State Energy Program

DEPARTMENT OF ENERGY

Office of Energy Efficiency and Renewable Energy

10 CFR Part 420

[Docket No. EE-RM-96-402]

RIN 1904-AB01

State Energy Program

AGENCY: Office of Energy Efficiency and Renewable Energy, Department of

Energy (DOE).

ACTION: Interim final rule and opportunity for public comment.

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SUMMARY: Today the Department of Energy (DOE or Department) is

publishing an interim final rule revising the regulations for its State

Energy Program. This rule provides for the possibility of certain

activities being funded under the Special Projects part of the program

that are not permitted under the formula grant part of the program. The

rule also provides for the specification of any Special Projects

funding limitations by the sector specific program offices providing

the Special Projects funding, and clarifies the applicability of

Subpart B to the formula grant part of the program and of Subpart C to

the Special Projects part of the program.

DATES: This rule becomes effective August 24, 1999. Written comments on

the interim final rule must be received by DOE no later than September

23, 1999, to ensure consideration.

ADDRESSES: Written comments (six copies and, if possible, a computer

disk) 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, SW,

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 a.m. and 4 p.m.,

Monday through Friday except Federal holidays, at the following

address: DOE Freedom of Information Reading Room, Department of Energy,

Room 1E-190, Forrestal Building, 1000 Independence Avenue, SW,

Washington, DC 20585, (202) 586-3142.

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 5E-080, EE-44, Forrestal Building, 1000 Independence Avenue, SW,

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. Review Under the Paperwork Reduction Act

IX. Review Under the National Environmental Policy Act

X. Review Under the Small Business Regulatory Enforcement Fairness

Act of 1996

XI. Review Under the Unfunded Mandate Reform Act of 1995

XII. Review Under the Regulatory Flexibility Act

XIII. The Catalog of Federal Domestic Assistance

I. Introduction and Description of the Program

On July 8, 1996, the Department 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. On May

14, 1997, the Department published in the Federal Register a final rule

for the program, incorporating revisions to the interim final rule

resulting from comments received. 62 FR 26726. 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 Projects activities with funding

contributed by the Office of Energy Efficiency and Renewable Energy's

sector specific program offices. Special Projects have been funded in

every fiscal year since SEP was established in 1996. DOE expects the

Special Projects part of SEP to continue in future years.

Among the goals of the SEP Special Projects activities are to

assist States to: accelerate deployment of energy efficiency and

renewable energy technologies; facilitate the acceptance of emerging

and under utilized energy efficiency and renewable energy technologies;

and increase the responsiveness of Federally funded technology

development efforts to private sector needs.

When the SEP rule was revised in 1996 to provide for the

incorporation of the Special Projects activities, DOE envisioned that

States would receive the funding by means of amendments to their SEP

formula grants. While the Special Projects requirements are primarily

covered under subpart C of the rule, the expenditure prohibitions and

limitations specified under Sec. 420.18 of subpart B continued to be

worded so that the section was deemed to apply to both the formula

grants and the Special Projects amendments to those grants. For the

first two years of Special Projects (fiscal years 1996 and 1997), when

Special Projects funding was provided via the State SEP grant, that was

necessary.

However, starting in fiscal year 1998, Special Projects funding has

been provided to States by means of individual grants for each project,

separate from the SEP formula grants. DOE therefore believes that the

application of the formula grant expenditure prohibitions and

limitations to the Special Projects is no longer necessary, and it

reduces their potential flexibility. Interest has been expressed in

using Special Projects funding for end-use sector specific

infrastructure improvements and research and development projects, both

of which are precluded or limited under Sec. 420.18. DOE believes the

Special Projects should no longer be limited by Sec. 420.18 so that the

Special Projects funding approach will be of maximum

[[Page 46112]]

benefit to the end-use sectors providing the funding.

Therefore, Special Projects funding will henceforth be required to

meet only the limitations and prohibitions that apply to all Federal

financial assistance under 10 CFR part 600 and any that may apply to

the particular sources of funding used by the respective end-use

sectors, as specified under the annual Special Projects solicitation/

guidance. To dissociate the Special Projects from the prohibitions

under 420.18, DOE is revising the wording of that section so that it

applies only to subpart B of the rule, covering the SEP formula grants.

DOE is making similar technical revisions to other sections of the rule

to achieve consistency in the applicability of the various subparts of

the rule.

In addition, technical revisions are being made to change the

designations of Regional Support Offices to Regional Offices, and

Regional Support Office Directors to Regional Office Directors to

conform to the official changes made in these designations as of April

25, 1999.

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 1999 Special Projects process is now

underway, and DOE would like to maximize the range of projects being

considered for funding by removing the formula grant prohibitions and

limitations from the Special Projects at this time. Removing these

special prohibitions and limitations will provide immediate flexibility

and will reduce burdens on State governments consistent with

government-wide uniform administrative requirements applicable to

grants to States under 10 CFR part 600. There is no reason to

anticipate State objections would be forthcoming if DOE were to propose

removal for public comment. Moreover, it is unlikely that any member of

the public could persuasively object to this regulatory change. 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

Part 420 (throughout)

The designations of Regional Support Office and Regional Support

Office Director are changed to Regional Office and Regional Office

Director, respectively, throughout the rule to conform to the official

redesignations made effective on April 25, 1999.

Section 420.12 State Matching Contribution

To clarify that this section applies only to the SEP formula

grants, the wording of paragraph (c) is changed so that the reference

to ``this part'' becomes ``this subpart.'' Whereas ``this part'' refers

to the entire 10 CFR part 420, ``this subpart,'' in this context,

refers only to subpart B of 10 CFR part 420, covering the SEP formula

grants. Cost sharing requirements for Special Projects grants are

covered under subpart C.

Section 420.13 Annual State Applications and Amendments to State Plans

To make the wording consistent with changes being made elsewhere in

the rule, the wording of paragraphs (a), (b)(3) and (b)(7) is changed

so that the references to ``subpart B of this part'' become ``this

subpart.'' To clarify that this section applies only to the SEP formula

grants, the wording of paragraph (b)(7) is changed so that the

reference to ``this part'' becomes ``this subpart,'' as further

explained under 420.12 above. The applications referred to under 420.13

are for the SEP formula grants. Applications for Special Projects

grants are covered under subpart C.

Section 420.14 Review and Approval of Annual State Applications and

Amendments to State Plans

To make the wording consistent with changes being made elsewhere in

the rule, the wording of paragraph (a) is changed so that the reference

to ``subpart B of this part'' becomes ``this subpart.'' To clarify that

this section applies only to the SEP formula grants, the wording of

paragraphs (a), (b)(1)(i), (b)(2), and (b)(3) is changed so that the

references to ``this part'' become ``subparts A and B of this part.''

Whereas ``this part'' refers to the entire 10 CFR part 420, the

applications and State plans covered under 420.14 need only meet the

requirements of subparts A and B. Subpart C covers applications for

Special Projects.

Section 420.17 Optional Elements of State Energy Program Plans

To clarify that the services referenced under paragraph (b)(3) of

this section are established under the SEP formula grants, the wording

of that paragraph is changed so that the reference to ``this part''

becomes ``this subpart,'' referring to subpart B covering the formula

grants.

Section 420.18 Expenditure Prohibitions and Limitations

To restrict the prohibitions and limitations specified under this

section to the formula grants part of SEP, the wording of paragraph (a)

is changed so that the reference to ``this part'' becomes ``this

subpart'' as further explained under the revision to 420.12 above.

Expenditure limitations that might apply to Special Projects grants are

covered under new Sec. 420.38 under Subpart C. In addition, the

references in paragraphs (b), (d) and (e) to ``this part'' are changed

to ``this subpart'' to clarify that the activities referred to are

those undertaken pursuant to the SEP formula grants covered by subpart

B. To clarify that the activities referred to under paragraphs (e)(3),

(e)(5) and (f) are those introduced under paragraph (e), the wording of

those paragraphs is changed so that the references to ``this

paragraph'' become ``paragraph (e) of this section.''

Section 420.19 Administrative Review

To clarify that the administrative review referred to under this

section applies only to the formula grants, wording is added to

paragraph (e) specifying that it refers to applications for financial

assistance ``under this subpart.'' Paragraph (i) is changed so that

reference to ``this part'' becomes ``this subpart'' to make clear that

the State plans referred to are those for the SEP formula grants

covered under subpart B.

Section 420.33 Application Requirements

To clarify that the applications referred to under this section are

for SEP Special Projects grants, the wording of paragraph (d) is

changed so that the reference to ``this part'' becomes ``this

subpart'', referring to subpart C which covers Special Projects grants.

Section 420.35 Application Evaluation

To clarify that the information in Special Projects applications

must meet the requirements under subpart C of the rule, the wording in

paragraph (a) is changed so that the reference to ``this part'' becomes

``this subpart.''

[[Page 46113]]

New Section 420.38 Special Projects Expenditure Prohibitions and

Limitations

This section is being added to provide that expenditure

prohibitions and limitations for Special Projects will be any general

prohibitions and limitations under 10 CFR part 600 together with any

specific prohibitions and limitations that may be required by the

respective end-use sectors providing Special Projects funding, as

specified each year by category in the Special Projects solicitation/

guidance.

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,'' 58 FR 51735 (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. Review Under the Paperwork Reduction Act

No new information collection or record keeping requirements are

imposed on the public by today's rules.

IX. 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) 586-3142.

X. Review Under the Small Business Regulatory Enforcement Fairness

Act of 1996

The interim 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. DOE

will report to Congress on the promulgation of the interim final

regulations prior to the effective date set forth at the beginning of

this notice.

XI. Review Under the Unfunded Mandates Reform Act of 1995

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.

XII. 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.

XIII. The Catalog of Federal Domestic Assistance

The Catalog of Federal Domestic Assistance number for the State

Energy Program is 81.041. The Catalog of Federal Domestic Assistance

number for the State Energy Program Special Projects is 81.119.

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 July 20, 1999.

Dan W. Reicher,

Assistant Secretary, Energy Efficiency and Renewable Energy.

For the reasons set forth in the preamble, Chapter II of Title 10,

Code of

[[Page 46114]]

Federal Regulations is amended as follows:

PART 420--[AMENDED]

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.)

PART 420--[AMENDED]

2. In part 420, revise all references to ``Regional Support

Office'' to read ``Regional Office.''

3. In part 420, revise all references to ``Regional Support Office

Director'' to read ``Regional Office Director.''

Secs. 420.12, 420.13, 420.17, 420.18, 420.19, 420.33, and

420.35 [Amended]

4. In subpart B, revise all references to ``this part'' to read

``this subpart'' in the following sections:

a. Sec. 420.12(c).

b. Sec. 420.13(b)(7) (second occurrence).

c. Sec. 420.17(b)(3).

d. Sec. 420.18(a).

e. Sec. 420.18(b).

f. Sec. 420.18(d) (two occurrences).

g. Sec. 420.18(e).

h. Sec. 420.19(i).

5. In subpart C, revise the references to ``this part'' to read

``this subpart'' in the following sections:

a. Sec. 420.33(d).

b. Sec. 420.35(a).

Secs. 420.13, 420.14 [Amended]

6. Revise all references to ``subpart B of this part'' to read

``this subpart'' in the following sections:.

a. Sec. 420.13(a).

b. Sec. 420.13(b)(3).

c. Sec. 420.13(b)(7).

d. Sec. 420.14(a).

Sec. 420.14 [Amended]

7. In section 420.14, revise all references to ``this part'' to

read ``subparts A and B of this part'' in the following sections:

a. Sec. 420.14(a).

b. Sec. 420.14(b)(l)(i).

c. Sec. 420.14(b)(2).

d. Sec. 420.14(b)(3).

Sec. 420.18 [Amended]

8. In section 420.18, revise the words ``this paragraph'' to read

``paragraph (e) of this section'' in the following sections:

a. Sec. 420.18(e)(3).

b. Sec. 420.18(e)(5).

c. Sec. 420.18(f).

Sec. 420.19 [Amended]

9. In 420.19, add the words ``under this subpart'' after the words

``financial assistance'' in the following paragraph:

Sec. 420.19(e).

10. A new section 420.38 is added under subpart C, to read as

follows:

Sec. 420.38 Special projects expenditure prohibitions and limitations.

(a) Expenditures under the special projects are subject to 10 CFR

part 600 and to any prohibitions and limitations required by the DOE

programs that are providing the special projects funding.

(b) DOE must state any expenditure prohibitions or limitations

specific to a particular category of special projects in the annual SEP

special projects solicitation/guidance.

[FR Doc. 99-21896 Filed 8-23-99; 8:45 am]

BILLING CODE 6450-01-P