid waste; or 

(2) Heat from a dry steam geothermal 

reservoir which—

(i) Has no mobile liquid in its natural 

state; 

(ii) Is a fluid composed of at least 95 

percent water vapor; and 

(iii) Has an enthalpy for the total 

produced fluid greater than or equal to 

2.791 megajoules per kilogram (1200 

British thermal units per pound). 

State means the District of Columbia, 

Puerto Rico, and any of the States, 

Commonwealths, territories, and 

possessions of the United States. 

■ 4. Section 451.4 is amended by: 

■ a. Revising paragraphs (a)(2) and (a)(3) 

and adding new paragraphs (a)(4) and 

(a)(5). 

■ b. Revising paragraph (e). 

■ c. Adding the word ‘‘ocean’’ after the 

word ‘‘wind’’ in paragraphs (f)(1) and 

(f)(2). 

■ d. Adding the words ‘‘or in U.S. 

jurisdictional waters’’ after the word 

‘‘State’’ in paragraph (g). 

The revisions and additions read as 

follows: 

§ 451.4 What is a qualified renewable 

energy facility. 

* * * * * 

(a) * * * 

(2) A public utility described in 

section 115 of the Internal Revenue 

Code of 1986; 


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(3) A not-for-profit electrical 

cooperative; 

(4) An Indian tribal government or 

subdivision thereof; or 

(5) A Native corporation. 

* * * * * 

(e) Time of first use. The date of the 

first use of a newly constructed 

renewable energy facility, or a facility 

covered by paragraph (f) of this section, 

must occur during the inclusive period 

beginning October 1, 1993, and ending 

on September 30, 2016. For facilities 

whose date of first use occurred in the 

period October 1, 2003, through 

September 30, 2004, the time of first use 

shall be deemed to be October 1, 2004. 

* * * * * 

■ 5. Section 451.5 is amended by 

revising paragraphs (b)(1) and (b)(2) to 

read as follows: 

§ 451.5 Where and when to apply. 

* * * * * 

(b) * * * 

(1) An application for an incentive 

payment for electric energy generated 

and sold in a fiscal year must be filed 

during the first quarter (October 1 

through December 31) of the next fiscal 

year, except as provided in paragraph 

(b)(2) of this section. 

(2) For facilities whose date of first 

use occurred in the period October 1, 

2003, through September 30, 2005, 

applications for incentive payments for 

electric energy generated and sold in 

fiscal year 2005 must be filed by August 

31, 2006. 

* * * * * 

§ 451.6 [Amended] 

■ 6. Section 451.6 is amended by adding 

the word ‘‘consecutive’’ before the 

words ‘‘fiscal years’’ in the first 

sentence, and in the last sentence, by 

removing the date ‘‘2013’’ and adding in 

its place the date ‘‘2026’’. 

■ 7. Section 451.8 is amended by: 

■ a. Removing the comma after the word 

‘‘owner,’’ where it is first used in 

paragraph (a). 

■ b. Removing paragraph (h) and 

redesignating (i) as paragraph (h). 

■ c. Revising redesignated paragraph 

(h). 

■ d. Adding a new paragraph (i). 

■ e. Revising paragraph (j). 

■ f. Removing the word ‘‘nonprofit’’ and 

adding in its place the term ‘‘not-forprofit’’ in paragraph (m). 

The revisions and additions read as 

follows: 

§ 451.8 Application content requirements. 

* * * * * 

(h) The total amount of electric energy 

for which payment is requested, 

including the net electric energy 

generated in the prior fiscal year, as 

determined according to paragraph (f) or 

(g) of this section; 

(i) Copies of permit authorizations if 

the date of first use is based on permit 

approvals and this is the initial 

application; 

(j) Instructions for payment by 

electronic funds transfer; 

* * * * * 

■ 8. Section 451.9 is amended by 

revising paragraphs (c), (d), and (e) to 

read as follows: 

§ 451.9 Procedures for processing 

applications. 

* * * * * 

(c) DOE determinations. The Assistant 

Secretary for Energy Efficiency and 

Renewable Energy shall determine the 

extent to which appropriated funds are 

available to be obligated under this 

program for each fiscal year. Upon 

evaluating each application and any 

other relevant information, DOE shall 

further determine: 

(1) Eligibility of the applicant for 

receipt of an incentive payment, based 

on the criteria for eligibility specified in 

this part; 

(2) The number of kilowatt-hours to 

be used in calculating a potential 

incentive payment, based on the net 

electric energy generated from a 

qualified renewable energy source at the 

qualified renewable energy facility and 

sold during the prior fiscal year; 

(3) The number of kilowatt-hours to 

be used in calculating a potential 

additional incentive payment, based on 

the total quantity of accrued energy 

generated during prior fiscal years; 

(4) The amounts represented by 60 

percent of available funds and by 40 

percent of available funds; and 

(5) Whether justification exists for 

altering the 60:40 payment ratio 

specified in paragraph (e) of this 

section. If DOE intends to modify the 

60:40 ratio, the Department shall notify 

Congress, setting forth reasons for such 

change. 

(d) Calculating payments. Subject to 

the provisions of paragraph (e) of this 

section, potential incentive payments 

under this part shall be determined by 

multiplying the number of kilowatthours determined under § 451.9(c)(2) by 

1.5 cents per kilowatt-hour, and 

adjusting that product for inflation for 

each fiscal year beginning after calendar 

year 1993 in the same manner as 

provided in section 29(d)(2)(B) of the 

Internal Revenue Code of 1986, except 

that in applying such provisions 

calendar year 1993 shall be substituted 

for calendar year 1979. Using the same 

procedure, a potential additional 

payment shall be determined for the 

number of kilowatt-hours determined 

under paragraph (c)(3) of this section. If 

the sum of these calculated payments 

does not exceed the funds determined to 

be available by the Assistant Secretary 

for Energy Efficiency and Renewable 

Energy under § 451.9(c), DOE shall 

make payments to all qualified 

applicants. 

(e) Insufficient funds. If funds are not 

sufficient to make full incentive 

payments to all qualified applicants, 

DOE shall—

(1) Calculate potential incentive 

payments, if necessary on a pro rata 

basis, not to exceed 60 percent of 

available funds to owners or operators 

of qualified renewable energy facilities 

using solar, wind, ocean, geothermal, 

and closed-loop biomass technologies 

based on prior year energy generation; 

(2) Calculate potential incentive 

payments, if necessary on a pro rata 

basis, not to exceed 40 percent of 

available funds to owners or operators 

of all other qualified renewable energy 

facilities based on prior year energy 

generation; 

(3) If the amounts calculated in 

paragraph (e)(1) and (2) of this section 

result in one owner group with 

insufficient funds and one with excess 

funds, allocate excess funds to the 

owner group with insufficient funds and 

calculate additional incentive payments, 

on a pro rata basis if necessary, to such 

owners or operators based on prior year 

energy generation. 

(4) If potential payments calculated in 

paragraphs (e)(1), (2), and (3) of this 

section do not exceed available funding, 

allocate 60% of remaining funds to 

paragraph (e)(1) recipients and 40% to 

paragraph (e)(2) recipients and calculate 

additional incentive payments, if 

necessary on a pro rata basis, to owners 

or operators based on accrued energy; 

(5) If the amounts calculated in 

paragraph (e)(4) of this section result in 

one owner group with insufficient funds 

and one with excess funds, allocate 

excess funds to the owner group with 

insufficient funds and calculate 

additional incentive payments, on a pro 

rata basis if necessary, to such owners 

or operators based on accrued energy. 

(6) Notify Congress if potential 

payments resulting from paragraphs 

(e)(3) or (5) of this section above will 

result in alteration of the 60:40 payment 

ratio; 

(7) Make incentive payments based on 

the sum of the amounts determined in 

paragraphs (e)(1) through (5) of this 

section for each applicant; 

(8) Treat the number of kilowatt-hours 

for which an incentive payment is not 

made as a result of insufficient funds as 


jlentini on PROD1PC65 with RULES
46388 Federal Register / Vol. 71, No. 156 / Monday, August 14, 2006 / Rules and Regulations 

accrued energy for which future 

incentive payment may be made; and 

(9) Maintain a record of each 

applicant’s accrued energy. 

* * * * * 

[FR Doc. 06–6925 Filed 8–10–06; 1:20 pm] 

BILLING CODE 6450–01–P 

FEDERAL RESERVE SYSTEM 

12 CFR Part 226 

[Regulation Z; Docket No. R–1263] 

Truth in Lending 

AGENCY: Board of Governors of the 

Federal Reserve System. 

ACTION: Final rule; staff commentary. 

SUMMARY: The Board is publishing a 

final rule amending the staff 

commentary that interprets the 

requirements of Regulation Z (Truth in 

Lending). The Board is required to 

adjust annually the dollar amount that 

triggers requirements for certain home 

mortgage loans bearing fees above a 

certain amount. The Home Ownership 

and Equity Protection Act of 1994 

(HOEPA) sets forth rules for home–

secured loans in which the total points 

and fees payable by the consumer at or 

before loan consummation exceed the 

greater of $400 or 8 percent of the total 

loan amount. In keeping with the 

statute, the Board has annually adjusted 

the $400 amount based on the annual 

percentage change reflected in the 

Consumer Price Index that is in effect 

on June 1. The adjusted dollar amount 

for 2007 is $547. 

DATES: January 1, 2007. 

FOR FURTHER INFORMATION CONTACT: 

Minh–Duc T. Le, Senior Attorney, 

Division of Consumer and Community 

Affairs, Board of Governors of the 

Federal Reserve System, at (202) 452–

3667. For the users of 

Telecommunications Device for the Deaf 

(‘‘TDD’’) only, contact (202) 263–4869. 

SUPPLEMENTARY INFORMATION: 

I. Background 

The Truth in Lending Act (TILA; 15 

U.S.C. 1601 – 1666j) requires creditors 

to disclose credit terms and the cost of 

consumer credit as an annual 

percentage rate. The act requires 

additional disclosures for loans secured 

by a consumer’s home, and permits 

consumers to cancel certain transactions 

that involve their principal dwelling. 

TILA is implemented by the Board’s 

Regulation Z (12 CFR part 226). The 

Board’s official staff commentary (12 

CFR part 226 (Supp. I)) interprets the 

regulation, and provides guidance to 

creditors in applying the regulation to 

specific transactions. 

In 1995, the Board published 

amendments to Regulation Z 

implementing HOEPA, contained in the 

Riegle Community Development and 

Regulatory Improvement Act of 1994, 

Pub. L. 103–325, 108 Stat. 2160 (60 FR 

15463). These amendments, contained 

in §§ 226.32 and 226.34 of the 

regulation, impose substantive 

limitations and additional disclosure 

requirements on certain closed–end 

home mortgage loans bearing rates or 

fees above a certain percentage or 

amount. As enacted, the statute requires 

creditors to comply with the HOEPA 

rules if the total points and fees payable 

by the consumer at or before loan 

consummation exceed the greater of 

$400 or 8 percent of the total loan 

amount. TILA and Regulation Z provide 

that the $400 figure shall be adjusted 

annually on January 1 by the annual 

percentage change in the Consumer 

Price Index (CPI) that was reported on 

the preceding June 1. (15 U.S.C. 

1602(aa)(3) and 12 CFR 226.32(a)(1)(ii)). 

The Board adjusted the $400 amount to 

$528 for the year 2006. 

The Bureau of Labor Statistics 

publishes consumer–based indices 

monthly, but does not ‘‘report’’ a CPI 

change on June 1; adjustments are 

reported in the middle of each month. 

The Board uses the CPI–U index, which 

is based on all urban consumers and 

represents approximately 87 percent of 

the U.S. population, as the index for 

adjusting the $400 dollar figure. The 

adjustment to the CPI–U index reported 

by the Bureau of Labor Statistics on May 

15, 2006, was the CPI–U index ‘‘in 

effect’’ on June 1, and reflects the 

percentage increase from April 2005 to 

April 2006. The adjustment to the $400 

figure below reflects a 3.55 percent 

increase in the CPI–U index for this 

period and is rounded to whole dollars 

for ease of compliance. 

II. Adjustment and Commentary 

Revision 

Effective January 1, 2007, for purposes 

of determining whether a home 

mortgage transaction is covered by 12 

CFR 226.32 (based on the total points 

and fees payable by the consumer at or 

before loan consummation), a loan is 

covered if the points and fees exceed the 

greater of $ 547 or 8 percent of the total 

loan amount. Comment 32(a)(1)(ii)–2, 

which lists the adjustments for each 

year, is amended to reflect the dollar 

adjustment for 2007. Because the timing 

and method of the adjustment is set by 

statute, the Board finds that notice and 

public comment on the change are 

unnecessary. 

III. Regulatory Flexibility Analysis 

The Board certifies that this 

amendment will not have a substantial 

effect on regulated entities because the 

only change is to raise the threshold for 

transactions requiring HOEPA 

disclosures. 

List of Subjects 

12 CFR Part 226 

Advertising, Federal Reserve System, 

Mortgages, Reporting and recordkeeping 

requirements, Truth in lending. 

■ For the reasons set forth in the 

preamble, the Board amends Regulation 

Z, 12 CFR part 226, as set forth below: 

PART 226—TRUTH IN LENDING 

(REGULATION Z) 

■ 1. The authority citation for part 226 

continues to read as follows: 

Authority: 12 U.S.C. 3806; 15 U.S.C. 1604 

and 1637(c)(5). 

■ 2. In Supplement I to Part 226, under 

Section 226.32–––Requirements for 

Certain Closed–End Home Mortgages, 

under Paragraph 32(a)(1)(ii), paragraph 

2. xii. is added. 

SUPPLEMENT I TO PART 226–

OFFICIAL STAFF INTERPRETATIONS 

*****

SUBPART E–SPECIAL RULES FOR 

CERTAIN HOME MORTGAGE 

TRANSACTIONS 

* * * * *

Section 226.32–Requirements for 

Certain Closed–End Home Mortgages 

32(a) Coverage 

*****

Paragraph 32(a)(1)(ii) 

*****

2. Annual adjustment of $400 

amount. 

*****

xii. For 2007, $547, reflecting a 3.55 

percent increase in the CPI–U from June 

2005 to June 2006, rounded to the 

nearest whole dollar. 

** * * * 

By order of the Board of Governors of the 

Federal Reserve System, acting through the 

Director of the Division of Consumer and 

Community Affairs under delegated 

authority, August 9, 2006. 

Jennifer J. Johnson, 

Secretary of the Board. 

[FR Doc. E6–13281 Filed 8–11–06; 8:45 am] 

BILLING CODE 6210–01–S 


jlentini on PROD1PC65 with RULES