[Federal Register Volume 61, Number 131 (Monday, July 8, 1996)]
[Rules and Regulations]
[Pages 35890-35903]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-17067]



[[Page 35889]]


_______________________________________________________________________

Part IV





Department of Energy





_______________________________________________________________________



Office of Energy Efficiency and Renewable Energy



_______________________________________________________________________



10 CFR Parts 420 and 450



State Energy Conservation Program; Interim Rule

Federal Register / Vol. 61, No. 131 / Monday, July 8, 1996 / Rules 
and Regulations

[[Page 35890]]



DEPARTMENT OF ENERGY

Office of Energy Efficiency and Renewable Energy

10 CFR Parts 420 and 450

[Docket No. EE-RM-96-402]
RIN 1904-AA81


State Energy Conservation Program

AGENCY: Office of Energy Efficiency and Renewable Energy.

ACTION: Interim final rule with opportunity to comment.

-----------------------------------------------------------------------

SUMMARY: The Department of Energy (Department or DOE) amends the 
regulations for the State Energy Conservation Program to provide for 
the consolidation of two formula grant programs--the State Energy 
Conservation Program (SECP) and the Institutional Conservation Program 
(ICP). DOE removes prescriptive energy audit procedures that are no 
longer needed and conflict with the President's regulatory reform 
program. DOE is also incorporating in this rule provisions for 
competitively awarded financial assistance for a number of State-
oriented special project activities.

DATES: This rule is effective July 8, 1996. Written comments [six 
copies and, if possible, a computer disk] on the interim final rule 
must be received by DOE no later than August 7, 1996, to ensure their 
consideration.
    The incorporation by reference of certain publications listed in 
the regulation is approved by the Director of the Federal Register as 
of July 8, 1996.

ADDRESSES: All written comments (six copies) are to be submitted to: 
Thomas P. Stapp, U.S. Department of Energy, Office of Building 
Technology, State and Community Programs, EE-44, Docket Number EE-RM-
96-402, 1000 Independence Avenue, S.W., Washington, DC, 20585, (202) 
586-2096.
    Copies of the comments, as well as other parts of the record, will 
be available for inspection between the hours of 9:00 a.m. and 4:00 
p.m., Monday through Friday except Federal holidays at the following 
address: DOE Freedom of Information Reading Room, United States 
Department of Energy, Room 1E-190, Forrestal Building, 1000 
Independence Avenue, S.W., Washington, DC 20585, (202) 586-6020.
    Copies of the material to be incorporated by reference are 
available from:
    The American Society of Heating, Refrigerating and Air-Conditioning 
Engineers (ASHRAE), 1791 Tullie Circle, N.E., Atlanta, Georgia 30329, 
(404) 636-8400;
    The Illuminating Engineering Society of North America (IESNA), 345 
East 47th Street, New York, New York 10017, (212) 705-7913; and
    The Council of American Building Officials (CABO), 5203 Leesburg 
Pike, Suite 708, Falls Church, Virginia 22041, (703) 931-4533.
    For more information concerning public participation in this 
rulemaking proceeding, see section IV, ``Opportunity for Public 
Comment.''

FOR FURTHER INFORMATION CONTACT: Thomas P. Stapp, Office of Building 
Technology, State and Community Programs, Department of Energy, Mail 
Stop 5G-063, EE-44, Forrestal Building, 1000 Independence Avenue, S.W., 
Washington, DC 20585, (202) 586-2096.

SUPPLEMENTARY INFORMATION:

I. Introduction and Description of the Program
II. Rationale for Interim Final Rulemaking
III. The Revisions to the Rule
IV. Opportunity for Public Comment
V. Review Under Executive Order 12612
VI. Review Under Executive Order 12866
VII. Review Under Executive Order 12988
VIII. Unfunded Mandate Review
IX. Review Under the Regulatory Flexibility Act
X. Review Under the Paperwork Reduction Act
XI. Review Under the National Environmental Policy Act
XII. Review Under the Small Business Regulatory Enforcement Fairness 
Act of 1996
XIII. The Catalog of Federal Domestic Assistance

I. Introduction and Description of the Program

    The conference report accompanying the Balanced Budget Down Payment 
Act II of 1996, Public Law 104-134, (H.R. Conf. Rept. No. 537, 104th 
Cong., 2d Sess. (1996)), provided the Department with the opportunity 
to consolidate two of its formula grant programs consistent with 
recommendations made in an earlier conference report (H.R. Conf. Rept. 
No. 402, 104th Cong., 1st Sess. 60 (1995)), which accompanied the 
Interior and Related Agencies Appropriations Bill, 1996 (H.R. 1977, 
104th Cong., 1st Sess. (1995)). Congress, in that earlier report, 
recommended such a consolidation to provide a more flexible program to 
be operated by the States. The Department is hereby following that 
recommendation by consolidating the State Energy Conservation Program 
(42 U.S.C. 6321 et seq.) and the Institutional Conservation Program (42 
U.S.C. 6371 et seq.) under the name ``State Energy Program (SEP)''. 
These two components will constitute the formula grants part of SEP. In 
the other part of SEP, DOE is providing for financial assistance for a 
number of State-oriented competitively awarded special project 
activities.

The State Energy Program Formula Grants

    The approach used to apply for and implement the activities 
formerly funded under ICP regulations (10 CFR part 455) will be 
different under SEP. The process for applying for the types of 
activities formerly funded under SECP will essentially stay the same, 
and will become the standard approach.
    DOE encourages all States to consider including ICP-type activities 
in their SEP State Plans in 1996 and future years, as appropriate. 
Following are brief explanations of how the component programs under 
the formula grants will work in the SEP context.

The State Energy Conservation Program

    This program provides grants to States for a wide range of energy-
related projects, and such projects will continue to be eligible for 
funding under SEP, using the same application process, and following 
the same programmatic requirements. This rulemaking is based on the 
SECP rule and makes only a few revisions to the SECP process, as 
discussed further in this document.

The Institutional Conservation Program

    This program provides grants both to schools and hospitals for a 
variety of energy conservation measures and technical audits of 
buildings, and to States to administer the program and, since 1993, to 
provide specialized assistance to institutions. States wishing to 
continue to undertake such activities under SEP will apply to do so 
under the rule published today. Grants will no longer be issued by DOE 
to individual schools and hospitals; the activities would now be 
covered under one or more of the program activities under the SEP grant 
to the State, and the State would then provide the funding to the 
institutions using the financial mechanisms specified in its approved 
State Plan. The State would also specify the requirements it will place 
on its schools and hospitals applicants. The regulations covering ICP 
(10 CFR Part 455) will not apply to grants issued under SEP but States 
are free to adopt any of the requirements in those regulations to cover 
ICP-type activities under SEP. ICP-type activities also continue to be 
eligible for funding under the various Petroleum Violation Escrow (PVE) 
settlements.
    For fiscal year 1996 Congress consolidated the funding for ICP and 
SECP. DOE believes that having these two programs consolidated into the 
State Energy Program Formula Grants

[[Page 35891]]

part of SEP will make it easier for States to apply for grants and more 
efficient for both DOE and the States to manage the grants. It should 
also simplify the process for the ultimate recipients of assistance, 
such as schools and hospitals, which will now be able to receive 
assistance directly from their States, rather than from DOE.

Special Projects Financial Assistance

    Financial assistance for the special projects now being provided 
for in this rulemaking covers a range of State-oriented activities to 
be offered as options in years when funding is available. States will 
be invited to apply for any of a range of potential activities 
announced for the fiscal year concerned. The announcement will be made 
in special project notices of funding availability published in the 
Federal Register, and in detailed program guidance/solicitation 
documents.
    Activities may include, but may not be limited to, new State-
oriented programs based on existing DOE initiatives such as Motor 
Challenge, Climate Wise, Clean Cities, Rebuild America, and the Federal 
Energy Management Program, as well as programs for updating State and 
local government building energy codes.
    DOE would then make its selection of projects based on the results 
of the technical evaluations and on each State's expressed interests/
priorities, DOE's priorities, the amount of funding requested, 
geographical diversity, the responsiveness of the applications to the 
purposes, requirements and program policy selection factors specified 
in the special projects guidance/solicitation, and the total funds 
available for each type of project.
    Providing for these projects to be undertaken as part of SEP will 
result in a more efficient vehicle for funding these more specialized 
activities, some of which may be new initiatives, and some of which 
were formerly funded separately. The rationale for covering these 
projects in a separate part of the rule, and for using a different 
approach for the application process, is that appropriations for these 
projects are from a variety of sources different from the source for 
the formula grants, and the funding must, therefore, be separately 
tracked. Projects approved for funding will be handled as amendment(s) 
to the SEP grant.

Energy Audit Procedures and List of Measures

    Consistent with section 365(e) of the Energy Policy and 
Conservation Act (EPCA or the Act), 42 U.S.C. 6325(e), in the late 
1970's DOE issued prescriptive regulations, codified at 10 CFR part 
450, containing a list of energy conservation measures and detailed 
energy audit procedures. The list of measures is no longer needed 
because the programs that utilized them have not been funded for more 
than 10 years. Prescriptive energy audit procedures are no longer 
needed for SEP because States are familiar with developing such 
procedures in light of their particular facts and circumstances. In 
lieu of prescriptive regulations, DOE will be providing informally 
energy audit guidance for States to consider and apply as they deem 
appropriate. This approach is consistent with the President's 
regulatory reform program which emphasizes removal of unnecessary 
categorical requirements in State grant programs.

II. Rationale for Interim Final Rulemaking

    In ordinary circumstances, DOE provides an opportunity for public 
comment prior to making significant final changes in the rules for 
financial assistance programs. Similarly, DOE ordinarily provides for 
an effective date 30 days or more following the date of publication so 
that affected entities have an opportunity to learn of changes and 
prepare to comply. However, the unusual and extended delay in the 
enactment of the 1996 appropriation for the State energy conservation 
grants subject to today's interim rule necessitates that DOE make 
expedited regulatory changes in order to facilitate early completion of 
necessary pre-award DOE activities and State plan amendments in light 
of the decrease in Federal funds for FY 1996. If the appropriation had 
been enacted on or about October 1, 1995 (the beginning of FY 1996) 
rather than April 25, 1996, then there would have been enough time for 
DOE to conduct a normal notice and comment rulemaking, to issue annual 
grant guidance on applying for funds to the States, and to review State 
plans and award grants. There would also have been ample time for 
States to develop and submit their plans reflecting a significant 
downsizing of their programs and for their employees to begin making 
appropriate personal plans where necessary.
    Although the magnitude of the funding reduction has been apparent 
for some time, DOE had to delay regulatory revisions until an 
appropriation act became law. It is now so late in FY 1996, which ends 
on September 30, 1996, that significant delay in changing existing 
rules could pressure the States into making hasty and ill-considered 
changes to their programs that would be highly disruptive. DOE has 
extensively and informally consulted with the States on the content of 
today's rule and has reason to believe that it will prove broadly 
acceptable. In any event, adjustments, if warranted, will be made in 
the notice of final rulemaking that responds to comments on today's 
notice and will apply to funds for FY 1997 and thereafter. Simultaneous 
with publication of this rule, DOE is sending a copy of this notice to 
each State so that they will be aware of the revised regulations in 
time to comply. On the basis of the foregoing, DOE has decided to waive 
prior notice and opportunity for public comment because issuance of a 
notice of proposed rulemaking is impracticable and contrary to the 
public interest. For the same reasons, DOE is making today's interim 
final rule effective immediately.

III. The Revisions to the Rule

List of Subparts and Sections

    To provide for the different approaches for the State Energy 
Program Formula Grants and the special projects financial assistance, 
DOE has divided the rule into three subparts. Subpart A covers the 
general provisions for all financial assistance under the program, 
subpart B covers the Formula Grant procedures, and subpart C covers the 
implementation of special projects financial assistance.
    With the exceptions of Sec. 420.1, Sec. 420.2, Sec. 420.3 (formerly 
Sec. 420.13), Sec. 420.4 (formerly Sec. 420.10), and Sec. 420.5 
(formerly Sec. 420.11), now in subpart A, the sections now found under 
subpart B comprised the entire former rule. Those sections have been 
rearranged and in some cases revised to improve the organization of the 
rule and to accommodate the new subpart format. The new arrangement 
(with former section numbers noted, if there has been a change) is as 
follows:

Subpart A--General Provisions for State Energy Program Financial 
Assistance

420.1  Purpose and scope. (same)
420.2  Definitions. (same)
420.3  Administration of financial assistance. (formerly 
Sec. 420.13)
420.4  Technical assistance. (formerly Sec. 420.10)
420.5  Reports. (formerly Sec. 420.11)
420.6  Reference sources. (new)

Subpart B--State Energy Program Formula Grant Procedures

420.10  Purpose. (new)
420.11  Allocations among the States. (formerly part of Sec. 420.3)
420.12  State matching contribution. (formerly part of Sec. 420.3)
420.13  Annual State applications and State plans. (formerly 
Sec. 420.4)

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420.14  Review and approval of annual State applications and State 
plans. (formerly Sec. 420.5)
420.15  Minimum criteria for required program activities for plans. 
(formerly Sec. 420.6)
420.16  Extensions for compliance with required program activities. 
(formerly Sec. 420.8)
420.17  Optional elements of State Energy Program plans. (formerly 
Sec. 420.7)
420.18  Expenditure prohibitions and limitations. (formerly 
Sec. 420.12)
420.19  Administrative review. (formerly Sec. 420.9)

    Throughout the rule cross-references have been revised to reflect 
the new section numbers. Subpart C has been added to the rule to 
provide for financial assistance for the new special projects. This 
subpart, with its respective sections, is as follows:

Subpart C--Implementation of Special Projects Financial Assistance

420.30  Purpose and scope.
420.31  Notice of availability.
420.32  Program guidance/solicitation.
420.33  Application requirements.
420.34  Matching contributions or cost sharing.
420.35  Application evaluation.
420.36  Evaluation criteria.
420.37  Selection.
Subpart A--General Provisions for State Energy Program Financial 
Assistance

Section 420.1  Purpose and scope

    This section has been substantially reduced by eliminating the 
first sentence of paragraph (a) and all of paragraph (b) and moving 
paragraph (c) to new Sec. 420.13. The second sentence of paragraph (a) 
is all that remains, modified to add the reduction of dependence on 
imported oil as a purpose of the program and to refer to the new State 
Energy Program name. The deleted wording from paragraphs (a) and (b) 
was essentially redundant. Former paragraph (c) more appropriately 
belongs under the section on State applications.

Section 420.2  Definitions

    A definition for ``alternative transportation fuel'' has been added 
to reflect the program's renewed emphasis on reducing dependence on 
imported oil. The text of the definition is based on the definition of 
alternative transportation fuel in section 301 of the Energy Policy Act 
of 1992 (Pub. L. 102-486).
    The definition for ``ASHRAE 90-75'' has been deleted because it is 
now obsolete.
    The definition of ``ASHRAE/IESNA 90.1-1989'' has been revised to 
add ``NA'' after ``IES'', to add ``as amended,'' to add the 
Illuminating Engineering Society of North America as co- publisher, and 
to reference addenda to be used as part of this standard and to cite 
the authority for incorporation by reference.
    The definition of ``Assistant Secretary'' has been revised to 
reflect the new name of the organization, Energy Efficiency and 
Renewable Energy.
    The definition of ``Btu'' has been deleted because it is more 
completely defined under ``British thermal unit.''
    The definition for ``building'' has been revised to include the 
exempted buildings formerly included under the definition of ``exempted 
building'' which has been deleted.
    The definition of ``CABO MEC-89'' has been deleted because it is 
out of date; Model Energy Code, 1993 is the version of this standard 
that should now be used.
    The definition for ``Deputy Assistant Secretary'' has been revised 
to reflect a reorganization within DOE whereby the Deputy Assistant 
Secretary for Building Technology, State and Community Programs has 
assumed responsibility for SEP.
    A definition for ``Director, State and Community Programs'' has 
been added to provide for this position which has responsibility for 
DOE's formula grants to States.
    The definition of ``energy audit'' has been revised primarily to 
delete the reference to 10 CFR part 450 which has been removed for 
reasons discussed above, under Energy Audit Procedures and list of 
measures.
    A definition for ``energy conservation measure'' has been added, to 
provide for this type of activity which may be more important under SEP 
now that ICP is included in the program. This definition is based on 
the one in Section 366 of the Act, 42 U.S.C. 6326 (4). As a conforming 
change, this term has been substituted for the term ``energy 
conservation building retrofit'' wherever that term appeared in the 
existing rule.
    The definition for ``exempted building'' has been deleted, with 
types of buildings formerly listed under that definition moved to the 
definition of ``building.''
    The definition for ``Governor'' has been revised to conform to the 
definition of ``State.''
    The definition for ``HUD minimum property standards'' has been 
deleted because it is out of date. The Model Energy Code, 1993 should 
now be used instead.
    The definition for ``industrial plant'' is being revised to 
``industrial facility'' because that is the term now used in the rule.
    The definition for ``major building type'' is being deleted because 
the term is no longer used in the rule.
    A definition for ``Model Energy Code, 1993'' has been added. This 
standard replaces the former ``CABO MEC-89,'' which has been deleted, 
as previously discussed.
    The definition for ``National energy conservation program'' is 
being deleted because it is no longer used in the rule.
    The definition for ``petroleum violation escrow funds'' has been 
revised to clarify that the matching requirements referred to are only 
found in Sec. 420.12 (formerly Sec. 420.3(e)), whereas under 
Sec. 420.18(b) (formerly Sec. 420.12(b)), there are cost limitations.
    The definition of ``plan'' has been revised to refer to the new 
State Energy Program.
    The definition for ``program measure'' has been revised to replace 
the word ``measure'' with the word ``activity.'' The term ``program 
activity'' now covers what were formerly referred to as ``program 
measures'' in some parts of the rule and ``programs'' in other parts of 
the rule.
    Under the definition of ``public building,'' a new subparagraph(e) 
has been added to include public and private non-profit schools and 
hospitals, reflecting the consolidation of ICP into SEP.
    The definition of ``renewable-resource energy measure'' has been 
revised to be a definition of ``renewable energy measure'' and to 
provide a more detailed description of such measures. This definition 
is based on the one in section 366 of the Act, 42 U.S.C. 6326(6). In 
addition, the reference to subpart D (covering Energy Measures) of 10 
CFR part 450, is being deleted, for reasons discussed earlier under 
Energy Audit Procedures and list of measures.
    The definition of ``State economic product'' has been deleted 
because the term is no longer used in the rule.
    The definition of ``Support Office Director'' has been revised to 
reflect the new title ``Regional Support Office Director.'' The new 
title, and the new Regional Support Office name, are now used 
throughout the rule wherever the former names appeared.

Section 420.3  Administration of Financial Assistance

    Former paragraph (a) (now paragraph (a)(1)) of this section has 
been revised to provide the current references for the requirement for 
intergovernmental review and coordination, now found in Executive Order 
12372 and its

[[Page 35893]]

implementing regulations at 10 CFR part 1005.
    Paragraphs (b) and (c) of this section were formerly found under 
Sec. 420.3 as paragraphs (c) and (e), respectively. Paragraph (b) has 
been revised to specify that budget periods (for both formula grants 
and special projects) shall be consistent with 10 CFR part 600.
    Paragraph (c) has been revised to add the necessity for subawards 
to be consistent with this part and 10 CFR part 600.

Section 420.4  Technical Assistance

    This section was formerly Sec. 420.10.

Section 420.5  Reports

    This section was formerly Sec. 420.11. It now covers all SEP 
financial assistance under both subpart B and subpart C. The 
requirement for an annual energy savings report has been deleted 
because of the marginal need for this particular type of report at this 
time.

Section 420.6  Reference Standards

    This is a new section providing information about the incorporation 
by reference of two standards, ASHRAE/IESNA 90.1-1989 and The Model 
Energy Code, 1993, which are referred to in Sec. 420.2 and Sec. 420.15.
Subpart B--State Energy Program Formula Grant Procedures

Section 420.10  Purpose

    This is a new section to introduce the purpose of subpart B, which 
is to set forth the procedures that apply to the State Energy Program 
Formula Grants.

Section 420.11  Allocation of Funds Among the States

    This section has been adapted from paragraphs (a) and (b) of former 
Sec. 420.3. Paragraph (a) remains the same.
    DOE has revised the process (specified under Sec. 420.11(b)) by 
which grant funds are allocated to the States, to accommodate the 
inclusion of ICP funds which were formerly allocated to States using a 
formula different from that used for SECP. The only common element in 
the two formulas was the population of each State. The other two 
elements in the ICP formula were regional costs of energy and the sum 
of a State's heating and cooling degree days. The other two elements in 
the SECP formula were a provision for dividing a portion of the funds 
equally among all the States, and the State's estimated energy savings 
from SECP efforts undertaken in calendar year 1980.
    The revised process involves an allocation for each State 
consisting of: a base allocation calculated on the program's $25.5 
million available funding for fiscal year 1996 and divided in the same 
ratio as each State received in fiscal year 1995 in combined funding 
from appropriations for ICP and SECP, together with a provision that 
any available funding beyond $25.5 million be allocated based on a new 
formula. This revised process serves several purposes: (1) it will 
reflect and incorporate in the base allocation the historical funding 
of the two distinct major component programs in SEP that formerly used 
different funding formulas; (2) it will provide for an equitable 
adjustment in program funding levels; and (3) it will help maintain the 
organizational capacity of the States to manage the programs.

Base Allocation

    To achieve this, DOE is hereby replacing the former SECP formula 
with the two-step process discussed above. The base allocation reflects 
elements from the ICP and SECP formulas in such a way that each State 
will receive, in fiscal year 1996, a base allocation in the same ratio 
(based on each State's 1995 allocations from 1995 appropriated funds) 
as it would have received if ICP and SECP were operated as separate 
programs. This base allocation, which applies to the first $25.5 
million of funds available, will remain the same in future years, or be 
adjusted downward if available funds are less than $25.5 million. Table 
1, listing the base allocation by State using the $25.5 million total, 
is added after Sec. 420.11(b)(1). Funds available above $25.5 million 
will be allocated based on the new formula described below.

Formula Allocation

    Funding available for SEP beyond the base $25.5 million ICP/SECP 
consolidated funds will be allocated using the new formula based on the 
following factors: 33\1/3\ percent divided among the States equally; 
33\1/3\ percent divided on the basis of the population of the 
participating States; and 33\1/3\ percent divided on the basis of the 
energy consumption of the participating States.
    The formula for the entire annual allocation is expressed 
mathematically as (PA)=(BA)+(FA), where (PA) is the total program 
allocation, (BA) is the base allocation, and (FA) is the formula 
allocation.
    Paragraphs (c) and (e) are now found under new Sec. 420.3, as 
already discussed under that section.
    Paragraph (d) is now found under new Sec. 420.12.

Section 420.12  State Matching Contribution

    This section was formerly paragraph (d) of former Sec. 420.3. It 
has been given a new title, and revised to replace the term ``cost 
sharing'' with ``match'' or ``matching'' because the Act uses the term 
``match'' in the sense of a percent of the State's Federal allocation, 
whereas, in this context, a ``cost share'' would be a percent of the 
total project cost. To receive financial assistance, each State must 
contribute a match of no less than 20 percent of the Federal financial 
assistance allocated to the State. Cash and in-kind contributions may 
continue to be used to meet this requirement. The sentence in this 
paragraph requiring that the State's match be identified in the State's 
application has been moved to Sec. 420.13 where it becomes new 
Sec. 420.13(b)(4)(ii).

Section 420.13  Annual State Application and State Plans

    This section was formerly Sec. 420.4.
    The title of this section has been changed to add State plans which 
must be included with SEP grant applications.
    A new paragraph (b)(1) has been added to provide for the submission 
of an application face page on Standard Form 424.
    Former paragraph (b)(1) has been redesignated (b)(2).
    Paragraph (b)(3) has been added to this section (it was formerly 
Sec. 420.1(c)). Since this paragraph refers to a requirement for State 
plans, DOE felt it was more appropriate to include it in the section 
covering applications and plans.
    Former paragraph (b)(2) has been redesignated (b)(4) to provide for 
the addition of new paragraphs (b)(1) and (b)(3) and has been revised 
to add a new (b)(4)(ii) requiring that States include their matching 
contribution in their applications, as already discussed under 
Sec. 420.12.
    Former subparagraphs (b)(2)(ii), (b)(2)(iii), and (b)(2)(iv) have 
been redesignated (b)(4)(iii), (b)(4)(iv), and (b)(4)(v), respectively, 
to allow for new (b)(4)(ii).
    Former paragraph (b)(3) has been redesignated (b)(5) to provide for 
the addition of new paragraphs (b)(1) and (b)(3).
    Paragraph (b)(6) (formerly paragraph (b)(4)) of this section, which 
required States to specify that activities funded under SECP would 
supplement and not supplant activities funded under ICP or the 
Weatherization Assistance Program (Weatherization), has been revised by 
deleting the reference to ICP. Activities

[[Page 35894]]

formerly funded under ICP are now being funded under SEP, so 
supplantation is not an issue.
    To continue the renumbering of paragraphs necessitated by the 
addition of paragraphs (b)(1) and (b)(3), former (b)(5) has been 
renumbered (b)(7); a new paragraph (b)(8) has been added covering State 
assurances; and former (b)(6) has been renumbered (b)(9).
    Former paragraph (b)(7) has been deleted because it does not relate 
to the contents of an application.
    The wording of a number of paragraphs in this section has been 
simplified to make the format consistent.

Section 420.14  Review and Approval of Annual State Applications and 
State Plans

    This section was formerly Sec. 420.5

Section 420.15  Minimum Criteria for Required Program Measures for 
Plans

    This section was formerly Sec. 420.6.
    Paragraphs (a)(3) and (d)(3) have been revised to refer to ASHRAE/
IESNA 90.1-1989 as amended, which is the current citation, as 
previously discussed under Sec. 420.2, Definitions. Paragraph (d)(4) 
has been revised to refer to Model Energy Code, 1993 as amended, which 
is the current citation, as previously discussed under Sec. 420.2, 
Definitions. The new standards are based upon the requirements of Title 
III of the Energy Conservation and Production Act, 42 U.S.C. 6831 et 
seq.
    A new paragraph (e)(3) has been added to provide for left turns 
from one-way streets onto one-way streets at traffic lights (right 
turns for the Virgin Islands), where appropriate, as required by 
section 362(c)(5) of EPCA, 42 U.S.C. 6322(c)(5).
    Former paragraph (e)(3) has been eliminated. This paragraph 
provided for a delay in implementing the requirement under paragraph 
(e)(2) until June 27, 1979. That provision is no longer necessary.

Section 420.16  Extensions for Compliance With Required Program 
Activities

    This section was formerly Sec. 420.8.

Section 420.17  Optional Elements of State Energy Program Plans

    This section was formerly Sec. 420.7.
    Paragraph (a)(3)(ii) has been revised to add wording at the end to 
make clear that public and private non-profit schools and hospitals, 
and local government buildings, which were formerly covered by ICP, are 
eligible buildings under SEP. It is important to note that local 
government buildings, which were eligible only for technical audits 
under ICP, are also eligible for energy conservation measures under 
SEP.
    New paragraphs (a)(10), (a)(11),(a)(12) and (a)(13) are being added 
to provide for four new examples of optional elements of State plans 
which were added to EPCA by section 141(b) of the Energy Policy Act of 
1992, Pub. L. 102-486 (EPACT). Those new elements are: program 
activities to provide training to building designers and contractors to 
promote energy efficiency ((a)(10)); program activities for the 
development of building retrofit standards ((a)(11)); support for 
feasibility studies to facilitate access to capital and credit for 
energy efficiency projects ((a)(12)); and program activities to 
facilitate the voluntary use of renewable energy technologies in 
Federal agency programs ((a)(13)).
    Former paragraph (a)(10) has been renumbered (a)(14).

Section 420.18  Expenditure Prohibitions and Limitations

    This section was formerly Sec. 420.12.
    This section has been renamed because the former name, ``Prohibited 
expenditures,'' did not reflect the fact that a number of the 
paragraphs under this section cover expenditures that are, under 
certain circumstances, allowable.
    Paragraph (e) has been revised to change the limitation of 33 
percent of a State's allocation to 50 percent, and to clarify that, up 
to that limit, funds may be used for the purchase and installation of 
energy conservation measures and renewable energy measures, to allow 
States more flexibility in this regard. With ICP-typed activities now a 
component of the consolidated SEP, and with energy conservation 
measures and renewable energy measures the primary purpose of ICP, DOE 
does not want to limit States to 33 percent for such expenditures, and 
believes a 50 percent limit is now appropriate because approximately 50 
percent of the appropriated funds for FY 1996 are attributable to ICP.
    Paragraph (e)(4), which required that funds under this program be 
used to supplement, but not supplant, ICP or Weatherization funds, has 
been revised to delete the reference to ICP. The reasons were 
previously discussed under Sec. 420.13.
    Former subparagraphs (e)(6)(i) and (e)(6)(iv) have been deleted 
because they are no longer necessary, and former subparagraphs 
(e)(6)(ii) and (e)(6)(iii) have been redesignated new subparagraphs 
(e)(6)(i) and (e)(6)(ii), respectively.
    Former paragraph (e)(7) has been deleted because the same 
limitation is covered in paragraph (d).

Section 420.19  Administrative Review

    This section was formerly Sec. 420.9. It covers decisions made 
under Sec. 420.14 and does not apply to financial assistance for the 
special projects in subpart C.
Subpart C--Implementation of Special Projects Financial Assistance
    This subpart is being added to specify how DOE will implement 
financial assistance for these special projects activities under SEP.

Section 420.30  Purpose

    This section is being added to provide the purpose of subpart C.

Section 420.31  Notice of Availability

    This section is being added to specify the process DOE will use for 
announcing the availability of funds for special projects financial 
assistance.

Section 420.32  Program Guidance/Solicitation

    This section is being added to provide for the program guidance/
solicitation, which will contain the relevant information necessary for 
States to apply for funding under this subpart.

Section 420.33  Application Requirements

    This section is being added to provide general information about 
applying for financial assistance for these special projects. More 
detailed application requirements will be provided by DOE in the 
program guidance/solicitation document.

Section 420.34  Matching Contributions or Cost Sharing

    This section is being added to address the possibility of a match 
or cost share requirement for some, or all, special projects financial 
assistance, to be specified in the program guidance/solicitation.

Section 420.35  Application Evaluation

    This section is being added to provide for the technical 
evaluations of applications for financial assistance pursuant to this 
subpart.

Section 420.36  Evaluation Criteria

    This section is being added to provide for the evaluation criteria 
to be applied to applications for financial assistance pursuant to this 
subpart.

Section 420.37  Selection

    This section is being added to provide for program policy factors 
which may be

[[Page 35895]]

applied in selecting special projects for funding under this subpart.

IV. Opportunity for Public Comment

Written Comment Procedures

    Interested persons are invited to participate in this rulemaking by 
submitting data, views or arguments with respect to the matters set 
forth in this notice.
    Comments (6 copies and, if possible, a computer disk) should be 
identified on the outside of the envelope, and on the documents 
themselves, with the designation: ``State Energy Program, Interim Final 
Rule, Docket Number EE-RM-96-402.'' In the event any person wishing to 
submit a written comment cannot provide six copies, alternative 
arrangements can be made in advance by calling (202) 586-2096.
    Any person submitting information which that person believes to be 
confidential, and which may be exempt by law from public disclosure, 
should submit one complete copy, as well as two copies from which the 
information claimed to be confidential has been deleted. DOE shall make 
a determination of any such claim as set forth in 10 CFR 1004.11 (53 FR 
15661, May 3, 1988).

V. Review Under Executive Order 12612

    Executive Order 12612, 52 FR 41685 (October 30, 1987) requires that 
regulations, legislation and any other policy action be reviewed for 
any substantial direct effects on States, on the relationship between 
the National Government and the States, or on the distribution of power 
among various levels of government. If there are sufficient substantial 
direct effects, the Executive Order requires preparation of a 
federalism assessment to be used in decisions by senior policy-makers 
in promulgating or implementing the regulation.
    Today's regulatory amendments will not have a substantial direct 
effect on the traditional rights and prerogatives of States in 
relationship to the Federal Government. Preparation of a federalism 
assessment is therefore unnecessary.

VI. Review Under Executive Order 12866

    Today's regulatory action has been determined not to be a 
significant regulatory action under Executive Order 12866, Regulatory 
Planning and Review, October 4, 1993. Accordingly, this action was not 
subject to review under the Executive Order by the Office of 
Information and Regulatory Affairs (OIRA).

VII. Review Under Executive Order 12988

    Section 3 of Executive Order 12988, 61 FR 4729 (February 7, 1996), 
instructs each agency to adhere to certain requirements in promulgating 
new regulations. These requirements, set forth in Section 3(a) and (b), 
include eliminating drafting errors and needless ambiguity, drafting 
the regulations to minimize litigation, providing clear and certain 
legal standards for affected legal conduct, and promoting 
simplification and burden reduction. Agencies are also instructed to 
make every reasonable effort to ensure that the regulation describes 
any administrative proceeding to be available prior to judicial review 
and any provisions for the exhaustion of administrative remedies. The 
Department has determined that today's regulatory action meets the 
requirements of Section 3 (a) and (b) of Executive Order 12988.

VIII. Unfunded Mandate Review

    The Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4) places a 
variety of review and consultative obligations on Federal agencies 
proposing regulatory actions for Federal intergovernmental mandates. 
Today's rule does not involve such a mandate because the Unfunded 
Mandates Reform Act excludes from the definition of ``Federal 
intergovernmental mandate'' provisions in a regulation that would 
impose conditions incident to a financial assistance program (not 
involving an entitlement) or a duty arising from participation in a 
voluntary Federal program 2 U.S.C. 658(5). This program is a standard 
non-entitlement financial assistance program and States are not 
obligated to participate in it.

IX. Review Under the Regulatory Flexibility Act

    There is no need to prepare a final regulatory flexibility analysis 
of today's interim final regulations under the Regulatory Flexibility 
Act, 5 U.S.C. 601 et seq., because they are not subject to a legal 
requirement for a general notice of proposed rulemaking.

X. Review Under the Paperwork Reduction Act

    No new information collection or recordkeeping requirements are 
imposed on the public by today's rules.

XI. Review Under the National Environmental Policy Act

    A programmatic environmental assessment has been prepared covering 
the grant program under the interim final regulations published today 
which was sent to the States for comment on March 27, 1996. No comments 
were received by the end of the 14-day comment period. This 
programmatic environmental assessment resulted in a finding of no 
significant impact (FONSI). A FONSI was issued on June 7, 1996. The 
documents relating to this programmatic environmental assessment are 
available in the DOE Freedom of Information Reading Room, United States 
Department of Energy, Room 1E-190, Forrestal Building, 1000 
Independence Avenue, SW., Washington, DC 20585, (202) 586-6020.

XII. Congressional Notification

    The final regulations published today are subject to the 
Congressional notification requirements of the Small Business 
Regulatory Enforcement Fairness Act of 1996 (Act), 5 U.S.C. 801. OMB 
has determined that the final regulations do not constitute a ``major 
rule'' under the Act, 5 U.S.C. 804. DOE will report to Congress on the 
promulgation of the final regulations prior to the effective date set 
forth at the beginning of this notice.

XIII. The Catalog of Federal Domestic Assistance

    The Catalog of Federal Domestic Assistance number for the State 
Energy Program is 81.041.

List of Subjects

10 CFR Part 420

    Energy conservation, Grant programs--energy, Reporting and 
recordkeeping requirements, Technical assistance, Incorporation by 
reference.

10 CFR Part 450

    Buildings, Business and Industry, Energy conservation, Housing, 
Reporting and recordkeeping requirements.

    Issued in Washington, DC, on June 26, 1996.
Christine A. Ervin,
Assistant Secretary, Energy Efficiency and Renewable Energy.

    For the reasons set forth in the preamble, Chapter II of Title 10, 
Code of Federal Regulations is amended as follows:
    1. Part 420 is revised to read as follows:

PART 420--STATE ENERGY PROGRAM

Subpart A--General Provisions for State Energy Program Financial 
Assistance
Sec.
420.1  Purpose and scope.
420.2  Definitions.
420.3  Administration of financial assistance.

[[Page 35896]]

420.4  Technical assistance.
420.5  Reports.
420.6  Reference standards.

Subpart B--Formula Grant Procedures

420.10  Purpose.
420.11  Allocation of funds among the States.
420.12  State matching contribution.
420.13  Annual State applications and State plans.
420.14  Review and approval of annual State applications and State 
plans.
420.15  Minimum criteria for required program activities for plans.
420.16  Extensions for compliance with required program activities.
420.17  Optional elements of State Energy Program plans.
420.18  Expenditure prohibitions and limitations.
420.19  Administrative review.

Subpart C--Implementation of Special Projects Financial Assistance

420.30  Purpose and scope.
420.31  Notice of availability.
420.32  Program guidance/solicitation.
420.33  Application requirements.
420.34  Matching contributions or cost-sharing.
420.35  Application evaluation.
420.36  Evaluation criteria.
420.37  Selection.

    Authority: Title III, part D, as amended, of the Energy Policy 
and Conservation Act (42 U.S.C. 6321 et seq.); Department of Energy 
Organization Act (42 U.S.C. 7101 et seq.)

Subpart A--General Provisions for State Energy Program Financial 
Assistance


Sec. 420.1  Purpose and scope.

    It is the purpose of this part to promote the conservation of 
energy, to reduce the rate of growth of energy demand, and to reduce 
dependence on imported oil through the development and implementation 
of a comprehensive State Energy Program and the provision of Federal 
financial and technical assistance to States in support of such 
program.


Sec. 420.2  Definitions.

    As used in this part:
    Act means title III, part D, as amended, of the Energy Policy and 
Conservation Act, 42 U.S.C. 6321 et seq.
    Alternative transportation fuel means methanol, denatured ethanol, 
and other alcohols; mixtures containing 85 percent or more by volume of 
methanol, denatured ethanol, and other alcohols with gasoline or other 
fuels; natural gas; liquified petroleum gas; hydrogen; coal-derived 
liquid fuels; fuels (other than alcohol) derived from biological 
materials (including neat biodiesel); and electricity (including 
electricity from solar energy).
    ASHRAE/IESNA 90.1-1989, as amended means the building design 
standard published in December 1989 by the American Society of Heating, 
Refrigerating and Air-Conditioning Engineers, and the Illuminating 
Engineering Society of North America titled ``Energy Efficient Design 
of New Buildings Except Low-Rise Residential Buildings,'' with Addenda 
90.1b-1992; Addenda 90.1d-1992; Addenda 90.1e-1992; Addenda 90.1g-1993; 
and Addenda 90.1i-1993, which is incorporated by reference in 
accordance with 5 U.S.C. 552(a) and 1 CFR part 51. The availability of 
this incorporation by reference is given in Sec. 420.6(b).
    Assistant Secretary means the Assistant Secretary for Energy 
Efficiency and Renewable Energy or any official to whom the Assistant 
Secretary's functions may be redelegated by the Secretary.
    British thermal unit (Btu) means the quantity of heat necessary to 
raise the temperature of one pound of water one degree Fahrenheit at 
39.2 degrees Fahrenheit and at one atmosphere of pressure.
    Building means any structure which includes provision for a heating 
or cooling system, or both, or for a hot water system, except for the 
following:
    (1) Any building whose peak design rate of energy usage for all 
purposes is less than one watt (3.4 Btu's per hour) per square foot of 
floor area for all purposes;
    (2) Any building with neither a heating nor cooling system;
    (3) Any mobile home; or
    (4) Any building owned or leased in whole or in part by the United 
States.
    Carpool means the sharing of a ride by two or more people in an 
automobile.
    Carpool matching and promotion campaign means a campaign to 
coordinate riders with drivers to form carpools and/or vanpools.
    Commercial building means any building other than a residential 
building, including any building constructed for industrial or public 
purposes.
    Commercially available means available for purchase by the general 
public or target audience in the State.
    Deputy Assistant Secretary means the Deputy Assistant Secretary for 
Building Technology, State and Community Programs or any official to 
whom the Deputy Assistant Secretary's functions may be redelegated by 
the Assistant Secretary.
    Director, Office of State and Community Programs means the official 
responsible for DOE's formula grant programs to States, or any official 
to whom the Director's functions may be redelegated by the Assistant 
Secretary.
    DOE means the Department of Energy.
    Energy audit means a determination of the energy consumption 
characteristics of a building which:
    (1) Identifies the type, size, energy use level and the major 
energy using systems of such building or buildings;
    (2) Determines appropriate energy conservation maintenance and 
operating procedures; and
    (3) Indicates the need and the estimated cost and energy cost 
savings, if any, associated with the acquisition and installation of 
energy conservation measures.
    Energy conservation measure means an installation which modifies 
any building, building system, energy consuming device associated with 
the building or industrial facility the construction of which was 
completed prior to May 1, 1989, if such measure has been determined by 
means of an energy audit to be likely to maintain or improve the 
efficiency of energy use and to reduce energy costs in an amount 
sufficient to enable a person to recover the total cost of purchasing 
and installing such measure within the lesser of--
    (1) The useful life of the modification involved; or
    (2) 15 years after the purchase and installation of such measure.
    Environmental residual means any pollutant or pollution causing 
factor which results from any activity.
    Exterior envelope physical characteristics means the physical 
nature of those elements of a building which enclose conditioned spaces 
through which thermal energy may be transferred to or from the 
exterior.
    Governor means the chief executive officer of a State, the District 
of Columbia, Puerto Rico, or any territory or possession of the United 
States, or a person duly designated in writing by the Governor to act 
upon his or her behalf.
    Grantee means the State or other entity named in the notice of 
grant award as the recipient.
    HVAC means heating, ventilating and air-conditioning.
    IBR means incorporation by reference.
    Industrial facility means any fixed equipment or facility which is 
used in connection with, or as part of, any process or system for 
industrial production or output.
    Institution of higher education has the same meaning as such term 
is defined in section 1201(a) of the Higher Education Act of 1965 (20 
U.S.C. 1141(a)).
    Metropolitan Planning Organization means that organization required 
by the

[[Page 35897]]

Department of Transportation, and designated by the Governor as being 
responsible for coordination within the State, to carry out 
transportation planning provisions in a Standard Metropolitan 
Statistical Area.
    Model Energy Code, 1993, including Errata, means the model building 
code published by the Council of American Building Officials, which is 
incorporated by reference in accordance with 5 U.S.C. 552(a) and 1 CFR 
part 51. The availability of this incorporation by reference is given 
in Sec. 420.6(b).
    Park-and-ride lot means a parking facility generally located at or 
near the trip origin of carpools, vanpools and/or mass transit.
    Petroleum violation escrow funds. For purposes both of exempting 
petroleum violation escrow funds from the matching requirements of 
Sec. 420.12 and of applying the limitations specified under 
Sec. 420.18(b), this term means any funds distributed to the States by 
the Department of Energy or any court and identified as Alleged Crude 
Oil Violation funds, together with any interest earned thereon by the 
States, but excludes any funds designated as ``excess funds'' under 
section 3003(d) of the Petroleum Overcharge Distribution and 
Restitution Act, subtitle A of title III of the Omnibus Budget 
Reconciliation Act of 1986, Public Law 99-509, and the funds 
distributed under the ``Warner Amendment,'' section 155 of Public Law 
97-377.
    Plan means a State Energy Program plan including required program 
activities in accordance with Sec. 420.15 and otherwise meeting the 
applicable provisions of this part.
    Political subdivision means a unit of government within a State, 
including a county, municipality, city, town, township, parish, 
village, local public authority, school district, special district, 
council of governments, or any other regional or intrastate 
governmental entity or instrumentality of a local government exclusive 
of institutions of higher learning and hospitals.
    Preferential traffic control means any one of a variety of traffic 
control techniques used to give carpools, vanpools and public 
transportation vehicles priority treatment over single occupant 
vehicles other than bicycles and other two-wheeled motorized vehicles.
    Program activity means one or more State actions, in a particular 
area, designed to promote energy efficiency, renewable energy and 
alternative transportation fuel.
    Public building means any building which is open to the public 
during normal business hours, including:
    (1) Any building which provides facilities or shelter for public 
assembly, or which is used for educational office or institutional 
purposes;
    (2) Any inn, hotel, motel, sports arena, supermarket, 
transportation terminal, retail store, restaurant, or other commercial 
establishment which provides services or retail merchandise;
    (3) Any general office space and any portion of an industrial 
facility used primarily as office space;
    (4) Any building owned by a State or political subdivision thereof, 
including libraries, museums, schools, hospitals, auditoriums, sport 
arenas, and university buildings; and
    (5) Any public or private non-profit school or hospital.
    Public transportation means any scheduled or nonscheduled 
transportation service for public use.
    Regional Support Office Director means the director of a DOE 
Regional Support Office with responsibility for grants administration 
or any official to whom that function may be redelegated.
    Renewable energy means a non-depletable source of energy.
    Renewable energy measure means a measure which modifies any 
building or industrial facility if such measure has been determined by 
means of an energy audit to--
    (1) Involve changing, in whole or in part, the fuel or source of 
the energy used to meet the requirements of such building or facility 
from a depletable source of energy to a non-depletable source of 
energy; and
    (2) Be likely to reduce energy costs (as calculated on the basis of 
energy cost assumptions provided by DOE) in an amount sufficient to 
enable a person to recover the total cost of purchasing and installing 
such measure (without regard to any tax benefit or Federal financial 
assistance applicable thereto) within the lesser of--
    (i) The useful life of the modification involved; or
    (ii) 25 years after the purchase and installation of such measure.
    Residential building means any building which is constructed for 
residential occupancy.
    Secretary mean the Secretary of DOE.
    SEP means the State Energy Program under this part.
    Small business means a private firm that does not exceed the 
numerical size standard promulgated by the Small Business 
Administration under section 3(a) of the Small Business Act (15 U.S.C. 
632) for the Standard Industrial Classification (SIC) codes designated 
by the Secretary of Energy.
    Start-up business means a small business which has been in 
existence for 5 years or less.
    State means a State, the District of Columbia, Puerto Rico, or any 
territory or possession of the United States.
    State or local government building means any building owned and 
primarily occupied by offices or agencies of a State; and any building 
of a unit of local government or a public care institution which could 
be covered by part H, title III, of the Energy Policy and Conservation 
Act, 42 U.S.C. 6372-6372i.
    Transit level of service means characteristics of transit service 
provided which indicate its quantity, geographic area of coverage, 
frequency and quality (comfort, travel, time, fare and image).
    Urban area traffic restriction means a setting aside of certain 
portions of an urban area as restricted zones where varying degrees of 
limitation are placed on general traffic usage and/or parking.
    Vanpool means a group of riders using a vehicle, with a seating 
capacity of not less than eight individuals and not more than fifteen 
individuals, for transportation to and from their residence or other 
designated locations and their place of employment, provided the 
vehicle is driven by one of the pool members.
    Variable working schedule means a flexible working schedule to 
facilitate carpool, vanpool and/or public transportation usage.


Sec. 420.3  Administration of financial assistance.

    (a) Financial assistance under this part shall comply with 
applicable laws and regulations including, but without limitation, the 
requirements of:
    (1) Executive Order 12372, Intergovernmental Review of Federal 
Programs, as implemented by 10 CFR part 1005.
    (2) DOE Financial Assistance Rules (10 CFR part 600); and
    (3) Other procedures which DOE may from time to time prescribe for 
the administration of financial assistance under this part.
    (b) The budget period(s) covered by the financial assistance 
provided to a State according to Sec. 420.11(b) or Sec. 420.33 shall be 
consistent with 10 CFR part 600.
    (c) Subawards are authorized under this part and are subject to the 
requirements of this part and 10 CFR part 600.


Sec. 420.4  Technical assistance.

    At the request of the Governor of any State to DOE and subject to 
the

[[Page 35898]]

availability of personnel and funds, DOE will provide information and 
technical assistance to the State in connection with effectuating the 
purposes of this part.


Sec. 420.5  Reports.

    (a) Each State receiving financial assistance under this part shall 
submit to the cognizant Regional Support Office Director a quarterly 
program performance report and a quarterly financial status report.
    (b) Reports under this section shall contain such information as 
the Secretary may prescribe in order to monitor effectively the 
implementation of a State's activities under this part.
    (c) The reports shall be submitted within 30 days following the end 
of each calendar year quarter.


Sec. 420.6  Reference standards.

    (a) The following standards which are not otherwise set forth in 
this part are incorporated by reference and made a part of this part. 
The following standards have been approved for incorporation by 
reference by the Director of the Federal Register in accordance with 5 
U.S.C. 552(a) and 1 CFR part 51. A notice of any change in these 
materials will be published in the Federal Register. The standards 
incorporated by reference are available for inspection at the Office of 
the Federal Register, 800 North Capitol Street, N.W., suite 700, 
Washington, D.C.
    (b) The following standards are incorporated by reference in this 
part:
    (1) The American Society of Heating, Refrigerating and Air-
Conditioning Engineers (ASHRAE), 1791 Tullie Circle, N.E., Atlanta, 
Georgia 30329, (404) 636-8400/The Illuminating Engineering Society of 
North America (IESNA), 345 East 47th Street, New York, New York 10017, 
(212) 705-7913: (i) ASHRAE/IESNA 90.1-1989, entitled ``Energy Efficient 
Design of New Buildings Except Low-Rise Residential Buildings,'' with 
Addenda 90.1b-1992; Addenda 90.1d-1992; Addenda 90.1e-1992; Addenda 
90.1g-1993; and Addenda 90.1i-1993, IBR approved for Sec. 420.2 and 
Sec. 420.15.
    (2) The Council of American Building Officials (CABO), 5203 
Leesburg Pike, Suite 708, Falls Church, Virginia 22041, (703) 931-4533: 
(i) The Model Energy Code, 1993, including Errata, IBR approved for 
Sec. 420.2 and Sec. 420.15.

Subpart B--Formula Grant Procedures


Sec. 420.10  Purpose.

    This subpart specifies the procedures that apply to the Formula 
Grant part of the State Energy Program, which allows States to apply 
for financial assistance to undertake a wide range of required and 
optional energy-related activities provided for under Sec. 420.15 and 
Sec. 420.17. Funding for these activities is allocated to the States 
based on funds available for any fiscal year, as described under 
Sec. 420.11.


Sec. 420.11  Allocation of funds among the States.

    (a) The cognizant Regional Support Office Director shall provide 
financial assistance to each State having an approved annual 
application from funds available for any fiscal year to develop, 
modify, or implement a plan.
    (b) DOE shall allocate financial assistance to develop, implement 
or modify plans among the States from funds available for any fiscal 
year, as follows:
    (1) If the available funds equal $25.5 million, such funds shall be 
allocated to the States according to Table 1 of this section.
    (2) The base allocation for each State is listed in Table 1.

                   Table 1.--Base Allocation by State                   
------------------------------------------------------------------------
                     State/Territory                                    
------------------------------------------------------------------------
Alabama.................................................        $381,000
Alaska..................................................         180,000
Arizona.................................................         344,000
Arkansas................................................         307,000
California..............................................       1,602,000
Colorado................................................         399,000
Connecticut.............................................         397,000
Delaware................................................         164,000
District of Columbia....................................         158,000
Florida.................................................         831,000
Georgia.................................................         534,000
Hawaii..................................................         170,000
Idaho...................................................         190,000
Illinois................................................       1,150,000
Indiana.................................................         631,000
Iowa....................................................         373,000
Kansas..................................................         327,000
Kentucky................................................         411,000
Louisiana...............................................         446,000
Maine...................................................         231,000
Maryland................................................         486,000
Massachusetts...........................................         617,000
Michigan................................................         973,000
Minnesota...............................................         584,000
Mississippi.............................................         279,000
Missouri................................................         518,000
Montana.................................................         182,000
Nebraska................................................         246,000
Nevada..................................................         196,000
New Hampshire...........................................         216,000
New Jersey..............................................         783,000
New Mexico..............................................         219,000
New York................................................       1,633,000
North Carolina..........................................         564,000
North Dakota............................................         172,000
Ohio....................................................       1,073,000
Oklahoma................................................         352,000
Oregon..................................................         325,000
Pennsylvania............................................       1,090,000
Rhode Island............................................         199,000
South Carolina..........................................         340,000
South Dakota............................................         168,000
Tennessee...............................................         476,000
Texas...................................................       1,322,000
Utah....................................................         242,000
Vermont.................................................         172,000
Virginia................................................         571,000
Washington..............................................         438,000
West Virginia...........................................         286,000
Wisconsin...............................................         604,000
Wyoming.................................................         155,000
American Samoa..........................................         115,000
Guam....................................................         120,000
Northern Marianas.......................................         114,000
Puerto Rico.............................................         322,000
U.S. Virgin Islands.....................................         122,000
------------------------------------------------------------------------
      Total.............................................      25,500,000
------------------------------------------------------------------------

    (3) If the available funds for any fiscal year are less than $25.5 
million, then the base allocation for each State shall be reduced 
proportionally.
    (4) If the available funds exceed $25.5 million, $25.5 million 
shall be allocated as specified in Table 1 and any in excess of $25.5 
million shall be allocated as follows:
    (i) One-third of the available funds is divided among the States 
equally;
    (ii) One-third of the available funds is divided on the basis of 
the population of the participating States as contained in the most 
recent reliable census data available from the Bureau of the Census, 
Department of Commerce, for all participating States at the time DOE 
needs to compute State formula shares; and
    (iii) One-third of the available funds is divided on the basis of 
the energy consumption of the participating States as contained in the 
most recent State Energy Data Report available from DOE's Energy 
Information Administration.
    (c) The budget period covered by the financial assistance provided 
to a State according to Sec. 420.11(b) shall be consistent with 10 CFR 
part 600.


Sec. 420.12  State matching contribution.

    (a) Each State shall provide cash, in kind contributions, or both 
for SEP activities in an amount totalling not less than 20 percent of 
the financial assistance allocated to the State under Sec. 420.11(b).
    (b) Cash and in-kind contributions used to meet this State matching 
requirement are subject to the limitations on expenditures described in 
Sec. 420.18(a), but are not subject to the 20 percent limitation in 
Sec. 420.18(b).

[[Page 35899]]

    (c) Nothing in this section shall be read to require a match for 
petroleum violation escrow funds used under this part.


Sec. 420.13  Annual State applications and State plans.

    (a) To be eligible for financial assistance under subpart B of this 
part, a State shall submit to the cognizant Regional Support Office 
Director an original and two copies of the annual application executed 
by the Governor. The date for submission of the annual State 
application shall be set by DOE.
    (b) An application shall include:
    (1) A face sheet containing basic identifying information, on 
Standard Form (SF) 424;
    (2) A description of the energy efficiency, renewable energy, and 
alternative transportation fuel goals to be achieved, including 
wherever practicable:
    (i) An estimate of the energy to be saved by implementation of the 
State plan;
    (ii) Why the goals were selected;
    (iii) How the attainment of the goals will be measured by the 
State; and
    (iv) How the program activities included in the State plan 
represent a strategy to achieve these goals;
    (3) With respect to financial assistance under subpart B of this 
part, a goal, consisting of an improvement of 10 percent or more in the 
efficiency of use of energy in the State concerned in the calendar year 
2000, as compared to the calendar year 1990, and may contain interim 
goals;
    (4) For the budget period for which financial assistance will be 
provided:
    (i) A total program budget with supporting justification, broken 
out by object category and by source of funding;
    (ii) The source and amount of State matching contribution;
    (iii) A narrative statement detailing the nature of amendments and 
of new program activities;
    (iv) For each program activity, a budget and listing of milestones; 
and
    (v) An explanation of how the minimum criteria for required program 
activities prescribed in Sec. 420.15 shall be satisfied;
    (5) A detailed description of the increase or decrease in 
environmental residuals expected from implementation of a plan defined 
insofar as possible through the use of information to be provided by 
DOE and an indication of how these environmental factors were 
considered in the selection of program activities.
    (6) For program activities involving purchase or installation of 
materials or equipment for weatherization of low-income housing, an 
explanation of how these activities would supplement and not supplant 
the existing DOE program under 10 CFR part 440.
    (7) A reasonable assurance to DOE that it has established policies 
and procedures designed to assure that Federal financial assistance 
under subpart B of this part will be used to supplement, and not to 
supplant, State and local funds, and to the extent practicable, to 
increase the amount of such funds that otherwise would be available, in 
the absence of such Federal financial assistance, for those activities 
set forth in the State Energy Program plan approved pursuant to this 
part;
    (8) An assurance that the State shall comply with all applicable 
statutes and regulations in effect with respect to the periods for 
which it receives grant funding; and
    (9) For informational purposes only, and not subject to DOE review, 
an energy emergency plan for an energy supply disruption, as designed 
by the State consistent with applicable Federal and State law including 
an implementation strategy or strategies (including regional 
coordination) for dealing with energy emergencies.
    (c) The Governor may request an extension of the annual submission 
date by submitting a written request to the cognizant Regional Support 
Office Director not less than 15 days prior to the annual submission 
date. The extension shall be granted only if, in the cognizant Regional 
Support Office Director's judgment, acceptable and substantial 
justification is shown, and the extension would further objectives of 
the Act.


Sec. 420.14  Review and approval of annual State applications and State 
plans.

    (a) After receipt of an application for financial assistance under 
subpart B of this part, or application for approval of an amendment to 
a State plan, the cognizant Regional Support Office Director may 
request the State to submit within a reasonable period of time any 
revisions necessary to make the application complete and to bring the 
application into compliance with the requirements of this part. The 
cognizant Regional Support Office Director shall attempt to resolve any 
dispute over the application informally and to seek voluntary 
compliance. If a State fails to submit timely appropriate revisions to 
complete an application and/or bring it into compliance, the cognizant 
Regional Support Office Director may reject the application in a 
written decision, including a statement of reasons, which shall be 
subject to administrative review under Sec. 420.19 of this part.
    (b) On or before 60 days from the date that a timely filed 
application is complete, the cognizant Regional Support Office Director 
shall--
    (1) Approve the application in whole or in part to the extent 
that--
    (i) The application conforms to the requirements of this part;
    (ii) The proposed program activities are consistent with a State's 
achievement of its energy conservation goals in accordance with 
Sec. 420.13; and
    (iii) The provisions of the application regarding program 
activities satisfy the minimum requirements prescribed by Sec. 420.15 
and Sec. 420.17 as applicable;
    (2) Approve the application in whole or in part subject to special 
conditions designed to ensure compliance with the requirements of this 
part; or
    (3) Disapprove the application if it does not conform to the 
requirements of this part.


Sec. 420.15  Minimum criteria for required program activities for 
plans.

    A plan shall satisfy all of the following minimum criteria for 
required program activities.
    (a) Mandatory lighting efficiency standards for public buildings 
shall:
    (1) Be implemented throughout the State, except that the standards 
shall be adopted by the State as a model code for those local 
governments of the State for which the State's constitution reserves 
the exclusive authority to adopt and implement building standards 
within their jurisdictions;
    (2) Apply to all public buildings above a certain size, as 
determined by the State;
    (3) For new public buildings, be no less stringent than the 
provisions of ASHRAE/IESNA 90.1-1989, and should be updated by 
enactment of, or support for the enactment into local codes or 
standards, which, at a minimum, are comparable to provisions of ASHRAE/
IESNA 90.1-1989 which is incorporated by reference in accordance with 5 
U.S.C. 552 (a) and 1 CFR part 51. The availability of this 
incorporation by reference is given in Sec. 420.6; and
    (4) For existing public buildings, contain the elements deemed 
appropriate by the State.
    (b) Program activities to promote the availability and use of 
carpools, vanpools, and public transportation shall:
    (1) Have at least one of the following actions under implementation 
in at least one urbanized area with a population of 50,000 or more 
within the State or in the largest urbanized area within the State if 
that State does not have an urbanized

[[Page 35900]]

area with a population of 50,000 or more:
    (i) A carpool/vanpool matching and promotion campaign;
    (ii) Park-and-ride lots;
    (iii) Preferential traffic control for carpoolers and public 
transportation patrons;
    (iv) Preferential parking for carpools and vanpools;
    (v) Variable working schedules;
    (vi) Improvement in transit level of service for public 
transportation;
    (vii) Exemption of carpools and vanpools from regulated carrier 
status;
    (viii) Parking taxes, parking fee regulations or surcharge on 
parking costs;
    (ix) Full-cost parking fees for State and/or local government 
employees;
    (x) Urban area traffic restrictions;
    (xi) Geographical or time restrictions on automobile use; or
    (xii) Area or facility tolls; and
    (2) Be coordinated with the relevant Metropolitan Planning 
Organization, unless no Metropolitan Planning Organization exists in 
the urbanized area, and not be inconsistent with any applicable Federal 
requirements.
    (c) Mandatory standards and policies affecting the procurement 
practices of the State and its political subdivisions to improve energy 
efficiency shall--
    (1) With respect to all State procurement and with respect to 
procurement of political subdivisions to the extent determined feasible 
by the State, be under implementation; and
    (2) Contain the elements deemed appropriate by the State to improve 
energy efficiency through the procurement practices of the State and 
its political subdivisions.
    (d) Mandatory thermal efficiency standards for new and renovated 
buildings shall--
    (1) Be implemented throughout the State, with respect to all 
buildings other than exempted buildings, except that the standards 
shall be adopted by the State as a model code for those local 
governments of the State for which the State's constitution reserves 
the exclusive authority to adopt and implement building standards 
within their jurisdictions;
    (2) Take into account the exterior envelope physical 
characteristics, HVAC system selection and configuration, HVAC 
equipment performance and service water heating design and equipment 
selection;
    (3) For all new commercial and multifamily high-rise buildings, be 
no less stringent than provisions of sections 7-12 of ASHRAE/IESNA 
90.1-1989, and should be updated by enactment of, or support for the 
enactment into local codes or standards, which, at a minimum, are 
comparable to provisions of ASHRAE/IESNA 90.1-1989; and
    (4) For all new single-family and multifamily low-rise residential 
buildings, be no less stringent than the Model Energy Code, 1993, and 
should be updated by enactment of, or support for the enactment into 
local codes or standards, which, at a minimum, are comparable to the 
Model Energy Code, 1993, which is incorporated by reference in 
accordance with 5 U.S.C. 552(a) and 1 CFR part 51. The availability of 
this incorporation by reference is given in Sec. 420.6;
    (5) For renovated buildings:
    (i) Apply to those buildings determined by the State to be 
renovated buildings; and
    (ii) Contain the elements deemed appropriate by the State regarding 
thermal efficiency standards for renovated buildings.
    (e) A traffic law or regulation which permits the operator of a 
motor vehicle to make a turn at a red light after stopping shall:
    (1) Be in a State's motor vehicle code and under implementation 
throughout all political subdivisions of the State;
    (2) Permit the operator of a motor vehicle to make a right turn 
(left turn with respect to the Virgin Islands) at a red traffic light 
after stopping except where specifically prohibited by a traffic sign 
for reasons of safety or except where generally prohibited in an urban 
enclave for reasons of safety; and
    (3) Permit the operator of a motor vehicle to make a left turn from 
a one-way street to a one-way street (right turn with respect to the 
Virgin Islands) at a red traffic light after stopping except where 
specifically prohibited by a traffic sign for reasons of safety or 
except where generally prohibited in an urban enclave for reasons of 
safety.
    (f) Procedures must exist for ensuring effective coordination among 
various local, State, and Federal energy efficiency, renewable energy 
and alternative transportation fuel programs within the State, 
including any program administered within the Office of Building 
Technology, State and Community Programs of the Department of Energy 
and the Low Income Home Energy Assistance Program administered by the 
Department of Health and Human Services.


Sec. 420.16  Extensions for compliance with required program 
activities.

    An extension of time by which a required program activity must be 
ready for implementation may be granted if DOE determines that the 
extension is justified. A written request for an extension, with 
accompanying justification and an action plan acceptable to DOE for 
achieving compliance in the shortest reasonable time, shall be made to 
the cognizant Regional Support Office Director. Any extension shall be 
only for the shortest reasonable time that DOE determines necessary to 
achieve compliance. The action plan shall contain a schedule for full 
compliance and shall identify and make the most reasonable commitment 
possible to provision of the resources necessary for achieving the 
scheduled compliance.


Sec. 420.17  Optional elements of State Energy Program plans.

    (a) Other appropriate activities or programs may be included in the 
State plan. These activities may include, but are not limited to, the 
following:
    (1) Program activities of public education to promote energy 
efficiency, renewable energy, and alternative transportation fuels;
    (2) Program activities to increase transportation energy 
efficiency, including programs to accelerate the use of alternative 
transportation fuels for government vehicles, fleet vehicles, taxis, 
mass transit, and privately owned vehicles;
    (3) Program activities for financing energy conservation measures 
and renewable energy measures--
    (i) Which may include loan programs and performance contracting 
programs for leveraging of additional public and private sector funds 
and program activities which allow rebates, grants, or other incentives 
for the purchase of energy conservation measures and renewable energy 
measures; or
    (ii) In addition to or in lieu of program activities described in 
paragraph (a)(3)(i) of this section, which may be used in connection 
with public or nonprofit buildings owned and operated by a State, a 
political subdivision of a State or an agency or instrumentality of a 
State, or an organization exempt from taxation under section 501(c)(3) 
of the Internal Revenue Code of 1986 including public and private non-
profit schools and hospitals, and local government buildings;
    (4) Program activities for encouraging and for carrying out energy 
audits with respect to buildings and industrial facilities (including 
industrial processes) within the State;
    (5) Program activities to promote the adoption of integrated energy 
plans which provide for:
    (i) Periodic evaluation of a State's energy needs, available energy 
resources (including greater energy efficiency), and energy costs; and

[[Page 35901]]

    (ii) Utilization of adequate and reliable energy supplies, 
including greater energy efficiency, that meet applicable safety, 
environmental, and policy requirements at the lowest cost;
    (6) Program activities to promote energy efficiency in residential 
housing, such as:
    (i) Program activities for development and promotion of energy 
efficiency rating systems for newly constructed housing and existing 
housing so that consumers can compare the energy efficiency of 
different housing; and
    (ii) Program activities for the adoption of incentives for 
builders, utilities, and mortgage lenders to build, service, or finance 
energy efficient housing;
    (7) Program activities to identify unfair or deceptive acts or 
practices which relate to the implementation of energy conservation 
measures and renewable energy measures and to educate consumers 
concerning such acts or practices;
    (8) Program activities to modify patterns of energy consumption so 
as to reduce peak demands for energy and improve the efficiency of 
energy supply systems, including electricity supply systems;
    (9) Program activities to promote energy efficiency as an integral 
component of economic development planning conducted by State, local, 
or other governmental entities or by energy utilities;
    (10) Program activities (enlisting appropriate trade and 
professional organizations in the development and financing of such 
programs) to provide training and education (including, if appropriate, 
training workshops, practice manuals, and testing for each area of 
energy efficiency technology) to building designers and contractors 
involved in building design and construction or in the sale, 
installation, and maintenance of energy systems and equipment to 
promote building energy efficiency;
    (11) Program activities for the development of building retrofit 
standards and regulations, including retrofit ordinances enforced at 
the time of the sale of a building;
    (12) Program activities to provide support for prefeasibility and 
feasibility studies for projects that utilize renewable energy and 
energy efficiency resource technologies in order to facilitate access 
to capital and credit for such projects;
    (13) Program activities to facilitate and encourage the voluntary 
use of renewable energy technologies for eligible participants in 
Federal agency programs, including the Rural Electrification 
Administration and the Farmers Home Administration; and
    (14) In accordance with paragraph (b) of this section, program 
activities to implement the Energy Technology Commercialization 
Services Program.
    (b) This section prescribes requirements for establishing State-
level Energy Technology Commercialization Services Program as an 
optional element of State plans.
    (1) The program activities to implement the functions of the Energy 
Technology Commercialization Services Program shall:
    (i) Aid small and start-up businesses in discovering useful and 
practical information relating to manufacturing and commercial 
production techniques and costs associated with new energy 
technologies;
    (ii) Encourage the application of such information in order to 
solve energy technology product development and manufacturing problems;
    (iii) Establish an Energy Technology Commercialization Services 
Program affiliated with an existing entity in each State;
    (iv) Coordinate engineers and manufacturers to aid small and start-
up businesses in solving specific technical problems and improving the 
cost effectiveness of methods for manufacturing new energy 
technologies;
    (v) Assist small and start-up businesses in preparing the technical 
portions of proposals seeking financial assistance for new energy 
technology commercialization; and
    (vi) Facilitate contract research between university faculty and 
students and small start-up businesses, in order to improve energy 
technology product development and independent quality control testing.
    (2) Each State Energy Technology Commercialization Services Program 
shall develop and maintain a data base of engineering and scientific 
experts in energy technologies and product commercialization interested 
in participating in the service. Such data base shall, at a minimum, 
include faculty of institutions of higher education, retired 
manufacturing experts, and National Laboratory personnel.
    (3) The services provided by the Energy Technology 
Commercialization Services Program established under this part shall be 
available to any small or start-up business. Such service programs 
shall charge fees which are affordable to a party eligible for 
assistance, which shall be determined by examining factors, including 
the following: the costs of the services received; the need of the 
recipient for the services; and the ability of the recipient to pay for 
the services.


Sec. 420.18  Expenditure prohibitions and limitations.

    (a) No financial assistance provided to a State under this part 
shall be used:
    (1) For construction, such as construction of mass transit systems 
and exclusive bus lanes, or for construction or repair of buildings or 
structures;
    (2) To purchase land, a building or structure or any interest 
therein;
    (3) To subsidize fares for public transportation;
    (4) To subsidize utility rate demonstrations or State tax credits 
for energy conservation measures or renewable energy measures; or
    (5) To conduct, or purchase equipment to conduct, research, 
development or demonstration of energy efficiency or renewable energy 
techniques and technologies not commercially available.
    (b) No more than 20 percent of the financial assistance awarded to 
the State for this program shall be used to purchase office supplies, 
library materials, or other equipment whose purchase is not otherwise 
prohibited by this section. Nothing in this paragraph shall be read to 
apply this 20 percent limitation to petroleum violation escrow funds 
used under this part.
    (c) Demonstrations of commercially available energy efficiency or 
renewable energy techniques and technologies are permitted, and are not 
subject to the prohibitions of Sec. 420.18(a)(1), or to the limitation 
on equipment purchases of Sec. 420.18(b).
    (d) A State may use regular or revolving loan mechanisms to fund 
SEP services which are consistent with this part and which are included 
in the State's approved SEP plan. The State may use loan repayments and 
any interest on the loan funds only for activities which are consistent 
with this part and which are included in the State's approved SEP plan.
    (e) A State may use funds under this part for the purchase and 
installation of equipment and materials for energy conservation 
measures and renewable energy measures subject to the following terms 
and conditions:
    (1) Such use must be included in the State's approved plan and, if 
funded by petroleum violation escrow funds, must be consistent with any 
judicial or administrative terms and conditions imposed upon State use 
of such funds;
    (2) A State may use for these purposes no more than 50 percent of 
all funds allocated by the State to SEP in a given year, regardless of 
source, except that this limitation shall not include regular

[[Page 35902]]

and revolving loan programs funded with petroleum violation escrow 
funds, and is subject to waiver by DOE for good cause. Loan documents 
shall ensure repayment of principal and interest within a reasonable 
period of time, and shall not include provisions of loan forgiveness.
    (3) Subject to the restrictions of this part, State and local 
government buildings, as defined in Sec. 420.2, are eligible for energy 
conservation measures and renewable energy measures under this section;
    (4) Funds must be used to supplement and no funds may be used to 
supplant weatherization activities under the Weatherization Assistance 
Program for Low-Income Persons, under 10 CFR part 440;
    (5) Subject to paragraph (e)(6) of this section, a State may use a 
variety of financial incentives to fund purchases and installation of 
materials and equipment under this paragraph including, but not limited 
to, regular loans, revolving loans, loan buy-downs, performance 
contracting, rebates, and grants.
    (6) The following mechanisms are not allowed for funding the 
purchase and installation of materials and equipment under this 
paragraph:
    (i) Rebates for more than 50 percent of the total cost of 
purchasing and installing materials and equipment (States shall set 
appropriate restrictions and limits to insure the most efficient use of 
rebates); and
    (ii) Loan guarantees.


Sec. 420.19  Administrative review.

    (a) A State shall have 20 days from the date of receipt of a 
decision under Sec. 420.14 to file a notice requesting administrative 
review in accordance with paragraph (b) of this section. If an 
applicant does not timely file such a notice, the decision under 
Sec. 420.14 shall become final for DOE.
    (b) A notice requesting administrative review shall be filed with 
the cognizant Regional Support Office Director and shall be accompanied 
by a written statement containing supporting arguments. If the 
cognizant Regional Support Office Director has disapproved an entire 
application for financial assistance, the State may request a public 
hearing.
    (c) A notice or any other document shall be deemed filed under this 
section upon receipt.
    (d) On or before 15 days from receipt of a notice requesting 
administrative review which is timely filed, the cognizant Regional 
Support Office Director shall forward to the Deputy Assistant 
Secretary, the notice requesting administrative review, the decision 
under Sec. 420.14 as to which administrative review is sought, a draft 
recommended final decision for concurrence, and any other relevant 
material.
    (e) If the State requests a public hearing on the disapproval of an 
entire application for financial assistance, the Deputy Assistant 
Secretary, within 15 days, shall give actual notice to the State and 
Federal Register notice of the date, place, time, and procedures which 
shall apply to the public hearing. Any public hearing under this 
section shall be informal and legislative in nature.
    (f) On or before 45 days from receipt of documents under paragraph 
(d) of this section or the conclusion of the public hearing, whichever 
is later, the Deputy Assistant Secretary shall concur in, concur in as 
modified, or issue a substitute for the recommended decision of the 
cognizant Regional Support Office Director.
    (g) On or before 15 days from the date of receipt of the 
determination under paragraph (f) of this section, the Governor may 
file an application for discretionary review by the Assistant 
Secretary. On or before 15 days from filing, the Assistant Secretary 
shall send a notice to the Governor stating whether the Deputy 
Assistant Secretary's determination will be reviewed. If the Assistant 
Secretary grants a review, a decision shall be issued no later than 60 
days from the date review is granted. The Assistant Secretary may not 
issue a notice or decision under this paragraph without the concurrence 
of the DOE Office of General Counsel.
    (h) A decision under paragraph (f) of this section shall be final 
for DOE if there is no review under paragraph (g) of this section. If 
there is review under paragraph (g) of this section, the decision 
thereunder shall be final for DOE and no appeal shall lie elsewhere in 
DOE.
    (i) Prior to the effective date of the termination or suspension of 
a grant award for failure to implement an approved State plan in 
compliance with the requirements of this part, a grantee shall have the 
right to written notice of the basis for the enforcement action and of 
the opportunity for public hearing before the DOE Financial Assistance 
Appeals Board notwithstanding any provisions to the contrary of 10 CFR 
600.22, 600.24, 600.25, and 600.243. To obtain a public hearing, the 
grantee must request an evidentiary hearing, with prior Federal 
Register notice, in the election letter submitted under Rule 2 of 10 
CFR 1024.4 and the request shall be granted notwithstanding any 
provisions to the contrary of Rule 2.

Subpart C--Implementation of Special Projects Financial Assistance


Sec. 420.30  Purpose and scope.

    (a) This subpart sets forth DOE's policies and procedures for 
implementing special projects financial assistance under this part.
    (b) For years in which such funding is available, States may apply 
for financial assistance to undertake a variety of State-oriented 
energy-related special projects activities in addition to the funds 
provided under the regular SEP grants.
    (c) The types of funded activities may vary from year to year, and 
from State to State, depending upon funds available for each type of 
activity and DOE and State priorities.
    (d) A number of end-use sector programs in the Office of Energy 
Efficiency and Renewable Energy participate in the funding of these 
activities, and the projects must meet the requirements of those 
programs.
    (e) The purposes of the special project activities are:
    (1) To utilize States to accelerate deployment of energy 
efficiency, renewable energy, and alternative transportation fuel 
technologies;
    (2) To facilitate the commercialization of emerging and 
underutilized energy efficiency and renewable energy technologies; and
    (3) To increase the responsiveness of Federally funded technology 
development efforts to the needs of the marketplace.


Sec. 420.31  Notice of availability.

    (a) If in any fiscal year DOE has funds available for special 
projects, DOE shall publish in the Federal Register one or more 
notice(s) of availability of SEP special projects financial assistance.
    (b) Each notice of availability shall cite this part and shall 
include:
    (1) Brief descriptions of the activities for which funding is 
available;
    (2) The amount of money DOE has available or estimates it will have 
available for award for each type of activity, and the total amount 
available;
    (3) The program official to contact for additional information, 
application forms, and the program guidance/solicitation document; and
    (4) The dates when:
    (i) The program guidance/solicitation will be available; and
    (ii) The applications for financial assistance must be received by 
DOE.


Sec. 420.32  Program guidance/solicitation.

    After the publication of the notice of availability in the Federal 
Register, DOE shall, upon request, provide States

[[Page 35903]]

interested in applying for one or more project(s) under the special 
projects financial assistance with a detailed program guidance/
solicitation that will include:
    (a) The control number of the program;
    (b) The expected duration of DOE support or period of performance;
    (c) An application form or the format to be used, location for 
application submission, and number of copies required;
    (d) The name of the DOE program office contact from whom to seek 
additional information;
    (e) Detailed descriptions of each type of program activity for 
which financial assistance is being offered;
    (f) The amount of money available for award, together with any 
limitations as to maximum or minimum amounts expected to be awarded;
    (g) Deadlines for submitting applications;
    (h) Evaluation criteria that DOE will apply in the selection and 
ranking process for applications for each program activity;
    (i) The evaluation process to be applied to each type of program 
activity;
    (j) A listing of program policy factors if any that DOE may use in 
the final selection process, in addition to the results of the 
evaluations, including:
    (1) The importance and relevance of the proposed applications to 
SEP and the participating programs in the Office of Energy Efficiency 
and Renewable Energy; and
    (2) Geographical diversity;
    (k) Reporting requirements;
    (l) References to:
    (1) Statutory authority for the program;
    (2) Applicable rules; and
    (3) Other terms and conditions applicable to awards made under the 
program guidance/solicitation; and
    (m) A statement that DOE reserves the right to fund in whole or in 
part, any, all, or none of the applications submitted.


Sec. 420.33  Application requirements.

    (a) Consistent with Sec. 420.32 of this part, DOE shall set forth 
general and special project activity-specific requirements for 
applications for special projects financial assistance in the program 
guidance/solicitation.
    (b) In addition to any other requirements, all applications shall 
provide:
    (1) A detailed description of the proposed project, including the 
objectives of the project in relationship to DOE's program and the 
State's plan for carrying it out;
    (2) A detailed budget for the entire proposed period of support, 
with written justification sufficient to evaluate the itemized list of 
costs provided on the entire project; and
    (3) An implementation schedule for carrying out the project.
    (c) DOE may, subsequent to receipt of an application, request 
additional budgetary information from a State when necessary for 
clarification or to make informed preaward determinations.
    (d) DOE may return an application which does not include all 
information and documentation required by this part, 10 CFR part 600, 
or the program guidance/solicitation, when the nature of the omission 
precludes review of the application.


Sec. 420.34  Matching contributions or cost-sharing.

    DOE may require (as set forth in the program guidance/solicitation) 
States to provide either:
    (a) A matching contribution of at least a specified percentage of 
the Federal financial assistance award; or
    (b) A specified share of the total cost of the project for which 
financial assistance is provided.


Sec. 420.35  Application evaluation.

    (a) DOE staff at the cognizant Regional Support Office shall 
perform an initial review of all applications to ensure that the State 
has provided the information required by this part, 10 CFR part 600, 
and the program guidance/solicitation.
    (b) DOE shall group, and technically evaluate according to program 
activity, all applications determined to be complete and satisfactory.
    (c) DOE shall select evaluators on the basis of their professional 
qualifications and expertise relating to the particular program 
activity being evaluated.
    (1) DOE anticipates that evaluators will primarily be DOE 
employees; but
    (2) If DOE uses non-DOE evaluators, DOE shall require them to 
comply with all applicable DOE rules or directives concerning the use 
of outside evaluators.


Sec. 420.36  Evaluation criteria.

    The evaluation criteria, including program activity-specific 
criteria, will be set forth in the program guidance/solicitation 
document.


Sec. 420.37  Selection.

    (a) DOE may make selection of applications for award based on:
    (1) The findings of the technical evaluations;
    (2) The priorities of DOE, SEP, and the participating program 
offices;
    (3) The availability of funds for the various special project 
activities; and
    (4) Any program policy factors set forth in the program guidance/
solicitation.
    (b) The Director, Office of State and Community Programs makes the 
final selections of projects to be awarded financial assistance.

PART 450--[REMOVED]

    2. Under the authority of 42 U.S.C. 7101 et seq. Part 450 is 
removed.

[FR Doc. 96-17067 Filed 7-5-96; 8:45 am]
BILLING CODE 6450-01-P