21322 Federal Register / Vol. 60, No. 83 / Monday, May 1, 1995 / Rules and Regulations

DEPARTMENT OF HEALTH AND

HUMAN SERVICES

Office of the Secretary

45 CFR Part 96

Block Grant Programs

AGENCY: Administration for Children

and Families, HHS.

ACTION: Final rule.

SUMMARY: This final rule amends the

regulations of the Department of Health

and Human Services (HHS) governing

the administration of block grant

programs; it applies specifically to the

low-income home energy assistance

program (LIHEAP). The rule revises, and

makes final, provisions included in an

interim final rule that amended the

block grant regulations and

implemented certain changes to the

LIHEAP statute made by the Augustus

F. Hawkins Human Services

Reauthorization Act of 1990. These

changes involve the Department’s

response to complaints, reduction in the

percent of LIHEAP funds that grantees

may carry forward from one fiscal year

to the next, waiver authority to increase

the percent of LIHEAP funds that

grantees may use for weatherization, a

requirement for additional outreach and

intake services under certain

circumstances, and a leveraging

incentive program. This final rule also

makes several related, largely technical

and conforming, amendments to the

block grant regulations.

EFFECTIVE DATE: This final rule is

effective beginning May 31, 1995, with

the exception of section 96.87,

Leveraging incentive program, which is

effective beginning October 1, 1995.

Section 96.87 as included in the interim

final rule published in the Federal

Register on January 16, 1992 (57 FR

1960), is effective through September

30, 1995.

FOR FURTHER INFORMATION CONTACT:

Janet M. Fox, 202–401–9351, or Ann

Bowker, 202–401–5308.

SUPPLEMENTARY INFORMATION: The LowIncome Home Energy Assistance Act of

1981, title XXVI of the Omnibus Budget

Reconciliation Act of 1981 (Public Law

97–35), established the low-income

home energy assistance program. On

July 6, 1982, HHS issued final

regulations for LIHEAP and the six other

blocks grants it administered at that

time (45 FR 29472). Since then, the

statute and the block grant regulations

have been amended several times.

The Augustus F. Hawkins Human

Services Reauthorization Act of 1990

(Pub. L. 101–501) was enacted on

November 3, 1990. Title VII of Public

Law 101–501 contains amendments to

the Low-Income Home Energy

Assistance Act, including several

changes effective in FY 1991 and FY

1992. These changes concern HHS’s

response to formal complaints,

reduction in the maximum amount that

grantees may carry forward from one

fiscal year to the next, waiver authority

to increase the statutory weatherization

assistance maximum, a requirement for

additional outreach and intake services

in certain cases, and a leveraging

incentive program.

On January 16, 1992, HHS published

an interim final rule (57 FR 1960)

amending the block grant regulations

and implementing these statutory

changes, as required under Public Law

101–501. The interim final rule allowed

a 60-day comment period.

We received 25 letters commenting on

the interim final rule—two from

members of Congress, twelve from State

LIHEAP grantees, one from a county,

two from Indian tribal grantees, three

from home energy suppliers, and five

from others. Based on the comments we

received and on our experience over the

two and half years the interim rule has

been in effect, we have revised the

interim rule as appropriate. It is now

being made final.

In addition to the statutory changes

implemented by the interim final rule

published January 16, 1992, Public Law

101–501 includes several changes

scheduled to affect LIHEAP beginning

in FY 1994. These changes concern

forward funding based on a program

year of July 1 through June 30—whose

implementation, initially set for FY

1993, was delayed until FY 1994 by the

Departments of Labor, Health and

Human Services, and Education, and

Related Agencies Appropriations Act,

1993 (Public Law 102–394)—and the

end of authority to transfer LIHEAP

funds to other HHS block grants. The

Department published a notice of

proposed rule making (NPRM) regarding

these changes, and other proposed

changes involving both LIHEAP and

other HHS block grants, on November

16, 1993 (58 FR 60498). The NPRM

allowed a 45-day comment period.

Since then, the Human Services

Amendments of 1994 (Public Law 103–

252), enacted May 18, 1994, changed the

forward (or advance) funding program

year to October 1 through September

30—the same dates as the current

Federal fiscal year, but funded one year

in advance. The November 16, 1993,

proposed rule also included some

provisions that had originally been

included in a notice of proposed

rulemaking issued by the Department on

July 17, 1992. Based on comments

received on these notices of proposed

rulemaking, HHS intends to publish a

separate final rule implementing

appropriate provisions, except for the

provisions described below, which are

incorporated into the final rule

published today.

The final rule published today

includes several changes proposed in

the November 1993 NPRM. They

involve issues that were also addressed

in the January 1992 interim rule. One

change gives grantees the option to

submit a preliminary request for a

waiver to increase the statutory

weatherization maximum. Other

changes relate to the end of grantees’

authority to transfer LIHEAP funds to

other block grants after FY 1993, and

reduction in the amount grantees may

carry forward from one fiscal year to the

next, and are included in the

regulations’ discussion of the time

period for obligation of LIHEAP funds.

These technical amendments implement

provisions of Public Law 101–501. We

received one comment from a State

LIHEAP grantee on the weatherization

waiver in the NPRM, and none on the

end of transfer authority or reduction in

maximum carryover.

The final rule also makes a technical

amendment deleting reference to the

transfer authority in the regulations’

discussion of uses of leveraging

incentive funds, because this authority

has ended.

Finally, the final rule makes a

technical amendment changing the due

date of grantees’ reports on their

leveraging activities, in accordance with

the Human Services Amendments of

1994 (Pub. L. 103–252). Title III of

Public Law 103–252 contains

amendments to the Low-Income Home

Energy Assistance Act. We plan to

address most of these statutory

amendments in a proposed rule at a

later date.

The provisions of the regulations,

together with the comments we received

and our responses, are discussed below.

Section-by-Section Analysis of Changes

in the Regulations

Subpart B—General Procedures

Section 96.14 Time Period for

Obligation and Expenditure of Grant

Funds

Public Law 101–501 amended section

2607(b)(2) of the LIHEAP statute,

reducing the maximum amount of

LIHEAP funds that grantees may carry

forward for obligation in the succeeding

fiscal year, from 15 to 10 percent of the

funds payable to the grantee and not

transferred to another HHS block grant.
Federal Register / Vol. 60, No. 83 / Monday, May 1, 1995 / Rules and Regulations 21323

This change was effective beginning

with FY 1991 funds carried forward to

FY 1992. In addition, Public Law 101–

501 amended section 2604(f)(2) of the

statute, ending grantees’ authority to

transfer LIHEAP funds to other HHS

block grants, beginning in FY 1994.

The final rule makes technical and

conforming corrections to section

96.14(a)(2) of the block grant

regulations, which concerns obligation

and carryover of LIHEAP funds, to

reflect these statutory changes.

Consistent with a change to section

96.81 that was included in the interim

rule, the final rule specifies the current

reduced amount that grantees may carry

forward to the next fiscal year. Also, it

omits reference to transfer of LIHEAP

funds, beginning with FY 1994

allotments.

Also, the final rule clarifies that

section 96.14(a)(2) applies to regular

LIHEAP block grant funds and not to

LIHEAP leveraging incentive funds.

(Section 96.87 of the regulations deals

with leveraging incentive funds.)

These technical changes are

consistent with language in the notice of

proposed rulemaking published

November 16, 1993, except that the final

rule deletes references to funding on a

program year cycle, since Congress

determined in the Human Services

Amendments of 1994 that LIHEAP will

remain on a Federal fiscal year cycle.

We received no comments on these

changes in the NPRM.

Subpart E—Enforcement

Section 96.50 Complaints

Public Law 101–501 amended section

2608(a)(2) of the LIHEAP statute,

effective beginning in FY 1991. Section

2608(a)(2) concerns formal complaints

of a substantial or serious nature that a

grantee has failed to used funds in

accordance with the LIHEAP statute.

The previous statutory language had

required HHS to ‘‘respond in an

expeditious and speedy manner to’’

such complaints. The amended

language sets a specific time period

within which HHS must respond to

complaints; it requires HHS to ‘‘respond

in writing in no more than 60 days to

matters raised in’’ complaints.

As originally published in July 1982,

the block grant regulations stated at 45

CFR 96.50(d):

The Department will provide a

written response to complaints

[concerning grantee administration of

the block grants] within 180 days after

receipt. If a final resolution cannot be

provided at that time, the response will

state the reasons why additional time is

necessary.

Section 96.50(c) of the regulations

provides that HHS will ‘‘promptly

furnish a copy of any complaint’’ to the

grantee against which the complaint

was made and that, in responding to the

complaint, HHS will consider any

comments received from the grantee

within 60 days, or a longer period

agreed on by the grantee and HHS.

The preamble to the interim final rule

published in January 1992 explained

that our experience has shown that,

because of the serious and generally

complex nature of the formal

complaints we have received, LIHEAP

grantees usually require a full 60 days

to respond to complaints made against

them. The interim rule therefore

amended section 96.50(d) by adding a

new sentence stating that, within 60

days after HHS receives a complaint

concerning the low-income home

energy assistance program, it ‘‘will

provide a written response to the

complainant, stating the actions that it

has taken to date and the timetable for

final resolution of the complaint.’’

This amendment implemented the

requirement in Public Law 101–501,

that HHS respond within 60 days to

complaints, while acknowledging the

amount of time generally needed for

grantees to respond to complaints, and

for HHS to review and resolve these

complaints. The interim rule’s preamble

explained that HHS will continue to

provide final resolution as soon as

possible, consistent with our

responsibility to provide the affected

grantee sufficient opportunity to

respond and to provide thorough

Federal review, and that we will

continue to advise the complainant of

the final action taken.

Public Comments, HHS Responses, and

Change

We received three comments on this

amendment. Two commenters said that

they believed the revised schedule for

HHS response to complaints was

reasonable and adequate.

The third commenter said that, while

HHS changed the regulation ‘‘to provide

a written response to complaints under

the LIHEAP statute within 60 days,

rather than the previous 180 days, the

response envisioned by HHS’ language

appears to be no more than a status

report.’’ The commenter also said that

Public Law 101–501 requires HHS to

‘‘establish a procedure for reviewing

and investigating any complaint

regarding State program compliance

with Federal statutes and

regulations. . . .’’ The commenter

asserted that ‘‘HHS does not establish ‘a

procedure for reviewing and

investigating any complaint regarding

State program compliance’ ’’ and noted

that 45 CFR 96.50(c), ‘‘relating generally

to block grants, states that HHS will

conduct an investigation of complaints

[only] ‘where appropriate.’ ’’ The

commenter believed that ‘‘this

regulatory language is contrary to the

statute’’ and must be amended ‘‘to

establish for LIHEAP the procedure

called for by this statutory change.’’

However, the language cited by the

commenter is not the language of Public

Law 101–501. Further, the block grant

regulations provide a procedure under

paragraphs (c), (d), and (e) of 45 CFR

96.50, for reviewing the resolving

complaints, and the January 1992

interim rule modified that procedure to

implement the requirement in Public

Law 101–501 for a written response

within 60 days to complaints involving

LIHEAP.

Where section 96.50(c) states that

HHS ‘‘will conduct an investigation of

complaints where appropriate,’’

‘‘investigation’’ means a formal and

systematic, thorough and detailed effort

to learn facts, that is carried out after a

review conducted in response to a

complaint shows evidence of possible

illegal action, such as commission of

fraud or theft. An investigation typically

would result in a recommendation for

civil or criminal prosecution and/or

administrative sanctions. (This is

consistent with the use of the term by

the HHS Office of Inspector General.) In

most cases, complaints are resolved

without conducting a formal

investigation. We will conduct an

investigation if our review of a

complaint indicates a need to do so.

The same commenter also referred to

Senate Report 101–421 accompanying

H.R. 4151 (the predecessor to Public

Law 101–501), that ‘‘explains this

proposed change as ‘designed to

respond to concerns regarding the need

for a more expeditious and effective

response to complaints. . . .’ ’’

Since the start of the LIHEAP block

grant in FY 1982, we have tried to

respond expeditiously and effectively to

the formal complaints we have received.

In addition, we have worked to reach

expeditious and effective resolution of

other concerns expressed to us about

grantee LIHEAP programs. During this

time, the only comments we have

received on the timeliness and

effectiveness of our response to

complaints have been the cited sentence

in the Senate Report and the comments

of this commenter. Neither included any

specific examples.

In response to this commenter, the

final rule adds the phrase, ‘‘if the

complaint has not yet been fully

resolved,’’ to the last sentence under
21324 Federal Register / Vol. 60, No. 83 / Monday, May 1, 1995 / Rules and Regulations

section 96.50(d), to indicate that we will

fully resolve complaints within 60 days

whenever possible. That sentence now

reads,

Under the low-income home energy

assistance program, within 60 days after

receipt of complaints, the Department

will provide a written response to the

complainant, stating the actions that it

has taken to date and, if the complaint

has not yet been fully resolved, the

timetable for final resolution of the

complaint.

We will make every reasonable

effort—while providing sufficient time

for grantees to respond to complaints

and for HHS to review the

complainant’s allegations and the

grantee’s response and to conduct an

investigation as necessary—to fully

resolve complaints within 60 days from

the date we receive them. However,

based on our experience over the past

decade, we believe that it would not

serve the best interests of the

complainant, the grantee, or the

Department to require by regulation that

HHS provide final resolution of formal

complaints within 60 days of their

receipt.

Subpart H—Low-Income Home Energy

Assistance Program

Section 96.83 Increase in Maximum

Amount That May Be Sued for

Weatherization And Other EnergyRelated Home Repair

Public Law 101–501 amended section

2605(k) of the LIHEAP statute,

beginning in FY 1991. It provides that

grantees may request after March 31 of

each fiscal year that HHS grant a waiver

for the fiscal year that increases from 15

percent to up to 25 percent of the

LIHEAP funds allotted or available to

the grantee, the maximum amount of

LIHEAP funds the grantee may use for

low-cost residential weatherization or

other energy-related home repair.

Grantees that choose to apply for a

waiver may request authority to use for

these purposes any amount between 15

percent and 25 percent of their LIHEAP

funds.

The statute provides that, after

reviewing a grantee’s waiver request and

any public comments, HHS may grant a

waiver if it determines that: (1) the

number of households in the grantee’s

service population that will receive

LIHEAP heating assistance, cooling

assistance, and crisis assistance (energy

crisis intervention) benefits during the

fiscal year will not be fewer than the

number that received such benefits in

the preceding fiscal year; (2) the

aggregate amount of LIHEAP benefits

that will be received during the fiscal

year will not be less than the aggregate

amount received in the preceding fiscal

year; and (3) the weatherization

activities have been demonstrated to

produce measurable savings in energy

expenditures. The statue also provides

that HHS may grant a waiver if, in

accordance with regulations to be

published by HHS, the grantee’s waiver

request demonstrates good cause for

failing to satisfy the requirements in the

preceding sentence.

The January 1992 interim final rule

added a new section 96.83 to the block

grant regulations to implement

procedures concerning ‘‘standard’’ and

‘‘good cause’’ waivers of the 15 percent

weatherization maximum.

The November 1993 NPRM on

forward funding proposed that grantees

be allowed to submit preliminary

weatherization waiver requests after

January 31 of the program year, to

expedite review and provide more time

for obligation of funds.

Public Comments, HHS Responses, and

Changes

We received several comments on the

provisions in the LIHEAP statute, the

interim rule, and the November 1993

NPRM relating to waiver of the

weatherization maximum.

Two commenters supported the

statutory waiver provision allowing an

increase in the percent of LIHEAP funds

that can be used for weatherization. One

commenter opposed the statutory

waiver provision, stating that it makes

LIHEAP ‘‘cash’’ heating/cooling/energy

crisis assistance and LIHEAP

weatherization ‘‘continue to compete for

limited resources.’’ One commenter said

that the rule ‘‘reflects our

understanding’’ of the statutory

weatherization amendments.

Comment and Response

Another commenter believed that

HHS ‘‘should have been more explicit in

conveying’’ to grantees that Congress

intended that weatherization waivers be

granted only ‘‘under the most limited of

circumstances.’’ A different commenter

said that the guidance in the interim

rule failed to state Congress’ intent, per

the Senate report, that a ‘‘good cause’’

waiver be granted only when a grantee

has demonstrated ‘‘compelling reasons.’’

While we did not specifically state

that waivers—especially ‘‘good cause’’

waivers—would be granted only for

compelling reasons and under very

limited circumstances, we believe it is

clear that grantees must demonstrate

that they meet specific, stringent

requirements in order to receive a

waiver. To date, we have received only

eight weatherization waiver requests.

We approved the one request received

in FY 1991 and seven requests received

in FY 1994. We approved standard

waivers for four of the FY 1994 requests.

Comment and Respronse

A commenter erroneously stated that

the interim rule ‘‘merely requests that

the Grantee submit an explanation of

the specific criteria under which the

Grantee’s weatherization activities have

been shown to produce measurable

savings’’ in energy expenditures. The

commenter believed that these savings

must be ‘‘substantial and long term.’’

The commenter proposed that HHS

establish ‘‘a standard methodology

* * * in the regulations for normalizing

annual consumption to ensure a

common measure for energy savings’’

and set ‘‘a minimum threshold’’ for

‘‘measurable savings.’’

The interim rule—and this final

rule—require at section 96.83(c)(5) that

grantees include with their

weatherization waiver requests ‘‘an

explanation of the specific criteria

under which the grantee has determined

whether’’ all LIHEAP weatherization

activities to be carried out during the

fiscal year for which the waiver is

requested ‘‘have been shown to produce

measurable savings in energy

expenditures.’’ However, we decline to

require that savings be ‘‘substantial and

long term,’’ to establish a standard

methodology to measure energy savings,

or to set a minimum threshold for

savings. The LIHEAP statute’s third

criterion for a ‘‘standard’’ waiver

specifies that the grantee’s

‘‘weatherization activities have been

demonstrated to produce measurable

savings in energy expenditures by lowincome households.’’ The regulation

uses parallel language; it does not go

beyond the substance of the statutory

criterion to specify a required level or

duration, or a standard measure, of

energy savings. We believe that it would

be inconsistent with the block grant

philosophy expressed by Congress and

implemented by HHS to impose such

additional requirements. The basic

premise of the block grants is that,

within the parameters set by the statute,

grantees should have maximum

flexibility to target resources to meet the

needs of their citizens. The regulation

limits the circumstances under which

waivers will be granted, in accordance

with the statutory language and what we

understand to be the legislative intent as

expressed in the legislative history.

Comment and Response

Another commenter addressed the

third criterion that must be met by

grantees applying for a ‘‘standard’’
Federal Register / Vol. 60, No. 83 / Monday, May 1, 1995 / Rules and Regulations 21325

waiver—that the weatherization

activities to be carried out by the grantee

in the fiscal year for which the waiver

is requested have been shown to

produce measurable savings in energy

expenditures. The commenter

erroneously believed that the criterion

applies only to ‘‘weatherization’’ and

‘‘ignores [other] ‘low-cost energy related

repair.’ ’’ However, paragraph (a) of

section 96.83, which describes the scope

of the section, states that ‘‘low-cost

residential weatherization and other

energy-related home repair’’ is referred

to (more briefly) as ‘‘weatherization.’’

Comment and Response

A commenter proposed that

improvement in health and safety

resulting from weatherization be

considered acceptable to meet the third

criterion. We cannot adopt this

proposal, because it would violate the

LIHEAP statute’s requirements for this

criterion—that the ‘‘weatherization

activities have been demonstrated to

produce measurable savings in energy

expenditures by low-income

households.’’ However, the statute and

regulations provide for a waiver if a

grantee can demonstrate ‘‘good cause’’

for failing to meet one or more of the

three ‘‘standard’’ waiver criteria.

Comment and Response

The interim rule’s preamble indicated

that, when determining whether to grant

a ‘‘good cause’’ waiver, HHS would

consider arguments and documentation

that greater benefits will accrue to

recipients for use of LIHEAP funds for

weatherization than for cash assistance.

A commenter asserted that neither the

statute nor the legislative history

supports considering this argument.

However, the commenter mentions the

Senate report’s reference to long-term

benefits resulting from weatherization

improvements that reduce home energy

costs. Consistent with the Senate

report’s prominent discussion of the

expanded flexibility grantees have to

provide energy conservation

improvements through the

weatherization waiver and the

reductions in home energy costs

resulting from these improvements, and

with the statute’s designation of HHS to

determine rules for ‘‘good cause’’

waivers, we are not changing this

policy.

Comment and Response

The commenter also believed that if

the grantee operated a shorter program,

reduced outreach activities, and/or

‘‘took other administrative steps which

may also have led to a reduction in

applications,’’ this would be relevant in

considering whether to grant a ‘‘good

cause’’ waiver. We agree. We therefore

revised section 96.83(e) to provide that

a grantee requesting a ‘‘good cause’’

waiver must include with its request a

comparison of its opening and closing

dates for applications, and a description

of its outreach efforts, for heating,

cooling and crisis assistance, in the

fiscal year for which the waiver is

requested and in the preceding fiscal

year. The comparison should address

the actual dates and outreach efforts—

or the planned dates and planned

outreach for future efforts expected to

take place later in the fiscal year for

which the waiver is requested. If the

grantee’s application period was longer

and/or its outreach efforts were greater

in the preceding fiscal year for one or

more of these program components, the

grantee must include an explanation

demonstrating good cause why a waiver

should be granted in spite of this fact.

We also revised this section to provide

that if the grantee took, or will take,

other actions that led, or will lead, to a

reduction in the number of applications

for heating, cooling, and/or crisis

assistance in the fiscal year for which

the waiver is requested, the grantee

must include with its request a

description of these actions, and an

explanation demonstrating good cause

why a waiver should be granted in spite

of these actions.

In addition, we made minor clarifying

technical amendments to section

96.83(e) describing information that

must be included in grantees’ requests

for ‘‘good cause’’ waivers under a newly

designated paragraph (1), and

explaining the conditions under which

HHS will grant a ‘‘good cause’’ waiver

under a newly-designated paragraph (2).

Comment and Response

A commenter believed that data from

local home energy vendors are most

appropriate for documenting decreased

home energy costs, because Department

of Energy data are mostly national or

regional. We agree. While we are not

changing the regulation to require use of

data from local vendors, we encourage

grantees submitting waiver requests that

document decreased home energy costs

to use actual cost/price/expenditure

data from the State or local area. In most

cases, compiling the best available data

probably would involve at least a

sample of vendors in the grantee’s

service area.

Comment and Response

A commenter said that HHS should

require grantees submitting waiver

requests to include copies of public

statements in full, including transcripts

of comments made during public

hearings, because the interim rule’s

requirement that grantees submit

‘‘copies and/or summaries of public

comments’’ affords grantees ‘‘an

opportunity to selectively quote and

characterize concerns expressed’’ by the

public. The commenter quoted the

Senate report statement that HHS

‘‘should not necessarily be guided only

by the submissions from the state’’ in

deciding whether to grant a waiver, to

support the assertion that the legislative

history ‘‘clearly’’ intends HHS ‘‘to

independently consider these

comments.’’

We decline to require grantees seeking

waivers to submit ‘‘copies of public

statements in full, including transcripts

of comments made during public

hearings.’’ We believe that the

paperwork burden imposed would

outweigh the possible advantages of

such a requirement. Use of the words

‘‘not necessarily’’ in the Senate report

indicates that HHS may decide the

extent to which it will review public

comments. We believe that grantees will

make responsible decisions regarding

submission of relatively brief public

comments in full and submission of

summaries of lengthy and/or numerous

comments. We will independently

consider the comments and summaries

submitted to us. During compliance

reviews, we will monitor the records/

documentation of grantees that

submitted summaries of public

comments with waiver requests, to

assure that these summaries accurately

reflect the comments.

In response to this commenter’s

recommendations, however, we

changed section 96.83(b) of the

regulations to require that written

public comments on a proposed waiver

request be made available for public

inspection upon their receipt by

grantees, and that any summaries of

written comments, and transcripts and/

or summaries of any verbal comments

made on the request at public meetings

or hearings also be made available for

public inspection. We also changed this

section to specify that transcripts and/

or summaries of any comments made on

the request at public meetings or

hearings must be included with waiver

requests submitted to HHS. Finally, we

changed this section to require that

copies of actual waiver requests must be

made available for public inspection

upon submission of the requests to

HHS, enabling the public to review the

decisions made by the grantee and

verify that comments were accurately

conveyed. These additional

requirements strengthen grantees’

accountability to the public by assuring
21326 Federal Register / Vol. 60, No. 83 / Monday, May 1, 1995 / Rules and Regulations

public access and the opportunity to

respond to comments, and by assuring

that waiver requests submitted to HHS

include verbal as well as written public

input.

The final rule also changes section

96.83(b) to require grantees to make all

weatherization waiver requests—

including the preliminary waiver

requests described below—available for

public inspection and comment until at

least March 15 of the fiscal year for

which the waiver is requested. Several

grantees said in their FY 1994 LIHEAP

plans that they intended to request

weatherization waivers in FY 1994.

Public participation in the development

of the plan—before or early in the fiscal

year—took place before the severity of

the winter, winter fuel prices, etc., were

known. Therefore, public inspection

and comment this far in advance of

submission of a waiver request is not

sufficient; public participation would

not be meaningful if the only public

notification was before the winter.

There should be public notice about a

proposed request, after January 1 of the

fiscal year for which the waiver is to be

requested.

We have tried to balance the interests

of the public—the recipients of LIHEAP

assistance—and the valid concerns of

grantees—the primary administrators of

the LIHEAP block grant. We have also

tried to write regulations that are

consistent with the statute and

legislative history, that require grantees

to address specific criteria and provide

specific information (including

quantified data) to justify use of

additional funds for weatherization—

without imposing unnecessary and

burdensome paperwork requirements

and without making it virtually

impossible to receive a waiver. We are

commented to assuring program

accountability and fair treatment,

meaningful access to information, and

meaningful opportunity for input for the

public. However, it would be

inconsistent with the block grant

philosophy clearly expressed by

Congress and implemented by HHS to

burden grantees with regulatory

requirements that do not clearly serve

those ends and that are not based on

statutory requirements and/or legislative

history.

Comments and Response

Finally, the interim rule’s preamble

said that we were interested in

comments about whether the statutory

starting date of April 1 for

weatherization waiver requests would

create problems for administration of

grantee programs under forward

funding. The forward funding program

year was scheduled to begin July 1 and

end June 30, leaving only three months

for submission and review of waiver

requests and for obligation of most of

the funds for which a waiver has been

granted. We received two comments in

response. A State proposed that HHS

ask Congress to amend the LIHEAP

statute to allow submission of waiver

requests after January 31 if forward

funding is implemented. Another

commenter said that a submission date

two to four weeks before March 31

might be reasonable.

Our November 1993 NPRM on

forward funding proposed that grantees

be permitted to submit a preliminary

waiver request after January 31 of a

program year. This would provide

sufficient time for HHS to review the

waiver request and obtain any

additional information that might be

needed, and still allow the grantee to

obligate its funds by June 30, which was

scheduled to be the end of the forward

funding program year. In a comment on

the NPRM, a State proposed that

weatherization waiver requests be

submitted with the grantee’s initial

LIHEAP application for a program year,

and that States not be required to submit

new waiver requests each time they

wanted a waiver. The commenter

objected to the (statutory) requirement

that HHS make decisions on waiver

requests only after March 31.

Seeking earlier feedback on their FY

1994 waiver requests, this State and

another submitted these requests before

April 1, 1994. These grantees confirmed

and completed the requests, and HHS

made the decisions to approve them,

after March 31.

The LIHEAP statute specifies that

HHS may grant a waiver ‘‘for a fiscal

year’’ if the grantee submits a written

request to the Department ‘‘after March

31 of such fiscal year’’ and if HHS

‘‘determines, after reviewing such

request and any public comments,’’ that

the number of households that will

receive LIHEAP benefits other than

weatherization, and the aggregate

amount of these benefits, will be greater

in the fiscal year for which it requests

a waiver than they were in the

preceding fiscal year, or there is good

cause for not meeting these conditions.

The grantee cannot know until well into

each winter how many households it

will (or is likely) to serve and the

amount of benefits it will provide, since

this often depends on weather and

economic conditions that are not known

before the winter.

However, the written comment on the

NPRM, grantees’ submission of early

weatherization waiver requests and

statements of intent to apply for

waivers, and verbal comments indicated

grantees’ concern that April 1 is

relatively late in the program year—and

in the Federal fiscal year as well. It

would be mid-April, at the earliest,

before a decision was made. This would

leave considerably less than three

months for additional weatherization

funds to be obligated under the

proposed July 1 to June 30 program

year. It would leave considerably less

than six months under the Federal fiscal

year.

As noted earlier, Congress has

determined that LIHEAP will remain on

the Federal fiscal year funding cycle, so

there will be more time for

weatherization to be implemented. But

we have concluded that the option for

a grantee that wants a weatherization

waiver, to submit a preliminary waiver

request between February 1 and March

31, is appropriate for the fiscal year

cycle as well as the program year cycle.

It will enable HHS to review the

preliminary request and discuss any

issues or concerns with the grantee as

winter is ending. Once the grantee

submits updated information and a

confirmation of its request after March

31, HHS can more quickly decide and

respond, and the grantee will have more

time to carry out the weatherization.

This final rule therefore changes

section 96.83(c) of the regulations to

permit grantees to submit preliminary

waiver requests at their option, between

February 1 and March 31 of the fiscal

year for which the grantee seeks a

waiver. The preliminary request should

contain the same information required

for waiver requests submitted after

March 31. Because the LIHEAP statute

permits grantees to submit waiver

requests for a fiscal year ‘‘after March 31

of such fiscal year,’’ grantees that submit

preliminary requests must submit

formal confirmation of their request

after March 31, along with information

on any additional public comments

received and any changes to the request.

HHS will make the decisions on

whether to grant waivers after March 31.

Additional Information

The preamble to the January 1992

interim final rule included additional

information relating to ‘‘standard’’ and

‘‘good cause’’ waivers, public comment,

submission and review of waiver

requests, and the effective period for

waivers. With indicated modifications

and clarifications made in response to

comments and our experience with

weatherization waiver requests, that

information is still effective and is

included as the remainder of this final

rule’s preamble discussion of section

96.83, as follows.
Federal Register / Vol. 60, No. 83 / Monday, May 1, 1995 / Rules and Regulations 21327

‘‘Standard’’ and ‘‘Good Cause’’ Waivers

The first criterion for a ‘‘standard’’

waiver requires that the number of

households in the grantee’s service

population that will receive LIHEAP

heating, cooling, and crisis assistance

benefits will not be fewer than the

number that received such benefits in

the preceding fiscal year. This criterion

applies to the total, combined, aggregate

number of households receiving these

types of benefits in each fiscal year.

Grantees are to use their best estimates

for each fiscal year of (1) the total or

combined number of all households

receiving each of these types of

assistance (which may involve some

duplication, e.g., counting a household

twice if it received both regular heating

assistance and heating crisis assistance);

or (2) the unduplicated number of

households receiving heating assistance

and heating crisis assistance plus the

unduplicated number of households

receiving cooling assistance and cooling

crisis assistance. Grantees must use the

same method of calculation for both

fiscal years. Numbers for the earlier

fiscal year should be consistent with the

numbers included in the grantee’s

official report of the number and income

levels of households it assisted during

that year (as required by 45 CFR 96.82)

or with a revised report.

The second criterion requires that the

aggregate amount of LIHEAP benefits in

the current year will not be less than the

aggregate amount of LIHEAP benefits

received in the preceding fiscal year. It

applies to the total, combined, aggregate

amount, in dollars, of LIHEAP heating,

cooling, and crisis assistance benefits in

each fiscal year—not to the separate

totals for each type of assistance. This

final rule clarifies at section

96.83(c)(2)(ii) that the LIHEAP benefit

amounts must be expressed in dollars.

When items such as blankets and fans

are provided as benefits, the dollar

amount of LIHEAP funds used to

purchase them should be included.

When services such as emergency repair

of furnaces are provided, the dollar

amount of LIHEAP funds used to pay for

the services should be included.

Grantees will need to project figures

for any households to be served and

funds to be obligated from the date the

waiver request is submitted until the

end of the fiscal year for which the

waiver is requested.

This final rule clarifies that the first

and second criteria apply respectively to

the number of households receiving

LIHEAP heating, cooling, and crisis

assistance, and to the amount of

LIHEAP heating, cooling, and crisis

assistance, provided by the grantee’s

Federal LIHEAP allotment from regular

and supplemental appropriations. It

clarifies that assistance provided from

other sources, such as the grantee’s own

funds, oil overcharge funds, (other)

leveraged resources, and leveraging

incentive funds, should not be included

under these criteria.

The third criterion requires that the

weatherization activities have been

shown to produce measurable savings in

energy expenditures. It applies to all

LIHEAP weatherization activities to be

carried out by the grantee during the

fiscal year for which the waiver is

requested, not just to activities proposed

to be carried out with amounts above 15

percent of the grantee’s LIHEAP funds.

Grantees will not meet this criterion

unless all of their LIHEAP

weatherization activities for the fiscal

year have been shown to produce

measurable savings.

The LIHEAP statute and the HHS

block grant regulations do not name

specific activities which are allowable

as weatherization and other energyrelated home repair under the LIHEAP

program. However, the statute and

Federal regulations for the low-income

weatherization assistance program

(LIWAP) administered by the

Department of Energy (DOE) do name

certain weatherization measures that are

allowable under that program. The

statute authorizing LIWAP is the Energy

Conservation in Existing Buildings Act

of 1976 (title IV of the Energy

Conservation and Production Act,

Public Law 94–385, as amended; 42

U.S.C. 6851 et seq.). The Federal

regulations implementing DOE’s

Weatherization Assistance for LowIncome Persons are found at 10 CFR

part 440. These regulations include

‘‘Standards for Weatherization

Materials’’ at Appendix A. In addition,

DOE has allowed other activities by

program notice and correspondence.

The DOE weatherization statute and

regulations apply specifically to LIWAP,

and the LIHEAP statute and regulations

apply to LIHEAP. However, to promote

consistency in their weatherization

programs, LIHEAP grantees may choose

to use certain DOE weatherization

provisions as guidance in administering

their LIHEAP weatherization programs,

as long as these provisions are

consistent with the LIHEAP statute and

regulations.

(Public Law 103–252—the Human

Services Amendments of 1994—allows

HHS to permit LIHEAP grantees to use

LIHEAP weatherization funds under

DOE LIWAP rules that are not

consistent with the LIHEAP statute.

HHS plans to address this new option

in a proposed rule on Public Law 103–

252.)

HHS will accept the following as

weatherization activities which have

been shown to produce measurable

savings in energy expenditures, as long

as these activities also are consistent

with the requirements of the LIHEAP

statute and regulations: installation of

the specific materials meeting the

specific standards listed in Appendix A

of the DOE weatherization regulations at

10 CFR part 440; installation of

materials meeting the specific standards

incorporated by reference in Appendix

A; and weatherization activities

specifically allowed by official DOE

correspondence and memoranda.

LIHEAP grantees requesting a waiver of

the LIHEAP statutory weatherization

maximum who propose to carry out

these weatherization activities may cite

these sources as the criteria under

which they have determined that these

activities have been shown to produce

measurable savings.

In addition to listing requirements for

a ‘‘standard’’ weatherization waiver for

grantees that meet the three criteria

discussed above, this final rule sets

criteria for a ‘‘good cause’’ waiver for

grantees that wish to use more than 15

percent of their LIHEAP funds for

weatherization, but do not meet one or

more of the three criteria for a

‘‘standard’’ waiver. As noted earlier in

this preamble, the final rule includes

additional requirements at section

96.83(e) for a ‘‘good cause’’ waiver,

regarding the length of the grantee’s

application period and the grantee’s

outreach efforts, for heating, cooling,

and/or crisis assistance applications,

from the preceding fiscal year to the

fiscal year for which the waiver is

requested.

Requests for both ‘‘standard’’ and

‘‘good cause’’ waivers must include

comparison of the grantee’s best

estimates of service and benefit totals

for the year for which the waiver is

requested with service and benefit totals

for the preceding fiscal year. The criteria

for a ‘‘good cause’’ waiver include the

requirements that grantees explain the

reasons they are not maintaining the

prior year’s service and/or benefit

levels, as appropriate, demonstrating

good cause for failing to maintain these

levels and justifying use of additional

funds for weatherization. Reasons for

failing to maintain service levels might

include reduction in need and/or fewer

applications for assistance due to

improvement in economic conditions

and decline in unemployment, warmer

than normal winter weather, and/or

lower home energy costs for low-income

households. As indicated earlier in this
21328 Federal Register / Vol. 60, No. 83 / Monday, May 1, 1995 / Rules and Regulations

preamble, we also will consider

arguments and documentation (e.g., cost

benefit analysis) that greater benefits

will accrue to recipients from use of

funds for weatherization than for cash

assistance. Further, we will consider

arguments that service or benefit levels

were higher in the preceding year

because of supplemental appropriations

enacted in response to unusual

conditions, such as abnormally cold

winter weather and/or large fuel price

increases.

‘‘Good cause’’ waiver requests also

must include a comparison of the

grantee’s LIHEAP heating, cooling, and

crisis assistance eligibility standards

(eligibility criteria), benefit levels,

application periods, and outreach efforts

for the fiscal year of the waiver request

and for the preceding fiscal year. If the

eligibility standards were less

restrictive, the benefit levels were

higher, the application periods were

longer, and/or the outreach efforts were

greater for one or more of these program

components in the preceding year, the

‘‘good cause’’ waiver request must

include an explanation demonstrating

good cause why a waiver should be

granted in spite of this fact. In addition,

other actions that led to a reduction in

the number of applications for heating,

cooling, and/or crisis assistance must be

addressed. We will review this

information to determine whether a

waiver would be consistent with

congressional intent to maintain service

and benefit levels.

‘‘Good cause’’ documentation should

cite measurable, quantified data, and the

sources for these data. For example,

grantees documenting reduction in need

for cash benefits may provide

comparison of unemployment statistics,

Aid to Families with Dependent

Children (AFDC) and other public

assistance recipiency data, and the

number of applications for LIHEAP

assistance, for the current and the

preceding fiscal year. Grantees

documenting milder weather may cite

National Weather Service data

comparing heating or cooling degree

days for their service area, as

appropriate. Grantees documenting

decreased home energy costs preferably

should cite actual prices/costs in the

local service area, as discussed earlier in

this preamble.

Public Ispection and Comment

Consistent with the requirements and

legislative history of Public Law 101–

501, the final rule maintains the

requirement from the interim rule that

grantees provide opportunity for timely

and meaningful public review of, and

comment on, their proposed

weatherization waiver requests. The

final rule adds the requirement that

proposed waiver requests, and any

preliminary waiver requests, be made

available until at least March 15 of the

fiscal year for which the waiver will be

requested. As discussed earlier in this

preamble, it also adds the requirement

that written public comments on the

proposed waiver request must be made

available for public inspection upon

their receipt by grantees, as must any

summaries prepared of these written

comments, and transcripts and/or

summaries of any verbal comments

made on the request at public meetings

or hearings. Consistent with House of

Representatives Conference Report 101–

816, this public comment procedure

does not require hearings. Once grantees

have submitted waiver requests to HHS,

copies of the entire waiver request

submission must be made available for

public inspection.

For example, we expect grantees to

provide notification about proposed

waiver requests with enough lead time

to allow interested parties a reasonable

period in which to comment. We also

expect grantees to specify what a

LIHEAP weatherization waiver request

is the (or a) topic of a meeting or request

for comments, rather than simply to

indicate that issues of general social

services interest are involved.

The final rule requires at section

96.83(c) that grantees include with their

waiver requests a description of how

and when the proposed waiver request

was made available for timely and

meaningful public review and comment,

copies or summaries of public

comments received, a statement of the

method for reviewing public comments,

and a statement of the changes, if any,

that were made in response to these

comments. Also, as discussed earlier in

this preamble, the final rule adds the

requirement that waiver requests

include transcripts and/or summaries of

any comments made on the request at

public meetings or hearings.

Submission and Review of Waiver

Requests

Requests for waiver of the

weatherization maximum must be made

by the grantee’s chief executive officer

or designee, in writing. They should be

sent to the Director, Office of

Community Services, Administration

for Children and Families, Department

of Health and Human Services, 370

L’Enfant Promenade, S.W., Washington,

D.C. 20447.

HHS may require additional

clarification or documentation as it

determines necessary to decide whether

a grantee fully satisfies the appropriate

waiver requirements.

We will review all requests and make

a decision within a maximum of 45 days

of receipt of a completed request. We

expect that most requests will be

handled much more quickly than this.

A need for additional information from

the grantee will delay the start of this

time period and delay the decision.

HHS will approve all waiver requests

that, in its judgment, meet all statutory

and regulatory requirements for either a

‘‘standard’’ or a ‘‘good cause’’ waiver

and that demonstrate adequate

solicitation and consideration of public

comments.

No waiver will be granted after the

end of the fiscal year for which the

funds are appropriated. Accordingly,

waiver requests must be submitted in

sufficient time before the end of the

fiscal year to allow for HHS review and

grantee obligation of funds that cannot

be carried forward.

Effective Period

Waivers will be effective from the

date of HHS’s written approval until the

funds are obligated in accordance with

the LIHEAP statute and regulations.

A grantee that has received a waiver

is not required to use the full approved

amount for weatherization. If a grantee

decides to use less than the approved

waiver amount for weatherization, it

should amend its LIHEAP plan to reflect

this decision.

Funds for which a weatherization

waiver is granted may be carried over to

the following fiscal year, consistent with

standard statutory and regulatory

requirements for obligation and

carryover of LIHEAP funds, and may

retain their designation as funds to be

used for weatherization, if the grantee so

chooses. However, any carried-forward

‘‘waiver funds’’ that retain this

designation may not be considered

‘‘funds available’’ or ‘‘funds allotted’’ for

the purpose of calculating the maximum

amount that may be used for

weatherization in the succeeding fiscal

year.

Section 96.84 Miscellaneous

The January 1992 interim final rule

consolidated three brief regulatory

provisions under section 96.84. They

are: a provision relating to rights and

responsibilities of territories, a

provision concerning applicability of

the LIHEAP statutory assurances, and a

provision concerning prevention of

waste, fraud, and abuse in grantee

LIHEAP programs. We consolidated

these provisions due to space

limitations in the LIHEAP portion of the

block grant regulations. Also, the
Federal Register / Vol. 60, No. 83 / Monday, May 1, 1995 / Rules and Regulations 21329

interim rule amended the provision

dealing with applicability of the

assurances to indicate that the new

assurance 15, discussed below, which

was added to the LIHEAP statute as

section 2605(b)(15) by Public Law 101–

501, applies to heating, cooling, and

energy crisis intervention assistance.

We received no comments on this

consolidation. The final rule makes no

change to section 96.84.

Section 96.86 Exemption From

Requirement for Additional Outreach

and Intake Services

Public Law 101–501 added a new

LIHEAP statutory assurance—assurance

15—to which States must certify in their

applications for LIHEAP funding. Under

the new section 2605(b)(15), beginning

in FY 1992, States that provide outreach

and intake for heating and cooling

assistance and crisis situations through

State departments of public welfare at

the local level also must provide

outreach and intake for these types of

assistance through additional State and

local governmental entities or

community-based organizations.

Examples of community-based

organizations listed in the statute are

not-for-profit neighborhood-based

organizations, area agencies on aging,

and community action agencies. In

States where such entities or

organizations did not administer these

functions as of September 30, 1991,

preference in awarding grants or

contracts for intake services is to be

provided to agencies that administer the

low-income weatherization or energy

crisis intervention programs.

Exemption of Indian Tribes, Tribal

Organizations, and Some Territories

The January 1992 interim final rule

established a new section 96.86 that

exempted Indian tribes and tribal

organizations from this requirement.

This new section also exempted

territories with annual LIHEAP

allotments of $200,000 or less from the

requirement.

In the preamble to the interim rule,

we explained the reasons for this

exemption. We concluded that the

provision concerning alternate outreach

and intake services is not appropriate to

American Indian tribal grantees because

of the nature of tribal governments and

their relationship to their service

populations. Assurance 15 refers to

outreach and intake services ‘‘offered by

State Departments of Public Welfare at

the local level’’—that is, by entities that

administer public welfare programs.

The legislative history for Public Law

101–501 refers specifically to agencies

that administer the Aid to Families with

Dependent Children (AFDC) program.

However, Indian tribes do not

administer AFDC for their service

populations. In accordance with Federal

law and regulations, States provide

AFDC assistance to eligible American

Indians, including Indian people

receiving LIHEAP assistance from tribes

that receive direct LIHEAP funding.

Indian tribes therefore do not have tribal

departments or offices directly

comparable to State departments of

public welfare. We also noted that

Indian tribes are close to their service

populations. ‘‘Tribal’’ and ‘‘local’’ levels

of administration generally are the

same. Consequently, requiring tribes to

provide for alternative outreach and

intake services by additional

governmental entities or communitybased organizations would be

inappropriate as well as inconsistent

with the Federal government’s policy of

Indian self-determination.

We also concluded that the new

provision concerning alternate outreach

and intake services is not appropriate to

territories with regular LIHEAP

allotments of $200,000 or less annually.

Experience has shown that each grantee

incurs certain basic administrative costs

in developing and implementing a

LIHEAP program. Most territories (and

tribes) receive relatively small LIHEAP

allotments. We concluded that, for

territorial grantees with annual LIHEAP

funding of $200,000 or less, the

additional resources that would be

required to provide alternative outreach

and intake services would increase

administrative and other non-benefit

costs prohibitively and would

significantly reduce the heating,

cooling, crisis, and/or weatherization

benefits that the territory could provide.

We doubted that territories with

LIHEAP allotments of $200,000 or less

would have the ability to provide

meaningful LIHEAP benefit levels if

they also were required to provide for

additional outreach and intake services.

The time, effort, and funds spent

providing alternate outreach and intake

services would be significantly out of

proportion to the direct LIHEAP benefits

that could be provided to eligible

households.

In addition, the territories with

current LIHEAP allotments of $200,000

or less that do not consolidate LIHEAP

funds under other programs pursuant to

Public Law 95–134, commonly referred

to as the Omnibus Territories Act,

administer LIHEAP entirely at the

central territorial level. Because of their

relatively small populations, they do not

have separate local administering

agencies. We concluded that a

requirement for alternative local

agencies would be inappropriate under

these circumstances.

This means that at current LIHEAP

funding levels, all territories except the

Commonwealth of Puerto Rico are

exempt from this provision. The

allotments of the territories in FY 1994,

under the regular LIHEAP appropriation

of $1.437 billion, range from $14,937 to

$68,807 for all territories except Puerto

Rico, whose allotment is $1,708,030.

We received one comment, from a

tribal organization, supporting the

exemption of tribal and small territorial

grantees from this requirement. We

received no comments opposing the

exemption.

Consistent with our previously stated

rationale and with this comment, we are

continuing to exempt Indian tribes and

tribal organizations, and territories with

annual regular LIHEAP allotments of

$200,000 or less, from the requirement

of section 2605(b)(15) of the LIHEAP

statute, as amended.

Although these tribal and territorial

grantees are exempt from this

requirement for additional outreach and

intake services, they are still subject to

the requirements in section 2605(b)(3) of

the LIHEAP statute—assurance 3—

concerning outreach. Under this

assurance, all grantees must ‘‘conduct

outreach activities designed to assure

that eligible households, especially

households with elderly individuals or

disabled individuals, or both, and

households with high home energy

burdens, are made aware of’’ LIHEAP

and similar energy-related assistance.

Other Comments and HHS Responses

The interim final rule provided

guidance to States on interpretation and

implementation of the requirement for

additional outreach and intake services.

The interim rule’s preamble noted that

grantees had requested such guidance

and that Senate Report 101–421 said

that HHS is expected to provide

guidance on compliance with this

requirement.

However, we did not provide detailed

requirements on interpretation and

implementation in the regulation itself.

The preamble stated:

‘‘As the original block grant regulations

and preamble explain, consistent with

statements of congressional intent, the

Department’s philosophy on block grants is

that grantees are to be given as much

flexibility as possible to implement the

programs in their own jurisdictions. We will

accept a grantee’s interpretation of a statutory

requirement unless the interpretation is

clearly erroneous.

* * * * *

‘‘We will review the grantees’ compliance

with the appropriate legislative and

regulatory requirements in carrying out our
21330 Federal Register / Vol. 60, No. 83 / Monday, May 1, 1995 / Rules and Regulations

responsibilities to conduct LIHEAP

compliance reviews, application reviews,

complaint investigations, and resolution of

audit findings. However, consistent with the

block grant philosophy, we are not

publishing Federal rules on how the

requirement for additional outreach and

intake services must be implemented by

grantees, except to specify that it does not

apply to Indian tribes and tribal

organizations or to territories receiving

$200,000 or less in annual LIHEAP

allotments. This is also consistent with our

regulatory treatment of other application

assurances required by the statute.’’

We received nine comments on the

statutory and regulatory provisions

relating to the requirement for

additional outreach and intake services

(including the comment from a tribal

organization mentioned previously).

Comments and Response

Two of the commenters were

members of Congress who requested a

specific rule to explicitly implement

assurance 15. Another letter supported

a rule that would include definitions of

a number of terms relating to this

assurance.

We continue to believe that it would

be inconsistent with the block grant

philosophy as expressed in law and

legislative history to publish Federal

rules mandating specific ways in which

States must implement this statutory

requirement. The LIHEAP statute

specifies in section 2605(b), which

contains the assurances: ‘‘The Secretary

may not prescribe the manner in which

the States will comply with the

provisions of this subsection.’’

Another commenter believed that

States might take assurance 15 ‘‘less

seriously because it is not included in

the regulations themselves.’’ However,

the statute is paramount. Further, the

chief executive officer of each State

must certify that the State agrees to

these assurances. Federal regulations are

not intended simply to repeat the law.

It is consistent with our treatment of the

LIHEAP statute’s other assurances—

which are as important as assurance

15—not to issue regulations mandating

specific ways in which grantees must

implement them.

We will continue to carry out our

responsibilities to help assure that

grantees comply with the statute. We

review grantees’ compliance with the

statutory assurances when we conduct

compliance reviews (including reviews

for compliance purposes of funding

applications), and when we resolve

audit findings and complaints. Public

Law 103–252 (the Human Services

Amendments of 1994) amends the

LIHEAP statute to require that States

include in their LIHEAP applications a

description of how they will carry out

assurance 15; this will help us in our

monitoring. We resolve grantee failure

to comply with the statute through

appropriate enforcement proceedings. If

we find while carrying out our

compliance responsibilities that several

grantees have misunderstood a statutory

provision, it may be appropriate for us

to clarify by regulation, as we did in

October 1987 regarding the applicability

of assurance 9’s administrative cost

requirements to subgrantees and

contractors as well as to grantees.

Comment and Response

One of the congressional commenters

said that the final rule should contain

‘‘strong regulation’’ stating that

alternative outreach and intake ‘‘must

be performed in a professional manner,

with strict contract standards for agency

accountability and paid for as part of the

administrative or program expenditures

of the LIHEAP program.’’

We agree that the requirements of

assurance 15 must be carried out by

States and by entities and persons acting

on their behalf in a competent manner,

by qualified agencies with effective

standards for accountability. This is the

case for all of the LIHEAP statutory

assurances. In applying for Federal

LIHEAP funds, the State has specifically

assured the Federal government that it

will carry out all of these assurances. In

accepting Federal LIHEAP grant funds,

the State has made a commitment to

follow the requirements of all applicable

Federal laws and regulations.

However, we do not believe that

assurance 15 requires that alternative

outreach and intake be ‘‘paid for as part

of * * * the LIHEAP program’’—i.e.,

always provided as a paid LIHEAP

function or activity and never provided

on an unpaid, voluntary basis. The

LIHEAP statute does not specify that

alternative outreach and intake must be

provided on a paid basis. And, as

previously stated, the statute specifies

that HHS ‘‘may not prescribe the

manner in which the States will

comply’’ with the assurances. Further,

we believe that the legislative history

assumes that alternative outreach and

intake provided by appropriate entities/

organizations on an unpaid, voluntary

basis will meet the assurance’s

requirements. Conference Report 101–

816 specifies that if States ‘‘are already

offering alternate intake sites in some

areas, this section does not require them

to modify their system of program

management in those areas.’’ Senate

Report 101–421 indicates that, if

alternative services previously were

provided voluntarily, providers should

continue to maintain comparable levels

of efforts voluntarily, stating that ‘‘local

entities now providing such [outreach

and intake] services voluntarily are

expected to maintain comparable levels

of effort in addition to the new activities

which may be contracted to them

pursuant to this provision.’’ As we

stated in the preamble to the interim

rule, assurance 15 should not be used as

a basis for reducing voluntary efforts.

While the law does not require that

alternative outreach and intake be

provided by entities or organizations

‘‘paid * * * as part of the * * *

expenditures of the LIHEAP program,’’

States should not attempt to compel

local entities/organizations to provide

these services on an unpaid basis.

Many—if not most—such entities do not

have the resources to provide LIHEAP

outreach and intake without appropriate

payment. While we support the use of

volunteer outreach and intake when

appropriate, our guidance is not

intended to encourage States to require

local agencies to provide these services

at no cost to the State. The Senate report

says that ‘‘State LIHEAP programs are

expected to use LIHEAP administrative

funding for any additional LIHEAP

activities required by this section, rather

than relying on other federal funds in

local agencies.’’ (We have found that

grantees’ classification of certain

outreach functions—such as energy

conservation education—as nonadministrative is not clearly erroneous.)

Also, if an alternative governmental

entity or community-based organization

freely—without pressure or coercion—

agrees to provide additional outreach

and/or intake services without charge,

we believe that assurance 15 does not

require the grantee to pay it for

providing these services.

Comments and Response

Several commenters indicated that the

discussion in the interim rule’s

preamble on the participation of utilities

and other home energy vendors in

LIHEAP outreach might imply that these

vendors could be considered

‘‘community-based organizations’’

whose participation in LIHEAP outreach

and/or intake could meet assurance 15’s

requirement for additional outreach and

intake. These commenters said that

utilities and other vendors are not

community-based organizations. One

letter rejected ‘‘the notion that lowincome clients may be given a choice by

the State of applying for LIHEAP at the

AFDC office or at the office of their

creditor, the utility, to whom they

would be required to submit income

documentation for scrutiny.’’ Another

noted that vendors’ relationships with

their clients ‘‘can be adversarial’’—
Federal Register / Vol. 60, No. 83 / Monday, May 1, 1995 / Rules and Regulations 21331

clients may need to bargain with their

vendors over payment agreements,

arrearage payments, etc. ‘‘They may

even have to resolve disputes in a

regulatory setting. * * * In these

circumstances, the confusion between

access to the program and contact with

a creditor that could be created by

vendor outreach and intake may

discourage the very expansion of access

that the law intends to encourage.’’ Two

commenters asserted that ‘‘ communitybased organizations’’ must be nonprofit

local agencies/organizations.

We continue to encourage cooperation

between grantee LIHEAP programs and

home energy vendors, and use of

vendors to provide LIHEAP outreach as

appropriate. But upon further reflection,

we agree with these commenters that

outreach and/or intake provided by

home energy vendors, including utility

companies, does not meet assurance

15’s requirement for additional outreach

and intake services. We agree that the

issues with respect to vendors’ status as

creditors are significant. In addition,

‘‘community-based organization’’—

historically a ‘‘term of art’’ used in

Federal anti-poverty programs—

generally refers to nonprofit entities;

utilities and other home energy vendors

generally are for profit. (For example,

regulations for the former Community

Services Administration at 45 CFR

1076.50–1(c) defined ‘‘communitybased organization’’ as ‘‘a cooperative or

private nonprofit organization at least

50 per centum of whose governing body

is composed of local area

residents.* * *’’)

Comment and Response

A commenter believed that ‘‘the

statute required States to ensure that all

interested organizations, including

vendors, engage in outreach. * * *’’

The statute requires that, ‘‘in addition

to’’ outreach and intake offered by State

public welfare departments at the local

level, there must be outreach and intake

for heating, cooling, and crisis

assistance ‘‘that is administered by

additional State and local governmental

entities or community-based

organizations. * * *’’ Comparable

levels of outreach and intake services

should be provided for welfare and nonwelfare households and, if feasible,

States should use a number of different

service providers. However, we do not

believe that the statute requires States to

ensure that ‘‘all interested organizations

* * * engage in outreach.’’

Comments and Response

A commenter believed that intake

functions were ‘‘appropriately described

in the guidance.’’ Another commenter

thought that intake might be ‘‘too

narrowly defined, given the legislative

history.’’ The statute does not define or

otherwise indicate what ‘‘intake’’

includes; both the conference report and

the Senate report refer to ‘‘intake or

application processing.’’ The interim

rule’s guidance noted functions that are

‘‘generally’’ included as intake (receipt

of applications for assistance and the

opportunity for applicants to provide

any missing information for their

applications). It also noted that States

have ‘‘the discretion to choose whether

to include’’ certain other functions

(income determination and verification,

and preliminary eligibility or benefit

determination). We continue to believe

that it is appropriate for grantees to have

this degree of flexibility in defining the

term—that they should not be required

to include all application processing

tasks as part of ‘‘intake.’’

Comments and Response

A State noted that mail-in

applications can be acceptable for intake

and recommended a similar

accommodation for outreach.

Information sent by mail about LIHEAP

can be an effective part of a grantee’s

outreach effort. However, outreach by

mail will not by itself meet the

requirement for alternate outreach

services. Many low-income households

would not be reached, or adequately

served, by outreach-by-mail. As the

Senate report explains, outreach efforts

should be varied and targeted to the

different populations eligible for

LIHEAP assistance—such as welfare

households, non-welfare households,

and the elderly—‘‘to assure that these

households have an effective way to

learn about the program and how to

apply for benefits.’’

The same State recommended that if

‘‘the local welfare office has an

established local advisory board

represented by those agencies that are

listed [in assurance 15] as potential

alternative sites, that the outreach

requirement is met.’’ However,

assurance 15 requires more than

participation in an advisory or other

board by alternate agencies. It

specifically requires that alternative

outreach and intake functions be

‘‘administered by additional State and

local governmental entities or

community-based organizations,’’ and is

intended to provide information directly

to low-income individuals, not just to

other agencies.

The State also proposed that a phonein intake process for households

experiencing an energy crisis be

considered to meet the statutory

requirements for crisis assistance. In

some circumstances, receiving a

telephone call by a household

experiencing an energy crisis would be

an appropriate and effective first step as

intake, although information on the

crisis and the household’s eligibility

would need to be verified. However,

some low-income households do not

have a telephone or reasonable access to

a telephone that they can realistically

use, and section 2604(c) of the LIHEAP

statute specifically requires each entity

that administers LIHEAP crisis

assistance to accept crisis assistance

applications ‘‘at sites that are

geographically accessible to all

households in the area.’’

A commenter believed that the

interim rule’s preamble guidance might

‘‘inadvertently encourage’’ welfare

departments ‘‘to conduct exclusively

mail-application intake.’’ The guidance

is not intended—and should not be

interpreted—as encouragement for

exclusively mail-application intake.

Comments and Response

Two States objected to the

requirements of assurance 15. One

objected to the increased expenditures

needed to provide additional outreach

and intake—with reduced funds

therefore available for benefits. The

State said that the ‘‘effort and funds

spent’’ to provide additional services

‘‘would be significantly out of

proportion to the direct benefits that

could be provided to eligible

households.’’ Another State defended its

effectiveness in reaching nonwelfare

households and objected ‘‘to the use of

limited funding to replicate a function

already being administered timely and

effectively.’’ The State believed that it

would be extremely difficult to meet the

requirement in section 2604(c) of the

LIHEAP statute that assistance to

resolve an energy crisis be provided

within 48 hours of an eligible

household’s application for crisis

assistance. This grantee requested that

assurance 15 be deleted, or waived for

grantees ‘‘already serving a broad based

population.’’

Only Congress can ‘‘delete’’ a

statutory provision, and HHS does not

have authority to waive statutory

requirements for States. The conference

report states that the conferees

‘‘recognize the potential for significantly

increased administrative expenses for

some states to comply with the new

alternative site requirements, and intend

to monitor possible effects on the

program and recipients.’’

Guidance Regarding Additional Services

The preamble to the January 1992

interim final rule included guidance
21332 Federal Register / Vol. 60, No. 83 / Monday, May 1, 1995 / Rules and Regulations

with respect to section 2605(b)(15) of

the LIHEAP statute. With modifications

and clarifications contained in the

preamble to this final rule, that

guidance is still effective and is

included as the remainder of this final

rule’s preamble discussion of section

96.86 of the block grant regulations and

of assurance 15.

The requirement for additional

outreach and intake services applies to

States (including the District of

Columbia) and to any territory with a

LIHEAP allotment larger than $200,000

for the fiscal year in question, when

local offices of the grantee department

or agency that administers AFDC or the

territorial equivalent basic cash public

assistance program(s) provide outreach

and intake for heating, cooling, and/or

crisis assistance in all or part of the

State or territory. The requirement

applies in these cases whether or not

that department or agency is named

‘‘State Department of Public Welfare’’ or

‘‘Department of Public Welfare.’’

The requirement applies whether or

not the department or agency provides

some of these services outside its own

offices. Section 2605(b)(15) requires that

grantees ‘‘provide, in addition to such

services as may be offered by State

Departments of Public Welfare at the

local level, outreach and intake

functions for crisis situations and

heating and cooling assistance that is

administered by additional State and

local governmental entities or

community-based organizations.* * *.’’

The provision does not refer to the

locations where the welfare department

provides services. Therefore, stationing

a welfare department employee at a

shopping mall, for example, will not

meet the requirement of this provision.

Consistent with Conference Report

101–816, if grantees are already offering

alternative services in some areas, they

are not required to modify their system

in these areas. Consistent with Senate

Report 101–421, ‘‘a reasonable share’’ of

outreach and intake functions is to be

administered through alternative

agencies, assuring that, to the extent

possible, all eligible households in the

grantee’s service population will have

viable access to alternative service sites.

However, consistent with this Senate

report, if the grantee finds no alternative

in an area or areas after engaging in an

open solicitation process, the grantee is

not required to create new entities. (In

such a case, the grantee would not be

required to solicit for alternate agencies

each succeeding year. However,

periodic assessment of the situation will

enable the grantee to determine when

further solicitation is likely to provide

an alternative and is therefore

appropriate.)

Also consistent with the Senate

report, if such services previously were

provided voluntarily, providers should

continue to maintain comparable levels

of effort voluntarily. The new

requirement should not be used as a

basis for reducing voluntary efforts.

Neither should it be used to compel or

require voluntary efforts.

Consistent with the legislative history,

we encourage the voluntary

participation of community groups and

organizations, including churches, and

of utilities and other home energy

vendors, in outreach activities. Such

entities often have excellent knowledge

of and access to low-income households

who may need LIHEAP assistance.

However, as explained earlier in this

preamble, utilities and other home

energy vendors are not ‘‘communitybased organizations’’ for the purposes of

the requirement of section 2605(b)(15)

for outreach and intake services

provided by ‘‘additional State and local

governmental entities or communitybased organizations. . . .’’

In order to meet the requirement for

alternative outreach and intake services,

the statute specifies that the alternative

service providers must be State or local

governmental entities or communitybased organizations. Senate Report 101–

421 mentions public or nonprofit

agencies including other State or local

government agencies, and communitybased organizations such as community

action agencies and aging organizations.

The Senate report emphasizes the

importance of providing sufficient

access to the LIHEAP program to the

non-welfare poor and the elderly,

through additional outreach efforts and

appropriate intake locations. Grantees

should provide varied outreach efforts

targeted to the different populations

eligible for LIHEAP assistance. Further,

grantees should consult with lowincome individuals and other interested

parties to determine the best ways to

implement the requirement for

additional outreach and intake services.

As a commenter stated, the intention of

assurance 15 is ‘‘to broaden the access

and availability of LIHEAP services to

those who are eligible but are not part

of the welfare system’’ and ‘‘to give

preference for intake functions to those

agencies that provide weatherization

and/or crisis assistance.’’ Agencies with

experience in successfully managing

similar Federal grant programs should

be used when feasible.

The term ‘‘intake’’ generally includes

receipt of applications for assistance

and the opportunity for applicants to

provide any missing information that is

needed to complete their applications.

Each grantee has the discretion to

choose whether to include income

determination and verification

responsibilities, and preliminary

eligibility or benefit determination, as

‘‘intake.’’ The conference report states

that the ‘‘conferees believe that intake or

application processing’’ is ‘‘best

provided by experienced service

providers with approved federal and

state grant management systems.’’

If a mail-in application system

administered by a welfare department is

used for a grantee’s heating and/or

cooling assistance programs, and if it is

not necessary to designate local

administering agencies to carry out

intake for these components, then there

is no need under section 2605(b)(15) to

designate other State and local

governmental entities or communitybased organizations to carry out intake

for these components. In such a case,

the grantee should assure that help is

readily available to households that are

unable to prepare and/or mail their

applications without such assistance.

Also, grantees should not change to a

system of mail-in applications in order

to avoid designating additional local

intake agencies.

Section 2604(c) of the LIHEAP statute

requires each entity that administers

energy crisis assistance ‘‘to accept

applications for energy crisis benefits at

sites that are geographically accessible

to all households in the area to be

served’’ by the entity and to provide to

physically-infirm low-income persons

the means to submit applications for

energy crisis benefits without leaving

their residences or to provide the means

to travel to the sites at which the entity

accepts applications. The statute thus

requires that there be energy crisis

intake sites and services at the local

level. Therefore, intake for crisis

assistance provided solely by welfare

departments will not meet the

requirement in section 2605(b)(15)

concerning additional intake services at

the local level. Also, telephone intake

can be part of a State’s intake process

but will not by itself meet the statutory

requirements for intake services.

It is our experience that outreach

normally is provided through local

administering agencies, and therefore

additional outreach services would be

necessary if outreach currently is

provided at the local level only through

the welfare department.

In enacting the requirement that

additional outreach and intake services

be provided in certain cases, Congress

has emphasized the importance of

adequate and appropriate outreach and

intake functions in grantee LIHEAP
Federal Register / Vol. 60, No. 83 / Monday, May 1, 1995 / Rules and Regulations 21333

programs. Congress also has specifically

limited the amount of Federal funds that

can be used for costs of LIHEAP

administration and planning to 10

percent of the funds payable to a State

and not transferred to another HHS

block grant program (section 2605(b)(9)

of the LIHEAP statute). (The block grant

regulations provide somewhat higher

administrative cost limits for Indian

tribes, tribal organizations, and

territories.) As we stated in the

preamble to the block grant regulations

of July 6, 1982, ‘‘The consistent

imposition of limits upon

administrative expenditures under the

various block grants is indicative of

congressional intent that States devote a

very high percentage of their block grant

funds to direct payments or services’’

(47 FR 29477). Grantees should make

every effort to provide the maximum

amount of direct LIHEAP assistance to

low-income households, consistent with

the provision of adequate support

services.

Although grantees subject to the new

requirement may categorize some of

their additional outreach expenses as

non-administrative, many of the

additional costs will be administrative.

Some grantees may have difficulty

providing additional outreach and

intake services and remaining within

the statutory limitation on use of

Federal funds for costs of LIHEAP

planning and administration. These

grantees, in particular, may need to

examine all of their LIHEAP activities

and costs to determine ways to increase

efficiency, to encourage voluntary

efforts, and to use their own funds to

supplement Federal LIHEAP funds.

HHS does not have authority to waive

the statutory limitation on

administrative costs. The requirement

for additional outreach and intake

services does not relieve grantees of the

need to comply with this statutory

limitation.

Consistent with Conference Report

101–816, HHS used FY 1992 LIHEAP

training and technical assistance funds

to help thirteen States that previously

had provided outreach and intake solely

through their public welfare

departments, to make the transition

required by assurance 15.

Although this preamble modifies and

clarifies some of the guidance regarding

assurance 15, the final rule makes no

change to section 96.86 of the block

grant regulations.

Section 96.87 Leveraging Incentive

Program

Public Law 101–501 added a new

section 2607A to the LIHEAP statute,

establishing a leveraging incentive

program, and amended section 2602 of

the LIHEAP statute, authorizing funds

for this program. Under the leveraging

incentive program, beginning in FY

1992, HHS may allocate supplementary

LIHEAP funds—leveraging incentive

funds—to grantees that have acquired

non-Federal leveraged resources and use

these non-Federal resources to expand

the effect of Federal LIHEAP dollars.

The interim final rule published

January 16, 1992, added a new section

96.87 to the block grant regulations to

implement the leveraging incentive

program. Consistent with the

requirements of section 2607A, the

interim final rule included requirements

for countable leveraged resources and

for calculation and documentation of

the value of leveraged resources,

submission of leveraging reports to

HHS, calculation of grantee shares of

leveraging incentive funds, and use of

leveraging incentive funds.

Discussing the leveraging program,

Senate Report 101–421 notes that, ‘‘if

the LIHEAP program uses its purchasing

power (or ‘leverage’) to acquire the full

economic value of its resources, it can

acquire substantial additional energy

assistance resources and services for the

poor from state energy market sources.’’

This report lists the following examples

of leveraged resources: ‘‘stateappropriated funds, quantifiable

payments, discounts, credits, energy

conservation improvements or other

measurable benefits to eligible

households in excess of the energy that

could be purchased by the LIHEAP

program at commonly available

residential rates.’’

All LIHEAP grantees—States

(including the District of Columbia),

Indian tribes, tribal organizations, and

territories—may participate in the

leveraging incentive program. Grantees

are not required to participate in the

leveraging program. We encourage

grantees to leverage additional resources

to supplement their Federal LIHEAP

funds, whether or not they choose to

request leveraging incentive funds.

Leveraged resources are counted in

the ‘‘base period’’ in which their

benefits were provided to low-income

households. For example, grantee funds

added to the LIHEAP program are

countable only when the benefits they

pay for—such as heating assistance

payments or weatherization services—

are provided to or on behalf of lowincome households.

Under the statute’s terms, grantees

that want to apply for leveraging

incentive funds must submit a report to

HHS that quantifies the grantee’s

leveraged resources for the preceding

fiscal year (the base period), less any

costs incurred by the grantee to leverage

the resources and any costs imposed on

federally eligible households.

Leveraging incentive funds to reward

these leveraging activities are awarded

in the fiscal year following the fiscal

year in which the leveraged resources/

benefits were provided to low-income

households. In other words, they are

awarded later in the fiscal year in which

the leveraging reports are submitted,

after HHS has reviewed the reports,

adjusted claimed resources and their

valuation as appropriate, and calculated

leveraging incentive grant amounts. The

leveraging incentive program’s first

‘‘base period’’ was FY 1991, and its first

‘‘award period’’ was FY 1992; leveraging

activities in FY 1991 were the basis for

the leveraging incentive grant awards

HHS made in FY 1992. Section 2607A

of the LIHEAP statute requires that

grantees use leveraging incentive funds

awarded to them only ‘‘for increasing or

maintaining benefits to households.’’

As the interim rule’s preamble

explained, consistent with the block

grant legislation and legislative history,

HHS’ policy generally is to provide

maximum flexibility to grantees to

operate their LIHEAP programs.

Grantees are the primary interpreters of

the LIHEAP statute and the primary

administrators of the LIHEAP program.

However, grantees apply

‘‘competitively’’ to HHS for shares of a

limited amount of leveraging incentive

funds. Shares are determined based on

reports submitted by grantees which

describe, and quantify the value of, the

resources they have leveraged. It is

therefore necessary that all grantees

applying for leveraging inventive funds

use the same rules. There must be

standard criteria and methods for

determining the resources that are

countable under the leveraging

incentive program and for quantifying

the value of these resources. In the

interim rule and in this final rule, we

have tried to make these criteria and

methods as clear and fair as possible,

within the limits of the statute and

legislative history.

Public Comments, HHS Responses, and

Changes: Section-by-Section Discussion

Twenty-four of the 25 letters we

received on the interim final rule

included comments on the leveraging

incentive program. Several of the

commenters addressed the interim rule

and its preamble in general. For

example, one believed that the complex

statutory instructions for the leveraging

program require the implementing

regulation to be ‘‘instructive yet

flexible’’ and said that the interim rule

‘‘generally meets these sometimes
21334 Federal Register / Vol. 60, No. 83 / Monday, May 1, 1995 / Rules and Regulations

conflicting purposes in an

understandable and common-sense

fashion.’’ Another appreciated HHS’

philosophy of keeping the rules for the

leveraging program ‘‘within the spirit of

a block grant.’’ A third supported HHS’

decision to exempt grantees’ use of

leveraging incentive funds from some

requirements that apply to regular

LIHEAP funds.

Most comments concerned specific

leveraging provisions. These comments,

and our responses, are discussed below

under the appropriate headings.

The section and subsection headings

are essentially the same in the interim

final rule and the final rule. While we

made some substantive changes, we

retained the structure and most of the

content of the interim rule. We made

some nonsubstantive changes for clarity

and consistency, as well. The changes

are based on the public comments on

the interim rule and on our experience

in operating the leveraging incentive

program under the interim rule.

Scope and Eligible Grantees

Subsection (a) of § 96.87 of the

interim final rule explained that § 96.87

concerns the leveraging incentive

program authorized by section 2607A of

the LIHEAP statute. We received no

comments on this statement of the scope

of the section, and we retained it in the

final rule in a new paragraph (1) under

§ 96.87(a).

After the comment period on the

interim rule, we received an informal

comment from a tribal grantee about

entities eligible to receive leveraging

incentive funds. A tribal organization

and its member tribes had leveraged

resources while the organization

received direct regular LIHEAP funding

on the tribes’ behalf; the tribes wanted

to apply for their own direct regular

funding—and the leveraging incentive

funds to reward the leveraged

resources—in the next fiscal year.

However, the preamble to the interim

rule stated that, in order to receive

leveraging incentive funds, ‘‘grantees

must receive regular LIHEAP block

grant funding directly from HHS in both

the ‘base’ year for which their leveraging

activities are reported and the ‘award’

year for which leveraging incentive

funds are requested’’ (57 FR 1965). We

agree with the tribal grantee that credit

for leveraging should be ‘‘portable’’

when a tribe enters or leaves a tribal

organization when certain conditions

are met—for example, a bribe or tribal

organization that applies for leveraging

incentive funds also must apply for and

receive direct regular LIHEAP funding

in the award period in order to receive

incentive funds. We do not want to

require tribes to continue existing

administrative relationships in order to

qualify for incentive funds. We

modified the statement of entities

eligible for leveraging incentive funds

accordingly and added the revised

statement in a new paragraph (2) under

§ 96.87(a) in the final rule itself, for

clarity and because of its importance.

Under the revised statement, if a tribe

leveraged resources while receiving

regular LIHEAP services under a

directly-funded tribal organization in

the base period, and then receives direct

regular LIHEAP funding on its own in

the award period, the tribe is eligible to

receive leveraging incentive funds to

reward these resources in the award

period. If a tribe leveraged resources

while receiving direct LIHEAP funding

in the base period and receives LIHEAP

services under a tribal organization in

the award period, the tribal organization

is eligible to receive leveraging

incentive funds on the tribe’s behalf to

reward these resources in the award

period. If a directly-funded tribal

organization leveraged resources in the

base period and one or more of the

tribes it had served apply for direct

funding in the award period, the tribes

and/or the tribal organization should

inform HHS in writing about the desired

fair and appropriate distribution of

leveraging incentive funds in the award

period. If the tribes and/or the tribal

organization are unable to agree, HHS

will determine the distribution of the

incentive funds among eligible

applicants based on the comparative

role of each entity in obtaining and/or

administering the resources, and/or

their relative numbers of LIHEAPeligible households.

Definitions

Section 96.87(b) of the interim final

rule defined five terms used in the

leveraging incentive program. We

received no comments on four of the

definitions—of ‘‘base period,’’ ‘‘home

energy,’’ ‘‘low-income households,’’ and

‘‘weatherization.’’ These definitions

remain substantively unchanged in the

final rule.

We received several comments

relating to the fifth definition—

‘‘countable petroleum violation escrow

funds.’’ These comments, and the

changes we made in response, are

discussed later in this preamble, under

‘‘Countable Leveraged Resources and

Benefits’’ and ‘‘Leveraging Issues

Relating to Tribal Grantees.’’

We added two definitions in the final

rule—of ‘‘award period’’ and ‘‘countable

loan fund.’’ We defined ‘‘award period’’

because—like ‘‘base period,’’ which

already was defined in the interim

rule—‘‘award period’’ is an important

and basic term whose meaning must be

clear. Countable loan funds and issues

related to them are discussed later in

this preamble, under ‘‘Countable

Leveraged Resources and Benefits’’ and

‘‘Resources and Benefits That Cannot Be

Counted.’’

LIHEAP Funds Used To Identify,

Develop, and Demonstrate Leveraging

Programs

Section 96.87(c) of the interim final

rule and of this final rule concern

LIHEAP funds used to identify, develop,

and demonstrate leveraging programs.

Section 2607A(c)(2) of the LIHEAP

statute provided that, each fiscal year,

States may spend up to the greater of

$35,000 or 0.0008 percent of their funds

allocated under the LIHEAP statute to

identify, develop, and demonstrate

leveraging programs. Consistent with

§ 96.87(g)(5) of the interim rule, in

grantees’ leveraging reports to HHS, all

funds from grantees’ regular LIHEAP

allotments that are used under the

authority of section 2607A(c)(2) to

identify, develop, and demonstrate

leveraging programs are to be deducted

as offsetting costs in the base period in

which these funds were obligated,

whether or not there are any resulting

leveraged benefits.

As we noted in the interim rule’s

preamble, 0.0008 percent of the largest

FY 1991 State LIHEAP allotment was

approximately $1,700; clearly $35,000

was the larger in all cases, and $35,000

would be the larger under all

foreseeable LIHEAP appropriation

levels. Therefore, we determined that if

the language were carried out as written,

the result would appear to be illogical

and inconsistent with reason. We

concluded that the figure 0.0008 percent

resulted from a typographical error and

that 0.0008 was intended to be the

actual factor by which the State’s

allotment is multiplied, rather than the

percent. (When calculating 0.08 percent

of a State’s allotment, one multiplies the

allotment by the factor 0.0008.) In the

interim final rule, we clarified that the

figure is 0.08 percent. This

interpretation provided a meaningful

result, since 0.08 percent of the FY 1991

State LIHEAP allotments ranged from

approximately $1,200 for the State with

the smallest allotment to $170,000 for

the State with the largest allotment;

$35,000 was the larger in some cases,

and 0.08 percent was the larger in other

cases. We received one comment

agreeing with this interpretation and

none disagreeing.

Since then, the Human Services

Amendments of 1994 (Public Law 103–

252) confirmed our interpretation and
Federal Register / Vol. 60, No. 83 / Monday, May 1, 1995 / Rules and Regulations 21335

corrected the percent in the LIHEAP

statue, which now says ‘‘0.08 percent.’’

We kept this same, corrected figure in

the final rule.

Comments and Response

In the interim rule we also

determined that $35,000 would be a

disproportionate amount for most tribes,

tribal organizations, and territories to

spend annually to identify, develop, and

demonstrate leveraging programs. (As

the preamble noted, FY 1991 tribal

allotments ranged from approximately

$1,100 to $1,038,000; the allotments of

84 of the 115 tribal grantees were under

$100,000. FY 1991 territorial allotments

ranged from approximately $15,000 to

$1,711,000; the allotments of five of the

six territorial grantees were under

$100,000.) The interim rule therefore

limited to two percent of their annual

LIHEAP allotments the amount that

these grantees may spend each fiscal

year for these purposes. This is

approximately the same percent as the

territory with the largest allotment

would have spent if it had used $35,000

of its FY 1991 allotment for these

purposes ($35,000 divided by

$1,711,284 equals 0.0204524 or 2.04524

percent).

We received no written comments on

this provision. Several tribal grantees

have told us informally, however, that

they believe that the two percent limit

is too low.

For most tribes and territories, we

believe that two percent is a realistic

amount to use for these purposes. We

recognize, however, that two percent of

the smallest allotments will provide

very little. For example, two percent of

$2,500 is only $50. Therefore, in

response to the concerns of small tribal

grantees, the final rule provides that

tribes, tribal organizations, and

territories may use up to the greater of

two percent, or $100, of their annual

LIHEAP allotments, specifically to

identify, develop, and demonstrate

leveraging programs. (For tribal

organizations receiving LIHEAP funds

on behalf of two or more tribes, the base

to which the two percent and $100 are

applied is the tribal organization’s total

regular LIHEAP allotment, not the

separate ‘‘allotments’’ of the individual

tribes that designated the tribal

organization to administer LIHEAP for

them.) For grantees with allotments

under $5,000, $100 is the larger and will

provide a usable amount. (In FY 1992,

22 of the 120 tribal grantees, and no

territorial grantees, had LIHEAP

allotments under $5,000.) To allow use

of more than the greater of two percent

or $100 for these purposes—in addition

to LIHEAP funds that can be used for

planning and administration—would

adversely affect the grantee’s ability to

provide home energy assistance with its

LIHEAP funds, which is the basic

purpose of the LIHEAP program. We

also note that the leveraging reports

covering FY 1991, FY 1992, and FY

1993 leveraging activities show that

most grantees used no LIHEAP funds to

identify, develop, or demonstrate

leveraging. Only two tribal grantees

have reported using LIHEAP funds to

develop leveraging. Only seven of the 63

grantees that received leveraging

incentive funds for their FY 1992

leveraging activities said they used any

LIHEAP funds for this purpose; only

two of the seven used the maximum

amount allowed.

Related Issues

The 0.08 percent maximum for States,

and the two percent/$100 maximum for

tribes, tribal organizations, and

territories, are based on and apply to the

grantee’s funds allocated under the

LIHEAP statute. For the purpose of this

provision, we defined this in the interim

rule to mean the grantees’ Federal

LIHEAP allotments, including

supplemental funds except leveraging

incentive funds. We received no

comments on this definition and have

retained it in the final rule. Grantees

may spend additional monies from their

own funds or other sources as

appropriate, to identify, develop, and

demonstrate leveraging programs.

LIHEAP block grant funds that are

used to identify, develop, and

demonstrate leveraging programs are

likely to support both planning and

administrative activities and costs, and

non-planning, non-administrative

(‘‘program’’) activities and costs. The

interim rule stated that LIHEAP funds

used under section 2607A(c)(2) of the

LIHEAP statute to identify, develop, and

demonstrate leveraging programs are not

subject to the statute’s limitation on the

maximum percent of Federal funds that

grantees may use for costs of planning

and administration. As we stated in the

interim rule’s preamble, we believe that,

if these funds were subject to the

limitation, it would be a disincentive to

grantees to develop leveraging

programs. However, Congress

established the leveraging incentive

program to encourage—to provide an

incentive to—grantees to leverage funds.

We therefore concluded that LIHEAP

funds used under section 2607A(c)(2)

should be available in addition to the

regular LIHEAP planning and

administration limits. We received one

comment supporting this decision. We

have retained this provision in the final

rule.

In addition to the maximum set by

§ 96.87(c) specifically for identifying,

developing, and demonstrating

leveraging programs, a grantee may find

that part of the LIHEAP funds it spends

for planning and administrative costs

also have the effect of helping to

identify, develop, and/or demonstrate

leveraging programs. Since these are

valid LIHEAP planning or

administrative activities, paid for from

the portion of a grantee’s LIHEAP block

grant funds that can be used for

planning and administration, they are

not subject to the 0.08 percent/$35,000

limit for States or the two percent/$100

limit for tribes/territories set by section

96.87(c). Thus, a grantee could, in effect,

use somewhat more than the maximum

0.08 percent/$35,000 or two percent/

$100 set specifically for identifying,

developing, and demonstrating

leveraging. This option is available to all

LIHEAP grantees.

Comment and Response

A commenter said that, because these

funds ‘‘are coming out of program

funds’’ and do not count against the

statutory limit on Federal funds used for

LIHEAP administration and planning,

HHS should request itemization of how

they are spent. The commenter said that

‘‘[w]ithout this information, neither

Congress nor advocates will have any

sense of how these additional nonbenefit, non-administrative funds will

have been used.’’ However, we have no

indication that Congress wants HHS to

collect and report this information, and

we do not believe that we need to

impose such an information collection

and reporting burden on grantees in

order to assure program accountability.

We therefore decline to accept this

suggestion. We do not require grantees

to specify how they use their LIHEAP

planning and administrative funds, and

we are not requiring them to specify

how they use their LIHEAP leveraging

development funds. Consistent with the

block grant philosophy and Federal

paperwork reduction efforts, the only

reports that LIHEAP grantees are

required to submit are those that

provide information necessary to meet

requirements in the LIHEAP statute and

the Single Audit Act. The LIHEAP

leveraging report form and our

voluntary LIHEAP telephone survey of

States provide data on the amount—if

any—that grantees spend to identify,

develop, and demonstrate leveraging.

We will check further on these activities

when carrying out our compliance

responsibilities—for example, when we

conduct compliance reviews.
21336 Federal Register / Vol. 60, No. 83 / Monday, May 1, 1995 / Rules and Regulations

Basic Requirements for Leveraged

Resources and Benefits

Based on the provisions of section

2607A of the LIHEAP statute, § 96.87(d)

of the regulation sets basic requirements

for leveraged resources and benefits.

Information and Comment on Basic

Requirements, Paragraph (1)

In the interim rule, paragraph (1) of

§ 96.87(d) listed four criteria, all of

which had to be met by countable

leveraged resources/benefits.

The first two criteria under paragraph

(1) implement requirements in section

2607A of the LIHEAP statute. They

require that countable leveraged

resources/benefits be from non-Federal

sources, and be provided to the

grantee’s LIHEAP program or to

federally qualified low-income

households. We received no comments

on these criteria; they remain the same

in the final rule.

In accordance with the LIHEAP

statute, leveraged resources that are

provided to households that do not meet

the Federal eligibility standards in

section 2605(b)(2) of the statute cannot

be counted under the leveraging

incentive program. Federally qualified

(federally eligible) low-income

households are:

• Households with incomes that do

not exceed the greater of 150 percent of

the poverty level for their State, or 60

percent of State median income; and

• Households in which one or more

individuals receive Aid to Families with

Dependent Children, Supplemental

Security income payments, food stamps,

or certain need-tested veterans’ and

survivors’ payments (payments under

sections 415, 521, 541, or 542 of title 38

of the U.S. Code or section 306 of the

Veterans’ and Survivors’ Pension

Improvement Act of 1978).

If a countable leveraging program/

activity provides benefits to both

federally eligible households and

households that do not meet Federal

eligibility standards, the grantee should

report only the benefits for households

that are federally eligible.

The LIHEAP statute allows grantees to

set eligibility standards for their

LIHEAP programs that are more

restrictive than these Federal

maximums. The statute permits grantees

to set their LIHEAP programs’ income

eligibility standard as low as 110

percent of the poverty level. The statute

also permits grantees to decide whether

to have categorical eligibility for their

LIHEAP program and, if so, to decide

which of the programs listed above to

include. State eligible (State qualified)

households are households that meet

the eligibility requirements set by a

State for its LIHEAP program. A grantee

may claim leveraged resources provided

to federally eligible households even if

the grantee set lower eligibility

standards for its LIHEAP program,

provided the resources meet all the

other statutory and regulatory

requirements.

Criterion (iv) under paragraph (1)

implements section 2607A(b)(1) of the

LIHEAP statute. Section 2607A(b)(1)

states that countable leveraged

resources/benefits must ‘‘represent a net

addition to the total energy resources

available to State and federally qualified

households in excess of the amount of

such resources that could be acquired

by such households through the

purchase of energy at commonly

available household rates.’’ The interim

rule’s preamble noted that this language

could be interpreted to limit countable

leveraged resources to energy credits

and fuels purchased at discounted

prices—to mean, for example, that a

grantee could not count leveraged

donated funds used to pay low-income

households’ actual fuel costs at normal

rates, because there would be no net

addition to the resources these

households could acquire at ‘‘commonly

available household rates,’’ or that a

grantee could not count tangible nonfuel items purchased at discounted

prices. We did not adopt this narrow

interpretation in the interim rule. In

criterion (iv) under paragraph (1) in the

interim rule, we clarified the statutory

language to state that countable

leveraged resources and benefits must

‘‘represent a net addition to the total

home energy resources available to lowincome households in excess of the

amount of such resources that could be

acquired by these households through

the purchase of home energy, or the

purchase of items that help these

households meet the cost of home

energy, at commonly available

household rates or costs, or that could

be obtained with regular LIHEAP

allotments provided under section

2602(b) of Public Law 97–35. . . .’’

We received one comment on this

regulatory provision. The commenter

believed that the provision ‘‘is

consistent with the overall intent’’ of the

statutory leveraging provisions. We

retained the same language in the final

rule.

Changes and recommendation

Based on our experience in operating

the leveraging program, we added a fifth

criterion to § 96.87(d)(1) in the final

rule, specifying and clarifying that

countable resources/benefits must meet

the requirements for leveraged resources

and benefits throughout § 96.87 of these

regulations and section 2607A of the

LIHEAP statute. This is to assure

consistent understanding and prevent

confusion about the fact that the criteria

in § 96.87(d) are not the only

requirements for countable leveraged

resources/benefits. We also added the

word ‘‘basic’’ to the heading for this

section—‘‘Basic requirements for

leveraged resources and benefits’’—to

underscore this point.

The third criterion under § 96.87(d)(1)

states that countable resources/benefits

must be measurable and quantifiable in

dollars. We made no change to this

criterion in the final rule. However,

based on our experience in operating

the leveraging program, we encourage

grantees to consolidate similar resources

in their leveraging reports, so that each

counted resource has a gross dollar

value of $200 or more as determined in

accordance with § 96.87(g). Several

grantees have included in their

leveraging reports separate resources

valued at only $10 or $20.

Disproportionate amounts of time and

effort are spent preparing and reviewing

information on such small resources.

We therefore urge grantees to

consolidate similar resources in their

leveraging reports, especially resources

valued at under $200, into combined

resources valued at $200 or more. For

example, a grantee could combine inkind donations of space heaters and

blankets by different groups and/or

individuals, which are separately

valued at under $200, into one resource

with a value of $200 or more.

Consolidation of similar resources in the

leveraging report is often helpful for

larger resources, as well. In almost all

cases, grantees will be able to

consolidate very small resources into

resources valued at $200 or more.

Information on Basic Requirements,

Paragraph (2)

In the interim rule, paragraph (2) of

section 96.87(d) listed three additional

basic requirements for countable

leveraged resources. Countable

resources/benefits were required to meet

at least one of these three requirements.

Paragraph (2) implements section

2607A(b)(2) of the LIHEAP statute.

Section 2607A(b)(2) mandates that

leveraged resources/benefits meet at

least one of the following three criteria

relating to the role of the grantee’s

LIHEAP program in the development or

distribution of the resources/benefits:

(1) They ‘‘result from the acquisition or

development by the State program of

quantifiable benefits that are obtained

from energy vendors through

negotiation, regulation or competitive
Federal Register / Vol. 60, No. 83 / Monday, May 1, 1995 / Rules and Regulations 21337

bid’’; or (2) they ‘‘are appropriated or

mandated by the State for distribution

. . . through the State program’’; or (3)

they ‘‘are appropriated or mandated by

the State for distribution . . . under the

plan referred to in section 2605(c)(1)(A)

to federally qualified low-income

households and such benefits are

determined by the Secretary to be

integrated with the State program.’’

The first criterion refers to the role of

the grantee’s LIHEAP program in the

acquisition or development of benefits

obtained from energy vendors. Based on

the discretion in the statute, the interim

rule defined the phrase ‘‘acquisition or

development by the State program’’ to

mean that the grantee’s LIHEAP

program must have ‘‘substantial

involvement in the acquisition or

development of these benefits. The

involvement of the grantee’s LIHEAP

program’’ must be ‘‘considerable,

important, material, and of real value or

effect.’’

The interim rule defined the second

criterion to mean that the leveraged

resources and benefits must be

‘‘provided to low-income households

eligible under the grantee’s standards, as

a part of (through or within) the

grantee’s LIHEAP program, consistent

with the Federal statutes and

regulations applicable to the LIHEAP

program.’’

The plan referred to in the third

criterion is a part of each grantee’s

annual application for regular LIHEAP

funds; in the plan, the grantee describes

how it will carry out statutory

assurances to which its chief executive

officer has certified and includes other

information required by statute. Based

on the context in which it appears in the

statute, the interim rule defined the

phrase, ‘‘appropriated or mandated by

the State for distribution . . . under the

plan . . .’’, to mean that the leveraged

resources and benefits must be

‘‘identified and described in the plan

and distributed as indicated in the plan;

however, they are not provided to lowincome households as a part of (through

or within) the grantee’s LIHEAP

program.’’

The third statutory criterion also

requires that the leveraged benefits be

‘‘integrated with the State program.’’

The interim rule defined this to mean

that the benefits must be ‘‘coordinated

with the grantee’s LIHEAP program and

. . . provided in cooperation and in

conjunction with the LIHEAP program.’’

We received ten letters that

commented on one or more of these

three criteria.

Comment and Response

A commenter recommended ‘‘that the

rules applying’’ to criteria (i) and (ii)

‘‘simply restate the language of the

law.’’ The commenter said that HHS

implemented an ‘‘expanded

interpretation’’ of these criteria that ‘‘is

unnecessary and inconsistent with the

nature of a block grant.’’

Much of the language of the LIHEAP

statute—including section 2607A—is

subject to differing interpretations. As

we stated earlier in this preamble, the

leveraging incentive program is different

from the regular LIHEAP block grant,

where different grantees may adopt

different interpretations of a statutory

provision, as long as the interpretations

are not clearly erroneous. In the regular

LIHEAP program, one grantee’s

statutory interpretations and program

operations generally do not depend on

or affect another’s. In the leveraging

program, however, where grantees are

‘‘competing’’ for shares of the same

limited amount of leveraging incentive

funds, we need to apply common rules

to all proposed resources, and all

concerned parties should have common

understandings about leveraged

resources that are countable, and

resources that are not. This is why we

do not ‘‘simply restate that language of

the law’’ in cases where conflicting

interpretations of provisions in section

2607A are likely.

Comments and Response

We received several verbal comments

about the meaning of the statutory

phrase, ‘‘the State program,’’ in criterion

(i). The same phrase is used in the

statute with respect to criteria (ii) and

(iii), where it clearly means the grantee’s

LIHEAP program, and not another State

agency or program. We believe it is

logical and appropriate to conclude that

it has the same meaning in criterion (i).

Through these three criteria, the statute

and regulations require that the

grantee’s LIHEAP program have a clear,

substantive role in developing,

acquiring, administering, and/or

coordinating with leveraged resources

countable under the LIHEAP leveraging

incentive program.

A commenter said that the

requirement in criterion (i) that the

grantee’s LIHEAP program have

‘‘substantial involvement’’ which is

‘‘considerable, important, material, and

of real value or effect’’ in acquisition or

development of benefits ‘‘is both overly

restrictive and subject to subjective

interpretation.’’ We do not believe it is

overly restrictive to require that the

grantee’s LIHEAP program play an

active role in acquiring or developing a

resource under this criterion. The

statute requires that, in order to meet

the criterion, the benefits must ‘‘result

from the acquisition or development by

the State program of quantifiable

benefits that are obtained from energy

vendors through negotiation, regulation

or competitive bid.’’ We do not believe

that this language should be understood

to require the grantee’s LIHEAP program

to acquire or develop the benefits

entirely by itself. On the other hand, in

cases where other entities also were

involved in the acquisition or

development, the grantee’s LIHEAP

program should have a substantive role.

If, for example, grantee LIHEAP staff

had simply attended a meeting at which

other people negotiated reduced home

energy rates for low-income households,

that attendance alone should not count

as meeting criterion (i). The interim rule

therefore required that the grantee’s

LIHEAP program have ‘‘substantial

involvement,’’ and the final rule

requires that the actions/efforts of

grantee LIHEAP program staff be

‘‘substantial and significant’’ in

obtaining a resource from a vendor.

The same commenter believed that

the statutory requirement for criterion

(i) is met as long as ‘‘the source of

leveraged funds are [sic] energy vendors

and the funds resulted from negotiation,

regulation, or competitive bidding,’’ and

the benefits ‘‘go to * * * the state

program.’’ We do not believe that a

resource countable under criterion (i)

must ‘‘go to’’ (be administered through

or within) the LIHEAP program.

Resources leveraged under this criterion

are often discounts or waivers for lowincome households, not ‘‘funds’’ that

can be administered through the

LIHEAP program. We believe that

reduced home energy rates and waivers

of certain home energy charges that are

negotiated with home energy vendors by

(or with substantive participation of)

LIHEAP program staff should be

countable under this criterion—even

though reduced rates and waivers

usually are not administered through

the LIHEAP program.

This commenter apparently assumed

that ‘‘development by the State

program’’ means that the State program

must be involved in developing ‘‘a

method of acquiring’’ the resources, but

that ‘‘acquisition * * * by the State

program’’ means only that the benefits

must ‘‘go to’’ the program. However, we

continue to believe that the grantee’s

LIHEAP program—at the central,

regional, and/or local office level—

should play an active, substantial role in

acquiring (obtaining) or developing the

resource from the home energy vendor,

not simply passively ‘‘acquire’’ (receive)
21338 Federal Register / Vol. 60, No. 83 / Monday, May 1, 1995 / Rules and Regulations

a benefit in whose acquisition it played

no part. (Such a resource could be

countable under criterion (ii), if the

resource is ‘‘appropriated or mandated’’

by the State, tribe, or territory for

distribution through the LIHEAP

program.) Benefits from vendors that are

negotiated by or result from competitive

bidding conducted by (or with

substantive participation of)

subrecipients (e.g., local administering

entities) under a State, tribal, or

territorial LIHEAP program acting in

that capacity, also are countable under

criterion (i) as long as all other

requirements also are met.

We agree that the interim rule’s

requirement that the involvement of the

grantee’s LIHEAP program in the

acquisition or development of the

resource be ‘‘substantial’’ and

‘‘considerable, important, material, and

of real value or effect’’ in some cases

may be confusing and subject to

subjective interpretation. In grantees’

leveraging reports on FY 1991 and FY

1992 leveraging, most resources claimed

under criterion (i) clearly met this test,

and several clearly did not. However,

there also were a number of claimed

resources for which we had to request

additional information from the grantee

to substantiate ‘‘substantial’’

involvement, and on several of these we

still had to make difficult judgments

about whether to count the resource.

Short of requiring that the grantee

LIHEAP program acquire or develop the

resource completely on its own, or

saying that the grantee program need

have no role at all in acquiring or

developing the resource—which we do

not believe to be appropriate—we see no

way to write regulatory language that

would totally eliminate such situations.

We also have found that several

grantees were confused about whether

criterion (i) applied only to resources

obtained from energy vendors. The

statute clearly limits this criterion to

resources/benefits ‘‘that are obtained

from energy vendors through

negotiation, regulation, or competitive

bid,’’ not from charitable organizations,

etc.

To clarify criterion (i) without

materially changing its substance, we

amended § 96.87(d)(2)(i) as follows in

the final rule:

‘‘The grantee’s LIHEAP program had

an active, substantive role in developing

and/or acquiring the resource/benefits

from home energy vendor(s) through

negotiation, regulation, and/or

competitive bid. The actions or efforts of

one or more staff of the grantee’s

LIHEAP program—at the central and/or

local level—and/or one or more staff of

LIHEAP program subrecipient(s) acting

in that capacity, were substantial and

significant in obtaining the resource/

benefits from the vendor(s).’’

Comments and Response

There have been several questions

about the statutory requirement that

resources countable under criterion (ii)

be distributed ‘‘through’’ the grantee’s

(LIHEAP) program. The interim rule and

this final rule state that this means

‘‘within’’ and ‘‘as a part of’’ the grantee’s

LIHEAP program. Under criterion (ii),

the leveraged resource/benefit is

administered by the LIHEAP agency or

agencies under the LIHEAP statute and

regulations, consistent with the

eligibility standards and benefit levels

used by the grantee for its Federal

LIHEAP funds; it is considered a

LIHEAP benefit. Resources counted

under criterion (ii) do not have to be

specifically identified in the grantee’s

LIHEAP plan if they are clearly covered

by the plan. For example, the plan

would not have to say that leveraged

cash resources are used to provide

heating assistance, as long as the plan

describes a heating assistance program

that is funded with LIHEAP resources

and the leveraged resources are used in

accordance with this description.

Five letters addressed the statutory

and regulatory requirements that

resources countable under criteria (ii)

and (iii) must be ‘‘appropriated or

mandated’’ by the grantee ‘‘for

distribution’’ through the grantee’s

LIHEAP program (criterion (ii)) or under

the grantee’s LIHEAP plan and

integrated with the LIHEAP program

(criterion (iii)).

Using similar language, two

Congressional letters said the regulation

should ‘‘make clear’’ that leveraging

initiatives that qualify for incentive

funds because they are ‘‘mandated’’ by

State action must be created by

legislation, rule, contract, binding

agreement, or another specific action or

identifiable ‘‘mandate’’ or

requirement—the grantee cannot merely

list voluntary charitable efforts in its

LIHEAP plan in order to meet these

criteria. Two other commenters said that

the interim rule was not sufficiently

clear regarding the requirements for

‘‘mandated’’ resources. One of these

commenters said that ‘‘merely

mentioning a program in the state’s plan

do not constitute a mandate’’; a mandate

‘‘should be a regulation, order, or other

formal agreement or expression by the

state agency governing the control and

the distribution of the leveraged

resource.’’

We agree that a mere list of voluntary

charitable efforts in a grantee’s LIHEAP

plan does not meet these two criteria.

Resources/benefits that are mentioned

in the plan, but are neither provided

through nor integrated with the LIHEAP

program, are not countable under these

criteria.

We do not believe that the statute or

legislative history require that resources

countable under these criteria be

‘‘created’’ by State, tribal, or territorial

‘‘mandate,’’ however. We therefore did

not make a change in response to

comments supporting such a

requirement. The statute requires

instead that the resource/benefits be

‘‘appropriated or mandated by the State

[or tribal or territorial grantee] for

distribution’’ through its LIHEAP

program (criterion (ii)) or under its

LIHEAP plan and also integrated with

its LIHEAP program (criterion (iii)). For

example, oil overcharge funds counted

under criterion (ii) would not be created

by State mandate; they would be

mandated by the State for distribution

through its LIHEAP program.

We believe that ‘‘by the State’’ means

that the State, tribe, tribal organization,

or territory—the grantee—must

appropriate or mandate the resource/

benefits for distribution. A subrecipient

such as a local nonprofit agency might

actually ‘‘distribute’’ the resource/

benefits on behalf of the grantee, but the

grantee must take the action that meets

the requirement to appropriate or

mandate the resource/benefits for

distribution through its LIHEAP

program or under its LIHEAP plan, etc.

The grantee’s LIHEAP application—

which includes the plan—is an official,

formal document in which the grantee

makes a binding commitment to

distribute resources in certain ways. We

therefore believe that it is reasonable to

assume that the inclusion of the

leveraged resource/benefits in the

LIHEAP plan means that the grantee has

‘‘mandated’’ the resource for

distribution as described in the plan.

Inclusion of appropriate information in

the plan is documentation of the

mandate. Because the grantee’s LIHEAP

plan is a formal expression by the

grantee that governs the distribution of

the leveraged resource, we consider

resources appropriately described in or

covered by the plan to be mandated by

the grantee for distribution as required

by criteria (ii) and (iii).

Another commenter believed that

criterion (ii) ‘‘can reasonably be read to

require that some state entity (in the

Executive, Legislative or Judicial

branch) provide the additional resources

to the State program for distribution by

the program, that is, they were

appropriated or mandated by the

Governor or legislature or by the

judiciary * * *.’’ On the other hand,
Federal Register / Vol. 60, No. 83 / Monday, May 1, 1995 / Rules and Regulations 21339

this commenter said that criterion (iii)

‘‘is somewhat of a ‘catchall’ for

independently initiated activities, so

long as they are then ‘integrated with’

the state program. The advantage of this

approach is that the program does not

have to assure that it is aware of every

instance when a CAP negotiates an

arrearage forgiveness or a waived fee for

a LIHEAP client in time to amend its

state plan to include such activity.’’

This commenter believed that resources

under this criterion ‘‘may clearly be

available independently of state

activity.’’

However, the statute requires that

resources countable under both criterion

(ii) and criterion (iii) be ‘‘appropriated

or mandated by the State for

distribution.’’ We therefore do not

believe it is appropriate to conclude that

criterion (ii) requires that a State entity

provide the resource for distribution by

the LIHEAP program, but that under

criterion (iii), the resource may be

available independent of State activity.

Also, criterion (iii) requires that the

resource/benefits be integrated with the

grantee’s LIHEAP program, and we do

not believe that a resource can be both

integrated with the LIHEAP program

and ‘‘available independently of State

activity.’’

We agree that ‘‘independently

initiated’’ resources/benefits that are

appropriated or mandated by the

grantee for distribution in a way that is

integrated with the LIHEAP program

can be countable under criterion (iii) as

long as all other relevant statutory and

regulatory requirements are met.

However, we believe that, in order to be

distributed under the grantee’s LIHEAP

plan—as required by the statute for

criterion (iii)—the resource/benefits

must be identified and described in the

plan. Also, because the statute requires

that resources countable under criterion

(iii) be ‘‘appropriated or mandated by

the State for distribution’’ under the

LIHEAP plan and ‘‘integrated’’ with the

LIHEAP program, we believe that the

grantee needs to be aware of these

resources. The grantee cannot

legitimately claim that it appropriated

or mandated a resource and the resource

was integrated with the LIHEAP

program—but the grantee did not know

about or document the resource during

the base period in which the benefits

were provided to recipients. The

identification and description of the

resource/benefits in the plan provides

formal documentation of the mandate

by the grantee that the resource/benefits

be distributed ‘‘under the plan’’ and

‘‘integrated’’ with the LIHEAP program.

We therefore continue to require that

resources to be counted under criterion

(iii) must be included in the grantee’s

plan.

The preamble to the interim rule

required (at 57 FR 1967) that the

resource be included in the plan during

the base period for which the resource

is claimed—the period in which the

resource/benefits are provided to lowincome households. For clarity, we

added this requirement to the final rule

itself. As we stated in the interim rule’s

preamble, grantees that did not identify

and describe all of their leveraging

activities for a base period in their

initial plans covering this period may

amend their plans to include such

resources at any time (before or) during

the base period, but they may not

amend their plans to include such

resources retroactively, after the base

period has ended. For clarity, the final

rule requires that any LIHEAP plan

amendments needed to cover leveraging

activities counted under criteria (ii) and

(iii) of section 96.87(d)(2) must be

submitted before the end of the base

period. Resources/benefits provided

under the criterion (ii) must be

distributed consistent with the grantee’s

LIHEAP plan and program policies that

were in effect during the base period.

The plan must identify and describe

resources/benefits provided under

criterion (iii) before the base period

ends.

In addition, the final rule reiterates

the requirement in the interim rule that

the plan identify and describe the

resources/benefits to be counted under

criterion (iii), and now also requires that

the plan identify and describe their

sources, and the way in which they are

integrated/coordinated with the

grantee’s LIHEAP program. We added

the latter requirements because several

grantees’ plan ‘‘descriptions’’ of

leveraged resources were so vague (e.g.,

‘‘donations’’) that they were virtually

meaningless. Each individual resource

does not necessarily need to be

separately identified; similar resources

may be grouped together. For example,

similar donations from a number of

churches might be covered as follows in

the plan: ‘‘In-kind contributions by

approximately five churches, of

blankets, space heaters, and fans that

will be distributed by these churches to

low-income households referred by the

LIHEAP program because the

households’ LIHEAP benefits do not

meet their need for these items.’’ (Such

related donations also could be

combined as one resource in the

grantee’s LIHEAP leveraging report.)

There have been several questions

and comments about the statutory

requirement that resources countable

under criterion (iii) must be ‘‘integrated

with the State program.’’ A commenter

said that ‘‘integration’’ should be

defined ‘‘to clearly require a higher form

of relationship than merely serving the

same income-class of households. An

integrated program should have

coordinated administrative procedures,

cooperative targeting of benefits and

benefit levels, and an integrated set of

aims and purposes that rely on LIHEAP

as the keystone to fulfilling those

common purposes.’’ Another said that

‘‘[t]here must be a direct connection

[with the LIHEAP program] through a

set of mutual, explicit obligations and

formalized arrangements.’’

The statutory requirement that

resources counted under criterion (iii)

be ‘‘integrated’’ with the grantee’s

LIHEAP program has been difficult for

HHS and grantees to implement. In the

interim rule, criterion (iii) required that

resources/benefits be ‘‘integrated’’ and

‘‘coordinated’’ with the grantee’s

LIHEAP program, and ‘‘provided in

cooperation and in conjunction’’ with

the LIHEAP program. A number of

grantees were confused about what

constituted integration and

coordination. In practice, these terms

were not sufficiently clear or

measurable, and they were subject to

differing understandings and

interpretations. We needed a more

objective way to determine whether a

resource was integrated with the

LIHEAP program.

We therefore added eight

‘‘conditions’’ (‘‘A’’ through ‘‘H’’) in the

final rule, describing specific

circumstances that demonstrate that a

resource is integrated with the grantee’s

LIHEAP program—that the resource and

LIHEAP function cooperatively and in

coordination with each other to provide

an interrelated larger unit or whole. If a

leveraged resource meets at least one of

these eight conditions, we will consider

it to be integrated and coordinated with

the grantee’s LIHEAP program.

Based on the comments we received

and on our experience in the first three

cycles of the leveraging program, we

clarified requirements for criteria (ii)

and (iii) of § 96.87(d)(2) in the final rule.

We amended criterion (ii) as follows:

The grantee appropriated or mandated

the resource/benefits for distribution to

low-income households through (that is,

within and as a part of) its LIHEAP

program. The resource/benefits are

provided through the grantee’s LIHEAP

program to low-income households

eligible under the grantee’s LIHEAP

standards, in accordance with the

LIHEAP statute and regulations and

consistent with the grantee’s LIHEAP

plan and program policies that were in

effect during the base period, as if they
21340 Federal Register / Vol. 60, No. 83 / Monday, May 1, 1995 / Rules and Regulations

were provided from the grantee’s

Federal LIHEAP allotment.

We amended criterion (iii) as follows:

The grantee appropriated or mandated

the resource/benefits for distribution to

low-income households as described in

its LIHEAP plan * * *. The resource/

benefits are provided to low-income

households as a supplement and/or

alternative to the grantee’s LIHEAP

program, outside (that is, not through,

within, or as a part of) the LIHEAP

program. The resource/benefits are

integrated and coordinated with the

grantee’s LIHEAP program. Before the

end of the base period, the plan

identifies and describes the resource/

benefits, their source(s), and their

integration/coordination with the

LIHEAP program.

The Department will determine

resources/benefits to be integrated and

coordinated with the LIHEAP program if

they meet at least one of the following

eight conditions. If a resource meets at

least one of conditions A through F

when the grantee’s LIHEAP program is

operating (and meets all other

applicable requirements), the resource

also is countable when the LIHEAP

program is not operating.

(A) For all households served by the

resource, the assistance provided by the

resource depends on and is determined

by the assistance provided to these

households by the grantee’s LIHEAP

program in the base period. The

resource supplements LIHEAP

assistance that was not sufficient to

meet households’ home energy needs,

and the type and amount of assistance

provided by the resource is directly

affected by the LIHEAP assistance

received by the households.

(B) Receipt of LIHEAP assistance in

the base period is necessary to receive

assistance from the resource. The

resource serves only households that

received LIHEAP assistance in the base

period.

(C) Ineligibility for the grantee’s

LIHEAP program, or denial of LIHEAP

assistance in the base period because of

unavailability of LIHEAP funds, is

necessary to receive assistance from the

resource.

(D) For discounts and waivers:

Eligibility for and/or receipt of

assistance under the grantee’s LIHEAP

program in the base period, and/or

eligibility under the Federal standards

set by section 2605(b)(2) of Public Law

97–35 * * * is necessary to receive the

discount or waiver.

(E) During the period when the

grantee’s LIHEAP program is operating,

staff of the grantee’s LIHEAP program

and/or staff assigned to the LIHEAP

program by a local LIHEAP

administering agency or agencies, and

staff assigned to the resource

communicate orally and/or in writing

about how to meet the energy needs of

specific, individual households. For the

duration of the LIHEAP program, this

communication takes place before

assistance is provided to each

household to be served by the resource,

unless the applicant for assistance from

the resource presents documentation of

LIHEAP eligibility and/or the amount of

LIHEAP assistance received or to be

received.

(F) A written agreement between the

grantee’s LIHEAP program or local

LIHEAP administering agency, and the

agency administering the resource,

specifies the following about the

resource: eligibility criteria; benefit

levels; period of operation; how the

LIHEAP program and the resource are

integrated/coordinated; and relationship

between LIHEAP eligibility and/or

benefit levels, and eligibility and/or

benefit levels for the resource. The

agreement provides for annual or more

frequent reports to be provided to the

LIHEAP program by the agency

administering the resource.

(G) The resource accepts referrals

from the grantee’s LIHEAP program, and

as long as the resource has benefits

available, it provides assistance to all

households that are referred by the

LIHEAP program and that meet the

resource’s eligibility requirements.

Under this condition, only the benefits

provided to households referred by the

LIHEAP program are countable.

(H) Before the grantee’s LIHEAP

heating, cooling, crisis, and/or

weatherization assistance component(s)

open and/or after the grantee’s LIHEAP

heating, cooling, crisis, and/or

weatherization assistance component(s)

close for the season or for the fiscal year,

or before the entire LIHEAP program

opens and/or after the entire LIHEAP

program closes for the season or for the

fiscal year, the resource is made

available specifically to fill the gap

caused by the absence of the LIHEAP

component(s) or program. The resource

is not available while the LIHEAP

component(s) or program is operating.

Additional Information

In order to be countable, a leveraged

resource must meet the requirements

under at least one of criteria (i), (ii), and

(iii). A single resource cannot meet both

criterion (ii) and criterion (iii), because

a resource cannot be provided to lowincome households both as a part of the

LIHEAP program (criterion (ii)), and not

as a part of, but integrated with, the

LIHEAP program (criterion (iii)). A

resource countable under criterion (iii)

must meet all of the requirements in the

first part of the criterion, and at least

one of the conditions demonstrating

integration/coordination in the second

part of the criterion.

In criterion (iii), conditions A through

F describe acceptable circumstances of

integration/coordination while the

grantee’s LIHEAP program is operating.

If a resource meets at least one of these

six conditions while the grantee’s

LIHEAP program is operating (as well as

all other applicable requirements), the

resource also is countable during the

base period when the LIHEAP program

is not operating. The circumstances

described in a condition must apply to

all assistance provided by the resource,

and all households assisted by the

resource, except for condition G.

Condition G describes certain resources

that accept referrals from the grantee’s

LIHEAP program. It is possible that

some of the households served by a

resource will not be referred to it by the

LIHEAP program. Under condition G,

benefits provided by certain resources to

households that were referred by the

LIHEAP program are countable, but

benefits provided to households that

were not referred by the LIHEAP

program are not countable. Condition H

describes certain resources made

available specifically because the

grantee’s entire LIHEAP program has

not yet opened or has closed, or because

one or more components of the LIHEAP

program have not yet opened or have

closed.

If a grantee sets its LIHEAP income

eligibility standard below the LIHEAP

statute’s maximum (for example, at 125

percent of the poverty level), it could

count leveraged benefits provided to

households with incomes between the

State standard and the Federal

maximum standard (the greater of 150

percent of the poverty level or 60

percent of State median income) under

criterion (i) or criterion (iii), as long as

the benefits meet all other requirements

for leveraged resources as well. These

criteria allow the counting of leveraged

benefits that are provided to households

with incomes up to the Federal

maximum and to categorically eligible

households, as described in section

2605(b)(2) of the LIHEAP statute,

whether or not the grantee’s LIHEAP

program has more restrictive eligibility

standards. Under criterion (ii), leveraged

benefits must be provided through the

grantee’s LIHEAP program, to

households eligible under the grantee’s

standards.
Federal Register / Vol. 60, No. 83 / Monday, May 1, 1995 / Rules and Regulations 21341

Countable Leveraged Resources and

Benefits

Section 96.87(e) of the interim rule

and the final rule describes resources

and benefits that are countable under

the LIHEAP leveraging incentive

program. This section describes the

three types of countable resources—

certain cash resources, home energy

discounts and waivers, and third-party

in-kind contributions—and lists

examples of countable resources/

benefits under each. Countable

resources/benefits are not limited to the

examples named. Additional resources

may be countable as well, provided that

they also meet all applicable

requirements.

Under both the interim rule and the

final rule, we do not require that

leveraging activities be ‘‘new’’ in the

base period in order to be countable.

Benefits provided by ongoing leveraging

activities—such as discounts in home

energy bills and home energy assistance

provided by fuel funds—are countable

as long as they meet the requirements of

the statute and these regulations, and

the counted benefits are provided to

federally or State eligible low-income

households during the base period.

There is sometimes a distinction or

difference between a resource as it was

acquired, and the benefits that the

resource provided to low-income

households. Resources acquired in the

form of cash can be used to provide

benefits in the form of certain cash

payments, tangible items, and/or

services. However, when resources are

acquired in the form of discounts/

waivers and in-kind contributions, the

benefits are essentially the same as the

resources.

The interim rule listed the three types

of countable leveraged resources as

‘‘cash resources,’’ ‘‘home energy

discounts and credits,’’ and ‘‘third-party

in-kind contributions.’’ Because the

word ‘‘credits’’ has more than one

common meaning, we found that its use

was confusing on occasion. In some

cases, a ‘‘credit’’ refers to and means a

discount. For example, a ‘‘credit’’

donated by a home energy vendor

toward the purchase of fuel from the

vendor—with no payment received for

this amount—represents a discount/

reduction in the price of the fuel and

should be classified as a discount. In

other cases, however, a ‘‘credit’’ to a

household’s home energy account

results from a payment on behalf of the

household and therefore refers to the

benefit provided by a cash resource. For

example, a grantee’s own funds used to

provide heating assistance benefits

should be considered a cash resource.

However, in its leveraging report, a

grantee mistakenly categorized these

funds under ‘‘discount/credit’’ because

the benefits represented ‘‘credits’’

toward the recipients’ accounts with

their vendors. To reduce confusion,

therefore, this final rule refers to ‘‘home

energy discounts and waivers,’’ rather

than ‘‘home energy discounts and

credits’’ as used in the interim rule. In

cases where a grantee has difficulty

determining whether to classify a

‘‘credit’’ as a cash resource or a

discount/waiver, we will discuss the

resource with the grantee to determine

the correct classification.

Comment and Response

We received one comment on

resources listed as countable in

§ 96.87(e) of the interim rule. The

commenter questioned whether

forgiveness of utility sales taxes for

LIHEAP-eligible households should be

countable.

The interim rule listed as a countable

resource/benefit ‘‘partial or full

forgiveness of home energy bill

arrearages’’; the arrearage amounts

could include sales taxes and/or other

extra charges, such as special energy

taxes, environmental surcharges, and

late payment charges. As long as such

charges are included in the low-income

household’s home energy bill and apply

to all residential customers in

comparable situations, we do not

believe that they should be excluded.

Use of leveraged funds to pay lowincome households’ home energy bills,

or portions of these bills, that include

such charges would be countable as

well. We retained this provision in the

final rule.

Comments and Changes

The final rule specifies that purchase

and donation of space heating and space

cooling devices, equipment, and

systems are countable. Purchase and

donation of space heating and space

cooling devices and equipment, such as

furnaces, fans, and air conditioners,

already were specified as countable in

the interim rule. Based on our

experience in operating the leveraging

program, we found that the term

‘‘devices and equipment’’ was too

limited. Therefore, we added the

broader term ‘‘systems’’ in the final rule.

For clarity, the final rule also specifies

additional countable weatherization

services: Replacement and repair of

weatherization materials (installation of

weatherization materials already was

specified as countable); installation,

replacement, and repair of space heating

and space cooling devices, equipment,

and systems (for example, installation of

energy efficient furnaces and repair of

leaks in heating system ducts); and

installation, replacement, and repair of

other tangible items that help lowincome households meet the costs of

home energy and that are specifically

approved by HHS. Also, for clarity and

in response to comments urging that

they be countable, the final rule adds

the following services when they are an

integral part of weatherization to help

low-income households meet the costs

of home energy: Installation,

replacement, and repair of windows,

exterior doors, roofs, exterior walls, and

exterior floors; pre-weatherization home

energy audits of homes that were

weatherized as a result of these audits;

and post-weatherization inspection of

homes. Also, we agree with the informal

comments we received recommending

that several safety-related aspects of

weatherization be countable when they

are integral and necessary parts of

weatherization. In response to these

comments, the final rule adds:

Installation, replacement, and repair of

smoke/fire alarms that are an integral

part, and necessary for safe operation, of

a home heating or cooling system

installed or repaired as a weatherization

activity; and asbestos removal that is an

integral part of and necessary to carry

out weatherization to help low-income

households meet the costs of home

energy. These services are countable if

they are paid for with leveraged cash

resources, or provided as in-kind

contributions by volunteers or donated

paid staff under the conditions specified

in the final rule. Discounts in the cost

of these items and services also are

countable under the conditions

specified in the final rule.

A commenter recommended that

weatherization ‘‘audits’’ and inspections

be countable, because they are essential

to the success of weatherization and

‘‘ensure the net addition of energy

resources to the household.’’ We

adopted this recommendation, with

respect to home energy audits to

determine households’ weatherization

needs, and inspections to assure that

weatherization has been properly

carried out, when these audits and

inspections are integral parts of

weatherization to help low-income

households meet the costs of home

energy. Only the home energy audits of

low-income households’ homes that

were weatherized as a result of these

audits are countable.

Because these countable services

involving smoke/fire alarms, asbestos

removal, pre-weatherization audits, and

post-weatherization inspections must be

an integral part of weatherization

carried out to help specific low-income
21342 Federal Register / Vol. 60, No. 83 / Monday, May 1, 1995 / Rules and Regulations

households meet the costs of home

energy, they generally should be

counted in the base period in which

these households’ homes were

weatherized. Pre-weatherization

audits—which are countable as an

integral part of resulting

weatherization—should be counted in

the base period in which the

weatherization is carried out. This will

prevent counting the audits of homes

when the follow-up weatherization was

not done. However, homes might be

weatherized using leveraged funds or

volunteer services in one base period

and therefore counted in that base

period, but the post-weatherization

inspections of these homes might take

place and be counted in the following

base period.

Also, based on our experience in

operating the leveraging incentive

program, we added a clarification to the

final rule at § 96.87(e)(1)(i), naming

several specific examples of countable

benefits provided by leveraged cash

resources: Heating, cooling, and energy

crisis assistance payments and cash

benefits made in the base period to or

on behalf of low-income households

toward their home energy costs—

including home energy bills, taxes on

home energy sales/purchases and

services, connection and reconnection

fees, application fees, late payment

charges, bulk fuel tank rental or

purchase costs, and security deposits

that are retained for six months or

longer.

Also as a clarification, we added

language at the beginning of paragraph

(2) of § 96.87(e), which describes

countable home energy discounts and

waivers, stating that countable

discounts/waivers must ‘‘pertain to

generally applicable prices, rates, fees,

charges, costs, and/or requirements.’’

This language applies to all of the subparagraphs under this paragraph. We

therefore deleted similar language from

subparagraph (ii).

Finally, we added clarifying language

specifying that the following are

countable: Partial or full waivers of bulk

fuel tank rental or purchase costs; and

reductions in, and partial or full waivers

of, non-Federal taxes on home energy

sales/purchases and services (such as

furnace repairs) and of other nonFederal taxes provided as tax ‘‘credits’’

to low-income households to offset their

home energy costs, unless Federal funds

or Federal tax ‘‘credits’’ provide

payment or reimbursement of these

costs.

As long as a fuel is used wholly or

partly for home energy by the lowincome recipient household, the full

amount of leveraged heating, cooling,

and crisis assistance benefits for the

fuel, and the full amount of leveraged

discounts and waivers (including

arrearage forgiveness) relating to the

fuel, are countable, even if they may

exceed the home energy portion of the

household’s bill. It is often difficult or

impossible to determine the exact

portion of a household’s fuel bill that

covers home energy—that is, home

heating and cooling rather than other

residential uses. Also, it is often

necessary to pay a household’s entire

fuel bill—not just the heating and

cooling portion—to prevent service

shut-off or termination.

Tangible items that are installed or

repaired using leveraged services must

be items that would be countable if they

were leveraged, or must be specifically

approved by HHS upon request by the

grantee. (For example, donated services

to install a washing machine would not

be countable, because this appliance,

even if it was purchased with nonFederal funds or donated, would not be

countable.) However, these items

themselves do not have to be leveraged

resources. Only the leveraged resource/

benefit (for example, leveraged cash

used to pay for installation of nonleveraged insulation) is countable in

such cases.

We deleted as separate countable

resources all services involving delivery

and transportation—that is, delivery of

fuel, weatherization materials, and other

items. We also deleted purchase, rental,

donation, and loan of supplies and

equipment used to deliver these things

and used to install weatherization

materials. Therefore, cash resources

used to pay for these services and items,

discounts in their cost, and in-kind

contributions of these services and

items are no longer countable as

separate resources. (Although delivery

services are no longer separately

countable, delivery costs sometimes are

included in the fair market price of

delivered bulk fuel—such as fuel oil,

propane, coal, and wood—and as part of

the purchase and/or installation costs of

weatherization materials and space

heating and space cooling devices,

equipment, and systems.)

We deleted delivery services, and

supplies and equipment used for

delivery and installation services, for

several reasons, based on our experience

with the leveraging program. These

services often are not actually direct

benefits to specific low-income

households. Valuation was a problem.

The value of equipment such as trucks

that would be used for a number of

years and by a number of different users

might have been pro-rated for the items’

expected useful life and anticipated

other users. However, it would be

virtually impossible to get consistent

estimates of, and pro-rating for, the

useful life of equipment, and accurate

pro-rating for other users, even if we

issued extensive regulatory instructions.

If the entire value of expensive

equipment that was to be used over a

period of years was counted for only

one base period, this would inflate the

resource’s effect for that base period—

and still leave the question of how to

account for other users. We also found

that several grantees’ leveraging reports

tried to stretch countable deliveryrelated services and items beyond the

letter and intent of the interim rule—for

example, to count a ‘‘discount’’ in the

cost of gasoline used in a vehicle that

transported fuel oil. Finally, the amount

of effort necessary to estimate and

document valuation, and to review

these calculations and documentation,

is disproportionate for such marginal

resources.

Comments and Response

Since the end of the comment period

on the interim rule, questions have

arisen about whether certain types of

borrowed funds are countable under the

leveraging incentive program. The

interim rule said that borrowed funds

were not countable. The interim rule’s

preamble indicated that borrowed funds

were not countable because they must

be repaid, and therefore there is no net

addition to households’ home energy

resources. This is the case if a lowincome household borrows funds, uses

these funds to pay a home energy bill

or weatherize its home, etc., and then

repays the loan with its own funds. It is

also the case if, for example, a grantee

borrows funds, uses these funds to pay

home energy bills or weatherize homes,

etc., and then repays the loan with

Federal LIHEAP funds.

In general, benefits or services paid

for with borrowed funds and interest on

those funds are not countable under the

leveraging incentive program. We

clarified in the final rule that this

prohibition also applies to loans made

to low-income households to help them

pay their home energy costs, including

weatherization, and to loans made by

low-income households.

However, we now recognize that

borrowed or repaid funds from certain

revolving loan funds and similar loan

arrangements can be countable. We

revised the final rule accordingly, at

§§ 96.87(b)(3) and 96.87(f)(2). The final

rule defines ‘‘countable loan fund’’ in

§ 96.87(b)(3) as follows:

Countable loan fund means revolving

loan funds and similar loan instruments

in which:
Federal Register / Vol. 60, No. 83 / Monday, May 1, 1995 / Rules and Regulations 21343

(i) The sources of both the loaned and

the repaid funds meet the requirements

of this section, including the

prohibitions of paragraphs (f)(1), (f)(2),

and (f)(3);

(ii) Neither the loaned nor the repaid

funds are Federal funds or payments

from low-income households, and the

loans are not made to low-income

households; and

(iii) The benefits provided by the

loaned funds meet the requirements of

this section for countable leveraged

resources and benefits.

In this definition, ‘‘payments from

low-income households’’ do not include

normal rent payments. Any interest paid

on funds borrowed from a revolving

loan fund would not be countable when

paid to the fund, but could be countable

when borrowed later and used for

countable benefits.

An example of a countable loan fund

is a resource in which a State used oil

overcharge funds in its LIHEAP program

to establish a revolving loan fund for

landlords to install weatherization

materials for low-income households.

The funds are used by landlords to

provide weatherization that helps the

households reduce their home energy

needs, with a requirement that the

landlords repay the loans to the State.

Repaid funds are then used to make

loans to landlords for additional

weatherization. This has the result of

increasing the amount of weatherization

carried out, with non-Federal funds and

without putting any burden on lowincome households. The resources are

countable in the base period in which

the weatherization takes place. When

repaid funds are used again, the

additional weatherization is countable

in the base period in which it is

provided. Such activities are countable

if neither Federal funds nor payments

from low-income households are used

for the loans or to repay the loans,

charges to the households (including

rent) are neither increased nor imposed

as a result, and all other statutory and

regulatory requirements are met.

Also, as long as all requirements of

§ 96.87 for countable leveraged

resources and benefits are met, if a

grantee or other entity borrows funds

(commercially or otherwise, consistent

with all applicable laws and

regulations), uses these funds to provide

benefits that would otherwise be

countable, and repays the loan with

countable non-Federal funds in the base

period in which the benefits were

provided, the benefits are countable

based on the countable non-Federal

character of the repaid funds and the

benefits’ net addition to low-income

households’ home energy resources.

Comments and Response

We made several changes in the final

rule involving countable petroleum

violation escrow (PVE or oil overcharge)

funds. Oil overcharge funds result from

settlements of cases of overcharges

which violated petroleum price controls

in effect from 1973 to 1981, under the

Emergency Petroleum Allocation Act of

1973. Since 1981, over $4.5 billion in oil

overcharge funds have been distributed

by the Department of Energy (DOE) to

the 50 States, the District of Columbia,

and most U.S. territories; additional oil

overcharge funds are expected to be

distributed in the future. LIHEAP is one

of the programs under which most of

these funds can be used.

Senate Report 101–421 on the 1990

LIHEAP reauthorization law states that

the Senate Committee on Labor and

Human Resources

believes there are very limited circumstances

under which Petroleum Violation Escrow

Funds should be considered as leveraged

resources. Therefore, if the Secretary chooses

to count Petroleum Violation Escrow Funds

as leveraged resources, he or she may only

count funds that are distributed after October

1, 1990, and that were not previously

required to be allocated to low-income

households.

In the interim final rule, we defined

‘‘countable petroleum violation escrow

funds’’ in section 96.87(b) as

‘‘petroleum violation escrow (oil

overcharge) funds that were distributed

to a State or territory after October 1,

1990, were added to and used as a part

of the State or territory’s LIHEAP

program, and were not previously

required to be allocated to low-income

households.’’ We said in the interim

rule’s preamble that oil overcharge

funds ‘‘may be counted under the

LIHEAP leveraging incentive program

only by the 50 States, the District of

Columbia, and the territories to which

they were distributed directly * * * .’’

Three States commented on the interim

rule’s treatment of oil overcharge funds.

Two of these States disagreed with the

interim rule’s requirement that only

PVE funds distributed to States and

territories after October 1, 1990, are

countable. One of the two States

believed that countability of PVE funds

should depend on the date a State or

territory added them to its LIHEAP

program. The second State believed that

all PVE funds added to and used as part

of a State’s LIHEAP program during a

base period should be countable.

We do not agree with these

comments. We believe that it is

consistent with the Senate Report to

provide that oil overcharge funds

distributed to States and territories by

DOE on or before October 1, 1990,

cannot be counted under the leveraging

program. Also, we believes that it would

be unfair to count remaining oil

overcharge funds that were distributed

to States and territories by DOE before

the LIHEAP leveraging incentive

program was established—before

grantees knew that they might receive

leveraging incentive funds if they used

oil overcharge funds in certain ways.

This would unfairly penalize grantees

that used these funds in a timely way,

soon after receiving them—as the terms

of distribution encouraged them to do.

It would unfairly reward grantees that

did not use these funds in a timely way.

We therefore retained and clarified the

requirement that only PVE funds that

were distributed to a State or territory

by DOE after October 1, 1990 (and used

consistent with all other relevant

regulatory and statutory requirements)

are countable.

In correspondence relating to its

leveraging report on FY 1991 leveraging

activities, a third State argued that oil

overcharge funds it used for home

energy, but not under LIHEAP, should

be countable. Under the interim final

rule, these funds were not countable

because they were not ‘‘added to and

used as a part of’’ the State’s LIHEAP

program. However, after further

reflection, we agree that PVE funds that

are used under other programs to

provide home energy to low-income

households should be countable as long

as they meet the requirements under

section 96.87. Therefore, this final rule

changes the definition of countable

petroleum violation escrow funds in

section 96.87(b)(4) to state, in part, that

they must be

* * * used to assist low-income

households to meet the costs of home energy

through (that is, within and as a part of) a

State or territory’s LIHEAP program, another

Federal program, or a non-Federal program,

in accordance with a submission for use of

these petroleum violation escrow funds that

was approved by DOE * * *.

Because the LIHEAP statute limits the

percent of LIHEAP funds that can be

used for weatherization, a grantee that

wanted to use large amounts of PVE

funds for weatherization would use

them under DOE’s low-income

weatherization assistance program or

under a non-Federal weatherization

program that meets the requirements for

use of PVE funds. With this change in

the regulations, these PVE funds could

be countable under the LIHEAP

leveraging incentive program as long as

they meet all applicable requirements

for countable leveraged resources.

The final rule also specifies the

requirements under § 96.87(d)—‘‘Basic
21344 Federal Register / Vol. 60, No. 83 / Monday, May 1, 1995 / Rules and Regulations

requirements for leveraged resources

and benefits’’—that countable PVE

funds must meet: all of the criteria

under paragraph (d)(1), as well as

criterion (ii) or criterion (iii) under

paragraph (d)(2). Paragraph (d)(1)

includes the requirement that countable

leveraged resources meet the

requirements in the leveraging incentive

program section of the final rule. This

clarifies that, for example, like other

countable leveraged resources,

countable PVE funds cannot be used as

matching or cost sharing for any Federal

program—such as emergency assistance

under title IV of the Social Security

Act—and they cannot be counted for

any other Federal leveraging incentive

program. This clarification is based on

our experience in operating the

leveraging incentive program and is

intended to prevent misunderstanding.

Because the grantee’s LIHEAP

program does not have an active,

substantive role in developing or

acquiring PVE funds from home energy

vendors through negotiation, regulation,

or competitive bid, PVE funds cannot be

counted under criterion (i) under

paragraph (d)(2). Countable PVE funds

added to and used as a part of the

grantee’s LIHEAP program would be

counted under criterion (ii) of paragraph

(d)(2). Countable PVE funds used under

another program would be counted

under criterion (iii); therefore, grantees

that want to count such funds must be

sure to meet the requirements of

criterion (iii) for inclusion in the

LIHEAP plan and integration with the

LIHEAP program.

In its comments on the interim rule,

a State urged HHS to allow tribes to

count oil overcharge funds under some

circumstances; several tribal grantees

have verbally agreed with that

comment. Upon further consideration,

we agree that there are certain

circumstances under which tribes

should be able to count oil overcharge

funds. We describe those circumstances

later in this preamble, under

‘‘Leveraging Issues Relating to Tribal

Grantees.’’

Finally, we changed the definition of

countable petroleum violation escrow

funds at § 96.87(b)(4) in the final rule to

include interest earned on PVE funds

distributed to a State or territory by DOE

after October 1, 1990 (as long as all

other applicable statutory and

regulatory requirements also are met).

Interest earned on PVE funds generally

is treated like the PVE funds

themselves; this change clarifies that

this practice is acceptable in the

leveraging program.

Resources and Benefits That Cannot Be

Counted

Section 96.87(f) of the interim rule

and the final rule describes resources

and benefits that are not countable

under the LIHEAP leveraging incentive

program. Thirteen of the letters we

received included comments on this

section.

Comment and Response

A commenter proposed that lowincome households’ co-payments for

home energy be countable as leveraged

funds. Similarly, in its leveraging report

on FY 1991 leveraging, a grantee

proposed to count the services of a

householder who installed

weatherization materials in his own

home. We cannot count such payments

and services under the leveraging

incentive program. In the first instance,

the household would simply be helping

to pay its own bill. In both cases, these

are the households’ own

‘‘contributions,’’ not leveraged

contributions, and they do not add to

the households’ net resources. We

therefore clarified in the final rule at

paragraph (1) under this section that the

following are not countable: resources

(or portions of resources) obtained,

arranged, provided, contributed, and/or

paid for, by a low-income household for

its own benefit, or which a low-income

household is responsible for obtaining

or required to provide for its own

benefit or for the benefit of others, in

order to receive a benefit of some type.

We also note that the LIHEAP statute

and these regulations require that any

costs and charges imposed on lowincome households in order to receive

counted resources/benefits must be

offset from the value of these resources.

Comment and Response

Another commenter disagreed with

the interim rule’s exclusion of leveraged

resources counted under the leveraging

incentive program(s) of the low-income

weatherization assistance program

administered by the Department of

Energy, or any other Federal leveraging

incentive program. However, we

continue to believe that leveraged

resources should be countable only

once—under one Federal leveraging

program only—and therefore we

retained this exclusion in the final rule.

Comment and Response

A commenter said that funds used as

matching for other Federal programs

should not be excluded from

consideration as leveraged resources,

because counting such funds

‘‘constitutes increasing the total amount

of funds available from all sources to

assist low-income households with their

home heating needs.’’ We do not agree.

As with resources counted under

another Federal leveraging program, we

continue to believe that ‘‘leveraged’’

resources should be countable only

once. In addition, the matching funds

are required in order to receive Federal

funds under the other program, and thus

nothing new has been added to help

low-income households that would not

otherwise have been added.

Comment and Response

Another commenter recommended

that interest paid on borrowed funds,

and reductions in interest paid on

borrowed funds, be countable ‘‘when it

can be demonstrated that they do

increase the amount of heat available to

households.’’ Interest paid by a

borrower to a commercial lender does

not represent a net addition to the home

energy resources of low-income

households. On the other hand, if a late

payment charge or ‘‘interest’’ is

included in a low-income household’s

home energy bill and is paid with

leveraged funds or is waived, the

amount paid or waived could be

countable. Also, as discussed earlier in

this preamble, interest paid on funds

borrowed from a revolving loan fund

would not be countable when paid to

the fund, but could be countable later

when, like repaid principal, it is

borrowed from the revolving loan fund

and used for countable benefits.

Reductions in interest paid on borrowed

funds are not in themselves countable;

leveraged funds that might have been

used for interest but instead are used to

provide countable benefits would be

countable.

Comment and Response

A commenter stated that the value/

costs of space, equipment, and paid staff

donated by local agencies and energy

suppliers should be countable because

they are ‘‘crucial and an integral part of

the service delivery system’’ and

counting them would ‘‘facilitate more

donations in these areas.’’ ‘‘Donation’’ of

office or other space, office equipment,

and paid or unpaid administrative staff

do not provide direct, quantifiable home

energy benefits for low-income

households or result in a direct,

quantifiable addition to these

households’ home energy resources.

Therefore they are not countable. As we

stated in the preamble to the interim

rule,

donated materials such as office supplies and

equipment do not result directly in a specific

net addition to low-income households’ total

energy resources, as required by section

2607A(b)(1) of the LIHEAP statute. The same
Federal Register / Vol. 60, No. 83 / Monday, May 1, 1995 / Rules and Regulations 21345

can be said of donations of time by

volunteers or staff to perform office or

administrative chores. Even though this may

result in the grantee being able to free some

of its funds for other uses, it would be

extremely difficult to assure and to document

that any savings are used for direct benefits

to low-income households.

Comments and Response

Nine commenters proposed that some

or all energy conservation education

costs be countable. As one of these

commenters stated, these ‘‘efforts can

yield significant cost savings for lowincome consumers, and produce

tangible benefits.’’ Another stated that

energy conservation education that

‘‘employs a proven curriculum’’

provides ‘‘a valid energy saving

measure’’ and should be countable.

Another suggested that the value of

conservation education be quantified as

three percent of the recipient

households’ energy bills, based on the

commenter’s understanding that these

education programs ‘‘consistently result

in an average 3% reduction in energy

usage.’’

We agree that a well designed and

implemented energy conservation

education program presented to

receptive households should result in

reduced home energy consumption and

costs. However, while the cost of

providing energy conservation

education can be quantified, we do not

know a reliable way to determine the

value of education as a net addition to

the total energy resources of low-income

households that would apply to all

grantees. The quality of the education

provided, the condition of different

homes, and the motivation of different

households to implement conservation

measures are highly variable. We

believe that the education activities

themselves do not provide direct,

quantifiable benefits or quantifiable net

additions to households’ home energy

resources. The final rule therefore

continues to exclude energy

conservation education.

One of the nine commenters claimed

that if energy education/case

management activities are not countable

under the leveraging program, ‘‘there

will not be an incentive to the CAP

agencies to provide energy case

management services although it has

been proven to be successful.’’ Section

2607A of the LIHEAP statute allows the

counting only of limited kinds of

activities and services as leveraging.

There are many additional worthwhile

activities and services that benefit the

program and the low-income

households it exists to serve. (Local

administering agencies and their staff

generally are paid for providing these

services.) Grantees should not change

successful activities that help lowincome households simply to substitute

activities that will count as leveraging.

Changes

Based on our experience in

implementing the leveraging incentive

program under the interim final rule

and on comments we received on the

interim rule, we retained most of the list

at § 96.87(f) of resources and benefits

that are not countable. For example, like

the interim rule, the final rule does not

allow the counting of office supplies

and equipment, services for

administrative activities, or any other

services that do not result in a direct,

net, quantifiable addition to low-income

households’ total energy resources, as

required by section 2607A(b)(1) of the

LIHEAP statute. Based on our

experience in operating the leveraging

program and on public comments

indicating that some of the leveraging

requirements in the interim rule were

unclear or too loose, and to assure

consistent understanding and avoid

misunderstanding, we changed

§ 96.87(f) in the final rule by clarifying

and tightening language in several

places and by specifying that the

following are not countable:

• Resources obtained, arranged,

provided, contributed, and/or paid for,

by a low-income household for its own

benefit, or which a low-income

household is responsible for obtaining

or required to provide in order to

receive some type of benefit;

• Resources provided, contributed,

and/or paid for by building owners,

building managers, and/or home energy

vendors, if the cost of rent, home

energy, or other charges to the recipient

were or will be increased, or if other

charges to the recipient were or will be

imposed, as a result;

• Resources directly provided,

contributed, and/or paid for by

member(s) of the recipient household’s

family (parents, grandparents, greatgrandparents, sons, daughters,

grandchildren, great-grandchildren,

brothers, sisters, aunts, uncles, first

cousins, nieces, and nephews, and their

spouses), regardless of whether the

family member(s) lived with the

household, unless the family member(s)

also provided the same resource to other

low-income households during the base

period and did not limit the resource to

members of their own family;

• Delivery, and discounts in the cost

of delivery, of fuel, weatherization

materials, and all other items;

• Purchase, rental, donation, and

loan, and discounts in the cost of

purchase and rental, or supplies and

equipment used for delivery,

installation, and repairs;

• Oil overcharge funds that do not

meet the definition in § 96.87(b)(4) of

the regulations;

• Interest earned/paid on oil

overcharge funds that were distributed

to a State or territory by DOE on or

before October 1, 1990;

• Interest earned/paid on Federal

funds (grantees should draw down

Federal funds only as needed for

‘‘immediate’’ use);

• Interest earned/paid on customers’

security deposits, utility deposits, etc.,

except when forfeited by the customer

and used to provide countable benefits

(interest is generally earned on such

deposits and therefore would not be a

leveraged benefit obtained for lowincome households);

• Borrowed funds that do not meet

the requirements in § 96.87(b)(3) of the

regulations (including loans made by

and/or to low-income households);

• Resources for which Federal

payment or reimbursement has been or

will be provided;

• Training;

• Installation, replacement, and

repair of lighting fixtures and light bulbs

(countable weatherization must be

directly related to home energy,

consistent with the definitions of ‘‘home

energy’’ and ‘‘weatherization’’ in

§ 96.87(b) of the regulations); and

• Activities involving smoke/fire

alarms and asbestos removal that are not

described in the final rule as countable.

Also, in response to questions raised

during the first two years of the

leveraging program, we clarified the

regulatory language regarding noncountable tax deductions and tax

credits. The revised language specifies

that tax deductions and tax credits

received by donors of resources for

these donations, and by vendors for

providing discounts, waivers, etc., are

not countable. If they meet the

requirements in the LIHEAP statute and

these regulations, the items and services

donated and discounts/waivers

provided would be countable. Counting

tax deductions and tax credits received

by the donors/vendors essentially

would result in double counting the

same benefit. In addition, tax

deductions and tax credits received by

donors of resources do not represent a

net addition to the home energy

resources available to low-income

households, as required by the LIHEAP

statute and these regulations. (On the

other hand, as noted earlier, special

non-Federal tax ‘‘credits’’ provided to

low-income households to offset their

home energy costs can be countable as

discounts/waivers, and non-Federal
21346 Federal Register / Vol. 60, No. 83 / Monday, May 1, 1995 / Rules and Regulations

payments to low-income households

from tax authorities to offset their home

energy costs can be countable as cash

resources/benefits—as long as Federal

funds are not used to pay for these

‘‘credits’’ and payments, and they are

not generally available to other

households.)

Leveraging Issues Relating to Tribal

Grantees

A number of leveraging issues relate

specifically to Indian tribes and tribal

organizations. These issues include

countability of oil overcharge funds,

resources obtained from trust lands,

resources obtained from National

Forests and Bureau of Land

Management areas, and Public Law 93–

638 funds. Several grantees have

commented, formally in response to the

January 1992 interim final rule, or

informally, and asked questions

concerning these issues. While

researching these issues, we consulted

with the Office of the General Counsel

in HHS, the Office of the Solicitor and

the Bureau of Land Management in the

Department of the Interior, and the

Office of the General Counsel and the

Forest Service in the Department of

Agriculture.

In addition, questions have been

raised about the possibility of both a

tribe and a State claiming the same

leveraged resource.

The guidance that follows addresses

these issues. We advised grantees of

most of this guidance in LIHEAP

Information Memorandum 92–19, dated

June 25, 1992.

Oil Overcharge Funds

In accordance with Federal law, court

orders, and agreements, the Department

of Energy distributes petroleum

violation escrow—PVE or oil

overcharge—funds to States and

territories, but not to Indian tribes or

tribal organizations. In the preamble to

the January 1992 interim final rule, we

stated that, because oil overcharge funds

are not distributed directly to tribes or

tribal organizations, tribal LIHEAP

grantees cannot count them under the

LIHEAP leveraging incentive program.

We noted that if a tribe receives PVE

funds under a State LIHEAP program,

the tribe would be a subgrantee or

contractor of the State’s program for the

administration of these funds, and the

funds would be used by the tribe as part

of the State’s LIHEAP program. Also, we

noted that if a tribe and State agree that

the tribe’s direct Federal LIHEAP

allotment is to be increased in lieu of

the tribe receiving PVE funds under the

State’s LIHEAP program, the increased

funds received by the tribe would be

regularly appropriated Federal LIHEAP

funds, not PVE funds; the State would

retain the actual PVE funds.

Several tribal grantees told us

informally that they believe that tribes

that obtain oil overcharge funds from

the State(s) in which they are located

and use these funds for home energy

assistance should be able to count them

under the leveraging incentive program,

since the tribes in fact have leveraged

those funds. Also, in its formal

comments on the January 1992

preamble and interim rule, a State

encouraged HHS ‘‘to allow tribes to offer

as countable resources any oil

overcharge funds [provided to them by

the States in which they are located]

that meet other criteria defined in the

law’’ for countable leveraged resources.

After considering these comments, we

determined that tribal LIHEAP grantees

that receive oil overcharge funds from

the State in which they are located (and/

or interest the State earned on oil

overcharge funds) and use these funds

(and/or interest the tribes or tribal

organizations earn on these funds) for

home energy assistance (generally as

subrecipients—subgrantees, contractors,

or subcontractors—of the State) can

count these funds under the leveraging

program, as long as these funds meet all

applicable statutory and regulatory

requirements for countable leveraged

resources, and the requirements in the

following paragraphs.

If a tribe or tribal organization wants

to count oil overcharge funds (and/or

interest earned on oil overcharge funds)

that it has used for home energy

assistance as a subrecipient of the State,

it must include with its leveraging

report documentation or verification

that (1) these particular oil overcharge

funds (and/or the oil overcharge funds

on which the interest was earned) were

distributed by the Department of Energy

to the State in which the tribal grantee

is located after October 1, 1990, and (2)

the State is not counting these particular

funds as leveraged resources. A copy of

a written statement from the State

providing this information will meet

this requirement. (As explained earlier

in this preamble, consistent with the

legislative history, the regulations

require that countable PVE funds must

be distributed by the Department of

Energy after October 1, 1990. It is the

State that knows when particular PVE

distributions were made to it by DOE.)

In general, the criterion in

§ 96.87(d)(2) of this final rule under

which a tribe would count these funds

is criterion (iii), where the resource is

distributed under the tribe’s LIHEAP

plan and integrated with its LIHEAP

program. (The tribe’s LIHEAP program

did not develop or acquire these funds

from vendors through negotiation,

regulation, or competitive bid, as

required under criterion (i).) Tribes

should be sure to meet all of the

requirements for criterion (iii) in order

to claim these oil overcharge funds

under this criterion. Also, for purposes

of leveraging, when a tribe uses oil

overcharge funds received from its State

in accordance with the LIHEAP statute

and regulations and the tribe’s LIHEAP

application, essentially as if they were

regular Federal LIHEAP funds, then the

tribe may count these oil overcharge

funds under criterion (ii). (Because the

tribe received the overcharge funds from

the State, rather than from the Federal

government, the tribe is accountable to

the State for their use.)

On the other hand, we have

determined that Federal funds added to

tribal grantees’ LIHEAP allotments, in

lieu of overcharge funds, cannot be

counted as leveraged resources, because

of the statutory requirement that

countable leveraged resources be from

non-Federal sources. In this case, the

State has retained the actual oil

overcharge funds, and the increased

funds awarded to the tribe by HHS are

regularly appropriated Federal LIHEAP

funds from the State’s gross LIHEAP

allotment.

Resources Obtained From Trust Land

Tribes may obtain home energy

resources, such as wood used to heat

low income households’ homes, from

tribal or individual trust land. These

trust lands are not Federal lands.

Therefore, resources obtained from

these lands are countable under the

LIHEAP leveraging incentive programs,

as long as they meet all relevant

statutory and regulatory requirements.

It is important to trace the source of

a resource/benefit to its origin, to

determine whether it is countable. For

example, if a tribe cuts firewood from

tribal trust land and gives that firewood

to low-income households, the fair

market value of the wood at the time of

‘‘donation’’ is countable. However, if a

tribe uses Federal LIHEAP funds to

purchase firewood cut from an

individual’s trust land at fair market

value, the wood is not countable,

because it was bought with Federal

funds and there was no discount in its

price. If a tribe uses Federal funds to

purchase firewood from an individual’s

trust land at a discount, then the

amount of the discount is countable, as

long as all relevant statutory and

regulatory requirements for leveraged

resources are met. The amount actually

paid is not countable, because Federal

funds were used. (If a tribe uses non-
Federal Register / Vol. 60, No. 83 / Monday, May 1, 1995 / Rules and Regulations 21347

Federal tribal funds to purchase

firewood from an individual’s trust land

and gives the wood to low-income

households, the wood’s fair market

value is countable.)

Donated or paid services specifically

to cut firewood, mine coal, etc., are not

countable under the leveraging

incentive program. However, in many

cases, the value of these services would

be included in the fair market value of

donated or purchased firewood, coal,

etc., that is obtained from non-Federal

land.

Resources Obtained From National

Forests and Bureau of Land

Management Areas

There are some circumstances under

which free firewood can be cut from

National Forest land; the Department of

Agriculture sometimes issues permits to

cut dead or downed trees or ‘‘slash’’

without a charge or fee. Also, there

might possibly be situations where there

is no charge or fee to cut firewood on

Bureau of Land Management (BLM)

land. The following two paragraphs

discuss the countability of home energy

resources obtained for free from

National Forest and/or BLM land.

Resources such as firewood that are

obtained from National Forests and

BLM areas in general are considered

Federal resources. Therefore, in general,

they are not countable as leveraged

resources under the LIHEAP leveraging

incentive program. Donated or paid

services to obtain such resources (e.g., to

cut such firewood) also would not be

countable.

In some cases, an Indian tribe might

have treaty rights to specified timber or

firewood resources on Federal lands

administered by the Forest Service or

the BLM. Where they exist, such treaty

provisions may confer a right to

usufruct, that is, a nonpossessory right

to use timber, usually for domestic

purposes. HHS will recognize such

rights where they have been adjudicated

by a court of competent jurisdiction or

are recognized by the Federal agency

administering the land in question.

(HHS cannot make such determinations

itself.) Where the usufructuary right is

so adjudicated or recognized, a resource

such as firewood would be considered

a tribal or Indian resource—that is, nonFederal. Therefore, a home energy

resource like firewood that is obtained

in such a case would be countable

under the leveraging incentive program,

as long as the resource met all

applicable statutory and regulatory

requirements for leveraged resources.

More often, firewood is cut from

National Forest or BLM land for

payment, rather than for free. A tribe

might pay for a permit to cut firewood

for domestic use, and/or it might pay for

the amount of wood actually cut. If, for

example, the tribe uses tribal funds to

pay for this permit and/or to pay for the

wood actually cut, then the tribal funds

are the leveraged resource—the resource

is cash; and the firewood, which is

obtained in return for payment of the

cash, is the benefit that is provided to

low-income households. In this case,

because the resource is non-Federal

cash, the resource is countable, as long

as all applicable statutory and

regulatory requirements for leveraged

resources and benefits are met. The

value of the resource/benefit would be

the amount that was actually paid for

the permit and/or for the wood itself. If

the wood is paid for with LIHEAP or

other Federal funds, it would not be

countable under the leveraging

incentive program.

Public Law 93–638 Contract and Grant

Funds

Several tribal grantees informally

asked us whether contract and grant

funds provided to them under Public

Law 93–638, the Indian SelfDetermination and Education

Assistance Act, by the Bureau of Indian

Affairs/Department of the Interior and

the Indian Health Service/HHS are

countable under the leveraging

incentive program. Also, in its formal

comments on the interim rule, a tribal

organization requested that these funds

be countable.

Contract and grant funds provided to

tribes under Public Law 93–638 are

considered to be Federal funds. Because

they retain their character as Federal

funds, they cannot be counted as

leveraged resources under the LIHEAP

leveraging incentive program.

Under certain circumstances, Public

Law 93–638 contract and grant funds

can be used as matching shares for other

programs. However, the LIHEAP

leveraging incentive program is not a

matching (cost sharing or cost

participation) program for which

grantees provide matching shares. (If the

Federal Public Law 93–638 funds were

used as matching shares for a program

other than LIHEAP, they still would not

be countable under the leveraging

incentive program, because Federal

funds, and funds used as matching for

other Federal programs, are not

countable under the leveraging

program.)

Resources That Might Be Claimed by

Both a Tribe and a State

In some cases, a leveraged resource

might be claimed by both a tribe or

tribal organization and the State in

which it is located. For example,

countable oil overcharge funds used by

a tribe as a subrecipient of a State’s

LIHEAP program could be claimed by

both. (The tribe might count these funds

under criterion (iii) of § 96.87(d)(2), and

the State might count them under

criterion (ii).) Also, donation of

weatherization materials might be

negotiated with a home energy vendor

by a State LIHEAP program (criterion

(i)), but then a tribe might install the

weatherization materials for its service

population through its LIHEAP program

(criterion (ii)) or under its LIHEAP plan

and integrated with its LIHEAP program

(criterion (iii)).

We have concluded that households

served by such resources can be counted

only once. It would be unfair to other

grantees applying for leveraging

incentive fund to count some

households twice, for both a tribe and

a State. We encourage tribes and States

themselves to determine which should

claim such a resource—or to have one

claim some of the tribal households

served and the other claim the

remainder. (Under the formula for

allocating leveraging incentive funds,

the tribe, with its smaller regular

LIHEAP allotment, would receive a

comparatively larger ‘‘return’’ for the

resource than the State would. However,

as explained later in this preamble,

under the final rule, no grantee can

receive a leveraging incentive funds

award greater than the smaller of its net

regular LIHEAP allotment during the

base period, or twice the final net value

of its countable leveraged resources for

the base period.) If a tribe and State

cannot resolve the issue, HHS will

decide on a case-by-case basis how such

a resource should be claimed,

depending on the comparative role of

each grantee in obtaining and/or

administering the resource in question.

Valuation of Leveraged Resources

Section 96.87(g) of the interim rule

and the final rule concerns valuation

and documentation of leveraged

resources and offsetting costs.

The benefits of countable leveraging

activities must be measurable and

quantifiable in dollars. Using the best

data available to them, grantees

applying for leveraging incentive funds

must quantify the actual value in dollars

of countable leveraged resources/

benefits provided to low-income

households during the base period.

Anticipated future benefits—for

example, savings expected in home

energy bills as a result of

weatherization—cannot be counted.

The statute requires that grantees

deduct from the gross value of leveraged
21348 Federal Register / Vol. 60, No. 83 / Monday, May 1, 1995 / Rules and Regulations

resources any costs the grantee incurred

in leveraging the resources and any

costs imposed on low-income

households. These costs are discussed

under ‘‘Valuation of Offsetting Costs’’

later in this preamble.

We received no comments regarding

valuation of leveraged resources and

offsetting costs.

Because the final rule adds discounts

in the cost of specified services as

countable resources (under

§ 96.87(e)(2)), we revised the valuation

of countable paid services under

§ 96.87(g) as follows, for consistency:

Installation, replacement, and repair of

weatherization materials, and other

countable services, will be valued at rates

consistent with those ordinarily paid for

similar work, by persons of similar skill in

this work, in the grantee’s or subrecipient’s

organization in the local area, at the time

these services were provided. If the grantee

or subrecipient does not have employees

performing similar work, the rates will be

consistent with those ordinarily paid by

other employers for similar work, by persons

of similar skill in this work, in the same labor

market, at the time these services were

provided. Fringe benefits and overhead costs

will not be counted.

Because the final rule deletes delivery

services and rented and loaned supplies

and equipment as separate countable

resources, we made a conforming

change to § 96.87(g) to delete valuation

of these services and items.

The final rule’s other requirements for

valuation of leveraged resources/

benefits are substantially unchanged

from the interim rule. They are

summarized below.

Third-party donations of fuel,

weatherization materials, and other

countable tangible items must be valued

at their fair market value at the time of

donation, according to the best data

available to the grantee.

Unpaid volunteer services must be

valued at rates consistent with those

ordinarily paid for similar work, by

persons of similar skill in this work, in

the grantee’s or subrecipient’s

organization. If the grantee or

subrecipient does not have employees

doing similar work, the rates must be

consistent with those ordinarily paid by

other employers for similar work, by

persons of similar skill in this work, in

the same labor market. Fringe benefits

and overhead costs cannot be counted.

Valuation of volunteers’ services must

vary according to the skill of the

volunteer at the task. For example, the

services of professional weatherization

installers working at a volunteer

weatherization project would be more

highly valued than the services of

unskilled weatherization volunteers.

When an employer other than a

grantee or subrecipient furnishes free of

charge the services of an employee in

the employee’s normal line of work, the

services must be valued at the

employee’s regular rate of pay,

excluding the employee’s fringe benefits

and overhead costs. If the services are in

a different line of work, the valuation

described in the previous paragraph

applies.

The benefits provided by leveraged

resources other than in-kind

contributions must be valued as

explained in the following paragraphs.

Cash benefits for heating, cooling, and

energy crisis assistance must be valued

at their actual amount at the time they

were provided to, or on behalf of, the

recipient household. Purchased fuel,

weatherization materials, and other

countable tangible items must be valued

at their actual fair market value at the

time of purchase, according to the best

data available to the grantee. The fair

market value of a fuel or tangible nonfuel item is the price or cost normally

charged a customer in the same

customer class, in the same local area,

as the recipient household. Countable

services, including installation,

replacement, and repair of

weatherization materials, must be

valued as described earlier. Home

energy discounts and credits must be

valued at their actual value—the actual

amount of the discount, reduction,

waiver, or forgiveness.

Fuel purchased with leveraged cash at

a discounted price and provided

without charge to low-income

households would be valued at the

actual fair market value of the fuel—the

commonly available household rate or

cost—at the time it was purchased. Fuel

purchased with leveraged cash at a

discounted price and provided at a

discount to low-income households

would be valued at the actual fair

market value of the fuel—the commonly

available household rate or cost—at the

time it was purchased, less (minus) the

amount paid by the recipients. Only the

amount of the net addition to recipient

households’ home energy resources may

be counted.

When low-income households pay

discounted prices or reduced rates for

home energy (such as fuel oil or

electricity), only the amount of the

discount or reduction is countable.

When low-income households receive

home energy at no cost to themselves

(for example, a LIHEAP grantee which

has purchased fuel oil with leveraged

resources or received donated fuel oil

provides the oil to a household at no

cost to the household), the amount the

fuel would have cost the household at

‘‘commonly available household rates’’

is countable.

Grantees may use leveraged funds,

regularly appropriated LIHEAP funds,

and leveraging incentive funds awarded

to them, to purchase fuel or other

approved tangible items at discounted

prices. If the grantee uses leveraged

funds, the gross value of the resource/

benefit is the amount it would have cost

the recipient households at the

commonly available household rate or

cost. This means that a grantee may

count as leveraged resources both the

leveraged funds and savings obtained

through buying at a discount. For

example, a grantee might use $10,000 of

its own funds to purchase fuel oil at a

discount, so that it obtains oil that

would be worth $12,500 at commonly

available household rates/costs. The

grantee would have leveraged $10,000

in cash and $2,500 in discounts. If the

grantee uses regular LIHEAP funds or

leveraging incentive funds—that is,

funds that are not countable leveraged

resources—to purchase fuel or other

approved tangible items at discounted

prices, the gross value of the resource/

benefit is the amount of the discount—

the difference between the amount the

item would have cost the recipient

household at the commonly available

household rate or cost and the reduced

amount actually paid. For example, if

the grantee had purchased the same fuel

oil as above, at the same discounted

price but with regular LIHEAP funds, it

could count as leveraging only the

$2,500 in discounts.

Valuation of Offsetting Costs

Section 2607A(d) of the LIHEAP

statute requires that, to determine the

net dollar value of grantees’ leveraged

resources, grantees must subtract from

the gross dollar value of leveraged

resources they received or acquired

during the base period any costs they

incurred to leverage such resources and

any costs imposed on federally eligible

low-income households.

Funds from grantees’ regular LIHEAP

allotments that are used specifically to

identify, develop, and demonstrate

leveraging programs under section

2607A(c)(2) of the LIHEAP statute must

be deducted as offsetting costs in

leveraging reports covering the base

period in which these funds were

obligated, whether or not there were any

leveraged benefits resulting from these

particular funds. However, if a grantee

does not submit a leveraging report

covering the base period in which these

funds were obligated, they should not

be offset in future reports. Also, any

funds from the grantee’s LIHEAP

planning and administrative funds that
Federal Register / Vol. 60, No. 83 / Monday, May 1, 1995 / Rules and Regulations 21349

are used to identify, develop, and

demonstrate leveraging should not be

deducted as offsetting costs. Such funds

are likely to serve more than one

planning/administrative purpose, and

exact amounts spent to identify,

develop, and demonstrate leveraging are

likely to be difficult to identify and

isolate.

Costs incurred from grantees’ own

funds to identify, develop, and

demonstrate leveraging programs must

be deducted in the first base period in

which resulting leveraged benefits are

provided to low-income households. If

there is no resulting leveraged benefit

from the expenditure of the grantee’s

own funds, the grantee’s expenditure

should not be counted or deducted.

Any costs assessed or charged to

counted low-income households on a

continuing or on-going basis, year after

year, specifically to participate in a

counted leveraging program or to

receive counted leveraged resources

must be deducted in the base period

these costs are paid. Any one-time costs

or charges to counted low-income

households specifically to participate in

a counted leveraging program or to

receive counted leveraged benefits must

be deducted in the first base period the

program or resource is counted, even if

those charges were made before this

base period. These costs/charges are to

be subtracted from the gross value of a

counted resource/benefit for lowincome households whose benefits are

counted, but not for any low-income or

other households whose benefits are not

counted. On the other hand, nonspecific

costs imposed on low-income

households—such as costs resulting

from increases in a utility company’s

general rates to pay for or support

benefits for households in special

programs—should not be deducted.

Documentation of Resources, Benefits,

and Costs

Section 96.87(g)(8) of the interim rule

required that grantees

maintain, or have readily available, records

sufficient to document leveraged resources

and benefits, and offsetting costs and charges,

and their valuation. These records must be

retained for three years after the end of the

base period whose leveraged resources and

benefits they document.

In addition, the preamble contained

guidance regarding documentation,

including a listing of the specific types

of documentation that should be

included in leveraging records

maintained by, or readily available to,

grantees.

Comment and Response

We received one comment concerning

leveraging documentation. The

commenter stated that grantees

competing for leveraging incentive

funds ‘‘have a right to expect each other

to keep archives of material clearly

documenting the flow of benefits

claimed.’’ The commenter agreed that

HHS should require applicants to keep

documentation for three years and make

it available to HHS when needed. We

retained these requirements in the final

rule.

Guidance on Documentation

We retained—and repeat below for

easy reference—most of the interim

rule’s preamble guidance on

documentation.

Grantees should have clear,

consistent, documented policies and

procedures for documenting leveraged

resources, benefits, and costs. Grantees

are to maintain, or have readily

available, records adequate to document

leveraged resources and benefits, and

offsetting costs and charges, and their

valuation. (For example, a grantee—

and/or subrecipients—should maintain

records to document counted oil

overcharge funds. A grantee should

maintain and/or have easy access to

documentation relating to counted fuel

fund benefits.) These records are to

consist of written and/or printed papers,

etc., furnishing evidence that

substantiates the claims made in the

grantees’ leveraging reports. These

records are to be retained for three years

after the end of the base period whose

leveraged resources they document.

These records should include:

• Documentation of the sources of

leveraged resources;

• Documentation of the negotiations,

competitive bids, written agreements,

legislation, regulations, and mandates

through which leveraged resources were

acquired or developed and under which

they were provided;

• Documentation of recipient

households’ Federal eligibility, or

eligibility for the grantee’s LIHEAP

program, as appropriate;

• Documentation of the type, amount,

and value of leveraged benefits

provided, including documentation of

commonly available, local market

household home energy rates or costs

charged;

• Documentation of the type, amount,

and value of in-kind contributions;

• Documentation of the costs

incurred by the grantee to leverage

resources and of the costs imposed on

low-income households;

• Documentation of the calculation of

the net addition to recipient

households’ home energy resources; and

• Documentation of the integration of

leveraged resources with the grantee’s

LIHEAP program, as appropriate.

Recipient eligibility documentation

should document each household’s

income or categorical eligibility. Benefit

documentation should document the

delivery and value of each benefit,

including the amount or quantity and

unit price, as appropriate.

We are requiring submission of some

of this documentation with grantees’

leveraging reports. We may require

submission of additional documentation

to clarify or support information

submitted in a leveraging report.

Many of the resources submitted

during the first three years of the

leveraging incentive program were

provided and administered at the

subrecipient level. As discussed

elsewhere in this preamble, such

resources are countable if they meet all

of the requirements for countable

resources. In such cases, records likely

will be kept at the local level, and

information required for the leveraging

report likely will be provided to State

officials by local agencies. Again, this is

acceptable, as long as the

documentation discussed above is

maintained and readily available both to

State and Federal officials.

However, we emphasize that it is

important for grantees to develop and

institute procedures to ensure that this

documentation is accurate and

complete. In some cases, when we asked

States for more information about

particular resources administered by

subrecipients, we found that the States

not only had virtually no knowledge

about the resources, but also were

unable to obtain the necessary

additional information from the local

agencies.

We expect grantees to ensure that

local agencies that provide and/or

administer leveraged resources/benefits

will receive adequate instruction or

training in the requirements for

countable resources and their valuation.

Also, we expect grantees to institute

monitoring procedures to ensure that

such agencies maintain required

documentation and provide accurate

reports. In addition, as previously

discussed in this preamble, resources

counted under criteria (ii) and (iii) of

§ 96.87(d)(2) must be ‘‘appropriated or

mandated’’ by the grantee—the State,

tribe, tribal organization, or territory—

for distribution to low-income

households, either through its LIHEAP

program (criterion (ii)) or as described

in its LIHEAP plan and integrated and
21350 Federal Register / Vol. 60, No. 83 / Monday, May 1, 1995 / Rules and Regulations

coordinated with its LIHEAP program

(criterion (iii))—not provided

independently by local agencies.

Leveraging Report

Section 2607A(e) of the LIHEAP

statute provides that grantees desiring

leveraging incentive funds must submit

a report to HHS that quantifies the

grantee’s leveraged resources for the

base period. These reports are grantees’

applications for leveraging incentive

funds. Section 96.87(h) of the

regulations lists requirements for these

reports. In both the interim rule and this

final rule, we included in the list only

the information we believe we need to

know in order to fulfill our

responsibility to evaluate grantees’

leveraged resources/benefits and to

determine appropriate grantee shares of

leveraging incentive funds.

HHS does not prescribe a format for

grantees’ annual applications for regular

LIHEAP funds. However, because

leveraging applications must include

specific, comparable data for grantees

‘‘competing’’ for shares of a limited

amount of leveraging incentive funds,

the interim rule and this final rule

specify that leveraging reports must be

in a format established by HHS. The

LIHEAP leveraging report form has

received Office of Management and

Budget clearance through May 1995 and

was used by grantees applying for

leveraging incentive funds in fiscal

years 1992, 1993, and 1994.

Grantee leveraging reports must

describe the leveraged resources/

benefits provided to low-income

households during the base period, and

must indicate the grantee’s valuation of

these resources and of the costs of

leveraging them. Grantees should report

these amounts as whole numbers

rounded to the nearest whole dollar or

rounded to the nearest multiple of 10 or

100.

We received four letters commenting

on § 96.87(h) of the interim final rule.

This section includes the requirements

that leveraging reports indicate the

geographical area (for example, the

cities and/or counties) in which the

leveraged resources/benefits were

provided to low-income households and

state the month(s) and year(s) when

these benefits were provided during the

base period.

Comments and Response

Two States commented that grantees

should not be required to include in

their leveraging reports either the

geographical area or the months and

years in which benefits were provided.

One of these comments recommended

instead that grantees provide ‘‘assurance

that the reported resources were

provided during the required base

period and in the grantee’s LIHEAP

service area.’’

However, we retained these

requirements in the final rule, for the

following reasons. This information

helps to identify each resource. We have

found it to be useful and believe that

Congress and other interested parties

may find it useful as well. It should not

be difficult for grantees to include in

their reports. Also, while reviewing

reports on leveraging activities, we have

found that several grantees that

indicated the appropriate base period at

the top of their leveraging report forms

included dates in the report itself,

where they were required to state the

month(s) and year(s) of the base period

in which benefits were provided, that

showed that the benefits actually were

not provided in the base period for

which the report was submitted. The

requirement thus serves as a check to

assure that benefits were provided in

the proper base period.

However, in response to commenters’

concerns about reporting requirements

and paperwork burden, we changed the

final rule to remove the requirement

that grantees explain how reported

resources/benefits valued under $5,000

meet criterion (i) or criterion (iii), as

appropriate, under § 96.87(d)(2). The

interim rule required that grantees

explain how all resources reported for

these criteria meet the appropriate

criterion or criteria; the final rule

requires this explanation only for

resources valued at $5,000 or more. It is

not intended that grantees divide large

resources into smaller components of

less than $5,000 in order to avoid the

documentation requirement. Resources

valued under $5,000 are subject to

verification by HHS during compliance

reviews, as are larger resources.

Comment and Response

Section 2607A(f) of the LIHEAP

statute provides that HHS ‘‘may request

any documentation’’ that it ‘‘determines

necessary for the verification’’ of

grantees’ applications for leveraging

incentive funds. Section 96.87(h) of the

interim rule required that leveraging

reports state the dollar value of each

resource/benefit, ‘‘indicate the source(s)

of the data used, and describe how the

grantee quantified the value and

calculated the total amount.’’ It also

provided that HHS

may require submission of additional

documentation and/or clarification as it

determines necessary to verify information in

a grantee’s leveraging report, to determine

whether a leveraged resource is countable,

and/or to determine the net valuation of a

resource. In such cases, the Department will

set a date by which it must receive

information sufficient to document

countability and/or valuation.

A commenter believed that HHS

should require grantees to provide with

their leveraging reports an ‘‘extensive

annotated listing’’ of their

documentation, detailing the data

contained in each document, ‘‘the claim

to resources it supports and its physical

location.’’

We decline to require grantees to

submit routinely with their leveraging

reports the additional documentation

proposed by this commenter. We

believe that the burden of compiling

and submitting the ‘‘extensive annotated

listing’’ on a routine basis would clearly

outweigh the possible benefits. Further,

the regulations require that detailed

documentation be readily available and

submitted to HHS upon request. In

addition, we monitor grantees’

leveraging records when we conduct

compliance reviews.

However, to reduce the chance of

misunderstanding regarding the

importance of grantees’ maintaining

accurate records that properly document

their claimed resources and submitting

any additional information requested by

HHS, we have added the following

clarification to section 96.87(h)(3): in

cases when HHS requires submission of

additional documentation and/or

clarification, ‘‘if the Department does

not receive information that it considers

sufficient to document countability and/

or valuation by the date it has set, then

the Department will not count the

resource (or portion of resource) in

question.’’

Submission Dates for Leveraging

Reports

Section 2607A(e) of the LIHEAP

statute as amended in 1990 provided

that grantees must submit their

leveraging reports to HHS by July 31 of

each year in order to qualify for

leveraging incentive funds. Public Law

102–394, which provided FY 1993

LIHEAP appropriations, anticipated

that, beginning in July 1994, LIHEAP

funds would be available on the basis of

the ‘‘forward funding’’ program year of

July 1 through June 30. As we explained

in the interim rule’s preamble, we

believe it was reasonable to assume that

Congress intended the July 31 date to

apply only after ‘‘forward funding’’

began, when July 31 would be one

month after the end of the program year

or base period whose leveraging

activities were reported. Grantees would

then be able to report leveraging

activities for the entire program year.
Federal Register / Vol. 60, No. 83 / Monday, May 1, 1995 / Rules and Regulations 21351

However, with LIHEAP funds

available for obligation on the basis of

the Federal fiscal year starting October

1, if grantees were required to submit

leveraging reports by July 31, they

would not be able to include leveraging

activities for the last two or three

months of the fiscal year. The interim

rule therefore modified the reporting

dates for reports to be submitted before

forward funding began. The deadline for

submission of reports while LIHEAP

funding is provided to grantees on the

basis of the Federal fiscal year of

October 1 through September 30 was set

as October 31 of the fiscal year for

which leveraging incentive funds are

requested—on month after the end of

the fiscal year or base period for which

leveraging activities are reported.

In a comment on the interim rule, a

State recommended that HHS change

the leveraging report submission

deadline to two months after the end of

the base period, to allow local entities

at least one month to report leveraging

results for the full base period to States,

and to allow a ‘‘reasonable amount of

time’’ for States to analyze the reports

and include allowable resources in their

leveraging reports.

The Human Services Amendments of

1994, Public Law 103–252, enacted May

18, 1994, reauthorizing LIHEAP through

FY 1999, provides for forward or

advance funding (that is, funding

appropriated one year in advance) on

the basis of the Federal fiscal year of

October 1 through September 30. Thus,

the July through June program year will

not be implemented.

Public Law 103–252 specifies that

leveraging reports are to be submitted ‘‘2

months after the close of the fiscal year’’

during which the grantee provided the

leveraged resources to eligible

households. The final rule makes this

technical change to the regulations at

§ 96.87(h)(2), stating that ‘‘Leveraging

reports must be postmarked or handdelivered not later than November 30 of

the fiscal year for which leveraging

incentive funds are requested.’’

Leveraging reports submitted later will

not be considered for a share of

leveraging incentive funds. The new

deadline is two months after the end of

the base period and two months ‘‘into’’

the award period, effective with the

leveraging reports to be submitted on FY

1994 leveraging activities. (The report

on FY 1994 leveraging activities must be

submitted by November 30, 1994. Any

LIHEAP plan amendments necessary to

qualify FY 1994 leveraging activities

under criterion (ii) or criterion (iii) of

section 96.87(d)(2) must be submitted

by September 30, 1994.)

Leveraging reports should be mailed

or delivered to the following address:

Director, Office of Community Services,

Administration for Children and

Families, Department of Health and

Human Services, 370 L’Enfant

Promenade, S.W., Washington, D.C.

20447.

Determination of Grantee Shares of

Leveraging Incentive Funds

Section 96.87(i) of the interim final

rule set the formula used to allocate

leveraging incentive funds among

grantees submitting leveraging reports.

The formula in the interim rule was

used to allocate leveraging incentive

funds in fiscal years 1992, 1993, and

1994. As indicated under ‘‘Effective

Date’’ near the beginning of this

preamble, it also will be used to allocate

leveraging incentive funds in FY 1995

that reward FY 1994 leveraging

activities. This means that the revised

formula included in this final rule and

described below will be used beginning

with leveraging incentive funds

awarded in FY 1996 to reward FY 1995

leveraging activities.

Section 2607A of the LIHEAP statute

requires HHS to develop a formula for

allocating leveraging incentive funds

that takes into account the size of the

grantee’s regular LIHEAP allotment

(allocation), and the value of the

grantee’s leveraged resources in relation

to its regular allotment amount. The

legislative history also includes

recommendations for the formula.

After considering ideas for possible

formulas, and then three different

formulas under three different

scenarios, we selected the two-part

formula that was in the interim rule.

The formula we selected, which we

called ‘‘Formula One,’’ was intended to

carry out Congress’ intent to give the

largest reward to the grantees that were

most successful in leveraging their

LIHEAP dollars. We included in the

preamble to the interim rule a detailed

discussion of the three formulas, with

examples of how allocations would

differ under each. (See pp. 1972–1976 of

the Federal Register dated January 16,

1992; 57 FR 1972–1976.)

Under the interim rule’s formula, we

distributed half of the leveraging

incentive funds for an award period

based on the value of the leveraged

resources/benefits provided by a grantee

during the base period relative to its net

allotment under the regular LIHEAP

program during the base period, as a

proportion of the total value of

leveraged resources/benefits provided

by all grantees in relation to their

regular net allotments during the same

period. We distributed the remaining

half of the funds based on the value of

leveraged resources/benefits that a

grantee provided during the base period

as a proportion of the total value of

leveraged resources/benefits provided

by all grantees. No grantee could receive

a leveraging incentive award larger than

its regular LIHEAP allotment during the

base period. When the formula would

have resulted in a grantee receiving an

incentive award larger than its regular

allotment, the ‘‘excess’’ funds were

reallocated to the other grantees

receiving leveraging incentive funds.

The leveraging figures used in these

calculations were based on the net value

of the countable leveraged resources in

grantees’ leveraging reports, as approved

by HHS.

We received eleven comments

regarding the formula used to determine

grantee shares of leveraging incentive

funds. Some of the commenters

supported our selection of Formula One,

while others suggested using a different

formula or modifying our selection in

some way.

In determining what allocation

formula to adopt in this final rule, we

considered not only the comments we

received, but also experience we have

gained in the last three grant periods in

using Formula One for allocations based

on the actual leveraging reports

submitted by grantees. We reconsidered

all three of the formulas discussed in

the preamble to the interim rule and

calculated what leveraging grant awards

would have been in FY 1994 if we had

used each of them. The actual FY 1994

awards—based on Formula One—are

shown below, as are the allocations that

would have resulted if we had used

Formula Two and Formula Three, and

State and territorial allocations that

would have resulted if we had

distributed the funds under the regular

LIHEAP block grant allocation formula,

rather than using them in the leveraging

incentive program.
21352 Federal Register / Vol. 60, No. 83 / Monday, May 1, 1995 / Rules and Regulations

LOW-INCOME HOME ENERGY ASSISTANCE PROGRAM—FINAL TOTALS FOR FISCAL YEAR 1994 LEVERAGING INCENTIVE

GRANTS

Grantee Fiscal year

1993 lev $

Fiscal year

1993 regular

allot $

Formula one

total share of

$25 M for fiscal year 1994

Formula two

total share of

$25 M for fiscal year 1994

Formula

three total

share of $25

M for fiscal

year 1994

Regular

block grant

allocation

formula 1

Alabama ............................................................ $4,806,142 $11,280,337 $345,359 $701,732 $113,424 $214,720

Alaska ............................................................... 5,962,440 4,717,311 767,112 2,081,738 417,434 137,061

Arizona .............................................................. 3,734,137 4,834,769 471,567 1,272,070 159,749 103,841

Arkansas ........................................................... 296,071 8,655,748 24,941 56,336 561 163,842

California ........................................................... 62,681,576 60,489,538 2,422,358 1,706,696 3,597,770 1,151,911

Colorado ........................................................... 12,845,031 21,218,391 677,400 997,055 430,717 401,635

Connecticut ....................................................... 10,408,642 27,680,140 496,176 619,330 216,797 523,947

Delaware ........................................................... 302,815 3,674,006 47,354 135,748 1,382 69,544

Dist. of Col. ....................................................... 1,515,878 4,298,771 209,438 580,787 29,609 81,370

Florida ............................................................... 196,428 17,935,527 11,140 18,038 119 339,751

Idaho ................................................................. 776,651 8,154,122 67,966 156,872 4,097 156,665

Illinois ................................................................ 2,769,870 76,613,847 102,605 59,545 5,547 1,450,196

Indiana .............................................................. 3,045,067 34,688,598 134,922 144,579 14,806 656,608

Iowa .................................................................. 137,864 24,584,274 6,863 9,236 43 465,347

Kentucky ........................................................... 796,475 18,051,829 45,034 72,669 1,947 341,697

Louisiana .......................................................... 292,500 11,589,893 20,699 41,566 409 219,518

Maine ................................................................ 4,740,507 17,332,318 273,066 450,469 71,817 339,434

Maryland ........................................................... 18,267,659 21,194,333 963,820 1,419,580 872,127 401,180

Massachusetts .................................................. 40,715,017 55,359,810 1,602,173 1,211,314 1,658,626 1,048,068

Michigan ........................................................... 27,757,124 72,601,649 1,037,432 629,687 587,809 1,376,834

Minnesota ......................................................... 7,119,144 52,403,709 283,485 223,750 53,571 991,931

Mississippi ........................................................ 493,047 9,714,872 38,673 83,589 1,386 184,089

Missouri ............................................................ 1,221,353 30,602,562 56,280 65,732 2,700 579,265

Montana ............................................................ 1,322,366 8,238,065 114,959 264,377 11,757 183,758

Nevada ............................................................. 839,136 2,576,577 176,024 536,396 15,138 48,771

New Hampshire ................................................ 2,153,023 10,480,307 161,422 338,354 24,500 198,378

New Jersey ....................................................... 77,849,703 51,321,226 3,114,419 2,498,368 6,541,100 972,969

New Mexico ...................................................... 430,906 6,369,423 44,529 111,424 1,615 130,002

New York .......................................................... 136,047,801 167,660,542 4,595,541 1,336,464 6,114,853 3,176,890

North Carolina .................................................. 1,894,735 24,477,911 94,445 127,488 8,124 473,453

North Dakota .................................................... 508,805 9,365,661 40,808 89,477 1,531 199,616

Ohio .................................................................. 23,155,352 67,776,399 875,896 562,690 438,186 1,282,915

Oklahoma ......................................................... 1,504,870 9,678,967 118,301 256,075 12,960 197,372

Oregon .............................................................. 3,998,678 16,445,150 236,066 400,475 53,855 311,284

Pennsylvania .................................................... 63,174,400 90,152,177 2,283,149 1,154,148 2,452,110 1,706,458

Rhode Island .................................................... 1,945,150 9,076,024 159,061 352,983 23,091 172,518

South Carolina .................................................. 550,490 9,009,177 45,222 100,638 1,863 170,531

South Dakota .................................................... 282,427 7,292,137 26,602 63,789 606 162,123

Tennessee ........................................................ 422,992 18,286,116 23,779 38,098 542 346,131

Utah .................................................................. 1,682,970 9,693,988 132,178 285,937 16,184 186,641

Vermont ............................................................ 980,437 7,855,363 87,904 205,565 6,778 148,691

Virginia .............................................................. 1,471,001 25,817,067 71,888 93,843 4,643 488,682

Washington ....................................................... 15,620,693 25,953,922 761,918 991,274 520,753 512,020

Wisconsin ......................................................... 19,992,724 47,170,863 815,604 698,063 469,358 892,880

Wyoming ........................................................... 61,886 3,947,822 9,142 25,819 54 74,727

Northern Mariana .............................................. 100,809 22,355 22,355 22,355 22,355 423

AK Tanana Chiefs ............................................ 14,078 648,973 10,428 35,728 17 .....................

AK Tlingit & Haida ............................................ 17,940 384,423 22,048 76,862 46 .....................

AZ Quechan Tribe ............................................ 12,265 1,054 1,054 1,054 7,905 .....................

CA Rincon Band ............................................... 12,401 10,523 10,523 10,523 809 .....................

CA San Pasqual Band ..................................... 100 1,796 1,796 1,796 0 .....................

ID Shoshone-Bannock ...................................... 17,299 92,612 86,558 92,612 179 .....................

MI Inter-Tribal Cnl ............................................. 11,303 31,196 31,196 31,196 227 .....................

MI Sault Ste. Marie ........................................... 22,760 86,569 86,569 86,569 331 .....................

MS Band of Choctaw ....................................... 2,960 10,554 10,554 10,554 46 .....................

MT Assin & Sioux ............................................. 27,000 287,713 44,056 154,561 140 .....................

MT Blackfeet Tribe ........................................... 31,566 465,164 32,232 111,766 119 .....................

MT C Salish Kootenai ...................................... 15,967 266,686 28,068 98,609 53 .....................

OK Cherokee Nation ........................................ 37,000 342,717 50,867 177,813 221 .....................

OK Choctaw Nation .......................................... 21,750 197,057 51,505 181,787 133 .....................

OK Kiowa Tribe ................................................ 15,651 14,668 14,668 14,668 925 .....................

OK Seneca-Cayuga Trb ................................... 2,276 2,296 2,296 2,296 125 .....................

SD Sisseton-Wahpeton .................................... 45,065 116,073 116,073 116,073 969 .....................

SD Yankton Sioux Trb ...................................... 27,000 64,631 64,631 64,631 625 .....................

WA Colville Conf Trb ........................................ 44,000 239,114 86,109 239,114 448 .....................

WA Kalispel Ind Comm .................................... 2,394 4,463 4,463 4,463 71 .....................

WA Lummi Tribe ............................................... 9,600 67,598 65,701 67,598 76 .....................
Federal Register / Vol. 60, No. 83 / Monday, May 1, 1995 / Rules and Regulations 21353

LOW-INCOME HOME ENERGY ASSISTANCE PROGRAM—FINAL TOTALS FOR FISCAL YEAR 1994 LEVERAGING INCENTIVE

GRANTS—Continued

Grantee Fiscal year

1993 lev $

Fiscal year

1993 regular

allot $

Formula one

total share of

$25 M for fiscal year 1994

Formula two

total share of

$25 M for fiscal year 1994

Formula

three total

share of $25

M for fiscal

year 1994

Regular

block grant

allocation

formula 1

WA Muckleshoot Tribe ..................................... 30,112 24,129 24,129 24,129 2,081 .....................

WA Port Gamble S’Kl ....................................... 970 11,145 11,145 11,145 5 .....................

WA Yakima Nation ........................................... 15,000 267,855 26,256 92,233 47 .....................

Total ....................................................... 567,309,248 1,229,982,602 25,000,000 25,000,000 25,000,000 23,435,689

1The ‘‘Regular Block Grant Allocation Formula’’ column does not add to $25 million because under this formula a portion is set aside for all

states and territories, including those that did not apply for leveraging incentive funds. In addition, we have not calculated awards for the tribal

grantees whose share of regular block grant funds comes out of their States’ allotments.

We also considered several other options to

determine whether we could devise a new

formula that resulted in a fairer distribution

of the funds, but we found that these other

formulas were hard to understand and use

and even harder to explain, and did not

provide results that were any fairer than

Formula One’s. After consideration of all

these results and the comments we received,

we decided to continue with Formula One,

with modifications as outlined below.

Comments and Response

Two of the commenters agreed with our

choice of Formula One. Two others suggested

the use of Formula Two from the interim

rule’s preamble, which would have

distributed all of the funds based on the first

half of Formula One (that is, based on the

amount of leveraging each grantee carried out

relative to the size of its regular allotment, as

a proportion of the total amount of leveraging

carried out by all grantees relative to their

regular allotments). We seriously considered

selecting Formula Two at the time we

published the interim final rule, but felt then

that Formula One was fairer overall. Our

experience in the last three grant periods

with our formula pointed out an unexpected

result with the first half of Formula One, and

thus with Formula Two as well. The actual

FY 1994 leveraging incentive grant awards,

determined using Formula One, are shown

below, along with details of how the

allocations were calculated. (Some numbers

were affected by rounding.)

LOW-INCOME HOME ENERGY ASSISTANCE PROGRAM—FINAL TOTALS FOR FY 1994 LEVERAGING INCENTIVE GRANTS

FORMULA ONE

Grantee FY 1993

lev $

FY 1993 regular allot $

Lev $

div. by

allot $

Grantee percent

Part one

share

Grantee percent of

lev $

Part two

share

Preliminary

total share

of $25 M

Final total

share of

$25 M for

FY 1994

A B C D E F G H I J

Alabama ................................. $4,806,142 $11,280,337 0.4261 1.11 $139,319 0.85 $105,898 $245,217 $345,359

Alaska ..................................... 5,962,440 4,717,311 1.2639 3.31 413,301 1.05 131,375 544,676 767,112

Arizona ................................... 3,734,137 4,834,769 0.7724 2.02 252,552 0.66 82,277 344,829 471,567

Arkansas ................................. 296,071 8,655,748 0.0342 0.09 11,185 0.05 6,524 17,709 24,941

California ................................ 62,681,576 60,489,538 1.0362 2.71 338,841 11.05 1,381,116 1,719,957 2,422,358

Colorado ................................. 12,845,031 21,218,391 0.6054 1.58 197,952 2.26 283,025 480,977 677,400

Connecticut ............................. 10,408,642 27,680,140 0.3760 0.98 122,960 1.83 229,342 352,302 496,176

Delaware ................................ 302,815 3,674,006 0.0824 0.22 26,951 0.05 6,672 33,623 47,354

Dist. of Col. ............................. 1,515,878 4,298,771 0.3526 0.92 115,307 0.27 33,401 148,708 209,438

Florida ..................................... 196,428 17,935,527 0.0110 0.03 3,582 0.03 4,328 7,910 11,140

Idaho ....................................... 776,651 8,154,122 0.0952 0.25 31,145 0.14 17,113 48,258 68,966

Illinois ...................................... 2,769,870 76,613,847 0.0362 0.09 11,822 0.49 61,031 72,853 102,605

Indiana .................................... 3,045,067 34,688,598 0.0878 0.23 28,704 0.54 67,095 95,799 134,922

Iowa ........................................ 137,864 24,584,274 0.0056 0.01 1,835 0.02 3,038 4,873 6,863

Kentucky ................................. 796,475 18,051,829 0.0441 0.12 14,427 0.14 17,549 31,976 45,034

Louisiana ................................ 292,500 11,589,893 0.0252 0.07 8,252 0.05 6,445 14,697 20,699

Maine ...................................... 4,740,507 17,332,318 0.2735 0.72 89,434 0.84 104,452 193,886 273,066

Maryland ................................. 18,267,659 21,194,333 0.8619 2.25 281,838 3.22 402,507 684,345 963,820

Massachusetts ........................ 40,715,017 55,359,810 0.7355 1.92 240,490 7.18 897,108 1,137,598 1,602,173

Michigan ................................. 27,757,124 72,601,649 0.3823 1.00 125,016 4.89 611,596 736,612 1,037,432

Minnesota ............................... 7,119,144 52,403,709 0.1359 0.36 44,422 1.25 156,862 201,284 283,485

Mississippi .............................. 493,047 9,714,872 0.0508 0.13 16,595 0.09 10,864 27,459 38,673

Missouri .................................. 1,221,353 30,602,582 0.0399 0.10 13,050 0.22 26,911 39,961 56,280

Montana .................................. 1,322,366 8,238,065 0.1605 0.42 52,488 0.23 29,137 81,625 114,959

Nevada ................................... 839,136 2,576,577 0.3257 0.85 106,494 0.15 18,489 124,983 176,024

New Hampshire ...................... 2,153,023 10,480,307 0.2054 0.54 67,176 0.38 47,439 114,615 161,422

New Jersey ............................. 77,849,703 51,321,226 1.5169 3.97 496,017 13.72 1,715,328 2,211,345 3,114,419

New Mexico ............................ 430,906 6,369,423 0.0677 0.18 22,122 0.08 9,495 31,617 44,529

New York ................................ 136,047,801 167,660,542 0.8114 2.12 265,337 23.98 2,997,655 3,262,992 4,595,541

North Carolina ........................ 1,894,735 24,477,911 0.0774 0.20 25,311 0.33 41,748 67,059 94,445

North Dakota .......................... 508,805 9,365,661 0.0543 0.14 17,764 0.09 11,211 28,975 40,808

Ohio ........................................ 23,155,352 67,776,399 0.3416 0.89 111,715 4.08 510,201 621,916 875,896

Oklahoma ............................... 1,504,870 9,678,967 0.1555 0.41 50,840 0.27 33,158 83,998 118,301
21354 Federal Register / Vol. 60, No. 83 / Monday, May 1, 1995 / Rules and Regulations

LOW-INCOME HOME ENERGY ASSISTANCE PROGRAM—FINAL TOTALS FOR FY 1994 LEVERAGING INCENTIVE GRANTS

FORMULA ONE—Continued

Grantee FY 1993

lev $

FY 1993 regular allot $

Lev $

div. by

allot $

Grantee percent

Part one

share

Grantee percent of

lev $

Part two

share

Preliminary

total share

of $25 M

Final total

share of

$25 M for

FY 1994

A B C D E F G H I J

Oregon .................................... 3,998,678 16,445,150 0.2432 0.64 79,509 0.70 88,106 167,615 236,066

Pennsylvania .......................... 63,174,400 90,152,177 0.7008 1.83 229,140 11.14 1,391,974 1,621,114 2,283,149

Rhode Island .......................... 1,945,150 9,076,024 0.2143 0.56 70,080 0.34 42,859 112,939 159,061

South Carolina ........................ 550,490 9,009,177 0.0611 0.16 19,980 0.10 12,129 32,109 45,222

South Dakota .......................... 282,427 7,292,137 0.0387 0.10 12,665 0.05 6,223 18,888 26,602

Tennessee .............................. 422,992 18,286,116 0.0231 0.06 7,564 0.07 9,320 16,884 23,779

Utah ........................................ 1,682,970 9,693,988 0.1736 0.45 56,769 0.30 37,082 93,851 132,178

Vermont .................................. 980,437 7,855,363 0.1248 0.33 40,812 0.17 21,603 62,415 87,904

Virginia .................................... 1,471,001 25,817,067 0.0570 0.15 18,631 0.26 32,412 51,043 71,888

Washington ............................. 15,620,693 25,953,922 0.6019 1.57 196,804 2.75 344,184 540,988 761,918

Wisconsin ............................... 19,992,724 47,170,863 0.4238 1.11 138,591 3.52 440,516 579,107 815,604

Wyoming ................................. 61,886 3,947,822 0.0157 0.04 5,127 0.01 1,364 6,491 9,142

Northern Mariana .................... 100,809 22,355 4.5094 11.80 1,474,550 0.02 2,221 1,476,771 22,355

Alaska:

Tanana Chiefs Conf. ....... 14,078 648,973 0.0217 0.06 7,094 0.00 310 7,404 10,428

Tlingit & Haida CC .......... 17,940 384,423 0.0467 0.12 15,260 0.00 395 15,655 22,048

Arizona: Quechan Tribe ......... 12,265 1,054 11.6366 30.44 3,805,080 0.00 270 3,805,350 1,054

California:

Rincon Band .................... 12,401 10,523 1.1785 3.08 385,345 0.00 273 385,618 10,523

San Pasqual Band .......... 100 1,796 0.0557 0.15 18,207 0.00 3 18,210 1,796

Idaho: Shoshone-Bannock Tr. 17,299 92,612 0.1868 0.49 61,078 0.00 381 61,459 86,558

Michigan:

Inter-Tribal Coun. ............ 11,303 31,196 0.3623 0.95 118,476 0.00 249 118,725 31,196

Sault Ste. Marie Tr. ......... 22,760 86,569 0.2629 0.69 85,969 0.00 501 86,470 86,569

Mississippi: MS Band of

Choctaw In .......................... 2,960 10,554 0.2805 0.73 91,709 0.00 65 91,774 10,554

Montana:

Assin & Sioux (Ft Peck) .. 27,000 287,713 0.0938 0.25 30,686 0.00 595 31,281 44,056

Blackfeet Tribe ................ 31,566 465,164 0.0679 0.18 22,190 0.01 696 22,886 32,232

Con Salish Kootenai ........ 15,967 266,686 0.0599 0.16 19,577 0.00 352 19,929 28,068

Oklahoma:

Cherokee Nat of OK ........ 37,000 342,717 0.1080 0.28 35,302 0.01 815 36,117 50,867

Choctaw Nat of OK ......... 21,750 197,057 0.1104 0.29 36,091 0.00 479 36,570 51,505

Kiowa Tribe ..................... 15,651 14,668 1.0670 2.79 348,906 0.00 345 349,251 14,668

Seneca-Cayuga Tribe ..... 2,276 2,296 0.9913 2.59 324,143 0.00 50 324,193 2,296

South Dakota:

Sisseton-Wahpeton ......... 45,065 116,073 0.3882 1.02 126,954 0.01 993 127,947 116,073

Yankton Sioux Tribe ........ 27,000 64,631 0.4178 1.09 136,603 0.00 595 137,198 64,631

Washington:

Colville Conf Tribe ........... 44,000 239,114 0.1840 0.48 60,171 0.01 969 61,140 86,109

Kalispel Ind Comm .......... 2,394 4,463 0.5364 1.40 175,402 0.00 53 175,455 4,463

Lummi Tribe .................... 9,600 67,598 0.1420 0.37 46,438 0.00 212 46,650 65,701

Muckleshoot Tribe ........... 30,112 24,129 1.2480 3.26 408,072 0.01 663 408,735 24,129

Port Gamble S’Kl Tr ........ 970 11,145 0.0871 0.23 28,469 0.00 22 28,491 11,145

Yakima Nation ................. 15,000 267,855 0.0560 0.15 18,312 0.00 331 18,643 26,256

Total ......................... 567,309,248 1,229,982,602 38.2273 100.00 12,500,000 100.00 12,500,000 25,000,000 25,000,000

In this table, the following

information is included in the columns:

Column A is the individual grantee.

Column B is the dollar value of

countable leveraged resources that the

grantee provided to low-income

households during the base period, after

deducting offsetting costs, as approved

by HHS.

Column C is the amount of the

grantee’s regular LIHEAP allotment

during the base period, net of any setasides for direct-grant Indian tribes and

tribal organizations in the case of a

State.

Column D is the amount of a grantee’s

net countable leveraged resources as a

proportion of its regular allotment

(column B divided by column C).

Column E is the amount of a grantee’s

net countable leveraged resources

divided by its regular allotment, as a

proportion of the net countable

resources leveraged by all grantees

relative to their regular allotments, with

the resulting figure expressed as a

percent (column D divided by the total

for column D).

Column F is the amount of leveraging

incentive funds that a grantee would

receive under the first part of the

formula (column E multiplied by onehalf of the leveraging funds available, in

this case $12,500,000).

Column G is the grantee’s net

countable leveraged resources as a

proportion of the net countable

resources leveraged by all grantees

(column B divided by the total for

column B).

Column H is the amount of leveraging

incentive funds that a grantee would

receive under the second part of the

formula (column G multiplied by one-
Federal Register / Vol. 60, No. 83 / Monday, May 1, 1995 / Rules and Regulations 21355

half of the leveraging funds available, in

this case $12,500,000).

Column I is a preliminary calculation

of the total amount of leveraging

incentive funds a grantee would receive

under this two-part formula, if there

were no limit on the amount of funds

a grantee could receive (column F plus

column H).

Column J is the final calculation of

the total amount of leveraging incentive

funds a grantee received. Because the

interim rule provided that no grantee

may receive a leveraging incentive

award larger than its regular LIHEAP

allotment, where the amount in column

I exceeds the amount in column C, the

‘‘excess’’ funds were distributed on a

proportionate basis to the other

leveraging grantees.

We were surprised that this formula

resulted in some tribal grantees

receiving very large grants in proportion

to the amount of leveraging they carried

out (and the awards would have been

even larger for half of the tribal grantees

in FY 1994, had it not been for the limit

that no grantee could receive a

leveraging incentive award larger than

its regular LIHEAP allotment). Under

the first part of the formula in FY 1994,

each grantee received about $12,000 for

each tenth of a percent (0.1 percent) that

appears in column E in the chart above,

no matter how large the grantee’s

regular allotment or the value of its

approved leveraging activities. The

basic determining factor in this first half

of the formula is the value of the

leveraging activities an individual

grantee carries out in relation to the size

of its regular allotment. For example,

the State of Virginia leveraged

$1,471,001 and had a regular allotment

in FY 1993 of $25,817,067, which

means it leveraged 5.7 percent of its

regular grant amount, translating to 0.15

percent in column E. Based on these

results, Virginia received $18,631 under

the first part of the formula. By

comparison, the Yakima Indian Nation

of Washington State leveraged $15,000

and had a regular allotment in FY 1993

of $267,855, which means it leveraged

5.6 percent of its regular grant amount,

translating to 0.15 percent in column E.

Based on these results, the Yakima

Nation received $18,312 under the first

part of the formula. (Numbers are

slightly different because of rounding.)

Grantees that leveraged large dollar

amounts made up for any ‘‘shortfall’’

under the first half of the formula by

receiving large amounts under the

second half of the formula, which

rewards grantees based on the amount

of leveraging they accomplished as a

proportion of the amount leveraged by

all grantees. In this case, Virginia

carried out 0.26 percent of all the

leveraging activities carried out by all

grantees for the year and received

$32,412 under the second half of the

formula, while the Yakima Nation

carried out 0.00264 percent of all the

leveraging activities for the year

(rounded to 0.00 percent in the chart

above) and received $331 under the

second half of the formula. (Both

Virginia and the Yakima Nation

received additional funds when ‘‘excess

awards’’ for other grantees were

redistributed.) Grantees that carried out

more leveraged activities did even better

under the second half of the formula, as

can be seen in the table above.

Based on these results, we do not

believe it would be fair to all grantees

to distribute the leveraging incentive

funds on the basis of Formula Two. We

believe the second half of Formula One

balances out the first half, and makes it

more fair to all. In addition, the first

table above shows that Formula Three

would skew the leveraging allocations

much too heavily in favor of larger

grantees, and thus would remove or

reduce the incentive for smaller grantees

to leverage resources. For these reasons,

we decided to retain Formula One in the

final rule.

Comments and Response

Some tribal grantees expressed

concern that prohibiting a grantee from

receiving a leveraging incentive award

that is larger than the size of its regular

allotment would unfairly affect tribal

grantees, which are generally in greater

need than State grantees. The

prohibition against receiving more in

leveraging incentive funds than in

regular block grant funds affected only

tribal grantees in fiscal years 1992 and

1993, and tribal and territorial grantees

in FY 1994. Tribes in general did very

well under the interim rule’s formula, in

most cases receiving considerably more

than the value of the leveraging

activities they carried out. (The amount

awarded to tribal grantees under this

formula was still relatively small

compared with the amount awarded to

States. In FY 1992, the eight tribal

grantees receiving leveraging incentive

funds received 2.27 percent of the

leveraging incentive funds awarded. In

FY 1993, the 19 tribal leveraging fund

recipients received 4.58 percent of the

leveraging incentive funds awarded. In

FY 1994, the 24 tribal leveraging fund

recipient received 3.53 percent of the

leveraging incentive funds awarded.) As

noted, several of the tribes would have

received more than their regular grant

amount under this formula were it not

for the prohibition against this (we

redistributed those ‘‘excess’’ funds on a

proportionate basis among the other

grantees). In an extreme example,

shown in the table above, the Port

Gamble S’Klallam Tribe of Washington

State leveraged $970 in FY 1993 and

received a leveraged grant award in FY

1994 of $11,145, the same amount as its

regular allotment in the base period of

FY 1993. It would have received a grant

award of $28,491 had it not been for the

limit on receiving no more than the size

of its regular allotment. We think the

actual grant award of $11,145, based on

$970 in countable leveraging activities,

is disproportionate and unfair to other

grantees. An award of $28,491 clearly

would have been excessive.

Accordingly, we considered various

ways of changing the formula or its

limits to make the awards for tribes and

other small grantees more equitable,

while still giving them an advantage to

compensate for their smaller size,

reduced leverage, and generally higher

level of poverty, compared with States.

Therefore, this final rule changes the

formula at section 96.87(i) to provide

that a grantee cannot receive a

leveraging incentive award that is more

than the smaller of (1) its regular

LIHEAP net allotment during the base

period, or (2) twice the net value of its

countable leveraged resources for the

base period. This means that the Port

Gamble S’Klallam Tribe’s leveraging

award in FY 1994 would have been

$1,940 (twice the amount of the $970 in

countable leveraging carried out in the

base period of FY 1993), rather than the

$11,145 the tribe received (the same

amount as its regular FY 1993

allotment). We believe that this revision

will be fairer to all grantees.

Comments and Response

Four commenters expressed concern

that the bulk of the leveraging incentive

funds should not go to one or just a few

large grantees that carry out a large

amount of leveraging, leaving little for

others. Several other persons made

similar comments informally. In

general, we found that the formula as a

whole tended to favor smaller grantees

and to dampen the effect of large

amounts of leveraging carried out by

large grantees. For example, New York

had countable leveraging activities in

FY 1993 valued at $136 million (with a

regular FY 1993 allotment of $167.7

million), which is about 24 percent of

the total amount of $567.3 million in

leveraging carried out by all grantees. Its

incentive grant award, however, was

$4.6 million, which is about 18.4

percent of the $25 million in incentive

grants. By comparison, Wyoming had

countable leveraging activities of

$61,886 (0.01 percent of the total
21356 Federal Register / Vol. 60, No. 83 / Monday, May 1, 1995 / Rules and Regulations

amount of leveraging for all grantees)

and a regular allotment of $3.9 million,

and received a leveraging incentive

award of $9,142, which is 0.04 percent

of the $25 million.

However, we recognize the potential

for just a few grantees receiving the bulk

of the available leveraging incentive

funds in the future. In FY 1992, the four

grantees with the largest amount of

leveraged resources received a total of

$11,924,159, or 47.7 percent of the $25

million distributed. In FY 1993, the four

grantees with the most leveraging

received $11,658,428, or 47 percent of

the $24.8 million distributed. In FY

1994, the four grantees with the most

leveraging received $12,415,467, or 49.7

percent of the $25 million distributed.

Accordingly, we changed the formula

to stipulate that no grantee can receive

a leveraging award larger than 12

percent of the total amount of leveraging

incentive funds available for

distribution in any award period. At a

funding level of $25 million for the

leveraging incentive program, that

means that no grantee could receive an

award of more than $3 million. We

believe this allows for adequate

compensation to a grantee that does a

large amount of leveraging, while still

leaving significant incentive for other

grantees. We do not expect a large

number of grantees to earn this

maximum grant amount. (In FY 1992,

FY 1993, and FY 1994, each of two

States received more than 12 percent of

the available leverging funds.)

Reexamining the Formula

Public Law 103–252, enacted in May

1994, and the conference report on

Public Law 103–252, do not mention the

formula for distributing leveraging

incentive funds. However, the Senate

and House committee reports on

predecessor bills do. Senate Report 103–

251 states that ‘‘it would be appropriate

for the Secretary to reconsider the

regulations for the fund in order to give

greater weight to rewarding initiatives

affecting energy regulations, markets,

and terms of service to LIHEAP-eligible

households.’’ House of Representatives

Report 103–483 uses essentially the

same language, except that it refers to

‘‘rewarding new initiatives affecting

energy regulations, markets, and terms

of service.’’ We believe the public

should have opportunity to comment on

reconsideration of the formula based on

this report language. We therefore will

reexamine the formula based on this

language in our forthcoming proposed

rule to implement Public Law 103–252.

Uses of Leveraging Incentive Funds

Section 96.87(j) of the interim rule

and the final rule concerns allowable

and unallowable uses of leveraging

incentive funds awarded to grantees by

HHS. Regular LIHEAP funds and

LIHEAP leveraging incentive funds are

separately authorized in the LIHEAP

statute—the former at section 2602(b),

and the latter at section 2602(d). Section

2607A of the LIHEAP statute directs that

leveraging incentive funds must be used

to increase or maintain benefits to

households—that is, they must be used

for LIHEAP heating, cooling, crisis, and/

or weatherization assistance, and they

cannot be used for some of the purposes

for which regular LIHEAP funds can be

used.

Comment and Response

We received one comment on this

section of the interim rule: a State

agreed with the exemption of leveraging

incentive funds from the weatherization

maximum applied to regular LIHEAP

funds, providing flexibility to grantees.

We retained this provision in the final

rule.

Clarifications

In accordance with the requirements

of section 2607A, leveraging incentive

funds cannot be used for costs of

planning and administration. However,

if a grantee receives more than a

minimal leveraging fund award, it likely

will need to use additional monies to

administer these funds. We therefore

said in the interim rule that leveraging

incentive funds can be counted in the

base for calculating the grantee’s

maximum planning and administrative

costs. This is consistent with the

treatment of oil overcharge funds under

section 155 of Public Law 97–377 (the

Warner Amendment) and Exxon oil

overcharge funds. However, leveraging

incentive funds may be obligated by the

grantee either in the award period—the

fiscal year in which they were awarded

to the grantee—or in the following fiscal

year. We believe it would not be

appropriate to permit grantees to count

the same leveraging incentive funds in

the base for calculating administrative

costs—thereby reducing the amount of

regular LIHEAP grant funds used for

benefits—in both years. In response to

questions from grantees about the year

in which to count incentive funds in the

administrative cost calculation base, the

final rule clarifies that leveraging

incentive funds cannot be counted in

the base for calculating maximum

administrative and planning costs in

both the award period and the following

fiscal year. The entire leveraging award

does not have to be counted in the base

in the same year—some may be counted

in the award year and the remainder in

the next. (Presumably they would be

counted in the base in the year in which

carrying out the activities they support

increases the grantee’s administrative/

planning costs.) While the grantee has

the discretion and flexibility to choose

how much to count in the base in each

year, the total amount from the

leveraging award that is included in the

base in both years combined cannot

exceed the amount of the leveraging

award.

As we said in the interim rule’s

preamble, grantees are to include the

uses of their leveraging incentive funds

in their LIHEAP plans. Uses must be

covered in the plan for the fiscal year in

which these funds will be used—either

in the plan as originally submitted to

HHS or in amendment(s) to the plan.

We added this requirement to the final

rule at a new § 96.87(j)(2), because of its

importance, and to clarify and avoid

misunderstanding. If the plan covers the

uses of the leveraging incentive funds,

it does not have to specify that

leveraging incentive funds are involved.

If the original plan does not cover these

uses, then these uses must be added. For

example, if leveraging incentive funds

are to be used along with regular

LIHEAP funds for cooling assistance

that is described in the plan, then the

plan need not specify that some of this

assistance will be provided with

leveraging incentive funds. However, if

the grantee does not have a regular

LIHEAP cooling assistance component

and leveraging incentive funds are to be

used for cooling assistance, the plan

must include the cooling assistance

supported by the leveraging funds.

The interim rule’s preamble said that

grantees are to document uses of

leveraging incentive funds in the same

way they document uses of regular

LIHEAP funds, and that leveraging

incentive funds are subject to the same

audit requirements as regular LIHEAP

funds. Because of their importance, and

to clarify and avoid misunderstanding,

we added these requirements to the

final rule at section § 96.87(j)(2).

Finally, consistent with Public Law

101–501, which ended grantees’

authority to transfer LIHEAP funds

effective in FY 1994, the final rule

deletes reference to transfers in

§ 96.87(j).

Period of Obligation for Leveraging

Incentive Funds

Section 96.87(k) of the interim rule

and the final rule concerns the period of

time during which grantees can use
Federal Register / Vol. 60, No. 83 / Monday, May 1, 1995 / Rules and Regulations 21357

leveraging incentive funds awarded to

them by HHS.

Incentive funds are awarded during

the course of each award period, rather

than at the beginning, since grantees’

leveraging reports are to be submitted

two months after each fiscal year begins,

and since Federal review of these

reports will follow. (Also, in fiscal years

1992 and 1993, Congress required HHS

to make leveraging incentive fund

awards in late September, at the end of

the fiscal year/award period.) We

therefore determine that leveraging

incentive funds are not subject to the

statutory and regulatory carryover and

reallotment requirements that apply to

regular LIHEAP funds. (Section 2607(b)

of the LIHEAP statute provides that

grantees may carry forward for use in

the succeeding fiscal year no more than

10 percent of their regular LIHEAP

funds payable for the prior fiscal year.)

Instead, the interim rule provided that

all leveraging incentive funds are

available for obligation from the date

they are awarded to a grantee until the

end of the succeeding fiscal year. Thus,

grantees could use these funds during

the remainder of the fiscal year in which

they were awarded, and throughout the

following fiscal year.

Comments and Response

We received one written comment on

this section in the interim rule: a State

supported the exemption of leveraging

incentive funds from the carryover limit

applied to regular LIHEAP funds.

Based on informal grantee comments

urging that we allow use of leveraging

incentive funds to pay for appropriate

activities carried out during the entire

award period, this final rule changes

§ 96.87(k) to provide that leveraging

incentive funds ‘‘are available for

obligation during both the award period

and the fiscal year following the award

period, without regard to limitations on

carryover of funds in section

2607(b)(2)(B)’’ of the LIHEAP statute.

Grantees therefore can use leveraging

incentive funds to reimburse themselves

for appropriate obligations made in the

award period before the leveraging

award was made.

Any leveraging incentive funds not

obligated for allowable purposes by the

end of this obligation period must be

returned to HHS. HHS will return such

funds to the U.S. Treasury.

Paperwork Reduction Act of 1980

There are no new information

collection requirements in this final rule

which require approval under the

Paperwork Reduction Act. The

information collection requirements

affected by this final rule have

previously been approved.

Section 96.87 of this final rule

contains information collection

requirements relating to applications for

leveraging incentive funds. Section

2607A of the Low-Income Home Energy

Assistance Act requires grantees to

submit these leveraging reports in order

to qualify for leveraging incentive funds.

These reports are the only source of the

information HHS needs in order to

allocate leveraging incentive funds

among grantees. ACF estimates the

reporting burden on applicants for

leveraging incentive funds to be 40

hours per applicant. As required by the

Paperwork Reduction Act, HHS

submitted these information collection

requirement to the Office of

Management and Budget (OMB) for its

review. OMB approved these

requirements and the LIHEAP

leveraging report form (form no. ACF–

119) through May 1995 (OMB clearance

no. 0970–0121).

Section 96.83 of this final rule

requires grantees to submit a waiver

request if they wish to obligate more

than 15 percent of their LIHEAP funds

allotted or funds available in any fiscal

year for weatherization activities. We

expect to receive less than 10 waiver

requests per year, and thus this

provision is not subject to the

Paperwork Reduction Act. We received

only one waiver request in FY 1991, and

no waiver requests in FY 1992 and FY

1993. We received seven waiver

requests in FY 1994.

Regulatory Impact Analysis

Executive Order 12866 requires that

regulations be reviewed to ensure that

they are consistent with the priorities

and principles set forth in the Executive

Order. The Department has determined

that this rule is consistent with these

priorities and principles. An assessment

of the costs and benefits of available

regulatory alternatives (including not

regulating) demonstrated that the

approach taken in the regulation is the

most cost-effective and least

burdensome while still achieving the

regulatory objectives.

Regulatory Flexibility Act

The Regulatory Flexibility Act (Pub.

L. 96–354) requires the Federal

government to anticipate and reduce the

impact of regulations and paperwork

requirements on small entities. The

primary impact of these regulations is

on State, tribal, and territorial

governments. Therefore, the Department

of Health and Human Services certifies

that this final rule will not have a

significant economic impact on a

substantial number of small entities

because it affects payments to States,

tribes, and territories. Thus, a regulatory

flexibility analysis is not required.

Catalog of Federal Domestic Assistance

Program Number

The Catalog of Federal Domestic

Assistance program number for the lowincome home energy assistance program

(LIHEAP) is 93.568.

List of Subjects in 45 CFR Part 96

Energy, Grant programs-energy, Grant

programs-Indians, Income assistance,

Leveraging incentive program, Low and

moderate income housing, Reporting

and recordkeeping requirements,

Weatherization.

Approved: April 4, 1995.

Mary Jo Bane,

Assistant Secretary for Children and Families.

For the reasons set forth in the

preamble, part 96 of Title 45 of the Code

of Federal Regulations as amended in

the interim rule published in the

Federal Register issue of January 16,

1992 (57 FR 1960) is adopted as final

with the following changes and part 96

is further amended as set forth below:

PART 96—[AMENDED]

1. The authority citation for part 96

continues to read as follows:

Authority: 42 U.S.C. 300w et seq.; 42

U.S.C. 300x et seq.; 42 U.S.C. 300y et seq.;

42 U.S.C. 701 et seq.; 42 U.S.C. 8621 et seq.;

42 U.S.C. 9901 et seq.; 42 U.S.C. 1397 et seq.;

31 U.S.C. 1243 note.

Subpart B—General Procedures

2. Section 96.14(a)(2) is revised as

follows:

§ 96.14 Time period of obligation and

expenditure of grant funds.

(a) * * *

(2) Low-income home energy

assistance. Regular LIHEAP block grant

funds authorized under section 2602(b)

of Public Law 97–35 (42 U.S.C. 8621(b))

are available only in accordance with

section 2607(b)(2)(B) of Public Law 97–

35 (42 U.S.C. 8626(b)(2)(B)), as follows.

From allotments for fiscal year 1982

through fiscal year 1984, a maximum of

25 percent may be held available for the

next fiscal year. From allotments for

fiscal year 1985 through fiscal year

1990, a maximum of 15 percent of the

amount payable to a grantee and not

transferred to another block grant

according to section 2604(f) of Public

Law 97–35 (42 U.S.C. 8623(f)) may be

held available for the next fiscal year.

From allotments for fiscal year 1991

through fiscal year 1993, a maximum of

10 percent of the amount payable to a
21358 Federal Register / Vol. 60, No. 83 / Monday, May 1, 1995 / Rules and Regulations

grantee and not transferred to another

block grant according to section 2604(f)

of Public Law 97–35 (42 U.S.C. 8623(f))

may be held available for the next fiscal

year. Beginning with allotments for

fiscal year 1994, a maximum of 10

percent of the amount payable to a

grantee may be held available for the

next fiscal year. No funds may be

obligated after the end of the fiscal year

following the fiscal year for which they

were allotted.

* * * * *

Subpart E—Enforcement

3. Section 96.50 is amended by

revising the last sentence of paragraph

(d) as follows:

§ 96.50 Complaints.

* * * * *

(d) . . . Under the low-income home

energy assistance program, within 60

days after receipt of complaints, the

Department will provide a written

response to the complainant, stating the

actions that it has taken to date and, if

the complaint has not yet been fully

resolved, the timetable for final

resolution of the complaint.

* * * * *

Subpart H—Low-income Home Energy

Assistance Program

4. Section 96.83 is revised as follows:

§ 96.83 Increase in maximum amount that

may be used for weatherization and other

energy-related home repair.

(a) Scope. This section concerns

requests for waivers increasing from 15

percent to up to 25 percent of LIHEAP

funds allotted or available to a grantee

for a fiscal year, the maximum amount

that grantees may use for low-cost

residential weatherization and other

energy-related home repair for lowincome households (hereafter referred to

as ‘‘weatherization’’), pursuant to

section 2605(k) of Public Law 97–35 (42

U.S.C. 8624(k)).

(b) Public inspection and comment.

Before submitting waiver requests to the

Department, grantees must make

proposed waiver requests available for

public inspection within their

jurisdictions in a manner that will

facilitate timely and meaningful review

of, and comment upon, these requests.

Written public comments on proposed

waiver requests must be made available

for public inspection upon their receipt

by grantees, as must any summaries

prepared of written comments, and

transcripts and/or summaries of verbal

comments made on proposed requests at

public meetings or hearings. Proposed

waiver requests, and any preliminary

waiver requests, must be made available

for public inspection and comment until

at least March 15 of the fiscal year for

which the waiver is to be requested.

Copies of actual waiver requests must be

made available for public inspection

upon submission of the requests to the

Department.

(c) Waiver request. After March 31 of

each fiscal year, the chief executive

officer (or his or her designee) may

request a waiver of the weatherization

obligation limit for this fiscal year, if the

grantee meets criteria in paragraphs

(c)(2)(i), (c)(2)(ii), and (c)(2)(iii) of this

section, or can show ‘‘good cause’’ for

obtaining a waiver despite a failure to

meet one or more of these criteria. (If the

request is made by the chief executive

officer’s designee and the Department

does not have on file written evidence

of the designation, the request also must

include evidence of the appropriate

delegation of authority.) Waiver requests

must be in writing and must include the

information specified in paragraphs

(c)(1) through (c)(6) of this section. The

grantee may submit a preliminary

waiver request for a fiscal year, between

February 1 and March 31 of the fiscal

year for which the waiver is requested.

If a grantee chooses to submit a

preliminary waiver request, the

preliminary request must include the

information specified in paragraphs

(c)(1) through (c)(6) of this section; in

addition, after March 31 the chief

executive officer (or his or her designee)

must submit the information specified

in paragraphs (c)(7) through (c)(10) of

this section, to complete the preliminary

waiver request.

(1) A statement of the total percent of

its LIHEAP funds allotted or available in

the fiscal year for which the waiver is

requested, that the grantee desires to use

for weatherization.

(2) A statement of whether the grantee

has met each of the following three

criteria:

(i) In the fiscal year for which the

waiver is requested, the combined total

(aggregate) number of households in the

grantee’s service population that will

receive LIHEAP heating, cooling, and

crisis assistance benefits that are

provided from Federal LIHEAP

allotments from regular and

supplemental appropriations will not be

fewer than the combined total

(aggregate) number that received such

benefits in the preceding fiscal year;

(ii) In the fiscal year for which the

waiver is requested, the combined total

(aggregate) amount, in dollars, of

LIHEAP heating, cooling, and crisis

assistance benefits received by the

grantee’s service population that are

provided from Federal LIHEAP

allotments from regular and

supplemental appropriations will not be

less than the combined total (aggregate)

amount received in the preceding fiscal

year; and

(iii) All LIHEAP weatherization

activities to be carried out by the grantee

in the fiscal year for which the wavier

is requested have been shown to

produce measurable savings in energy

expenditures.

(3) With regard to criterion in

paragraph (c)(2)(i) of this section, a

statement of the grantee’s best estimate

of the appropriate household totals for

the fiscal year for which the wavier is

requested and for the preceding fiscal

year.

(4) With regard to criterion in

paragraph (c)(2)(ii) of this section, a

statement of the grantee’s best estimate

of the appropriate benefit totals, in

dollars, for the fiscal year for which the

waiver is requested and for the

preceding fiscal year.

(5) With regard to criterion in

paragraph (c)(2)(ii) of this section, a

description of the weatherization

activities to be carried out by the grantee

in the fiscal year for which the wavier

is requested (with all LIHEAP funds

proposed to be used for weatherization,

not just with the amount over 15

percent), and an explanation of the

specific criteria under which the grantee

has determined whether these activities

have been shown to produce measurable

savings in energy expenditures.

(6) A description of how and when

the proposed wavier request was made

available for timely and meaningful

public review and comment, copies

and/or summaries of public comments

received on the request (including

transcripts and/or summaries of any

comments made on the request at public

meetings or hearings), a statement of the

method for reviewing public comments,

and a statement of the changes, if any,

that were made in response to these

comments.

(7) To complete a preliminary waiver

request: Official confirmation that the

grantee wishes approval of the waiver

request.

(8) To complete a preliminary waiver

request: A statement of whether any

public comments were received after

preparation of the preliminary waiver

request and, if so, copies and/or

summaries of these comments

(including transcripts and/or summaries

of any comments made on the request

at public meetings or hearings), and a

statement of the changes, if any, that

were made in response to these

comments.

(9) To complete a preliminary waiver

request: A statement of whether any
Federal Register / Vol. 60, No. 83 / Monday, May 1, 1995 / Rules and Regulations 21359

material/substantive changes of fact

have occurred in information included

in the preliminary waiver request since

its submission, and, if so, a description

of the change(s).

(10) To complete a preliminary waiver

request: A description of any other

changes to the preliminary request.

(d) ‘‘Standard waiver. If the

Department determines that a grantee

has meet the three criteria in paragraph

(c)(2) of this section, has provided all

information required by paragraph (c) of

this section, has shown adequate

concern for timely and meaningful

public review and comment, and has

proposed weatherization that meets all

relevant requirements of title XXVI of

Public Law 97–35 (42 U.S.C. 8621 et

seq.) and 45 CFR part 96, the

Department will approve a ‘‘standard’’

waiver.

(e) ‘‘Good cause’’ waiver.

(1) If a grantee does not meet one or

more of the three criteria in paragraph

(c)(2) of this section, then the grantee

may submit documentation that

demonstrates good cause why a waiver

should be granted despite the grantee’s

failure to meet this criterion or these

criteria. ‘‘Good cause’’ waiver requests

must include the following information,

in addition to the information specified

in paragraph (c) of this section:

(i) For each criterion under paragraph

(c)(2) of this section that the grantee

does not meet, an explanation of the

specific reasons demonstrating good

cause why the grantee does not meet the

criterion and yet proposes to use

additional funds for weatherization,

citing measurable, quantified data, and

stating the source(s) of the data used;

(ii) A statement of the grantee’s

LIHEAP heating, cooling, and crisis

assistance eligibility standards

(eligibility criteria) and benefits levels

for the fiscal year for which the waiver

is requested and for the preceding fiscal

year; and, if eligibility standards were

less restrictive and/or benefit levels

were higher in the preceding fiscal year

for one or more of these program

components, an explanation of the

reasons demonstrating good cause why

a waiver should be granted in spite of

this fact;

(iii) A statement of the grantee’s

opening and closing dates for

applications for LIHEAP heating,

cooling, and crisis assistance in the

fiscal year for which the waiver is

requested and in the preceding fiscal

year, and a description of the grantee’s

outreach efforts for heating, cooling, and

crisis assistance in the fiscal year for

which the waiver is requested and in

the preceding fiscal year, and, if the

grantee’s application period was longer

and/or outreach efforts were greater in

the preceding fiscal year for one or more

of these program components, an

explanation of the reasons

demonstrating good cause why a waiver

should be granted in spite of this fact;

and

(iv) If the grantee took, or will take,

other actions that led, or will lead, to a

reduction in the number of applications

for LIHEAP heating, cooling, and/or

crisis assistance, from the preceding

fiscal year to the fiscal year for which

the waiver is requested, a description of

these actions and an explanation

demonstrating good cause why a waiver

should be granted in spite of these

actions.

(2) If the Department determines that

a grantee requesting a ‘‘good cause’’

waiver has demonstrated good cause

why a waiver should be granted, has

provided all information required by

paragraphs (c) and (e)(1) of this section,

has shown adequate concern for timely

and meaningful public review and

comment, and has proposed

weatherization that meets all relevant

requirements of title XXVI of Public

Law 97–35 (42 U.S.C. 8621 et seq.) and

45 CFR part 96, the Department will

approve a ‘‘good cause’’ waiver.

(f) Approvals and disapprovals. After

receiving the grantee’s complete waiver

request, the Department will respond in

writing within 45-day, informing the

grantee whether the request is approved

on either a ‘‘standard’’ or ‘‘good cause’’

basis. The Department may request

additional information and/or

clarification from the grantee. If

additional information and/or

clarification is requested, the 45-day

period for the Department’s response

will start when the additional

information and/or clarification is

received. No waiver will be granted for

a previous fiscal year.

(g) Effective period. Waivers will be

effective from the date of the

Department’s written approval until the

funds for which the waiver is granted

are obligated in accordance with title

XXVI of Public Law 97–35 (42 U.S.C.

8621 et seq.) and 45 CFR part 96. Funds

for which a weatherization waiver was

granted that are carried over to the

following fiscal year and used for

weatherization shall not be considered

‘‘funds allotted’’ or ‘‘funds available’’ for

the purposes of calculating the

maximum amount that may be used for

weatherization in the succeeding fiscal

year.

5. Section 96.87 is revised as follows:

§ 96.87 Leveraging incentive program.

(a) Scope and eligible grantees.

(1) This section concerns the

leveraging incentive program authorized

by section 2607A of Public Law 97–35

(42 U.S.C. 8626(a).

(2)(i) The only entities eligible to

receive leveraging incentive funds from

the Department are States (including the

District of Columbia), Indian tribes,

tribal organizations, and territories that

received direct Federal LIHEAP funding

under section 2602(b) of Public Law 97–

35 (42 U.S.C. 8621(b)) in both the base

period for which leveraged resources are

reported, and the award period for

which leveraging incentive funds are

sought; and tribes and tribal

organizations described in paragraphs

(a)(2)(ii) and (a)(2)(iii) of this section.

(ii) Indian tribes that received LIHEAP

services under section 2602(b) of Public

Law 97–35 (42 U.S.C. 8621(b)) through

a directly-funded tribal organization in

the base period for which leveraged

resources are reported, and receive

direct Federal LIHEAP funding under

section 2602(b) in the award period,

will receive leveraging incentive funds

allocable to them if they submit

leveraging reports meeting all applicable

requirements. If the tribal organization

continues to receive direct funding

under section 2602(b) in the award

period, the tribal organization also will

receive incentive funds allocable to it if

it submits a leveraging report meeting

all applicable requirements. In such

cases, incentive funds will be allocated

among the involved entities that submit

leveraging reports, as agreed by these

entities. If they cannot agree, HHS will

allocate incentive funds based on the

comparative role of each entity in

obtaining and/or administering the

leveraged resources, and/or their

relative number of LIHEAP-eligible

households.

(iii) If a tribe received direct Federal

LIHEAP funding under section 2602(b)

of Public Law 97–35 (42 U.S.C. 8621(b))

in the base period for which resources

leveraged by the tribe are reported, and

the tribe receives LIHEAP services

under section 2602(b) through a

directly-funded tribal organization in

the award period, the tribal organization

will receive leveraging incentive funds

on behalf of the tribe for the resources

if the tribal organization submits a

leveraging report meeting all applicable

requirements.

(b) Definitions.

(1) Award period means the fiscal

year during which leveraging incentive

funds are distributed to grantees by the

Department, based on the countable

leveraging activities they reported to the

Department for the preceding fiscal year

(the base period).
21360 Federal Register / Vol. 60, No. 83 / Monday, May 1, 1995 / Rules and Regulations

(2) Base period means the fiscal year

for which a grantee’s leveraging

activities are reported to the

Department; grantees’ countable

leveraging activities during the base

period or base year are the basis for the

distribution of leveraging incentive

funds during the succeeding fiscal year

(the award period or award year).

Leveraged resources are counted in the

base period during which their benefits

are provided to low-income households.

(3) Countable loan fund means

revolving loan funds and similar loan

instruments in which:

(i) The sources of both the loaned and

the repaid funds meet the requirements

of this section, including the

prohibitions of paragraphs (f)(1), (f)(2),

and (f)(3) of this section;

(ii) Neither the loaned nor the repaid

funds are Federal funds or payments

from low-income households, and the

loans are not made to low-income

households; and

(iii) The benefits provided by the

loaned funds meet the requirements of

this section for countable leveraged

resources and benefits.

(4) Countable petroleum violation

escrow funds means petroleum violation

escrow (oil overcharge) funds that were

distributed to a State or territory by the

Department of Energy (DOE) after

October 1, 1990, and interest earned in

accordance with DOE policies on

petroleum violation escrow funds that

were distributed to a State or territory

by DOE after October 1, 1990, that:

(i) Were used to assist low-income

households to meet the costs of home

energy through (that is, within and as a

part of) a State or territory’s LIHEAP

program, another Federal program, or a

non-Federal program, in accordance

with a submission for use of these

petroleum violation escrow funds that

was approved by DOE;

(ii) Were not previously required to be

allocated to low-income households;

and

(iii) Meet the requirements of

paragraph (d)(1) of this section, and of

paragraph (d)(2)(ii) or (d)(2)(iii) or this

section.

(5) Home energy means a source of

heating or cooling in residential

dwellings.

(6) Low-income households mean

federally eligible (federally qualified)

households meeting the standards for

LIHEAP income eligibility and/or

LIHEAP categorical eligibility as set by

section 2605(b)(2) of Public Law 97–35

(42 U.S.C. 8624(b)(2)).

(7) Weatherization means low-cost

residential weatherization and other

energy-related home repair for lowincome households. Weatherization

must be directly related to home energy.

(c) LIHEAP funds used to identify,

develop, and demonstrate leveraging

programs.

(1) Each fiscal year, States (excluding

Indian tribes, tribal organizations, and

territories) may spend up to the greater

of $35,000 or 0.08 percent of their net

Federal LIHEAP allotments (funds

payable) allocated under section 2602(b)

of Public Law 97–35 (42 U.S.C. 8621(b))

specifically to identify, develop, and

demonstrate leveraging programs under

section 2607A(c)(2) of Public Law 97–35

(42 U.S.C. 8626a(c)(2)). Each fiscal year,

Indian tribes, tribal organizations, and

territories may spend up to the greater

of two (2.0) percent of $100 of their

Federal LIHEAP allotments allocated

under section 2602(b) of Public law 97–

35 (42 U.S.C. 8621(b)) specifically to

identify, develop, and demonstrate

leveraging programs under section

2607A(c)(2) of Public Law 97–35 (42

U.S.C. 8625a(c)(2)). For the purpose of

this paragraph, Federal LIHEAP

allotments include funds from regular

and supplemental appropriations, with

the exception of leveraging incentive

funds provided under section 2602(d) of

Public Law 97–35 (42 U.S.C. 8621(d)).

(2) LIHEAP funds used under section

2607A(c)(2) of Public Law 97–35 (42

U.S.C. 8626a(c)(2)) specifically to

identify, develop, and demonstrate

leveraging programs are not subject to

the limitation in section 2605(b)(9) of

Public Law 97–35 (42 U.S.C. 8624(b)(9))

on the maximum percent of Federal

funds that may be used for costs of

planning and administration.

(d) Basic requirements for leveraged

resources and benefits.

(1) In order to be counted under the

leveraging incentive program, leveraged

resources and benefits must meet all of

the following five criteria:

(i) They are from non-Federal sources.

(ii) They are provided to the grantee’s

low-income home energy assistance

program, or to federally qualified lowincome households as described in

section 2605(b)(2) of Public Law 97–35

(42 U.S.C. 8624(b)(2)).

(iii) They are measurable and

quantifiable in dollars.

(iv) They represent a net addition to

the total home energy resources

available to low-income households in

excess of the amount of such resources

that could be acquired by these

households through the purchase of

home energy, or the purchase of items

that help these households meet the cost

of home energy, at commonly available

household rates or costs, or that could

be obtained with regular LIHEAP

allotments provided under section

2602(b) of Public Law 97–35 (42 U.S.C.

8621(b)).

(v) They meet the requirements for

countable leveraged resources and

benefits throughout this section and

section 2607A of Public Law 97–35 (42

U.S.C. 8626a).

(2) Also, in order to be counted under

the leveraging incentive program,

leveraged resources and benefits must

meet at least one of the following three

criteria:

(i) The grantee’s LIHEAP program had

an active, substantive role in developing

and/or acquiring the resource/benefits

from home energy vendor(s) through

negotiation, regulation, and/or

competitive bid. The actions or efforts of

one or more staff of the grantee’s

LIHEAP program—at the central and/or

local level—and/or one or more staff of

LIHEAP program subrecipient(s) acting

in that capacity, were substantial and

significant in obtaining the resource/

benefits from the vendor(s).

(ii) The grantee appropriated or

mandated the resource/benefits for

distribution to low-income households

through (that is, within and as a part of)

its LIHEAP program. The resource/

benefits are provided through the

grantee’s LIHEAP program to lowincome households eligible under the

grantee’s LIHEAP standards, in

accordance with the LIHEAP statute and

regulations and consistent with the

grantee’s LIHEAP plan and program

policies that were in effect during the

base period, as if they were provided

from the grantee’s Federal LIHEAP

allotment.

(iii) The grantee appropriated or

mandated the resource/benefits for

distribution to low-income households

as described in its LIHEAP plan

(referred to in section 2605(c)(1)(A) of

Public Law 97–35) (42 U.S.C.

8624(c)(1)(A). The resource/benefits are

provided to low-income households as

a supplement and/or alternative to the

grantee’s LIHEAP program, outside (that

is, not through, within, or as a part of)

the LIHEAP program. The resource/

benefits are integrated and coordinated

with the grantee’s LIHEAP program.

Before the end of the base period, the

plan identifies and describes the

resource/benefits, their source(s), and

their integration/coordination with the

LIHEAP program. The Department will

determine resources/benefits to be

integrated and coordinated with the

LIHEAP program if they meet at least

one of the following eight conditions. If

a resource meets at least one of

conditions A through F when the

grantee’s LIHEAP program is operating

(and meets all other applicable

requirements), the resource also is
Federal Register / Vol. 60, No. 83 / Monday, May 1, 1995 / Rules and Regulations 21361

countable when the LIHEAP program is

not operating.

(A) For all households served by the

resource, the assistance provided by the

resource depends on and is determined

by the assistance provided to these

households by the grantee’s LIHEAP

program in the base period. The

resource supplements LIHEAP

assistance that was not sufficient to

meet households’ home energy needs,

and the type and amount of assistance

provided by the resource is directly

affected by the LIHEAP assistance

received by the households.

(B) Receipt of LIHEAP assistance in

the base period is necessary to receive

assistance from the resource. The

resource serves only households that

received LIHEAP assistance in the base

period.

(C) Ineligibility for the grantee’s

LIHEAP program, or denial of LIHEAP

assistance in the base period because of

unavailability of LIHEAP funds, is

necessary to receive assistance from the

resource.

(D) For discounts and waivers:

eligibility for and/or receipt of

assistance under the grantee’s LIHEAP

program in the base period, and/or

eligibility under the Federal standards

set by section 2605(b)(2) of Public Law

97–35 (42 U.S.C. 8624(b)(2)), is

necessary to receive the discount or

waiver.

(E) During the period when the

grantee’s LIHEAP program is operating,

staff of the grantee’s LIHEAP program

and/or staff assigned to the LIHEAP

program by a local LIHEAP

administering agency or agencies, and

staff assigned to the resource

communicate orally and/or in writing

about how to meet the home energy

needs of specific, individual

households. For the duration of the

LIHEAP program, this communication

takes place before assistance is provided

to each household to be served by the

resource, unless the applicant for

assistance from the resource presents

documentation of LIHEAP eligibility

and/or the amount of LIHEAP assistance

received or to be received.

(F) A written agreement between the

grantee’s LIHEAP program or local

LIHEAP administering agency, and the

agency administering the resource,

specifies the following about the

resource: eligibility criteria; benefit

levels; period of operation; how the

LIHEAP program and the resource are

integrated/coordinated; and relationship

between LIHEAP eligibility and/or

benefit levels, and eligibility and/or

benefit levels for the resource. The

agreement provides for annual or more

frequent reports to be provided to the

LIHEAP program by the agency

administering the resource.

(G) The resource accepts referrals

from the grantee’s LIHEAP program, and

as long as the resource has benefits

available, it provides assistance to all

households that are referred by the

LIHEAP program and that meet the

resource’s eligibility requirements.

Under this condition, only the benefits

provided to households referred by the

LIHEAP program are countable.

(H) Before the grantee’s LIHEAP

heating, cooling, crisis, and/or

weatherization assistance component(s)

open and/or after the grantee’s LIHEAP

heating, cooling, crisis, and/or

weatherization assistance component(s)

close for the season or for the fiscal year,

or before the entire LIHEAP program/

opens and/or after the entire LIHEAP

program closes for the season or for the

fiscal year, the resource is made

available specifically to fill the gap

caused by the absence of the LIHEAP

component(s) or program. The resource

is not available while the LIHEAP

component(s) or program is operating.

(e) Countable leveraged resources and

benefits. Resources and benefits that are

countable under the leveraging

incentive program include but are not

limited to the following, provided that

they also meet all other applicable

requirements:

(1) Cash resources: State, tribal,

territorial, and other public and private

non-Federal funds, including countable

loan funds and countable petroleum

violation escrow funds as defined in

paragraphs (b)(3) and (b)(4) of this

section, that are used for:

(i) Heating, cooling, and energy crisis

assistance payments and cash benefits

made in the base period to or on behalf

of low-income households toward their

home energy costs (including home

energy bills, taxes on home energy

sales/purchases and services,

connection and reconnection fees,

application fees, late payment charges,

bulk fuel tank rental or purchase costs,

and security deposits that are retained

for six months or longer);

(ii) Purchase of fuels that are provided

to low-income households in the base

period for home energy (such as fuel oil,

liquefied petroleum gas, and wood);

(iii) Purchase of weatherization

materials that are installed in recipients’

homes in the base period;

(iv) Purchase of the following tangible

items that are provided to low-income

households and/or installed in

recipients’ homes in the base period:

blankets, space heating devices,

equipment, and systems; space cooling

devices, equipment, and systems; and

other tangible items that help lowincome households meet the costs of

home energy and are specifically

approved by the Department as

countable leveraged resources;

(v) Installation, replacement, and

repair of the following in the base

period: weatherization materials; space

heating devices, equipment, and

systems; space cooling devices,

equipment, and systems; and other

tangible items that help low-income

households meet the costs of home

energy and are specifically approved by

the Department;

(vi) The following services, when they

are an integral part of weatherization to

help low-income households meet the

costs of home energy in the base period:

installation, replacement, and repair of

windows, exterior doors, roofs, exterior

walls, and exterior floors; preweatherization home energy audits of

homes that are weatherized as a result

of these audits; and post-weatherization

inspection of homes; and

(vii) The following services, when

they are provided (carried out) in the

base period: installation, replacement,

and repair of smoke fire alarms that are

an integral part, and necessary for safe

operation, of a home heating or cooling

system installed or repaired as a

weatherization activity; and asbestos

removal and that is an integral part of,

and necessary to carry out,

weatherization to help low-income

households meet the cost of home

energy.

(2) Home energy discounts to waivers

that are provided in the base period to

low-income households and pertain to

generally applicable prices, rates, fees,

charges, costs and/or requirements, in

the amount of the discount, reduction,

waiver, or forgiveness, or that apply to

certain tangible fuel and non-fuel items

and to certain services, that are

provided in the base period to lowincome households and help these

households meet the costs of home

energy, in the amount of the discount or

reduction.

(i) Discounts or reductions in utility

and bulk fuel prices, rates, or bills;

(ii) Partial or full forgiveness of home

energy bill arrearages;

(iii) Partial or full waivers of utility

and other home energy connection and

reconnection fees, application fees, late

payment charges, bulk fuel tank rental

or purchase costs, and home energy

security deposits that are retained for

six months or longer;

(iv) Reductions in and partial or full

waivers of non-Federal taxes on home

energy sales/purchases and services,

and reductions in and partial or full

waivers of other non-Federal taxes

provided as tax ‘‘credits’’ to low-income
21362 Federal Register / Vol. 60, No. 83 / Monday, May 1, 1995 / Rules and Regulations

households to offset their home energy

costs, except when Federal funds or

Federal tax ‘‘credits’’ provide payment

or reimbursement for these reductions/

waivers;

(v) Discounts or reductions in the cost

of the following tangible items that are

provided to low-income households

and/or installed in recipients’ homes:

weatherization materials; blankets;

space heating devices, equipment, and

systems; space cooling devices,

equipment, and systems; and other

tangible items that are specifically

approved by the Department;

(vi) Discounts or reductions in the

cost of installation, replacement, and

repair of the following: weatherization

materials; space heating devices,

equipment, and systems; space cooling

devices, equipment, and systems; and

other tangible items that help lowincome households meet the costs of

home energy and are specifically

approved by the Department;

(vii) Discounts or reductions in the

cost of the following services, when the

services are an integral part of

weatherization to help low-income

households meet the costs of home

energy: installation, replacement, and

repair of windows, exterior doors, roofs,

exterior walls, and exterior floors; preweatherization home energy audits of

homes that were weatherized as a result

of these audits; and post-weatherization

inspection of homes; and

(viii) Discounts or reductions in the

cost of installation, replacement, and

repair of smoke/fire alarms that are an

integral part, and necessary for safe

operation, of a home heating or cooling

system installed or repaired as a

weatherization activity; and discounts

or reductions in the cost of asbestos

removal that is an integral part of, and

necessary to carry out, weatherization to

help low-income households meet the

costs of home energy.

(3) Certain third-party in-kind

contributions that are provided in the

base period to low-income households:

(i) Donated fuels used by recipient

households for home energy (such as

fuel oil, liquified petroleum gas, and

wood);

(ii) Donated weatherization materials

that are installed in recipients’ homes;

(iii) Donated blankets; donated space

heating devices, equipment, and

systems; donated space cooling devices,

equipment, and systems; and other

donated tangible items that help lowincome households meet the costs of

home energy and are specifically

approved by the Department as

countable leveraged resources;

(iv) Unpaid volunteers’ services

specifically to install, replace, and

repair the following: weatherization

materials; space heating devices,

equipment, and systems; space cooling

devices, equipment, and systems; and

other items that help low-income

households meet the costs of home

energy and are specifically approved by

the Department;

(v) Unpaid volunteers’ services

specifically to provide (carry out) the

following, when these services are an

integral part of weatherization to help

low-income households meet the costs

of home energy: installation,

replacement, and repair of windows,

exterior doors, roofs, exterior walls, and

exterior floors; pre-weatherization home

energy audits of homes that were

weatherized as a result of these audits;

and post-weatherization inspection of

homes;

(vi) Unpaid volunteers’ services

specifically to: install, replace, and

repair smoke/fire alarms as an integral

part, and necessary for safe operation, of

a home heating or cooling system

installed or repaired as a weatherization

activity; and remove asbestos as an

integral part of, and necessary to carry

out, weatherization to help low-income

households meet the costs of home

energy;

(vii) Paid staff’s services that are

donated by the employer specifically to

install, replace, and repair the

following: weatherization materials;

space heating devices, equipment, and

systems; space cooling devices,

equipment, and systems; and other

items that help low-income households

meet the costs of home energy and are

specifically approved by the

Department;

(viii) Paid staff’s services that are

donated by the employer specifically to

provide (carry out) the following, when

these services are an integral part of

weatherization to help low-income

households meet the costs of home

energy: installation, replacement, and

repair of windows, exterior doors, roofs,

exterior walls, and exterior floors; preweatherization home energy audits of

homes that were weatherized as a result

of these audits; and post-weatherization

inspection of homes; and

(ix) Paid staff’s services that are

donated by the employer specifically to:

install, replace, and repair smoke/fire

alarms as an integral part, and necessary

for safe operation, of a home heating or

cooling system installed or repaired as

a weatherization activity; and remove

asbestos as an integral part of, and

necessary to carry out, weatherization to

help low-income households meet the

costs of home energy.

(f) Resources and benefits that cannot

be counted. The following resources and

benefits are not countable under the

leveraging incentive program:

(1) Resources (or portions of

resources) obtained, arranged, provided,

contributed, and/or paid for, by a lowincome household for its own benefit, or

which a low-income household is

responsible for obtaining or required to

provide for its own benefit or for the

benefit of others, in order to receive a

benefit of some type;

(2) Resources (or portions of

resources) provided, contributed, and/or

paid for by building owners, building

managers, and/or home energy vendors,

if the cost of rent, home energy, or other

charge(s) to the recipient were or will be

imposed, as a result;

(3) Resources (or portions of

resources) directly provided,

contributed, and/or paid for by

member(s) of the recipient household’s

family (parents, grandparents, greatgrandparents, sons, daughters,

grandchildren, great-grandchildren,

brothers, sisters, aunts, uncles, first

cousins, nieces, and nephews, and their

spouses), regardless of whether the

family member(s) lived within the

household, unless the family member(s)

also provided the same resource to other

low-income households during the base

period and did not limit the resource to

members of their own family;

(4) Deferred home energy obligations;

(5) Projected future savings from

weatherization;

(6) Delivery, and discounts in the cost

of delivery, of fuel, weatherization

materials, and all other items;

(7) Purchase, rental, donation, and

loan, and discounts in the cost of

purchase and rental, of: supplies and

equipment used to deliver fuel,

weatherization materials, and all other

items; and supplies and equipment used

to install and repair weatherization

materials and all other items;

(8) Petroleum violation escrow (oil

overcharge) funds that do not meet the

definition in paragraph (b)(4) of this

section;

(9) Interest earned/paid on petroleum

violation escrow funds that were

distributed to a State or territory by the

Department of Energy on or before

October 1, 1990;

(10) Interest earned/paid on Federal

funds;

(11) Interest earned/paid on

customers’ security deposits, utility

deposits, etc., except when forfeited by

the customer and used to provide

countable benefits;

(12) Borrowed funds that do not meet

the requirements in paragraph (b)(3)

above (including loans made by and/or

to low-income households), interest
Federal Register / Vol. 60, No. 83 / Monday, May 1, 1995 / Rules and Regulations 21363

paid on borrowed funds, and reductions

in interest paid on borrowed funds;

(13) Resources (or portions of

resources) for which Federal payment or

reimbursement has been or will be

provided/received;

(14) Tax deductions and tax credits

received from any unit(s) of government

by donors/contributors of resources for

these donations, and by vendors for

providing rate reductions, discounts,

waivers, credits, and/or arrearage

forgiveness to or for low-income

households, etc.;

(15) Funds and other resources that

have been or will be used as matching

or cost sharing for any Federal program;

(16) Leveraged resources counted

under any other Federal leveraging

incentive program;

(17) Costs of planning and

administration, space costs, and intake

costs;

(18) Outreach activities, budget

counseling, case management, and

energy conservation education;

(19) Training;

(20) Installation, replacement, and

repair of lighting fixtures and light

bulbs;

(21) Installation, replacement, and

repair of smoke/fire alarms that are not

an integral part, and necessary for safe

operation, of a home heating or cooling

system installed or repaired as a

weatherization activity;

(22) Asbestos removal that is not an

integral part of, and necessary to carry

out, weatherization to help low-income

households meet the costs of home

energy;

(23) Paid services where payment is

not made from countable leveraged

resources, unless these services are

donated as a countable in-kind

contribution by the employer;

(24) All in-kind contributions except

those described in paragraph (e)(3) of

this section; and

(25) All other resources that do not

meet the requirements of this section

and of section 2607A of Public Law 97–

35 (42 U.S.C. 8626a).

(g) Valuation and documentation of

leveraged resources and offsetting costs.

(1) Leveraged cash resources will be

valued at the fair market value of the

benefits they provided to low-income

households, as follows. Payments to or

on behalf of low-income households for

heating, cooling, and energy crisis

assistance will be valued at their actual

amount or value at the time they were

provided. Purchased fuel,

weatherization materials, and other

countable tangible items will be valued

at their fair market value (the commonly

available household rate or cost in the

local market area) at the time they were

purchased. Installation, replacement,

and repair of weatherization materials,

and other countable services, will be

valued at rates consistent with those

ordinarily paid for similar work, by

persons of similar skill in this work, in

the grantee’s or subrecipient’s

organization in the local area, at the

time these services were provided. If the

grantee or subrecipient does not have

employees performing similar work, the

rates will be consistent with those

ordinarily paid by other employers for

similar work, by persons of similar skill

in this work, in the same labor market,

at the time these services were

provided. Fringe benefits and overhead

costs will not be counted.

(2) Home energy discounts, waivers,

and credits will be valued at their actual

amount or value.

(3) Donated fuel, donated

weatherization materials, and other

countable donated tangible items will be

valued at their fair market value (the

commonly available household cost in

the local market area) at the time of

donation.

(4) Donated unpaid services, and

donated third-party paid services that

are not in the employee’s normal line of

work, will be valued at rates consistent

with those ordinarily paid for similar

work, by persons of similar skill in this

work, in the grantee’s or subrecipient’s

organization in the local area, at the

time these services were provided. If the

grantee or subrecipient does not have

employees performing similar work, the

rates will be consistent with those

ordinarily paid by other employers for

similar work, by persons of similar skill

in this work, in the same labor market,

at the time these services were

provided. Fringe benefits and overhead

costs will not be counted. Donated

third-party paid services of employees

in their normal line of work will be

valued at the employee’s regular rate of

pay, excluding fringe benefits and

overhead costs.

(5) Offsetting costs and charges will

be valued at their actual amount or

value.

(i) Funds from grantees’ regular

LIHEAP allotments that are used

specifically to identify, develop, and

demonstrate leveraging programs under

section 2607A(c)(2) of Public Law 97–35

(42 U.S.C. 8626a(c)(2)) will be deducted

as offsetting costs in the base period in

which these funds are obligated,

whether or not there are any resulting

leveraged benefits. Costs incurred from

grantees’ own funds to identify,

develop, and demonstrate leveraging

programs will be deducted in the first

base period in which resulting leveraged

benefits are provided to low-income

households. If there is no resulting

leveraged benefit from the expenditure

of the grantee’s own funds, the grantee’s

expenditure will not be counted or

deducted.

(ii) Any costs assessed or charged to

low-income households on a continuing

or on-going basis, year after year,

specifically to participate in a counted

leveraging program or to receive

counted leveraged resources/benefits

will be deducted in the base period

these costs are paid. Any one-time costs

or charges to low-income households

specifically to participate in a counted

leveraging program or to receive

counted leveraged resources/benefits

will be deducted in the first base period

the leveraging program or resource is

counted. Such costs or charges will be

subtracted from the gross value of a

counted resource or benefit for lowincome households whose benefits are

counted, but not for any households

whose benefits are not counted.

(6) Only the amount of the net

addition to recipient low-income

households’ home energy resources may

be counted in the valuation of a

leveraged resource.

(7) Leveraged resources and benefits,

and offsetting costs and charges, will be

valued according to the best data

available to the grantee.

(8) Grantees must maintain, or have

readily available, records sufficient to

document leveraged resources and

benefits, and offsetting costs and

charges, and their valuation. These

records must be retained for three years

after the end of the base period whose

leveraged resources and benefits they

document.

(h) Leveraging report.

(1) In order to qualify for leveraging

incentive funds, each grantee desiring

such funds must submit to the

Department a report on the leveraged

resources provided to low-income

households during the proceedings base

period. These reports must contain the

following information in a format

established by the Department.

(i) For each separate leveraged

resource, the report must:

(A) Briefly describe the specific

leveraged resource and the specific

benefit(s) provided to low-income

households by this resource, and state

the source of the resource;

(B) State whether the resource was

acquired in cash, as a discount/waiver,

or as an in-kind contribution;

(C) Indicate the geographical area in

which the benefit(s) were provided to

recipients;

(D) State the month(s) and year(s)

when the benefit(s) were provided to

recipients;
21364 Federal Register / Vol. 60, No. 83 / Monday, May 1, 1995 / Rules and Regulations

(E) State the gross dollar value of the

countable benefits provided by the

resource as determined in accordance

with paragraph (g) of this section,

indicate the source(s) of the data used,

and describe how the grantee quantified

the value and calculated the total

amount;

(F) State the number of low-income

households to whom the benefit(s) were

provided, and state the eligibility

standard(s) for the low-income

households to whom the benefit(s) were

provided;

(G) Indicate the agency or agencies

that administered the resource/

benefit(s); and

(H) Indicate the criterion or criteria

for leveraged resources in paragraph

(d)(2) of this section that the resource/

benefits meet, and for criteria in

paragraphs (d)(2)(i) and (d)(2)(iii) of this

section, explain how resources/benefits

valued at $5,000 or more meet the

criterion or criteria.

(ii) State the total gross dollar value of

the countable leveraged resources and

benefits provided to low-income

households during the base period (the

sum of the amounts listed pursuant to

paragraph (h)(1)(i)(E) of this section).

(iii) State in dollars any costs incurred

by the grantee to leverage resources, and

any costs and charges imposed on lowincome households to participate in a

counted leveraging program or to

receive counted leveraged benefits, as

determined in accordance with

paragraph (g)(5) of this section. Also

state the amount of the grantee’s regular

LIHEAP allotment that the grantee used

during the base period specifically to

identify, develop, and demonstrate

leveraging programs under section

2607A(c)(2) of Public Law 97–35 (42

U.S.C. 8626a(c)(2)).

(iv) State the net dollar value of the

countable leveraged resources and

benefits for the base period. (Subtract

the amounts in paragraph (h)(1)(iii) of

this section from the amount in

paragraph (h)(1)(ii) of this section.)

(2) Leveraging reports must be

postmarked or hand-delivered not later

than November 30 of the fiscal year for

which leveraging incentive funds are

requested.

(3) The Department may require

submission of additional documentation

and/or clarification as it determines

necessary to verify information in a

grantee’s leveraging report, to determine

whether a leveraged resource is

countable, and/or to determine the net

valuation of a resource. In such cases,

the Department will set a date by which

it must receive information sufficient to

document countability and/or valuation.

In such cases, if the Department does

not receive information that it considers

sufficient to document countability and/

or valuation by the date it has set, then

the Department will not count the

resource (or portion of resource) in

question.

(i) Determination of grantee shares of

leveraging incentive funds. Allocation of

leveraging incentive funds to grantees

will be computed according to a formula

using the following factors and weights:

(1) Fifty (50) percent based on the

final net value of countable leveraged

resources provided to low-income

households during the base period by a

grantee relative to its net Federal

allotment of funds allocated under

section 2602(b) of Public Law 97–35 (42

U.S.C. 8621(b)) during the base period,

as a proportion of the final net value of

the countable leveraged resources

provided by all grantees during the base

period relative to their net Federal

allotment of funds allocated under that

section during the base period; and

(2) Fifty (50) percent based on the

final net value of countable leveraged

resources provided to low-income

households during the base period by a

grantee as a proportion of the total final

net value of the countable leveraged

resources provided by all grantees

during the base period; except that: No

grantee may receive more than twelve

(12.0) percent of the total amount of

leveraging incentive funds available for

distribution to grantees in any award

period; and no grantee may receive

more than the smaller of its net Federal

allotment of funds allocated under

section 2602(b) of Public Law 97–35 (42

U.S.C. 8621(b)) during the base period,

or two times (double) the final net value

of its countable leveraged resources for

the base period. The calculations will be

based on data contained in the

leveraging reports submitted by grantees

under paragraph (h) of this section as

approved by the Department, and

allocation data developed by the

Department.

(j) Uses of leveraging incentive funds.

(1) Funds awarded to grantees under

the leveraging incentive program must

be used to increase or maintain heating,

cooling, energy crisis, and/or

weatherization benefits through (that is,

within and as a part of) the grantee’s

LIHEAP program. These funds can be

used for weatherization without regard

to the weatherization maximum in

section 2605(k) of Public Law 97–35 (42

U.S.C. 8624(k)). However, they cannot

be counted in the base for calculation of

the weatherization maximum for regular

LIHEAP funds authorized under section

2602(b) of Public Law 97–35 (42 U.S.C.

8621(b)). Leveraging incentive funds

cannot be used for costs of planning and

administration. However, in either the

award period or the fiscal year following

the award period, they can be counted

in the base for calculation of maximum

grantee planning and administrative

costs under section 2605(b)(9) of Public

Law 97–35 (42 U.S.C. 8624(b)(9)). They

cannot be counted in the base for

calculation of maximum carryover of

regular LIHEAP funds authorized under

section 2602(b) of Public Law 97–35 (42

U.S.C. 8621(b)).

(2) Grantees must include the uses of

leveraging incentive funds in their

LIHEAP plans (referred to in section

2605(c)(1)(A) of Public Law 97–35) (42

U.S.C. 8624(c)(1)(A)) for the fiscal year

in which the grantee obligates these

funds. Grantees must document uses of

leveraging incentive funds in the same

way they document uses of regular

LIHEAP funds authorized under section

2602(b) of Public Law 97–35 (42 U.S.C.

8621(b)). Leveraging incentive funds are

subject to the same audit requirements

as regular LIHEAP funds.

(k) Period of obligation for leveraging

incentive funds. Leveraging incentive

funds are available for obligation during

both the award period and the fiscal

year following the award period,

without regard to limitations on

carryover of funds in section

2607(b)(2)(B) of Public Law 97–35 (42

U.S.C. 8626(b)(2)(B)). Any leveraging

incentive funds not obligated for

allowable purposes by the end of this

period must be returned to the

Department.

[FR Doc. 95–9915 Filed 4–28–95; 8:45 am]

BILLING CODE 4110–60–M