[Federal Register Volume 71, Number 156 (Monday, August 14, 2006)]
[Rules and Regulations]
[Pages 46383-46388]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-6925]



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Federal Register / Vol. 71, No. 156 / Monday, August 14, 2006 / Rules 
and Regulations

[[Page 46383]]



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

[[Page 46384]]

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.

[[Page 46385]]

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

[[Page 46386]]

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.

0
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

0
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.


0
2. Section 451.1(a) is revised to read as follows:


Sec.  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.
* * * * *

0
3. Section 451.2 is amended by:
0
a. Adding in alphabetical order definitions of ``Biomass,'' ``Date of 
first use,'' ``Indian tribal government,'' ``Native corporation,'' 
``Not-for-profit electrical cooperative,'' and ``Ocean''.
0
b. Revising the definitions of ``Closed loop biomass,'' ``Deciding 
Official,'' ``Renewable energy source'' and ``State.''
0
c. Removing the definition of ``Nonprofit electrical cooperative.''
    The revisions and additions read as follows:


Sec.  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 Self-Determination 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-for-profit 
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.

0
4. Section 451.4 is amended by:
0
a. Revising paragraphs (a)(2) and (a)(3) and adding new paragraphs 
(a)(4) and (a)(5).
0
b. Revising paragraph (e).
0
c. Adding the word ``ocean'' after the word ``wind'' in paragraphs 
(f)(1) and (f)(2).
0
d. Adding the words ``or in U.S. jurisdictional waters'' after the word 
``State'' in paragraph (g).
    The revisions and additions read as follows:


Sec.  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;

[[Page 46387]]

    (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.
* * * * *

0
5. Section 451.5 is amended by revising paragraphs (b)(1) and (b)(2) to 
read as follows:


Sec.  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.
* * * * *


Sec.  451.6  [Amended]

0
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''.

0
7. Section 451.8 is amended by:
0
a. Removing the comma after the word ``owner,'' where it is first used 
in paragraph (a).
0
b. Removing paragraph (h) and redesignating (i) as paragraph (h).
0
c. Revising redesignated paragraph (h).
0
d. Adding a new paragraph (i).
0
e. Revising paragraph (j).
0
f. Removing the word ``nonprofit'' and adding in its place the term 
``not-for-profit'' in paragraph (m).
    The revisions and additions read as follows:


Sec.  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;
* * * * *

0
8. Section 451.9 is amended by revising paragraphs (c), (d), and (e) to 
read as follows:


Sec.  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 kilowatt-hours determined 
under Sec.  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 
Sec.  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

[[Page 46388]]

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