This section of the FEDERAL REGISTER

contains notices to the public of the proposed

issuance of rules and regulations. The

purpose of these notices is to give interested

persons an opportunity to participate in the

rule making prior to the adoption of the final

rules.

Proposed Rules Federal Register

23804 

Vol. 74, No. 97 

Thursday, May 21, 2009 

DEPARTMENT OF ENERGY 

10 CFR Part 440 

[Docket No. EEWAP0515] 

RIN 1904–AB–97 

Weatherization Assistance Program for 

Low-Income Persons 

AGENCY: Office of Energy Efficiency and 

Renewable Energy, Department of 

Energy. 

ACTION: Notice of proposed rulemaking, 

request for comment. 

SUMMARY: The U.S. Department of 

Energy (DOE) is proposing to amend the 

eligibility provisions applicable to 

multi-unit buildings under the 

Weatherization Assistance Program for 

Low-Income Persons. As proposed, if a 

multi-unit building is under an assisted 

or public housing program and is 

identified by the U.S. Department of 

Housing and Urban Development 

(HUD), and included on a list published 

by DOE, that building would meet 

certain income eligibility requirements, 

and the procedural requirements to 

protect against rent increases and undue 

enhancement of the weatherized 

building would be satisfied, under the 

Weatherization Assistance Program 

without the need for further evaluation 

or verification. If a multi-unit building 

includes units that participate in the 

Low Income Housing Tax Credit 

Program, identified by HUD, and 

included on a list published by DOE, 

that building would meet the income 

eligibility requirements of the 

Weatherization Assistance Program 

without the need for further evaluation 

or verification. DOE believes that the 

proposed rule would reduce the 

procedural burdens on evaluating 

applications from buildings that are part 

of HUD assisted and public housing 

programs, and the Federal low-income 

housing tax credit programs. 

DATES: Public comments on this 

proposed rule will be accepted until 

June 22, 2009. 

ADDRESSES: You may submit comments 

identified by the RIN number specified 

in the heading of this notice of proposed 

rulemaking (NOPR), by any of the 

following methods: 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• E-mail: WXHUDNOPR@ee.doe.gov. 

Include the RIN number in the subject 

line of the message. 

• Postal Mail: Gil Sperling, U.S. 

Department of Energy, Weatherization 

Assistance Program, Mailstop EE–2K, 

1000 Independence Avenue, SW., 

Washington, DC 20585–0121. 

• Hand Delivery/Courier: Gil 

Sperling, U.S. Department of Energy, 

Weatherization Assistance Program, 

Room 6050, 1000 Independence 

Avenue, SW., Washington, DC 20585– 

0121. 

Instructions: All submissions must 

include the agency name and docket 

number or Regulatory Information 

Number (RIN) for this rulemaking. 

FOR FURTHER INFORMATION CONTACT: Gil 

Sperling, U.S. Department of Energy, 

Office of Energy Efficiency and 

Renewable Energy, Weatherization 

Assistance Program, EE–2K, Room 6070, 

1000 Independence Avenue, SW., 

Washington, DC 20585–0121, (202) 586– 

1510, e-mail: Gil.Sperling@ee.doe.gov, 

or Chris Calamita, U.S. Department of 

Energy, Office of the General Counsel, 

Forrestal Building, GC–72, 1000 

Independence Avenue, SW., 

Washington, DC 20585, (202) 586–9507, 

e-mail: 

Christopher.Calamita@hq.doe.gov. 

SUPPLEMENTARY INFORMATION: 

I. Introduction 

II. Eligibility Requirements for Multi-unit 

Buildings 

III. HUD Public and Assisted Housing 

Programs 

IV. Low Income Housing Tax Credit Program 

V. Eligibility of Multi-Unit Buildings 

Identified by HUD 

VI. Regulatory Analysis 

VII. Approval of the Office of the Secretary 

I. Introduction 

Sections 411–418 of the Energy 

Conservation and Production Act (Act) 

established the Weatherization 

Assistance Program for Low-Income 

Persons (Weatherization Assistance 

Program). (42 U.S.C. 6861 et seq.) The 

Weatherization Assistance Program 

reduces energy costs for low-income 

persons, families, and households by 

increasing the energy efficiency of their 

homes, while promoting their health 

and safety. DOE works in partnership 

with State- and local-level agencies to 

implement the Weatherization 

Assistance Program. DOE’s Project 

Management Center awards grants to 

State-level agencies, which then 

contract with subgrantees (e.g., local 

agencies). The subgrantees then provide 

weatherization services to eligible lowincome families. 

In establishing the Weatherization 

Assistance Program, Congress found 

that ‘‘a fast, cost-effective, and 

environmentally sound way to prevent 

future energy shortages in the United 

States while reducing the Nation’s 

dependence on imported energy 

supplies is to encourage and facilitate, 

through major programs, the 

implementation of energy conservation 

and renewable-resource energy 

measures with respect to dwelling 

units.’’ (42 U.S.C. 6861(a)(1)) Congress 

also recognized that many dwellings 

owned or occupied by low-income 

persons are energy inefficient and that 

low-income persons can least afford to 

make the modifications necessary to 

improve the energy efficiency of such 

dwellings. (42 U.S.C. 6861(a)(2)(A) and 

(B)) Additionally, Congress directed that 

States, through Community Action 

Agencies and units of general purpose 

local government, should be 

encouraged, with Federal financial and 

technical assistance, to develop and 

support coordinated weatherization 

programs designed to alleviate the 

adverse effects of energy costs on lowincome persons, to supplement other 

Federal programs serving such lowincome persons, and to increase energy 

efficiency. (42 U.S.C. 6861(a)(4)) 

Congress, therefore, stated that the 

purpose of the Weatherization 

Assistance Program is to develop and 

implement an assistance program to 

increase the energy efficiency of 

dwellings owned or occupied by lowincome persons, reduce their total 

residential energy expenditures, and 

improve their health and safety, 

especially low-income persons who are 

particularly vulnerable such as the 

elderly, the handicapped, and children. 

(42 U.S.C. 6861(b)) 

The Weatherization Assistance 

Program statute recognizes that singlefamily dwelling units are potentially 

high energy consuming dwelling units, 


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1For the purposes of this proposed rule, 

‘‘Qualified Assisted Housing’’ includes public 

housing projects, and assisted housing projects that 

receive project-based Section 8 assistance, under 

the U.S. Housing Act of 1937, as amended (42 

U.S.C. 1437 et seq.) (except projects also benefitting 

from assistance under Section 221(d)(3) and (d)(5), 

and 236 of the National Housing Act (12 U.S.C. 

17151(d)(3) and (d)(5), and 12 U.S.C. 1715z–1, 

respectively)), Supportive Housing for the Elderly 

projects receiving HUD assistance under section 

202 of the Housing Act of 1959 (12 U.S.C. 17012), 

or Supportive Housing for Persons with Disabilities 

under section 811 of the Cranston-Gonzales 

National Affordable Housing Act, as amended (42 

U.S.C. 8013). 

and grantees should consider 

appropriate prioritization for such units. 

(42 U.S.C. 6864(b)(2)) The statute also 

recognizes that in some instances, 

weatherization efforts under the 

program may be appropriate for 

buildings in which there are multiple 

rental units. (42 U.S.C. 6863(b)(5)) 

II. Eligibility Requirements for MultiUnit Buildings 

In establishing the Weatherization 

Assistance Program, Congress 

recognized that additional 

considerations are necessary when 

evaluating the eligibility of multi-unit 

buildings, as opposed to single family 

dwellings. In any case in which a 

person requesting weatherization 

assistance from a subgrantee for a 

dwelling that consists of a rental unit or 

rental units, the State, in implementing 

its weatherization program, must ensure 

that— 

• The benefits of weatherization 

assistance in connection with such 

rental units, including units where the 

tenants pay for their energy through 

their rent, will accrue primarily to the 

low-income tenants residing in such 

units; 

• For a reasonable period of time after 

weatherization work has been 

completed on a dwelling containing a 

unit occupied by an eligible household, 

the tenants in that unit (including 

households paying for their energy 

through their rent) will not be subjected 

to rent increases unless those increases 

are demonstrably related to matters 

other than the weatherization work 

performed; 

• The enforcement of the rent 

increase provision is provided through 

procedures established by the State by 

which tenants may file complaints and 

owners, in response to such complaints, 

shall demonstrate that the rent increase 

concerned is related to matters other 

than the weatherization work 

performed; and 

• No undue or excessive 

enhancement will occur to the value of 

such dwelling units. 

(42 U.S.C. 6863(b)(5)) 

DOE provided additional direction 

regarding the eligibility of multi-unit 

buildings in the Weatherization 

Assistance Program regulations. Under 

the DOE regulations a subgrantee may 

weatherize a building containing rental 

dwelling units using financial assistance 

for dwelling units eligible for 

weatherization assistance, where: 

• The subgrantee has obtained the 

written permission of the owner or his 

agent; 

• Not less than 66 percent (50 percent 

for duplexes and four-unit buildings, 

and certain eligible types of large multifamily buildings) of the dwelling units 

in the building: 

Æ Are eligible dwelling units, or 

Æ Will become eligible dwelling units 

within 180 days under a Federal, State, 

or local government program for 

rehabilitating the building or making 

similar improvements to the building; 

and 

• The grantee has established 

procedures for dwellings which consist 

of a rental unit or rental units to ensure 

that: 

Æ The benefits of weatherization 

assistance in connection with such 

rental units, including units where the 

tenants pay for their energy through 

their rent, will accrue primarily to the 

low-income tenants residing in such 

units; 

Æ For a reasonable period of time 

after weatherization work has been 

completed on a dwelling containing a 

unit occupied by an eligible household, 

the tenants in that unit (including 

households paying for their energy 

through their rent) will not be subjected 

to rent increases unless those increases 

are demonstrably related to matters 

other than the weatherization work 

performed; 

Æ The enforcement of the rent 

increase provision is provided through 

procedures established by the State by 

which tenants may file complaints, and 

owners, in response to such complaints, 

shall demonstrate that the rent increase 

concerned is related to matters other 

than the weatherization work 

performed; and 

Æ No undue or excessive 

enhancement shall occur to the value of 

the dwelling units. 

10 CFR 440.22(b). An eligible dwelling 

unit is one that is occupied by a family 

unit (1) whose income is at or below 200 

percent of the poverty level, (2) which 

contains a member who has received 

cash assistance payments under certain 

Social Security programs, or applicable 

State or local laws at any time during 

the 12-month period preceding the 

determination of eligibility under the 

Weatherization Assistance Program, or 

(3) if the State elects, is eligible for 

assistance under the Low-Income Home 

Energy Assistance Act, provided that 

such basis is at least 200 percent of the 

poverty level. 10 CFR 440.22(a); See 

also, 42 U.S.C. 6862(7). 

DOE recognizes that determining the 

eligibility of multi-unit buildings may 

present difficulties to subgrantees in 

evaluating the income eligibility of 

tenants meeting the 200 percent of 

poverty requirement, and that this 

difficulty can be overcome where HUD 

already has procedures in place for 

determining such income eligibility. In 

particular, it may be difficult for a 

subgrantee to verify the income of the 

families dwelling in each unit, and that 

in any event, such income verification 

likely would be duplicative of income 

certifications that are already on file 

with HUD. For some multi-unit 

buildings, the eligibility requirements 

could mean that a subgrantee must 

confirm the income of a hundred 

families or more for a single building. In 

addition to the income verification 

required by the subgrantee, 

weatherization of a multi-unit building 

requires that the applicable grantee has 

established procedures for ensuring that 

the benefits of the weatherization work 

accrue primarily to the low-income 

tenants, the rent will not increase for a 

reasonable period of time, and no undue 

or excessive enhancement occurs to the 

value of the dwelling units. 

III. HUD Public and Assisted Housing 

Programs 

HUD’s Qualified Assisted Housing 1

programs generally serve the population 

for which the Weatherization Assistance 

Program was established to serve. This 

assisted and public housing portfolio 

includes properties that are privately 

owned, but receive some form of HUD 

assistance subject to affordability and 

income requirements. Income targets for 

HUD programs are set in relationship to 

a percentage of area median income— 

generally, 30 to 80 percent of area 

median income. A review of data from 

HUD programs indicates that a large 

majority of residents in HUD assisted 

and public housing would meet the 

income eligibility requirements of the 

Weatherization Assistance Program. 

HUD data show that nationally close to 

100 percent of residents in these 

properties meet the 200 percent income 

requirement, far exceeding the 66% 

threshold required under DOE’s 

regulation. 10 CFR 440.22(b)(2). 

Moreover, the income verification 

process applicable to the HUD programs 

is rigorous. Under these HUD programs, 

HUD assisted housing owners or public 


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23806 Federal Register / Vol. 74, No. 97 / Thursday, May 21, 2009 / Proposed Rules 

housing authorities must determine 

each participating family’s income 

before the family is permitted to move 

into the assisted housing, and at least 

annually thereafter. HUD developed and 

has implemented a sophisticated system 

of third-party income verifications, 

originally designated as the Upfront 

Income Verification (UIV) system, now 

known as the Enterprise Income 

Verification (EIV) system. The EIV 

system, a central repository and source 

for income and benefit data, is securely 

accessible over the internet, for use by 

public housing authorities and owners 

or their agents to improve the accuracy 

of rent and income determinations. 

HUD monitors compliance with tenant 

eligibility requirements on an annual 

basis through management and 

occupancy reviews in addition to the 

submission of tenant data to HUD 

payment systems. Tenant eligibility 

certifications are required in order for 

subsidy payments to be authorized. A 

building owner must verify each 

family’s income, assets, expenses, and 

deductions three times: (1) Prior to 

move-in, (2) as part of the annual 

recertification process, and (3) as a 

result of changes in income allowances, 

or family characteristics reported 

between annual re-certifications. 

IV. Low Income Housing Tax Credit 

Program 

The Low Income Housing Tax Credit 

(LIHTC) Program was created by the Tax 

Reform Act of 1986 (Pub. L. 99–514), as 

an alternate method of funding housing 

for low- and moderate-income 

households, and has been in operation 

since 1987. The LIHTC Program is an 

indirect Federal subsidy used to finance 

the development of affordable rental 

housing for low-income households. To 

be eligible for consideration under the 

LIHTC Program, a proposed project 

must: 

• Be a residential rental property. 

• Commit to one of two possible lowincome occupancy threshold 

requirements. 

• Restrict rents, including utility 

charges, in low-income units. 

• Operate under the rent and income 

restrictions for 30 years or longer, 

pursuant to written agreements with the 

agency issuing the tax credits. 

Property owners participating in the 

LIHTC Program are directed to utilize 

the same income verification process set 

forth in HUD Handbook 4350.3 REV1, 

IRS Code Section 42, and IRS Handbook 

8823 (Chapter 5), and incorrect 

eligibility determinations may adversely 

affect the utilization of the tax credits. 

After the initial determination of 

eligibility, owners, or their agents, are 

required to recertify each low-income 

household at least annually, within 120 

days of the anniversary date of the 

occupancy. The allocating agency, 

typically a state housing finance agency, 

is responsible for monitoring 

compliance with the provisions during 

the affordability period and must report 

the results of monitoring to the Internal 

Revenue Service. The allocating agency 

is required to perform an on-site 

inspection and a review of 20 percent of 

tenant files at least every three years. 

The LIHTC Program requires a 

minimum affordability period of 30 

years (i.e., a 15-year compliance period 

and subsequent 15-year extended use 

period). 

V. Eligibility of Multi-Unit Buildings 

Identified by HUD 

As indicated previously in this notice, 

the requirement to demonstrate the 

income eligibility of each family living 

in a multi-unit building can create a 

procedural burden for subgrantees when 

evaluating a request for assistance under 

the Weatherization Assistance Program. 

Demonstration of the income eligibility 

of at least 66 percent of the units of a 

multi-unit building (50 percent for 

duplexes and four unit buildings) helps 

ensure that the benefits of weatherizing 

a multi-unit building are realized by 

low-income tenants, but the necessary 

income verification may hinder an 

eligibility determination for such 

buildings. 

In an evaluation of its data, including 

data generated through the LIHTC 

Program, HUD has identified buildings 

that participate in the Qualified 

Assisted Housing and LIHTC Programs 

that, upon preliminary review by DOE, 

would meet the income eligibility 

requirements for multi-unit buildings 

under the Weatherization Assistance 

Program, i.e., at least 66 percent of the 

dwelling units are occupied by family 

units whose income is at or below 200 

percent of the poverty level. 10 CFR 

440.22(b)(2). Moreover, DOE has 

determined preliminarily that the 

procedural requirements under the 

Weatherization Assistance Program to 

protect against rent increases and undue 

enhancement of the weatherized 

building would be satisfied for 

buildings that are in the Qualified 

Assisted Housing programs identified 

by HUD. 

A. Income Eligibility of Multi-Family 

Buildings 

As discussed previously, the income 

of the families occupying units in 

buildings under the Qualified Assisted 

Housing and LIHTC Programs is subject 

to HUD’s rigorous verification 

processes, discussed previously. Given 

the nature of the data collected by HUD 

and the income verification procedures 

employed under these housing 

programs, DOE proposes that buildings 

identified by HUD as having not less 

than 66 percent (50 percent for duplexes 

and four-unit buildings) of dwelling 

units occupied by family units whose 

income is at or below 200 percent of the 

poverty level would meet the minimum 

income eligibility requirements for 

multi-unit buildings under the 

Weatherization Assistance Program. 

DOE requests comments on its 

proposal that income data collected by 

HUD under the Qualified Assisted 

Housing and LIHTC programs would be 

sufficient for the purpose of 

demonstrating the income requirements 

of multi-unit buildings under the 

Weatherization Assistance Program. 

B. Limitations on Rent Increases 

Under the Weatherization Assistance 

Program, a grantee must establish 

procedures that ensure that for a 

reasonable period of time after 

weatherization work has been 

completed on a dwelling containing a 

unit occupied by a low-income tenant, 

the tenant in that unit will not be 

subjected to rent increases unless those 

increases are demonstrated to be related 

to matters other than the weatherization 

work performed. 10 CFR 440.22(b)(3)(ii). 

The enforcement of this provision is 

provided through procedures 

established by the State by which 

tenants may file complaints, and owners 

in response to such complaints must 

demonstrate that the rent increase 

concerned is related to matters other 

than the weatherization. 10 CFR 

440.22(b)(3)(iii). 

Under the Qualified Assisted Housing 

programs, tenant rents are capped at 

thirty percent (30 percent) of their 

income, so tenants would not be subject 

to rent increases as a result of the 

weatherization or otherwise. Although 

the LIHTC Program provides for rent 

control, it is DOE’s understanding that 

the program does not have comparable 

uniform restrictions as under the 

Qualified Assisted Housing programs. 

DOE proposes that the restrictions on 

rent for units in buildings participating 

in the Qualified Assisted Housing 

Programs would provide the assurance 

required under the Weatherization 

Assistance Program that for a reasonable 

period of time after weatherization work 

is completed on a dwelling occupied by 

a low-income family unit, rent will not 

increase. 

DOE requests comments on whether 

the Qualified Assisted Housing Program 

sufficiently protects low-income tenants 


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from rent increases so as to satisfy the 

requirement that grantees under the 

Weatherization Assistance Program 

establish procedures to protect lowincome tenants against rent increases 

resulting from the weatherization. 

Additionally, DOE requests comments 

on its understanding that the LIHTC 

Program does not offer sufficiently 

uniform protections regarding rent 

increases so as to permit DOE to 

determine that buildings under the 

LIHTC Program would meet the rent 

control requirement of the 

Weatherization Assistance Program. 

C. No Undue or Excess Enhancement 

Weatherization of a building 

containing rental units requires that the 

applicable grantee ensure that no undue 

or excessive enhancement would occur 

to the value of the dwelling unit. 10 CFR 

440.22(b)(3)(iv). The expenditures 

allowed under the Weatherization 

Assistance Program help focus 

enhancements on those that provide 

weatherization benefits. For example, 

repairs to a dwelling unit must be 

necessary to make the installation of 

weatherization materials effective. 10 

CFR 440.18(b)(9). Moreover, for 

buildings that are in the Qualified 

Assisted Housing Programs, HUD 

controls the capital improvements that 

may be made. DOE proposes that the 

existing limits on permissible work 

under the Weatherization Assistance 

Program and the HUD control of 

improvements under the Qualified 

Assisted Housing programs would 

provide the necessary assurances that 

no undue or excessive enhancement 

will occur as a result of the 

weatherization of the buildings 

identified by HUD. 

DOE requests comment on whether 

HUD control of improvements to 

buildings under the Qualified Assisted 

Housing programs would ensure that no 

undue or excessive enhancement would 

occur as a result of weatherization. DOE 

also requests information on whether 

similar controls may be present under 

the LIHTC Program to a degree 

sufficient to allow DOE to make a 

similar finding for the LIHTC Program. 

D. Eligibility of Buildings in the HUD 

Programs 

Based on the preceding discussion, 

DOE tentatively has determined that 

buildings subject to the Qualified 

Assisted Housing programs and that are 

identified by HUD would meet the 

income eligibility, rent control, and no 

undue or excessive enhancement 

requirements of the Weatherization 

Assistance Program for determining 

eligibility of multi-unit buildings. DOE 

has also tentatively determined that 

buildings subject to the LIHTC Program 

and that are identified by HUD would 

meet the income eligibility requirement 

of the Weatherization Assistance 

Program for determining eligibility of 

multi-unit buildings. If today’s proposed 

rule were made final, DOE would post 

annually a list of such buildings 

provided by HUD. The list would be 

available on the Weatherization Program 

Web site, http://www.eere.energy.gov/ 

wip, and would be included in future 

funding opportunity announcements 

and program guidance. In evaluating the 

eligibility of a multi-unit building, 

inclusion on the most recent published 

list of Qualified Assisted Housing 

program buildings would demonstrate 

that a building meets the income, rent 

control, and no undue or excessive 

enhancement requirements established 

at 10 CFR 440.22(b)(2) and (3)(ii) and 

(iv). Inclusion on the most recent 

published list of LIHTC Program 

buildings would demonstrate that a 

building meets the income requirement 

established at 10 CFR 440.22(b)(2). 

Today’s proposed rule is intended to 

reduce the review and verification that 

a subgrantee must undertake when 

evaluating the eligibility of the 

identified buildings. DOE does not 

intend that today’s proposal would 

make buildings eligible under the 

Weatherization Assistance Program that 

previously were not eligible. The 

purpose of today’s proposed rule is to 

reduce the burden on States and 

subgrantees when evaluating 

applicability requirements for which 

HUD has already collected and verified 

the necessary data. In the event that a 

subgrantee is presented with a request 

for weatherization assistance of a multiunit building, the subgrantee, under the 

proposed rule, would be able to 

reference the DOE published list of 

buildings identified by HUD. If the 

building which is the subject of a 

request were on the most recent list, the 

subgrantee would not need to undertake 

an independent verification of the 

income of the building tenants. In the 

case of buildings on the Qualified 

Assisted Housing Program list, the 

procedures required by the relevant 

grantee to ensure protection from rent 

increases, and ensure that no undue or 

excessive enhancement shall occur, 

would be met. 

DOE recognizes that if made final, 

today’s proposal would not address the 

requirement that, for multi-unit 

buildings, a grantee must ensure that the 

benefits of weatherizing a building that 

consists of rental units, including rental 

units where the tenant pays for energy 

through rent, accrue primarily to the 

low-income tenants. (42 U.S.C. 

6863(b)(5)(A); 10 CFR 440.22(b)(3)(i)) 

Given the variability with how utility 

savings could be realized by tenants in 

the Qualified Assisted Housing and 

LIHTC Programs, a request for 

weatherization of a multi-unit building 

on the list provided by HUD would 

need to demonstrate that the benefits of 

the weatherization work accrue 

primarily to the low-income tenants. 

Generally, compliance with the 

requirement for the benefits of 

weatherization to accrue to the lowincome tenants can be demonstrated by 

reduced utilities costs for the tenant that 

result from the weatherization work. 

Under the Qualified Assisted Housing 

programs and the LIHTC Program 

tenants may not directly pay for all or 

part of their utility bills. In instances in 

which tenants of a building do not 

directly pay utility costs and have 

capped rents, the property owner needs 

to demonstrate that benefits accrue 

primarily to the tenant of the 

weatherized units other than the benefit 

of reduced utility bills. 

DOE requests comment on how to 

ensure compliance with the requirement 

that benefits of weatherization accrue 

primarily to low-income tenants, 

including information on procedures 

that may be used by States and 

subgrantees to determine that the 

accrual provision is satisfied in the 

context of buildings in the Qualified 

Assisted Housing programs and LIHTC 

Program. 

Additionally, today’s proposed rule 

would not alleviate the need for a 

subgrantee to obtain the written 

permission of the owner or the owner’s 

agent or confirm that a dwelling unit is 

not designated for acquisition or 

clearance by Federal, State, or local 

program within 12 months from the date 

of the weatherization. 10 CFR 

440.22(b)(1) and 440.18(e)(1), 

respectively. The proposed rule would 

not eliminate the ability of States to 

require financial participation from 

building owners (10 CFR 440.22(d)), or 

other requirements of DOE’s rules. 

Moreover, the proposed rule would not 

impact the prioritization that States and 

subgrantees rely on in evaluating 

requests for weatherization work. 

Despite the remaining issues that 

would still need to be addressed when 

weatherizing a multi-unit building, if 

finalized, DOE believes that today’s 

proposal would be an important step in 

facilitating the weatherization of 

buildings that participate in the 

Qualified Assisted Housing and LIHTC 

Programs. 


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23808 Federal Register / Vol. 74, No. 97 / Thursday, May 21, 2009 / Proposed Rules 

2 It is important to note that rules that transfer 

Federal dollars often have opportunity costs or 

benefits in addition to the budgetary dollars spent 

because they can affect incentives, and thus lead to 

changes in the way people behave (e.g., in their 

investment decisions). For example, OMB Circular 

A–94 suggests that transfers that result from 

increased taxes may be associated with a marginal 

excess burden (deadweight loss) of 25 cents per 

dollar of Federal revenue collected (p. 12). 

VI. Regulatory Analysis 

A. Review Under Executive Order 12866 

Today’s proposed rule has been 

determined to be an economically 

significant regulatory action under 

section 3(f)(1) of Executive Order 12866, 

‘‘Regulatory Planning and Review,’’ 58 

FR 51735 (October 4, 1993). 

Accordingly, this action was subject to 

review under that Executive Order by 

the Office of Information and Regulatory 

Affairs of the Office of Management and 

Budget (OMB). 

The American Recovery and 

Reinvestment Act of 2009 (Pub. L. 111– 

5; Recovery Act) provided $5 billion for 

the Weatherization Assistance Program. 

Funding for grants under the 

Weatherization Assistance Program at a 

level greater than $100 million makes 

this rulemaking economically 

significant under the Executive Order. 

The weatherization grants provided 

under this program constitute transfer 

payments. In this case, the payments are 

from the Government to grantees (e.g., 

States, units of general purpose of local 

government, and community action 

agencies), and the payments do not 

represent a change in the total resources 

available to society. The grants do 

generate impacts such as weatherization 

benefits, however, which are discussed 

qualitatively in this proposed rule.2 See 

OMB Circular A–4, at 14, 38 and 46. If 

today’s proposal is finalized prior to 

expenditure of the Recovery Act funds 

by grantees and subgrantees under the 

Weatherization Assistance Program, 

today’s proposal could impact the 

process used by grantees and 

subgrantees to evaluate applications 

from multi-unit buildings that are part 

of HUD’s Qualified Assisted Housing 

and LIHTC Programs for the purpose of 

distributing funds provided under the 

Recovery Act. Such changes in the 

process for application evaluation have 

the potential to cause a change in the 

distribution of Recovery Act funding, 

which may constitute a transfer between 

different non-Federal entities. Such 

impacts would also be a consideration 

when categorizing this rulemaking 

under EO 12866. 

B. Review Under the Regulatory 

Flexibility Act 

The Regulatory Flexibility Act (5 

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

preparation of an initial regulatory 

flexibility analysis for any rule that by 

law must be proposed for public 

comment, unless the agency certifies 

that the rule, if promulgated, will not 

have a significant economic impact on 

a substantial number of small entities. 

As required by Executive Order 13272, 

‘‘Proper Consideration of Small Entities 

in Agency Rulemaking,’’ (67 FR 53461; 

August 16, 2002), DOE published 

procedures and policies on February 19, 

2003, to ensure that the potential 

impacts of its rules on small entities are 

properly considered during the 

rulemaking process (68 FR 7990). DOE 

has made its procedures and policies 

available on the Office of General 

Counsel’s Web site: http:// 

www.gc.doe.gov. If finalized, today’s 

action would revise the eligibility 

requirements that apply to the 

administration of the Weatherization 

Assistance Program grants by grantees 

and subgrantees. Because the matter of 

today’s action relates to grants, it is not 

subject to the notice and comment 

provisions of the Administrative 

Procedure Act. 5 U.S.C. 553(a)(2). 

Therefore, the analytical requirements 

of the Regulatory Flexibility Act do not 

apply. Although DOE is requesting 

comment, today’s proposed rule on the 

eligibility of multi-unit buildings under 

the Weatherization Assistance Program 

is not subject to any legal requirement 

to publish a general notice of proposed 

rulemaking. 

C. Review Under the National 

Environmental Policy Act of 1969 

DOE has determined that, if finalized, 

today’s action is covered under the 

Categorical Exclusion found in DOE’s 

National Environmental Policy Act 

regulations at paragraph A.6. of 

Appendix A to subpart D, 10 CFR part 

1021. That Categorical Exclusion 

applies to rulemakings that are strictly 

procedural, such as rulemaking 

establishing the administration of 

grants. Today’s proposal would amend 

the eligibility provisions for multi-unit 

buildings under the Weatherization 

Assistance Program. The regulations 

would not have direct environmental 

impacts. Accordingly, DOE has not 

prepared an environmental assessment 

or an environmental impact statement. 

D. Review Under Executive Order 

13132, ‘‘Federalism’’ 

Executive Order 13132, 64 FR 43255 

(August 4, 1999), imposes certain 

requirements on agencies formulating 

and implementing policies or 

regulations that pre-empt State law or 

that have federalism implications. 

Agencies are required to examine the 

constitutional and statutory authority 

supporting any action that would limit 

the policymaking discretion of the 

States and carefully assess the necessity 

for such actions. DOE has examined 

today’s proposed rule and has 

determined that if finalized, it would 

not pre-empt State law and would not 

have a substantial direct effect on the 

States, on the relationship between the 

national government and the States, or 

on the distribution of power and 

responsibilities among the various 

levels of government. No further action 

is required by Executive Order 13132. 

E. Review Under Executive Order 12988 

With respect to the review of existing 

regulations and the promulgation of 

new regulations, section 3(a) of 

Executive Order 12988, Civil Justice 

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

imposes on Executive agencies the 

general duty to adhere to the following 

requirements: (1) Eliminate drafting 

errors and ambiguity; (2) write 

regulations to minimize litigation; and 

(3) provide a clear legal standard for 

affected conduct rather than a general 

standard and promote simplification 

and burden reduction. The review 

required by sections 3(a) and 3(b) of 

Executive Order 12988 specifically 

requires that Executive agencies make 

every reasonable effort to ensure that the 

regulation: (1) Clearly specifies the preemptive effect, if any; (2) clearly 

specifies any effect on existing Federal 

law or regulation; (3) provides a clear 

legal standard for affected conduct 

while promoting simplification and 

burden reduction; (4) specifies the 

retroactive effect, if any; (5) adequately 

defines key terms; and (6) addresses 

other important issues affecting clarity 

and general draftsmanship under any 

guidelines issued by the Attorney 

General. Section 3(c) of Executive Order 

12988 requires Executive agencies to 

review regulations in light of applicable 

standards in sections 3(a) and 3(b) to 

determine whether they are met or it is 

unreasonable to meet one or more of 

them. 

DOE has completed the required 

review and determined that, to the 

extent permitted by law, today’s action 

meets the relevant standards of 

Executive Order 12988. 

F. Review Under the Unfunded 

Mandates Reform Act of 1995 

The Unfunded Mandates Reform Act 

of 1995 (Pub. L. 104–4) generally 


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Federal Register / Vol. 74, No. 97 / Thursday, May 21, 2009 / Proposed Rules 23809 

requires Federal agencies to examine 

closely the impacts of regulatory actions 

on State, local, and tribal governments. 

Subsection 101(5) of Title I of that law 

defines a Federal intergovernmental 

mandate to include any regulation that 

would impose upon State, local, or 

tribal governments an enforceable duty, 

except a condition of Federal assistance 

or a duty arising from participating in a 

voluntary Federal program. Title II of 

that law requires each Federal agency to 

assess the effects of Federal regulatory 

actions on State, local, and tribal 

governments, in the aggregate, or to the 

private sector, other than to the extent 

such actions merely incorporate 

requirements specifically set forth in a 

statute. Section 202 of that title requires 

a Federal agency to perform a detailed 

assessment of the anticipated costs and 

benefits of any rule that includes a 

Federal mandate which may result in 

costs to State, local, or tribal 

governments, or to the private sector, of 

$100 million or more. Section 204 of 

that title requires each agency that 

proposes a rule containing a significant 

Federal intergovernmental mandate to 

develop an effective process for 

obtaining meaningful and timely input 

from elected officers of State, local, and 

tribal governments. 

If made final, today’s proposed rule 

would not impose a Federal mandate on 

State, local or tribal governments, and it 

would not result in the expenditure by 

State, local, and tribal governments in 

the aggregate, or by the private sector, of 

$100 million or more in any one year. 

Accordingly, no assessment or analysis 

is required under the Unfunded 

Mandates Reform Act of 1995. 

G. Review Under the Treasury and 

General Government Appropriations 

Act of 1999 

Section 654 of the Treasury and 

General Government Appropriations 

Act of 1999 (Pub. L. 105–277) requires 

Federal agencies to issue a Family 

Policymaking Assessment for any rule 

that may affect family well-being. If 

made final, today’s proposed rule would 

not have any impact on the autonomy 

or integrity of the family as an 

institution. Accordingly, DOE has 

concluded that it is not necessary to 

prepare a Family Policymaking 

Assessment. 

H. Review Under the Treasury and 

General Government Appropriations 

Act of 2001 

Section 515 of the Treasury and 

General Government Appropriations 

Act, 2001 (44 U.S.C. 3516, note) 

provides for agencies to review most 

disseminations of information to the 

public under guidelines established by 

each agency pursuant to general 

guidelines issued by OMB. OMB’s 

guidelines were published at 67 FR 

8452 (February 22, 2002), and DOE’s 

guidelines were published at 67 FR 

62446 (October 7, 2002). DOE has 

reviewed today’s rule under the OMB 

and DOE guidelines and has concluded 

that it is consistent with applicable 

policies in those guidelines. 

I. Review Under Executive Order 13211 

Executive Order 13211, ‘‘Actions 

Concerning Regulations That 

Significantly Affect Energy Supply, 

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

22, 2001), requires Federal agencies to 

prepare and submit to the OMB a 

Statement of Energy Effects for any 

proposed significant energy action. A 

‘‘significant energy action’’ is defined as 

any action by an agency that 

promulgated or is expected to lead to 

promulgation of a final rule, and that: 

(1) Is a significant regulatory action 

under Executive Order 12866, or any 

successor order; and (2) is likely to have 

a significant adverse effect on the 

supply, distribution, or use of energy, or 

(3) is designated by the Administrator of 

the Office of Information and Regulatory 

Affairs (OIRA) as a significant energy 

action. For any proposed significant 

energy action, the agency must give a 

detailed statement of any adverse effects 

on energy supply, distribution, or use, 

should the proposal be implemented, 

and of reasonable alternatives to the 

action and their expected benefits on 

energy supply, distribution, and use. 

Today’s regulatory action, if finalized, 

would not have a significant adverse 

effect on the supply, distribution, or use 

of energy and is therefore not a 

significant energy action. Accordingly, 

DOE has not prepared a Statement of 

Energy Effects. 

J. Review Under Executive Order 13175 

Executive Order 13175. ‘‘Consultation 

and Coordination with Indian Tribal 

Governments’’ (65 FR 67249; November 

9, 2000), requires DOE to develop an 

accountable process to ensure 

‘‘meaningful and timely input by tribal 

officials in the development of 

regulatory policies that have tribal 

implications.’’ ‘‘Policies that have tribal 

implications’’ refers to regulations that 

have ‘‘substantial direct effects on one 

or more Indian tribes, on the 

relationship between the Federal 

Government and Indian tribes, or on the 

distribution of power and 

responsibilities between the Federal 

Government and Indian tribes.’’ Today’s 

regulatory action is not a policy that has 

‘‘tribal implications’’ under Executive 

Order 13175. Today’s regulatory action 

amends the eligibility provisions 

applicable to multi-unit buildings under 

the Weatherization Assistance Program. 

DOE has reviewed today’s action under 

Executive Order 13175 and has 

determined that it is consistent with 

applicable policies of that Executive 

Order. 

VI. Approval of the Office of the 

Secretary 

The Secretary of Energy has approved 

publication of today’s notice of 

proposed rulemaking. 

List of Subjects in 10 CFR Part 440 

Administrative practice and 

procedure, Aged, Energy conservation, 

Grant programs—energy, Grant 

programs—housing and community 

development, Housing standards, 

Indians, Individuals with disabilities, 

Reporting and recordkeeping 

requirements, Weatherization. 

Issued in Washington, DC, on May 15, 

2009. 

Steven G. Chalk, 

Principal Deputy Assistant Secretary, Energy 

Efficiency and Renewable Energy. 

For the reasons set forth in the 

preamble, DOE proposes to amend part 

440 of chapter II of title 10, Code of 

Federal Regulations to read as follows: 

PART 440—WEATHERIZATION 

ASSISTANCE PROGRAM FOR LOWINCOME PERSONS 

1. The authority citation for part 440 

continues to read as follows: 

Authority: 42 U.S.C. 6861 et seq.; 42 U.S.C. 

7101 et seq. 

§ 440.22 Eligible dwelling units. 

2. Section 440.22 is amended by 

adding paragraph (b)(4) to read as 

follows: 

* * * * * 

(b) * * * 

(4)(i) A building containing rental 

dwelling units meets the requirements 

of paragraph (b)(2) and paragraphs 

(b)(3)(ii) and (b)(3)(iv), of this section if 

it is included on the most recent list 

posted by DOE of Qualified Assisted 

Housing and Public Housing buildings 

identified by the U.S. Department of 

Housing and Urban Development as 

meeting those requirements. 

(ii) A building containing rental 

dwelling units meets the requirement of 

paragraph (b)(2) of this section if it is 

included on the most recent list posted 

by DOE of Low Income Housing Tax 

Credit buildings identified by the U.S. 

Department of Housing and Urban 


dwashington3 on PROD1PC60 with PROPOSALS-1
23810 Federal Register / Vol. 74, No. 97 / Thursday, May 21, 2009 / Proposed Rules 

1Smart Grid Policy, 126 FERC ¶ 61,253 (2009). As 

the Proposed Policy Statement described, Smart 

Grid advancements will apply digital technologies 

to the electric transmission system and enable realtime coordination of information from various 

resources to bring new efficiencies to the grid. 

Id. P 1. 

2Public Law No. 110–140, 121 Stat. 1492 (2007). 

3EISA sec. 1301, to be codified at 15 U.S.C. 

17381. 4To be codified at 42 U.S.C. 17384, as amended 

by the American Recovery and Reinvestment Act of 

2009, Public Law No. 111–5, Title IV, Subpart A 

(ARRA). 5To be codified at 42 U.S.C. 17386, as amended 

by the ARRA. 6See Proposed Policy Statement, 126 FERC 

¶ 61,253 at P 7–8. 7 16 U.S.C. 824d. 

8Proposed Policy Statement, 126 FERC ¶ 61,253 

at P 46. The Commission also discussed other rate 

treatments. Id. P 51–52. 

9 Id. P 52 (footnote omitted). 

10For the section 1304 program, the Department’s 

National Energy Technology Laboratory issued a 

Draft Funding Opportunity Announcement 

numbered DE–FOA–0000036 on April 16, 2009 

(Draft Funding Opportunity Announcement). For 

the section 1306 program, the Department’s Office 

of Energy Delivery and Electric Reliability issued a 

Notice of Intent to Issue a Funding Opportunity 

Announcement numbered DE–FOA–0000058A on 

April 16, 2009 (Notice of Intent). 

11The Notice of Intent states that the evaluation 

of proposals will include ‘‘* * * the likelihood that 

the proposed work can be accomplished * * * with 

additional merit given to applications that * * * 

[o]ffer the greatest extent of institutional and 

organizational commitment with consideration 

given to: * * * [r]equired approvals from regulatory 

organizations.’’ Notice of Intent at 12–13. 

12 Draft Funding Opportunity Announcement at 

32–33. 

Development as meeting that 

requirement. 

* * * * * 

[FR Doc. E9–11890 Filed 5–20–09; 8:45 am] 

BILLING CODE 6450–01–P 

DEPARTMENT OF ENERGY 

Federal Energy Regulatory 

Commission 

18 CFR Chapter I 

[Docket No. PL09–4–000] 

Smart Grid Policy; Notice Requesting 

Supplemental Comments 

Issued May 19, 2009. 

AGENCY: Federal Energy Regulatory 

Commission. 

ACTION: Request for supplemental 

comments. 

SUMMARY: On March 19, 2009, the 

Federal Energy Regulatory Commission 

(Commission) issued a Proposed Policy 

Statement and Action Plan (Proposed 

Policy Statement) that, among other 

things, proposed an interim rate policy 

to encourage the development of smart 

grid systems. In this notice, the 

Commission seeks supplemental 

comments regarding rate recovery for 

certain smart grid investments. 

DATES: Comments are due May 28, 2009. 

FOR FURTHER INFORMATION CONTACT: 

Ray Palmer (Technical Information), 

Office of Energy Policy and 

Innovation, Federal Energy Regulatory 

Commission, 888 First Street, NE., 

Washington, DC 20426, (202) 502– 

6569. 

Elizabeth Arnold (Legal Information), 

Office of the General Counsel, Federal 

Energy Regulatory Commission, 888 

First Street, NE., Washington, DC 

20426, (202) 502–8818. 

SUPPLEMENTARY INFORMATION: 

1. On March 19, 2009, the Federal 

Energy Regulatory Commission 

(Commission) issued a Proposed Policy 

Statement and Action Plan (Proposed 

Policy Statement) that, among other 

things, proposed an interim rate policy 

to encourage the development of Smart 

Grid systems.1 Subsequent to the 

Commission’s issuance of the Proposed 

Policy Statement, the U.S. Department 

of Energy (Department) announced two 

Smart Grid funding opportunities to be 

offered by the Department that may 

supply up to 50 percent of the funding 

for certain Smart Grid projects. In 

addition, the Department plans to 

require applicants to identify the source 

of non-Department funds, along with 

some evidence as to the certainty of 

these funds. Given that applicants for 

these programs might include 

jurisdictional public utilities that seek 

rate recovery through FERCjurisdictional rates for the nonDepartment portion of funds for 

transmission-related projects, the 

Commission seeks supplemental 

comments on this matter. 

I. Background 

2. In the Energy Independence and 

Security Act of 2007 (EISA),2 Congress 

enacted a number of provisions related 

to Smart Grid. Section 1301 of the EISA 

states that it is the policy of the United 

States to support the modernization of 

the Nation’s electricity transmission and 

distribution system to maintain a 

reliable and secure electricity 

infrastructure that can meet future 

demand growth and to achieve each of 

several goals and characteristics, which 

together characterize a Smart Grid.3

EISA authorizes the Department to carry 

out two separate funding programs for 

Smart Grid projects: (1) Providing up to 

50 percent of the cost of certain 

demonstration projects, as described in 

section 1304; 4 and (2) providing federal 

matching funds for Smart Grid 

investment costs, as described in section 

1306.5 EISA also directed the 

development of a framework of 

protocols and standards to achieve 

interoperability of Smart Grid devices 

and systems, which was described in 

detail in the Proposed Policy Statement, 

and in which the Commission plays a 

role.6

3. In the Proposed Policy Statement, 

the Commission proposed an interim 

rate policy for Smart Grid investments, 

intended to encourage investment in 

technologies that advance efficiency, 

security, reliability and interoperability. 

Specifically, the Commission proposed 

to accept single-issue rate filings 

submitted by public utilities under 

section 205 of the Federal Power Act 7

to recover the costs of Smart Grid 

projects involving jurisdictional 

facilities, provided that certain 

showings are made.8 The Commission 

specifically noted that, ‘‘[w]e would also 

consider applying these rate treatments 

to the portion of a smart grid pilot or 

demonstration project’s cost that is not 

already paid for by Department of 

Energy funds, such as those authorized 

by EISA sections 1304 and 1306.’’ 9

4. Subsequent to the Commission’s 

issuance of the Proposed Policy 

Statement, the Department released two 

documents relative to forthcoming 

solicitations for applications for Smart 

Grid funding; one of these solicitations 

was authorized by EISA section 1304, 

and one authorized by EISA section 

1306.10

5. In the Notice of Intent, electric 

utilities are specifically identified as a 

category of eligible bidders. While the 

Notice of Intent does not specifically 

require that an applying electric utility 

get approval from a regulatory 

commission for non-Federal funds, the 

document could be read as indicating a 

preference for such approval.11

6. The Draft Funding Opportunity 

Announcement does not explicitly 

address regulatory approvals, but does 

instruct applicants to submit a funding 

plan that identifies all sources of project 

funds, and directs applicants to include 

a commitment letter from third parties 

providing a specific minimum dollar 

amount of cost sharing.12 For public 

utilities that plan to match the Federal 

funds with charges to ratepayers, it is 

possible that public utilities may seek to 

obtain an order addressing rate recovery 

from this Commission for charges 

subject to this Commission’s 

jurisdiction. 

II. Request for Comments 

7. Given the requirements for 

potential applications by public utilities 


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