[Federal Register Volume 62, Number 93 (Wednesday, May 14, 1997)]
[Rules and Regulations]
[Pages 26724-26728]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-12641]
[[Page 26723]]
_______________________________________________________________________
Part V
Department of Energy
_______________________________________________________________________
Office of Energy Efficiency and Renewable Energy
_______________________________________________________________________
10 CFR Parts 420 and 450
State Energy Program; Rule
Federal Register / Vol. 62, No. 93 / Wednesday, May 14, 1997 / Rules
and Regulations
[[Page 26724]]
=======================================================================
-----------------------------------------------------------------------
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 Program
AGENCY: Office of Energy Efficiency and Renewable Energy, DOE.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: Today the Department of Energy is publishing a final rule
revising the regulations for its State Energy Program in response to
comments received after the publication of the program's interim final
rule on July 8, 1996. With the exception of the revisions to the
interim final rule discussed herein, the interim final rule is being
adopted as it was printed on July 8, 1996.
EFFECTIVE DATE: June 13, 1997.
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. The Revisions to the Interim Rule
III. Review Under Executive Order 12612
IV. Review Under Executive Order 12866
V. Review Under Executive Order 12988
VI. Review Under the Paperwork Reduction Act
VII. Review Under the National Environmental Policy Act
VIII. Review Under the Small Business Regulatory Enforcement
Fairness Act of 1996
IX. Review Under the Unfunded Mandates Reform Act of 1995
X. The Catalog of Federal Domestic Assistance
I. Introduction and Description of the Program
On July 8, 1996, the Department of Energy (Department or DOE)
published in the Federal Register an interim final rule consolidating
the State Energy Conservation Program (SECP) and the Institutional
Conservation Program (ICP) under the name ``State Energy Program'' (SEP
or program). 61 FR 35890 The program provides formula grants to States
for a wide variety of energy efficiency and renewable energy
initiatives, and, in years when funding is available, may also offer
financial assistance for a number of State-oriented competitively
awarded special project activities.
The Department also included in its July 8, 1996 rulemaking the
removal of 10 CFR part 450, which constituted prescriptive energy audit
procedures that are no longer needed.
Six comment letters were received regarding the changes made under
10 CFR part 420, which are discussed herein. No comments were received
regarding the removal of 10 CFR part 450, and its removal is herein
made final.
II. The Revisions to the Rule
With the exception of the revisions made and discussed below, this
rule is adopted as it was published in the program's interim rule on
July 8, 1996 (61 FR 35890). The major issues raised in the comments are
discussed below.
Section 420.2 Definitions
Several commenters argued that the revised definition for
``building'' was too restrictive, with some suggesting that the
definition be reduced to ``any structure.'' DOE is not making that
change because it would disregard the statutory definition of
``building'' requiring provision for a ``heating or cooling system, or
both, or for a hot water system''. 42 U.S.C. 6326. However, DOE has
revised the definition by limiting it to the wording in the statutory
definition.
Four exceptions included in the interim definition of ``building''
have been removed from the new definition and, as appropriate, moved to
the specific sections of the rule where they apply, as follows:
(1) The exception regarding buildings for which the 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 has been moved to
Sec. 420.15(d)(1), which covers mandatory thermal efficiency standards
for new and renovated buildings. States are not required to implement
thermal efficiency standards for buildings that are covered by this
exception.
(2) The exception regarding buildings with neither a heating nor a
cooling system or a hot water sytem is incorporated into the definition
of ``building'' and does not need to be repeated, as a commenter
pointed out. Such buildings are not eligible for any type of assistance
under SEP.
(3) The exception regarding mobile homes has been revised to cover
``manufactured homes,'' which is the current term of art, and has been
moved to Sec. 420.15(d)(1), which covers mandatory thermal efficiency
standards for new and renovated buildings. States are not required to
implement thermal efficiency standards for ``manufactured homes''
because that is already done by the U. S. Department of Housing and
Urban Development. (A definition for ``manufactured home'' has also
been added, as discussed under that term.) Buildings meeting the
definition of ``manufactured home'' are eligible for appropriate
assistance under SEP other than their exclusion from the SEP mandatory
thermal efficiency standards.
(4) The exception regarding buildings owned or leased by the United
States has been moved to Sec. 420.15(a)(2), which covers mandatory
lighting efficiency standards, and Sec. 420.15(d)(1), which covers
mandatory thermal efficiency standards. States are not required to
implement either of those types of standards for buildings owned or
leased by the United States. The exception for such buildings has also
been added as a new Sec. 420.18(e)(3) under expenditure prohibitions
and limitations. Buildings owned or leased by the United States are not
eligible under SEP for funding the purchase and installation of
equipment and materials for energy efficiency and renewable energy
measures.
A number of commenters stated that the definition of ``energy
audit'' was limiting due to its being confined to buildings and being
overly specific. DOE has therefore replaced that definition with a new
one suggested by two of the commenters (based on the definition in the
Act), which has broader application to all capital investments that are
eligible for funding under SEP. DOE will be providing energy audit
guidance for consideration by the States.
Several commenters expressed concern that the definition for
``energy conservation measure'' was too restrictive. DOE has changed
the term defined to ``energy efficiency measure'' to reflect the
broader current concerns of SEP, removing the restriction to buildings,
and providing for a wide range of cost-effective improvements.
DOE has added a definition for ``manufactured home'' in conjunction
with moving some of the exceptions to eligible buildings to
Sec. 420.15, as previously discussed. The term formerly used was
``mobile homes'' which was not defined.
A few commenters complained that the definition of ``renewable
energy measure'' was too restrictive, and DOE has revised this
definition to provide for a wider range of activities.
One commenter claimed that the definition of ``variable working
schedule'' should include, as an example, telecommuting. DOE has
[[Page 26725]]
revised that definition to provide for examples of allowable activities
including the activities formerly part of the definition plus
telecommuting.
Section 420.5 Reports.
Some commenters advocated that DOE require semiannual rather than
quarterly reports, and that the reports be simplified. DOE has
determined that quarterly reports are needed to adequately track the
progress of the program, but will work with the States to streamline
the reports and to expedite the quantification of results.
Section 420.11 Allocation of funds among the States.
A few commenters argued that two of the data elements in the base
allocation (population and SECP savings data) should be updated
annually. DOE has not made this change because it believes the base
allocation needs to remain constant to reflect and incorporate the
historical distribution of funding for SEP's component programs, SECP
and ICP, that formerly used different funding formulas.
One commenter recommended that DOE use only one approach for the
entire allocation, either the base allocation approach or the new
formula. For the reason stated in the previous paragraph, DOE believes
the base allocation should remain constant, with the new formula
applying only to available funding above $25.5 million, so DOE is not
making this change.
One commenter wanted DOE to use the most recent population and
energy consumption data for the new formula. DOE intends to do this, as
stated under Sec. 420.11(b)(4)(iii).
Section 420.12 State matching contribution.
One commenter asked if petroleum violation escrow (PVE) funds could
be used to meet the requirement for a State matching contribution.
Under SEP, PVE funds that are considered as ``Federally appropriated''
funds (such as Warner Amendment and Exxon funds) may not be used to
meet a State's matching contribution. However, PVE funds that are
considered as ``non-Federally appropriated'' (such as Stripper Well and
Diamond Shamrock funds) may be used to meet a State's matching
contribution.
Section 420.13 Annual State applications and amendments to State
plans.
A number of commenters requested that DOE simplify the information
required in SEP grant applications, including the requirement that
goals be specified and quantified each year under Sec. 420.13(b) (2)
and (3). DOE believes a State's goals need to be articulated each year
as part of making the program accountable, and therefore DOE is not
making this change. However, as mentioned under Sec. 420.5, Reports,
DOE will be working with the States to simplify and expedite the
quantification of program goals and results.
One commenter expressed the opinion that annual applications should
be required, but not State plans. While DOE does not require complete
State plans to be resubmitted each year, amendments to plans need to be
submitted whenever the activities a State intends to undertake under
SEP change. If an activity for which funds are sought is not in the
State plan, then an amendment to that plan is necessary because the Act
only authorizes DOE to provide financial assistance to execute State
plans. The heading of this section and the wording of Sec. 420.13(a)
have been revised to clarify this.
One commenter suggested that States be allowed to submit an
assurance that the required activities under Sec. 420.15 have been
implemented. DOE was not persuaded by this comment, because these
activities need to be accounted for annually, as specified under
Sec. 420.13(b)(4)(v), which has been revised to make the requirement
clearer.
One commenter argued that States should only have to address the
issues specified under Sec. 420.13 (b)(5) and (b)(6) in cases where a
State is actually undertaking activities that apply to those
situations. That is DOE's intent, and those paragraphs have been
revised to clarfy that.
Section 420.14 Review and approval of annual State applications and
amendments to State plans.
One commenter suggested that ``plans'' be dropped from the heading
and that only applications be required. As already discussed under
Sec. 420.13, DOE is continuing to require amendments to plans to
reflect changes, and DOE has revised this heading to provide for
amendments to State plans. Unless the State elects to submit a complete
plan each year with its application, DOE only requires appropriate plan
amendments.
Section 420.15 Minimum criteria for required program activities for
plans.
One commenter wanted the references to ``plans'' in the heading and
the text of the section deleted and replaced with ``applications.'' As
with the discussions under Secs. 420.13 and 420.14, this commenter
argued that only applications should be required each year, not plans.
Since the statute requires that the State plan include the relevant
activities a State is undertaking, DOE is not deleting the requirement
for State plan amendments where warranted.
Section 420.17 Optional elements of State Energy Program plans.
One commenter thought only applications should be required and
wanted the reference to ``plans'' in the heading replaced with
``applications.'' As already discussed under Secs. 420.13, 420.14, and
420.15, DOE has not made this change because State plan amendments must
continue to be submitted with applications when a State changes the SEP
activities for which it is seeking financial assistance. Paragraphs
(a)(3) and (a)(7) have been revised to replace the term ``energy
conservation measure'' with ``energy efficiency measure'' to coincide
with the change in terms defined, as discussed under Sec. 420.2,
Definitions.
Section 420.18 Expenditure prohibitions and limitations.
One commenter asked that design costs be allowable as part of
energy efficiency and renewable energy measure costs, and DOE has
revised Sec. 420.18(e) to provide for reasonable design costs to be
allowable.
Some commenters advocated that DOE drop the 50 percent limit on
energy efficiency and renewable energy measure expenditures because it
was unnecessary. DOE believes that it is reasonable to have this 50
percent limitation in order to, in general, keep a balance between
State activities relating to energy efficiency and renewable energy
measures and the wide variety of other types of SEP activities that
States may undertake. On the other hand, DOE also believes it is
worthwhile to include the possibility of a waiver, provided for under
Sec. 420.18(e)(2), for States that plan to use more than 50 percent of
their SEP funds for energy efficiency and renewable energy measures.
DOE will treat any waiver requests expeditiously; States simply need to
explain how much funding they plan to devote to energy efficiency and
renewable energy measures, and why they need to exceed the 50 percent
limit. Therefore, DOE has not dropped the 50 percent limit.
One commenter claimed the restriction on loan repayments and the
prohibition on loan forgiveness specified under Sec. 420.18(e)(2)
should not apply to non-Federal funds used under SEP. DOE is of the
view that any funds used under SEP must be used in
[[Page 26726]]
compliance with the SEP rule, and is not changing those restrictions.
One commenter wanted the wording under Sec. 420.18(e)(3) revised to
provide for public buildings, not just State and local government
buildings. DOE believes this entire paragraph should be deleted; the
section applies to all eligible buildings and the range of eligible
buildings has already been specified under Sec. 420.17(a)(3). DOE is
replacing that paragraph with one excluding from eligibility for energy
efficiency and renewable energy measures buildings owned or leased by
the United States as was discussed earlier under the definition of
``building.''
Former Sec. 420.18 (e)(6), (e)(6)(i), and (e)(6)(ii) have been
redesignated Sec. 420.18 (f), (f)(1), and (f)(2), respectively, because
they are more logically separate paragraphs rather than continuations
of the limitations specified under paragraph (e).
One commenter wondered if the 50 percent limit on rebates specified
under new Sec. 420.18(f)(1) (former Sec. 420.18(e)(6)(i)) applied to
grants. This limit does not apply to grants, which may be for up to 100
percent of the cost of measures under SEP.
III. 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.
IV. 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).
V. 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.
VI. Review Under the Paperwork Reduction Act
No new information collection or recordkeeping requirements are
imposed on the public by today's rules.
VII. Review Under the National Environmental Policy Act
A programmatic environmental assessment has been prepared covering
the grant program under the 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.
VIII. 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.
IX. Review Under the Unfunded Mandates Reform Act of 1995
Title II of the Unfunded Mandates Reform Act of 1995 imposes a
variety of procedural requirements on agencies proposing or finalizing
a ``Federal mandate'' on State, local, and tribal governments. 2 U.S.C.
1531-1535. None of these requirements apply to this rulemaking because,
by definition, enforceable duties that are a condition of Federal
financial asistance do not constitute a ``Federal mandate.'' 2 U.S.C.
658 (5)(A)(i)(I), (6).
X. The Catalog of Federal Domestic Assistance
The Catalog of Federal Domestic Assistance number for the State
Energy Program is 81.041.
List of Subjects in 10 CFR Part 420
Energy conservation, Grant programs--energy, Reporting and
recordkeeping requirements, Technical Assistance, Incorporation by
reference.
Issued in Washington, DC, on April 11, 1997.
Christine A. Ervin,
Assistant Secretary, Energy Efficiency and Renewable Energy.
Accordingly, the interim rule revising 10 CFR part 420 and removing
10 CFR part 450 which was published at 61 FR 35890 on July 8, 1996, is
adopted as a final rule with the following changes to part 420:
PART 420--STATE ENERGY PROGRAM
1. The authority citation for part 420 continues to read as
follows:
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.)
Sec. 420.2 [Amended]
2. Section 420.2 is amended by (a) Revising the definitions for
``Building,'' ``Energy audit,'' ``Renewable energy measure,'' and
``Variable working schedule;'' by (b) adding, in alphabetical order,
the definitions of ``Energy efficiency measure,'' and ``Manufactured
home;'' and by (c) removing the definition of ``Energy conservation
measure,'' to read as follows:
Sec. 420.2 Definitions.
* * * * *
Building means any structure which includes provision for a heating
or cooling system, or both, or for a hot water system.
* * * * *
[[Page 26727]]
Energy audit means any process which identifies and specifies the
energy and cost savings which are likely to be realized through the
purchase and installation of particular energy efficiency measures or
renewable energy measures.
Energy efficiency measure means any capital investment that reduces
energy costs in an amount sufficient to recover the total cost of
purchasing and installing such measure over an appropriate period of
time and maintains or reduces non-renewable energy consumption.
* * * * *
Manufactured home means any dwelling covered by the Federal
Manufactured Home Construction and Safety Standards, 24 CFR part 3280.
* * * * *
Renewable energy measure means any capital investment that reduces
energy costs in an amount sufficient to recover the total cost of
purchasing and installing such measure over an appropriate period of
time and that results in the use of renewable energy to replace the use
of non-renewable energy.
* * * * *
Variable working schedule means a flexible working schedule to
facilitate activities such as carpools, vanpools, public transportation
usage, and/or telecommuting.
* * * * *
Sec. 420.13 [Amended]
3. Section 420.13 is amended by revising the heading, paragraph
(a), paragraph (b)(4)(iii), paragraph (b)(4)(v), paragraph (b)(5), and
paragraph (b)(6) to read as follows:
Sec. 420.13 Annual State applications and amendments to 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, including an amended State plan or any amendments to
the State plan needed to reflect changes in the activities the State is
planning to undertake for the fiscal year concerned. The date for
submission of the annual State application shall be set by DOE.
(b) * * *
(4) * * *
(iii) A narrative statement detailing the nature of State plan
amendments and of new program activities.
* * * * *
(v) An explanation of how the minimum criteria for required program
activities prescribed in Sec. 420.15 have been implemented and are
being maintained.
(5) If any of the activities being undertaken by the State in its
plan have environmental impacts, 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) If a State is undertaking 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.
* * * * *
Sec. 420.14 [Amended]
4. Section 420.14 is amended by revising the heading and paragraph
(a) to read as follows:
Sec. 420.14 Review and approval of annual State applications and
amendments to State plans.
(a) After receipt of an application for financial assistance under
subpart B of this part and for approval of an amendment, if any, 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 or to 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.
* * * * *
Sec. 420.15 [Amended]
5. Section 420.15 is amended by revising paragraphs (a)(2) and
(d)(1) to read as follows:
Sec. 420.15 Minimum criteria for required program activities for
plans.
* * * * *
(a) * * *
(2) Apply to all public buildings (except for public buildings
owned or leased by the United States), above a certain size, as
determined by the State;
* * * * *
(d) * * *
(1) Be implemented throughout the State, with respect to all
buildings (other than buildings owned or leased by the United States,
buildings 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 space
for all purposes, or manufactured homes), 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 law reserves the
exclusive authority to adopt and implement building standards within
their jurisdictions;
* * * * *
Sec. 420.17 [Amended]
6. Section 420.17 is amended by revising paragraph (a)(3)
introductory text, paragraph (a)(3)(i), and paragraph (a)(7) to read as
follows:
Sec. 420.17 Optional elements of State Energy Program plans.
(a) * * *
(3) Program activities for financing energy efficiency 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 efficiency measures and renewable energy
measures; or
* * * * *
(7) Program activities to identify unfair or deceptive acts or
practices which relate to the implementation of energy efficiency
measures and renewable energy measures and to educate consumers
concerning such acts or practices;
* * * * *
Sec. 420.18 [Amended]
7. Section 420.18 is amended by revising the introductory text to
paragraph (e), by revising paragraphs (e)(3) and (e)(5), and by
redesignating paragraphs (e)(6) introductory text, (e)(6)(i), and
(e)(6)(ii) as new paragraphs (f) introductory text, (f)(1), and (f)(2),
respectively, to read as follows:
Sec. 420.18 Expenditure prohibitions and limitations.
* * * * *
(e) A State may use funds under this part for the purchase and
installation of equipment and materials for energy efficiency measures
and renewable energy measures, including reasonable
[[Page 26728]]
design costs, subject to the following terms and conditions:
* * * * *
(3) Buildings owned or leased by the United States are not eligible
for energy efficiency measures or renewable energy measures under this
paragraph;
* * * * *
(5) Subject to paragraph (f) 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.
* * * * *
[FR Doc. 97-12641 Filed 5-13-97; 8:45 am]
BILLING CODE 6450-01-P
