[Federal Register Volume 59, Number 92 (Friday, May 13, 1994)]
[Unknown Section]
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From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-11738]


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[Federal Register: May 13, 1994]


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DEPARTMENT OF ENERGY

Office of Energy Efficiency and Renewable Energy

10 CFR Part 451

[Docket No. EE-RM-94-301]

 

Renewable Energy Production Incentives

AGENCY: Office of Energy Efficiency and Renewable Energy, DOE.

ACTION: Notice of proposed rulemaking and public hearing and request 
for public comment.

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SUMMARY: The Department of Energy (DOE) Office of Energy Efficiency and 
Renewable Energy (EE) today proposes a rule to implement a program in 
response to the requirements of section 1212 of the Energy Policy Act 
of 1992 to make incentive payments to qualified renewable energy 
facilities. The proposed rule covers application procedures, 
qualification requirements, calculation of incentive payments, and 
administrative remedies.

DATES: Written comments on the proposed rule (12 copies) must be 
received by the Department on or before July 12, 1994. A public hearing 
will be held on June 16, 1994, beginning at 9:30 a.m. at the address 
listed below. Requests to speak must be received by the Department on 
or before June 9, 1994. The length of each oral presentation is limited 
to 10 minutes.

ADDRESSES: All written comments (12 copies), as well as requests to 
speak at the public hearing are to be submitted to: U.S. Department of 
Energy, Office of Energy Efficiency and Renewable Energy, EE-10/REPI 
NOPR, Docket No. EE-RM-94-301, 1000 Independence Avenue SW., 
Washington, DC 20585, (202) 586-3012. FAX comments will not be 
accepted. The public hearing will be held at the U.S. Department of 
Energy, Forrestal Building, room 1E-245, 1000 Independence Avenue, SW., 
Washington, DC. 20585. Copies of the transcript of the public hearing 
and public comments received may be read at the DOE Freedom of 
Information Reading Room, U.S. Department of Energy, Forrestal 
Building, Room 1E-190, 1000 Independence Avenue, SW., Washington, DC, 
20585, (202) 586-6020 between the hours of 9 a.m. and 4 p.m. Monday 
through Friday, except Federal holidays. A copy of comments concerning 
information collection requirements of the proposed rule should also be 
directed to the Office of Information and Regulatory Affairs, Office of 
Management and Budget, Attention: Desk Officer for the Department of 
Energy, 725 17th Street, NW., Washington, DC, 20503.

FOR FURTHER INFORMATION CONTACT:

Kurt Klunder, Office of Energy Efficiency and Renewable Energy, Mail 
Station EE-10, U.S. Department of Energy, 1000 Independence Avenue SW., 
Washington, DC 20585, (202) 586-4564.
Josephine B. Patton, Esq., U.S. Department of Energy, Office of General 
Counsel, Forrestal Building, Mail Station GC-72, 1000 Independence 
Avenue SW., Washington, DC 20585, (202) 586-9507.

SUPPLEMENTARY INFORMATION:

I. Background

    Section 1212 of the Energy Policy Act of 1992, 42 U.S.C. 13317, 
requires the Department of Energy to make, subject to the availability 
of appropriations, incentive payments to the owners or operators of 
qualified renewable energy facilities for the production and sale of 
electric energy from certain renewable energy sources. With certain 
exceptions, qualified renewable energy facilities are renewable energy 
conversion facilities (solar, wind, geothermal, or biomass) owned by 
States, subdivisions of States, or nonprofit electrical cooperatives 
that generate electric energy for sale. The goal of the incentive 
program is to advance the use of renewable energy conversion systems in 
the United States, particularly those systems that use emerging 
technologies.
    The payment rate begins at 1.5 cents per kilowatt-hour, adjusted 
for fiscal year 1994 inflation over fiscal year 1993, for energy 
produced in fiscal year 1994. For energy produced in subsequent years, 
payment rates will be similarly adjusted annually to account for 
inflation. Payments may be made for 10 years only to owners or 
operators of qualified facilities first put in service during the 
period beginning on October 1, 1993, and ending on September 30, 2003.
    The stated purposes of title XII of the Energy Policy Act of 1992, 
of which section 1212 is a part, are promotion of: `` (1) Increases in 
the production and utilization of energy from renewable energy 
resources; (2) further advances of renewable energy technologies; and 
(3) exports of United States renewable energy technologies.'' 42 U.S.C. 
13311.
    Section 1212 appears to be complementary to sections 1914 and 1916 
of the Energy Policy Act of 1992. Section 1914 amended the Internal 
Revenue Code to provide a tax credit of 1.5 cents per kilowatt-hour 
adjusted for inflation for electricity produced from wind or from 
biomass derived from organic matter grown exclusively for use in 
generating electricity. 26 U.S.C. 45. Section 1916 amended the Internal 
Revenue Code to make permanent the energy investment tax credit for 
non-utility investors in solar and geothermal property. 26 U.S.C. 
48(a)(2). Sections 1914 and 1916 are designed to assist in making 
certain emerging renewable energy technologies cost competitive. 
Section 1212 appears to have a similar objective with regard to State 
instrumentalities and nonprofit electric cooperatives neither of which 
can benefit from tax credits because they do not pay Federal income 
taxes.

II. Description of Proposed Rule

Proposed Section 451.1
    Proposed Sec. 451.1 defines the purpose and scope of part 451 as 
setting policies and procedures governing the administration of the 
renewable energy production incentive program and the process for the 
payment of incentives. This proposed section states that determinations 
with regard to incentive payments are not subject to the Department's 
general financial assistance regulation in 10 CFR part 600. Those 
regulations deal with grants and cooperative agreements that are 
awarded to stimulate assistance recipients to undertake certain future 
activities with Federal funds. In contrast, the incentive payments 
under section 1212 are a reward for activities that have already taken 
place and there is no stated restriction with regard to what the 
recipient does with the Federal funds received.
Proposed Section 451.2
    Proposed Sec. 451.2 sets forth the definitions for part 451. The 
first defined term is ``closed-loop biomass'' which is based on the 
definition of the same term in section 1914. For reasons discussed in 
greater detail below, closed-loop biomass energy facilities, in 
contrast to other eligible biomass energy facilities, would receive 
priority payment in the event that Congress has not appropriated enough 
funds to make all incentive payments in any given fiscal year.
    Proposed Sec. 451.2 defines the term ``fiscal year'' as the 
standard Federal fiscal year which runs from October 1 of any given 
year to September 30 of the next year. Section 1212 refers to fiscal 
years, but does not provide a definition. In the absence of any 
legislative history to the contrary, Congress is assumed to have 
intended use of the standard Federal fiscal year.
    Proposed Sec. 451.2 defines the term ``nonprofit electrical 
cooperative,'' which is one category of eligible owners named in 
section 1212. The proposed definition is based on the provisions of the 
Internal Revenue Code dealing with tax exempt organizations and on 
information provided by the National Rural Electric Cooperative 
Association. The Department invites comments on the adequacy of this 
definition and related suggestions for editing.
    Although section 1212 does not use the term ``renewable energy 
source,'' or any other term, to characterize the eligible energy 
sources, the Department has found it useful at various points in the 
proposed rule. The definition is based on the list of energy sources in 
paragraph (b) of section 1212 which refers to ``solar, wind, biomass, 
or geothermal energy.'' 42 U.S.C. 13317(b). It is also based on the 
list of excepted (and therefore ineligible) energy sources in 
subparagraphs (b)(1) (municipal solid waste) and (b)(2) (certain dry 
steam geothermal energy). 42 U.S.C. 13317(b) (1), (2). Wind and biomass 
are indirect forms of solar energy. The specification of those two 
indirect forms as well as the word ``solar'' suggests that Congress 
meant the word ``solar'' to include only direct forms of solar energy, 
namely, solar heat (concentrated solar insulation for a solar thermal 
electric facility) and solar light (concentrated or unconcentrated 
solar insulation for a solar photovoltaic electric facility). That 
reading is supported by the facts with regard to indirect forms of 
solar energy. Indirect forms of solar energy other than wind and 
biomass (e.g., hydropower) are either fully competitive with fossil 
fuels without need of an incentive payment or are at a development 
stage such that an incentive payment could not make them cost 
competitive with fossil fuels.
    Proposed Sec. 451.2 defines the term ``renewable energy facility'' 
which appears in section 1212. The key part of the definition is the 
reference to ``a system or an integrated set of components'' which 
makes it clear that the facility is mostly equipment such as heat 
exchangers or turbines and that the facility does not include the land 
on which it is located. In addition, for geothermal facilities it does 
not include the geothermal field, and for biomass facilities it does 
not include the biomass farm. The proposed definition also omits any 
reference to equipment for transmission or use of electricity because 
the text of paragraph (b) of section 1212 which defines the term 
``qualified renewable energy facility,'' does not state that such a 
facility must include such equipment. It is important to note that the 
definition refers to electric energy ``in whole or in part'' from a 
renewable energy source. That language takes account of the likelihood 
that some facilities will produce electric energy in part from a non-
renewable energy source such as fossil fuel.
    Finally, proposed 451.2 defines the term ``State'' which is not 
defined in the text of section 1212. However, given the above-quoted 
stated purpose of title XII of the Energy Policy Act of 1992, it is 
reasonable to conclude that Congress meant for incentive payments to be 
available for power generation in any of the 50 States, the District of 
Columbia, Puerto Rico, and any other territory or possession of the 
United States. This qualification is explicitedly set forth in proposed 
Sec. 451.4(g)
Proposed Section 451.3
    Proposed Sec. 451.3 deals with who is eligible to apply. Consistent 
with section 1212, it states that any owner or operator of a qualified 
renewable energy facility may apply. However, it qualifies the word 
``operator'' to make clear that such a person or entity must have the 
written consent of the owner. A contractual provision would suffice, 
but it is not the only written manifestation of owner consent that 
would be acceptable. This provision will enable the Department to avoid 
a situation where both the owner and operator of a facility apply.
Proposed Section 451.4
    Proposed Sec. 451.4 answers the question: What is a qualified 
renewable energy facility? Proposed paragraph (a) tracks section 1212 
by providing that various State instrumentalities or a nonprofit 
electric cooperative must be the owner.
    Proposed paragraph (b) clarifies an ambiguity in section 1212 with 
regard to what constitutes ownership. In light of the possibility that 
the facilities of nonprofit electric cooperative may be financed, the 
Department worded proposed paragraph (b) to cover situations in which 
the cooperative has all rights to the beneficial use of the qualified 
renewable energy facility, but legal title is held by a financing 
source for the benefit of the cooperative. The Department invites 
comments on the adequacy of proposed paragraph (b) in light of 
experience with the title aspects of financing arrangements.
    Proposed paragraph (c) tracks the language of section 1212 by 
requiring that the electricity generated must be ``for sale in, or 
affecting, interstate commerce among the States.'' The Department is 
inclined to interpret the word ``sale'' to mean a transaction between 
two entities, who may be related, involving the transfer of electric 
energy for consideration. Thus, electric energy generated by an entity 
for internal use by that entity would not constitute a ``sale.''
    Proposed paragraph (d) restates that only ``renewable energy 
sources'' as defined by proposed Sec. 451.2 are covered.
    Proposed paragraph (e) lists the types of biomass and geothermal 
energy sources specifically excluded by section 1212. This paragraph 
reflects the provisions of section 1212(b)(1) and (2). 42 U.S.C. 
13317(b)(1) and (2).
    Proposed paragraph (f) tracks the provision of section 1212 which 
requires that the facility must first be used during the period 
beginning with October 1, 1993, and ending on September 30, 2003.
    In addition, the Department considered inclusion of a requirement 
that, to be considered qualified for receipt of incentive payments, a 
facility must be purchased and installed without financial assistance 
from other federal programs. The requirement was omitted from this 
proposed rule because of uncertainty regarding the total breadth and 
form of federal programs that might be applicable to facility design, 
construction, installation, and operation. The Department will consider 
this possibility further and invites comments on the advisability of 
such a requirement.
Proposed Section 451.5
    Proposed Sec. 451.5 deals with where and when to apply. Proposed 
paragraph (a) permits the filing of an application only in response to 
an annual notice in the Federal Register. Issuance of that notice 
should closely follow enactment of appropriations. Proposed paragraph 
(b) concerns the initial application. It provides that such an 
application may be filed in the first fiscal year following that in 
which electricity eligible for incentive payments is first generated, 
and that subsequent applications may be filed in the fiscal years 
following those in which electricity eligible for incentive payments is 
generated.
Proposed Section 451.6
    Consistent with the requirements of section 1212, proposed 
Sec. 451.6 provides that the Department may only make incentive 
payments for a 10-fiscal year period to any particular qualified 
renewable facility.
Proposed Section 451.7
    Proposed Sec. 451.7 describes metering requirements which the 
Department thinks are desirable to promote the accuracy and veracity of 
applications for incentive payments. In all cases, the number of 
kilowatt-hours generated and sold is to be metered. If non-qualifying 
renewable or non-renewable energy sources as well as qualifying 
renewable energy sources are used, proposed Sec. 451.7 would not 
require electrical metering of sources where such is not possible or 
practical. In such cases, the kilowatt hours attributable to the 
qualified renewable energy source must usually be calculated from 
fractions of heat input, or other energy input, from the several 
sources. Such inputs must be metered, measured, or otherwise quantified 
from the respective raw energy streams using commonly accepted (and 
identified) procedures and conversion methodologies.
Proposed Section 451.8
    Proposed Sec. 451.8 sets forth application content requirements. 
Most of the requirements are self-explanatory. However, several of them 
deserve some discussion to focus them for public comment.
    Proposed paragraph (f) would require: ``That components and 
equipment, representing at least 50 percent of the capital cost of the 
qualified renewable energy facility, were substantially manufactured in 
a State.'' This provision is consistent with the purposes of title XII 
of the Energy Policy Act of 1992. It is modeled on a provision of 
section 6 of the Renewable Energy and Energy Efficiency Technology 
Competitiveness Act of 1989, as amended by title XII of the Energy 
Policy Act of 1992. 42 U.S.C. Sec. 12005(b)(1)(B). Like section 6, it 
would not exclude entities merely on the basis of foreign ownership. It 
would promote domestic jobs and production without discriminating 
against foreign entities that invest in production facilities in the 
United States.
    Proposed paragraphs (g) and (h) would require independently audited 
and certified statements of the monthly and annual electric energy 
generated and sold. The content of the certification should be similar 
to the type of certification supplied by an accounting firm in a 
company's annual report to shareholders. Paragraph (h) also describes 
the calculation necessary when the metered number of kilowatt-hours 
represents electric energy generated from renewable and non-renewable 
or excluded-renewable energy sources. The proposed requirement for an 
independently audited and certified statement will minimize the chance 
of erroneous claims and the need for DOE audits.
    Consistent with applicable regulations under the Paperwork 
Reduction Act, 5 CFR 1320.6(f), proposed paragraph (k) would require a 
statement agreeing to retain records for a period of three years to 
provide for prompt access to, or copies of, such records in response to 
a written request by DOE. DOE is still considering whether the 
retention period should be the entire ten year period during which 
incentive payments may be collected. DOE did not propose a longer 
retention period because the proposed audit and certification 
requirements would make fraud or mistake unlikely.
Proposed Section 451.9
    Proposed Sec. 451.9 describes DOE's procedures for processing 
applications for incentive payments including the statutory formula for 
initially calculating the amount due and the adjustment for inflation. 
DOE is proposing a procedure to deal with the possibility that there 
could be a shortage of appropriations to make the full incentive 
payments. The President's annual budget request and Congressional 
action on that request will precede receipt of the applications in 
every year. It is therefore unlikely that Congress will appropriate 
precisely the amount necessary to make the full incentive payments. In 
the event that the amount appropriated is less than the amount required 
to make full payments to all qualified applicants, the proposed 
procedure involves priority first (and, if necessary, pro rata 
payments) to all owners or operators of solar, wind, geothermal, and 
closed-loop biomass facilities, and priority second (and, if necessary, 
pro rata payments) to owners or operators of all other qualified 
facilities. This procedure favors emerging technologies which are 
similarly favored by the tax credit provisions of sections 1914 and 
1916. These technologies are close to or in early commercialization 
stages where the incentive payments can help speed the 
commercialization process. If payments are reduced as a result of a 
shortage of appropriations, the kilowatt-hours attributable to the 
shortfall will accrue for payment in succeeding years to the extent 
that Congress appropriates funds sufficient to allow payment for these 
accruals together with other eligible electricity production.
Proposed Section 451.10
    DOE is proposing an administrative remedy for those aggrieved by 
the initial decision of the DOE Deciding Official who will be the 
Assistant Secretary for Energy Efficiency and Renewable Energy. In 
order to exhaust administrative remedies, it will be necessary to 
appeal to DOE's Office of Hearings and Appeals. This procedure has two 
virtues. It would be less expensive than pursuing a judicial remedy 
immediately. It would also ensure that DOE has made a record which is 
appropriate for judicial review in the event a petition for review is 
filed in a federal court.

III. Regulatory Review

    DOE has concluded that this is not a significant regulatory action 
because it does not meet the criteria which define such actions under 
Executive Order 12866, 58 FR 51735, and is therefore exempt from 
regulatory review. Accordingly, no clearance of this proposed rule by 
the Office of Management and Budget is required.

IV. Review Under the Regulatory Flexibility Act

    This proposed rule was reviewed under the Regulatory Flexibility 
Act of 1980, 5 U.S.C. 601-612, which requires preparation of a 
regulatory flexibility analysis for any regulation that will have a 
significant economic impact on a substantial number of small entities; 
i.e., small businesses, small organizations, and small governmental 
jurisdictions. DOE has determined that this proposed rule will not have 
a significant impact on small entities because the rule directly 
affects only qualified renewable energy facilities owned by state or 
local governments or non-profit electrical cooperatives, and such 
facilities are not deemed small entities.

V. Review Under the Paperwork Reduction Act

    New information collection requirements subject to the Paperwork 
Reduction Act, 44 U.S.C. 3501, et seq., and recordkeeping requirements 
are proposed by this rulemaking. Accordingly, this notice has been 
submitted to the Office of Management and Budget for review and 
approval of paperwork requirements. Earlier in this notice, DOE 
described the application content proposed for use under the rule. The 
information DOE proposes to collect on the applications for incentive 
payments is necessary to determine whether the applicant is qualified 
for payment. The frequency of the information collection is monthly for 
those entities eligible to apply for incentive payments. It is 
estimated that less than 40 entities will apply for incentive payments 
in the first year, growing to less than 200 over a ten year period.
    The public reporting burden is estimated to average 25 hours per 
response, including time for reviewing instructions, searching existing 
data sources, gathering and maintaining the data needed, and completing 
and retrieving the collection of information. The collection of 
information contained in this proposed rule is considered the least 
burdensome for the Department of Energy's functions to comply with the 
legal requirements and achieve program objectives. However, comments 
are requested concerning the accuracy of the estimated paperwork 
reporting burden, in addition to the proposed record retention 
requirement discussed above.

VI. Review Under Executive Order 12612

    Executive Order 12612, 52 FR 41685 (October 30, 1987), requires 
that regulations, rules, legislation, and any other policy actions be 
reviewed for any substantial direct effects on States, on the 
relationship between the National Government and the States, or in the 
distribution of power and responsibilities among various levels of 
Government. If there are sufficient substantial effects, then the 
Executive Order requires preparation of a federalism assessment to be 
used in all decisions involved in promulgating and implementing policy 
action. This proposed rule establishes an incentive program under which 
state owned renewable energy facilities may qualify for incentive 
payments based on the amount of electric energy the facility generates 
using specified renewable sources for sale in, or affecting interstate 
commerce. The Department has determined that since the generation of 
electricity is not a primary function of a State, the proposed rule 
will not have a substantial direct effect on the institutional 
interests or traditional functions of States.

VII. Review Under Executive Order 12778

    Section 2 of Executive Order 12778 instructs each agency to adhere 
to certain requirements in promulgating new regulations. These 
requirements, set forth in section 2(a) and (b)(2), 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. DOE certifies that the proposed 
rule meets the requirements of section 2(a) and (b)(2) of Executive 
Order 12778.

VIII. Review Under the National Environmental Policy Act

    DOE has determined that promulgation of this proposed rule falls 
within the procedural rulemaking class, Category A6 of Appendix A to 
Subpart D, ``Categorical Exclusions Applicable to General Agency 
Actions'', of the DOE National Environmental Policy Act (NEPA) 
regulations. 10 CFR part 1021. It is therefore categorically excluded 
from preparation of either an Environmental Assessment or an 
Environmental Impact Statement under the NEPA (42 U.S.C. 4321, et. 
seq).

IX. Opportunities for Public Comment

A. Written Comment Procedures

    Interested persons are invited to participate in this rulemaking by 
submitting data, views, or comments with respect to the proposed 
rulemaking.
    Twelve copies of written comments should be submitted to the 
address indicated in the ADDRESSES section of this notice and must be 
received by the date indicated in the DATES section of this notice. 
Comments should be identified on the outside of the envelope and on the 
documents themselves with the designation ``REPI NOPR, Docket No. EE-
RM-94-301''. In the event any person wishing to provide written 
comments cannot provide twelve copies, alternative arrangements can be 
made in advance with DOE.
    All written comments received will be available for public 
inspection as part of the administrative record on file for this 
rulemaking in the Department of Energy Freedom of Information Office 
Reading Room at the address provided at the beginning of this notice. 
If informal meetings or other contacts occur during this rulemaking, 
DOE may add a memorandum to the record on file summarizing what 
transpired.
    Pursuant to the provisions of 10 CFR 1004.11, 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 of the document, as well as two copies from which the information 
claimed to be confidential has been deleted. DOE reserves the right to 
determine the confidential status of the information and to treat it 
according to its determination.

B. Public Hearing

1. Request to Speak Procedures
    A public hearing on the proposed rule will be held at the time and 
place indicated in the DATES and ADDRESSES Sections of this notice. Any 
person who has an interest in the proposed rule or who is a 
representative of a group or class of persons that has an interest in 
the proposed rule may request an opportunity to make an oral 
presentation. A request to speak at the public hearing should be 
addressed to the address or phone number indicated at the beginning of 
this notice. The person making the request should briefly describe his 
or her interest in the proceedings and, if appropriate, state why the 
person is a proper representative of the group. The person should also 
provide a phone number where he or she may be reached during the day. 
Each person selected to be heard will be notified by DOE as to the 
approximate time they will be speaking. Twelve copies of the speaker's 
statement should be submitted at the hearing. In the event any person 
wishing to testify cannot meet this requirement, alternative 
arrangements can be made in advance with DOE.
2. Conduct of the Hearing
    DOE reserves the right to select persons to be heard at the 
hearing, to schedule their respective presentations, and to establish 
procedures governing the conduct of the hearing. The length of each 
presentation will be limited to 10 minutes or based on the number of 
persons requesting an opportunity to speak.
    A DOE official will preside at the hearing. This will not be a 
judicial or evidentiary-type hearing. It will be conducted in 
accordance with 5 U.S.C. 553 and section 501 of the Department of 
Energy Organization Act, 42 U.S.C. 7191.
    Questions may be asked only by those conducting the hearing. At the 
conclusion of all initial oral statements, each person who has made an 
oral statement will be given the opportunity to make a rebuttal or 
clarifying statement. The statements will be given in the order in 
which the initial statements were made and will be subject to time 
limitations.
    Any further procedural rules needed for the proper conduct of the 
hearing will be announced by the presiding officer.
    A transcript of the hearing will be made by DOE and made available 
as part of the administrative record for this rulemaking. It will be on 
file for inspection at the DOE Freedom of Information Reading Room at 
the address indicated at the beginning of this notice.
    If DOE must cancel the public hearing, DOE will make every effort 
to publish an advance notice of such cancellation in the Federal 
Register. Actual notice of cancellation will also be given to all 
persons scheduled to speak. The hearing date may be canceled in the 
event no member of the public requests the opportunity to make an oral 
presentation.

List of Subjects in 10 CFR Part 451

    Electric utilities, Grant programs, Solar energy.

    Issued in Washington, DC, on May 9, 1994.
Christine A. Ervin,
Assistant Secretary, Energy Efficiency and Renewable Energy.

    For the reasons set forth in the preamble, title 10, chapter II, of 
the Code of Federal Regulations is proposed to be amended by adding a 
new part 451 to read as set forth below:

PART 451--RENEWABLE ENERGY PRODUCTION INCENTIVES

Sec.
451.1  Purpose and scope.
451.2  Definitions.
451.3  Who may apply.
451.4  What is a qualified renewable energy facility.
451.5  Where and when to apply.
451.6  What is the duration of incentive payments.
451.7  Metering requirements.
451.8  Application content requirements.
451.9  Procedures for processing applications.
451.10  Administrative appeals.

    Authority: 42 U.S.C. 7254; 42 U.S.C. 13317.


Sec. 451.1  Purpose and scope.

    (a) The provisions of this part cover the policies and procedures 
applicable to the determinations by DOE to make incentive payments for 
electric energy generated in a State and sold by a qualified renewable 
energy facility, as defined by 42 U.S.C. 13317 and this part.
    (b) Determinations to make incentive payments under this part are 
not subject to the provisions of 10 CFR part 600 and such payments 
shall not be construed to be financial assistance.


Sec. 451.2  Definitions.

    As used in this part--
    Closed-loop biomass means plant matter, other than standing timber, 
grown for the sole purpose of being used to generate electricity.
    Deciding Official means the Assistant Secretary for Energy 
Efficiency and Renewable Energy (or any DOE official to whom the 
authority of the Assistant Secretary may be redelegated by the 
Secretary of Energy). The duties of the Assistant Secretary may not be 
sub-delegated without the written approval of the Secretary.
    DOE means the Department of Energy.
    Finance Office means the DOE Office of the Chief Financial Officer 
(or any office to which that office's authority may be redelegated by 
the Secretary).
    Fiscal year means the Federal fiscal year beginning October 1 and 
ending on September 30 of the following calendar year.
    Nonprofit electrical cooperative means a cooperative association 
that is treated as tax exempt under section 501(c)(12) of the Internal 
Revenue Code and that is organized under the laws of any State for the 
purpose of providing electric service to its members and other 
customers.
    Renewable energy facility means a system or an integrated set of 
components necessary to generate electric energy in whole or in part 
from a renewable energy source, including--
    (1) Solar photovoltaic cells which convert sunlight to direct 
current electricity;
    (2) Solar thermal electric systems which use a fluid heated by the 
sun to drive a turbine generator;
    (3) Wind energy systems which capture wind energy through 
aerodynamically shaped blades rotating about a horizontal or vertical 
axis and drive an alternating current or direct current generator;
    (4) Biomass energy systems which use heat derived from combustion 
of plant matter or from combustion of gases or liquids derived from 
plant matter or animal waste or from combustion of gases derived from 
landfills in order to drive an electric generator; and
    (5) Geothermal systems which use natural heat stored underground in 
rocks or underground in an aqueous liquid or vapor, whether or not 
under pressure, in order to drive an electric generator.
    Renewable energy source means solar heat, solar light, wind, 
geothermal, and biomass energy except for exclusions set forth in 
section 451.4(e) of this part.
    State means the District of Columbia, Puerto Rico, and any of the 
States, territories, and possessions of the United States.


Sec. 451.3  Who may apply.

    Any owner, or operator with the written consent of the owner, but 
not both, of a qualified renewable energy facility, may apply for 
incentive payments for electric energy generated from a renewable 
energy source and sold.


Sec. 451.4  What is a qualified renewable energy facility.

    In order to be eligible for an incentive payment under this part, a 
renewable energy facility must meet the following qualifications--
    (a) Ownership. The owner must be-
    (1) A State (or agency, authority, or instrumentality thereof);
    (2) Any political subdivision of a State (or agency, authority, or 
instrumentality thereof);
    (3) Any corporation or association wholly owned, directly or 
indirectly, by a State or a political subdivision of a State; or
    (4) A nonprofit electric cooperative.
    (b) What must be owned. The owner must have all rights to the 
beneficial use of the renewable energy facility, and legal title must 
be held by, or for the benefit of, the beneficial owner.
    (c) Sales affecting interstate commerce. The renewable energy 
facility must generate electric energy for sale in, or affecting, 
interstate commerce among the States.
    (d) Type of renewable energy sources. Except as provided in 
paragraph (e) of this section, the source of the electric energy for 
which incentive payments is sought must be solar heat, solar light, 
wind energy, biomass energy, or geothermal energy.
    (e) Excluded renewable energy sources. The source of the electric 
energy for which incentive payments is sought may not be--
    (1) Municipal solid waste which is burned to create heat; or
    (2) A dry steam geothermal reservoir which has--
    (i) No mobile liquid in its natural state;
    (ii) Steam quality of 95 percent water, or higher; and
    (iii) An enthalpy for the total produced fluid greater than or 
equal to 1200 British thermal units per pound.
    (f) Time of first use. The date of the first use of a qualified 
renewable energy facility must occur during the period beginning with 
October 1, 1993, and ending on September 30, 2003.
    (g) Location. The qualified renewable energy facility must be 
located in a State.


Sec. 451.5  Where and when to apply.

    (a) The owner or operator of a qualified renewable energy facility 
may file an annual application for incentive payment under this part 
only in response to an annual notice in the Federal Register inviting 
applications.
    (b) An applicant may file the initial application for incentive 
payments under this part in the first fiscal year following that in 
which electricity generated from the qualified renewable energy 
facility is first eligible for such payments. Subsequent applications 
may be filed in the fiscal years following those in which the 
electricity eligible for incentive payments is generated.


Sec. 451.6  What is the duration of incentive payments.

    DOE may make incentive payments under this part with respect to a 
qualified renewable energy facility only for a 10-fiscal year period.


Sec. 451.7  Metering requirements.

    The number of kilowatt-hours generated and sold from a qualified 
renewable energy facility must be measured by a standard metering 
device that--
    (a) Meets generally accepted industry standards;
    (b) Is maintained in proper working order according to the 
instructions of its manufacturer; and
    (c) Is calibrated according to generally accepted industry 
standards.


Sec. 451.8  Application content requirements.

    Except as provided in paragraph (b) of this section, each 
application for incentive payments under this part must be signed by an 
authorized executive official and shall provide information showing to 
the satisfaction of DOE--
    (a) That the applicant is the owner or operator (with the written 
consent of an authorized executive official of the owner);
    (b) The name of the facility or other official designation by the 
owner;
    (c) The location of the qualified renewable energy facility and 
type of renewable energy source;
    (d) The name and telephone number of a point of contact to respond 
to questions or requests for additional information;
    (e) That the renewable energy facility satisfies the eligibility 
criteria under section 451.4 of this part and other requirements 
prerequisite to receipt of incentive payments under this part;
    (f) That components and equipment, representing at least 50 percent 
of the capital cost of the qualified renewable energy facility, were 
substantially manufactured in a State;
    (g) An independently audited, certified statement of the annual and 
monthly metered number of kilowatt-hours generated and sold to another 
entity during the fiscal year and the entity or class of customer to 
whom the electric energy was sold;
    (h) In the case of a renewable energy facility which generates 
electric energy using a fossil fuel, nuclear energy, or other non-
qualified energy source, in addition to a renewable energy source, an 
independently audited, certified statement of the number of kilowatt 
hours attributable to the renewable energy source, calculated by 
multiplying the monthly and annual total number of metered kilowatt-
hours generated and sold to another entity during the fiscal year by a 
fraction consisting of the heat input, as measured in British thermal 
units, received by the working fluid from the renewable energy source 
divided by the heat input, as measured in British thermal units, 
received by the working fluid from all energy sources;
    (i) The amounts of accrued electric energy by year, if any, for 
which the applicant previously applied and DOE did not make incentive 
payments as a result of insufficient appropriations;
    (j) Wire transfer payment instructions, if available; and
    (k) A statement agreeing to retain records of the independent audit 
for a period of three years and to provide prompt (no later than 10 
calendar days) access to, or copies of, such records in response to a 
written request by DOE.


Sec. 451.9  Procedures for Processing Applications.

    (a) Upon receipt, each application shall be date and time stamped 
and DOE shall acknowledge receipt thereof.
    (b) DOE may request supplementary information.
    (c) DOE may conduct an audit to verify the number of kilowatts 
claimed to have been generated from renewable energy sources.
    (d) Upon evaluating the application and any other available 
information, DOE shall determine whether the application meets the 
requirements of this part and, if appropriate, the number of kilowatt-
hours to be used in calculating the incentive payment.
    (e) Calculating payments. Subject to adjustments under paragraphs 
(f) and (g) of this section, incentive payments under this part to the 
owner or operator of any qualified renewable energy facility shall be 
calculated by multiplying the number of kilowatt-hours of electricity 
generated through the use of renewable energy sources and sold to 
another entity during the payment period by 1.5 cents per kilowatt-
hour.
    (f) Adjustments. The amount of the incentive payment to any owner 
or operator under this section shall be adjusted for inflation for each 
fiscal year beginning after calendar year 1993 in the same manner as 
provided in section 29(d)(2)(B) of the Internal Revenue Code of 1986, 
except that in applying such provisions the calendar year 1993 shall be 
substituted for calendar year 1979.
    (g) If there are insufficient appropriations available to make 
incentive payments for all approved applications, DOE shall--
    (1) On a priority (and if necessary on a pro rata) basis, make 
incentive payments first with respect to qualified renewable energy 
facilities using wind, solar, geothermal, and closed-loop biomass 
technologies;
    (2) In the event there are insufficient funds for full incentive 
payments to applicants other than those specified in paragraph (g)(1) 
of this section, reduce the amount of incentive payments to these other 
applicants on a prorated basis by the ratio of appropriated funds 
remaining after payments under paragraph (g)(1) to the total approved 
incentive payments for the other applicants; and
    (3) Treat the number of kilowatt-hours attributable to the portion 
of any incentive payment which is reduced under this paragraph as 
accrued energy that may be combined with energy subsequently produced 
from the same source for which subsequent application for incentive 
payment is made.
    (h) After calculating the amount of the incentive payment under 
paragraphs (e) through (g) of this section, the DOE Deciding Official 
shall then issue a notice of the determination to the applicant--
    (1) Approving the application as appropriate for payment and 
forwarding a copy to the DOE Finance Office with a request to pay;
    (2) Setting forth the calculation of the approved amount; and
    (3) Stating the amount of accrued kilowatt-hours, if any, and the 
energy source for same.
    (i) If the application does not meet the requirements of this part 
or some of the kilowatt-hours claimed in the application meriting an 
incentive payment are disallowed as unqualified, the Deciding Official 
shall issue a notice denying the application in whole or in part with 
an explanation of the basis for denial.


Sec. 451.10  Administrative appeals.

    (a) In order to exhaust administrative remedies, an applicant who 
receives a notice denying an application in whole or in part shall 
appeal, on or before 30 days from date of the notice issued by the DOE 
Deciding Official, to the Office of Hearings and Appeals, 1000 
Independence Avenue, SW., Washington, D.C. 20585, in accordance with 
the procedures set forth in subpart H of 10 CFR part 205.
    (b) If an applicant does not appeal under paragraph (a) of this 
section, the determination of the DOE Deciding Official shall become 
final for DOE and judicially unreviewable.
    (c) If an applicant appeals on a timely basis under paragraph (a) 
of this section, the decision and order of the Office of Hearings and 
Appeals shall be final for DOE.
    (d) If the Office of Hearings and Appeals orders an incentive 
payment, the DOE Deciding Official shall send a copy of such order to 
the DOE Finance Office with a request to pay.

[FR Doc. 94-11738 Filed 5-12-94; 8:45 am]
BILLING CODE 6450-01-P