[Federal Register Volume 60, Number 36 (Thursday, February 23, 1995)]
[Proposed Rules]
[Pages 10296-10302]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-4425]




[[Page 10295]]

_______________________________________________________________________

Part VII





Department of Energy





_______________________________________________________________________



Office of Policy



_______________________________________________________________________



10 CFR Part 600



Financial Assistance Rules: Eligibility Determination for Certain 
Financial Assistance Programs; Proposed Rule

  Federal Register / Vol. 60, No. 36 / Thursday, February 23, 1995 / 
Proposed Rules   
[[Page 10296]] 

DEPARTMENT OF ENERGY

Office of Policy

10 CFR Part 600

[Docket No. PO-RM-95-101]


Financial Assistance Rules: Eligibility Determination for Certain 
Financial Assistance Programs

AGENCY: Department of Energy.

ACTION: Notice of proposed rulemaking and public hearing.

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

SUMMARY: The Department of Energy (Department or DOE) today gives 
notice of a proposed general statement of policy to guide DOE officials 
in making eligibility determinations required by section 2306 of the 
Energy Policy Act of 1992. The proposed general statement of policy 
includes procedures and interpretations related to the statutory limits 
placed by section 2306 on eligibility to receive financial assistance 
under DOE programs authorized by Titles XX through XXIII of that Act.

DATES: Written comments (9 copies) must be received by DOE on or before 
April 24, 1995. A public hearing will be held on April 19, 1995 
beginning at 9:30 a.m. at the address listed below. Requests to speak 
must be received by April 17, 1995, by calling (202) 586-3012.

ADDRESSES: Written comments and requests to speak must be submitted to: 
Dr. Robert C. Marlay, Office of Science Policy, Office of Policy, U.S. 
Department of Energy, 1000 Independence Avenue, SW., Washington, D.C. 
20585, (202) 586-3012.
    Telecopied comments will not be accepted. The public hearing will 
be held in Room 1E-245, U.S Department of Energy, 1000 Independence 
Avenue SW., Washington, D.C. 20585. See Section V. for additional 
information concerning public comment procedures.

FOR FURTHER INFORMATION CONTACT: Dr. Robert C. Marlay, Office of 
Science Policy (Mail Stop PO-81), Office of Policy, U.S. Department of 
Energy, 1000 Independence Avenue, SW., Washington, D.C. 20585, (202) 
586-3900. Paul Sherry, Esq., Office of General Counsel (Mail Stop GC-
61), U.S. Department of Energy, 1000 Independence Avenue SW., 
Washington, D.C. 20585, (202) 586-2440.

SUPPLEMENTARY INFORMATION:

I. Background

    This notice sets forth a proposed general statement of policy, 
including procedures and interpretations, concerning implementation of 
the requirements of section 2306 of the Energy Policy Act of 1992 
(EPAct) (42 U.S.C. 13525). The general statement of policy, when 
finalized, will guide implementing DOE officials in making a special 
eligibility determination prerequisite to a financial assistance award 
to a company under Titles XX through XXIII of EPAct. Those titles 
relate to research, development, demonstration and commercialization 
programs in diverse areas of energy efficiency, energy supply, and 
related basic research.
    The Department has decided to adopt a general statement of policy 
and to codify that policy in the part of the Code of Federal 
Regulations containing the Department's financial assistance 
regulations. Such a codified policy statement is needed to communicate 
guidance on these implementation issues to Departmental officials and 
potential DOE program applicants. This policy statement applies only to 
DOE's implementation of section 2306 of EPAct; it is not intended to 
apply to any other agency or to the implementation of any other 
statutory eligibility requirement.
    The eligibility restrictions addressed in this policy statement 
apply to a broad range of DOE programs (see list of covered programs 
below), many of which pre-dated enactment of EPAct. These programs are 
conducted by a large number of program and contracting officials 
located in regional and field offices as well as DOE headquarters. This 
policy statement provides uniform guidance for DOE officials and for 
applicants to the broad array of covered programs.
    Section 2306 does not require the Department to conduct a 
rulemaking. Further, notice and comment rulemaking is not required by 
law for general statements of policy. However, DOE has chosen to 
publish the proposed general statement of policy in the Federal 
Register in order to ensure a full opportunity for public comment and 
input prior to finalizing the policy.
    Section 2306 provides for a two-part determination. An applicant 
must be found to satisfy the conditions of both parts in order to be 
eligible.
    The first part, set out in section 2306(1), involves a finding with 
regard to whether an award to the applicant would be in the economic 
interest of the United States. 42 U.S.C. 13525(1). The statute provides 
some illustrative examples of the kinds of evidence that would support 
such a finding: Investments in the United States in research, 
development, and manufacturing; significant contributions to employment 
in the United States; and agreements, with respect to any technology 
arising from financial assistance provided, to promote the manufacture 
within the United States of products resulting from that technology and 
to procure parts and materials for such manufacture from competitive 
suppliers.
    The second part of the determination, section 2306(2), involves two 
subparts, one of which must be satisfied. 42 U.S.C. 13525(2). The first 
subpart is satisfied if the applicant is a ``United States-owned 
company.'' The second subpart is satisfied if the applicant is found to 
be incorporated in the United States and the applicant's parent company 
is incorporated in a foreign country that: (a) Affords opportunities to 
United States-owned companies comparable to those afforded to any other 
company with regard to access to government-supported joint ventures in 
energy research and development; (b) affords opportunities to United 
States-owned companies comparable to those afforded to any other 
company with regard to general investment opportunities; and (c) 
affords adequate and effective protection to intellectual property 
rights owned by United States-owned companies.
    None of the statutory terms used in section 2306 is defined by 
EPAct, and the legislative history sheds no light on the intended 
meaning of such terms. Consequently, the Department's proposed 
interpretations are based on the common usage of these terms, as 
informed by their usage in similar contexts.
    The Department is of the view that the proposed general statement 
of policy sets forth a reasonable decisionmaking framework for the 
guidance of implementing officials. If any of the provisions of the 
policy would be unreasonable as applied, those officials would have the 
discretion to depart from its terms based upon particular facts and 
circumstances. Department officials must, in all cases, comply with the 
requirements of the statute.

II. Applicability of Eligibility Requirements

    Section 2306's eligibility requirements apply to applicants for 
``financial assistance under Titles XX through XXIII of this Act.'' 42 
U.S.C. 13525. EPAct does not define ``financial assistance.'' 
Consistent with the Federal Grant and Cooperative Agreement Act of 
1977, 31 U.S.C. 6301-6308, and the practices of other Executive 
agencies, DOE currently defines financial assistance instruments to 
include grants [[Page 10297]] and cooperative agreements, but not 
contracts and subcontracts. 10 CFR 600.3 (``financial assistance 
instruments are grants and cooperative agreements and subawards''). 
Contracts and subcontracts do not constitute financial assistance but 
instead provide for payment in exchange for procured products or 
services. See 31 U.S.C. 6303. Thus, the Department concludes that 
contracts and subcontracts, including cost-shared contracts and 
subcontracts, fall outside the scope of financial assistance and does 
not propose modifying the current definition of financial assistance in 
10 CFR 600.3 for purposes of this subpart.
    The Department's current definition of financial assistance also 
excludes cooperative research and development agreements (CRADAs). The 
Stevenson-Wydler Technology Innovation Act, 15 U.S.C. 3710a, which 
authorizes the use of CRADAs, does not authorize the transfer of funds 
to a CRADA participant and specifically distinguishes CRADAs from 
cooperative agreements. Thus any assistance provided under CRADAs would 
not be ``financial'' assistance as the term ordinarily is understood. 
We note as well that existing law governing the use of CRADAs contains 
a set of considerations for the selection of CRADA participants that 
address similar policy objectives. 15 U.S.C. 3710a(c)(4).
    Section 2306 applies to financial assistance ``under Titles XX 
through XXIII'' of EPAct. The intended effect of this statutory phrase 
is ambiguous. The Department proposes to interpret the range of 
activities covered by section 2306 to include all Department of Energy 
research and development programs either mentioned specifically in the 
text of Titles XX through XXIII or suggested by references to similar 
and related research and development activities in the conference 
reports on the Appropriations Acts for Energy and Water Development and 
for Interior and Related Agencies. This includes many programs and 
program activities that were initiated prior to the enactment of EPAct 
under authority of pre-existing law. Thus, for many programs, there are 
now two or more authorities. Comment is requested on this 
interpretation.
    A list of covered programs for fiscal year 1995 (FY95) is set forth 
in the discussion of the term ``covered program'' in section III below. 
This list will be updated each fiscal year and published in the Federal 
Register to account for changes in appropriated activities undertaken 
under Titles XX through XXIII of EPAct.

III. Section-By-Section Analysis

    Today's proposed policy statement would be codified as a new 
subpart F in 10 CFR part 600 where the Department's general financial 
assistance regulations are codified. The following is a discussion of 
the new sections that would make up subpart F.


Sec. 600.500  Purpose and scope.

    This section states that the subpart provides procedures and 
interpretations to guide DOE officials in making eligibility 
determinations under section 2306 of the EPAct.


Sec. 600.501  Definitions.

    The definition section begins by alerting readers that the existing 
definitions in Sec. 600.3 of the general subpart are applicable to the 
new subpart F. Section 600.3 contains definitions of ``applicant,'' 
``cooperative agreement,'' ``financial assistance,'' ``grant,'' and 
``State.''
    The term ``company'' is defined to mean any for-profit business 
entity. The eligibility requirements of section 2306 would apply only 
to companies. This definition, based on common usage of the term 
company, is intended to include for-profit corporations, general or 
limited partnerships, sole proprietorships, and other forms of business 
entities. It is also intended to cover joint ventures involving one or 
more such entities. The definition does not include governmental 
entities, and thus such entities would not be subject to this 
restriction on eligibility to receive financial assistance. Moreover, 
the definition does not include non-profit organizations. The 
Department invites comment on whether it is appropriate to exclude all 
non-profit organizations from this definition, or whether it would be 
more appropriate to exclude a narrower class of educational and 
charitable organizations, such as organizations exempted from Federal 
income tax under section 501(c)(3) of the Internal Revenue Code.
    The term ``covered program'' is defined in order to have a 
convenient term for referring to the list of activities under Titles XX 
through XXIII of the Energy Policy Act of 1992 to which the section 
2306 eligibility restrictions apply. Set out below is the proposed list 
of covered programs for FY95:

                         Covered Programs--FY 95                        
------------------------------------------------------------------------
                 Fossil energy R & D                    EPACT sections  
------------------------------------------------------------------------
Petroleum:                                                              
  All Programs......................................  Sec. 2011, 2012   
Gas:                                                                    
  Natural Gas Research..............................  Sec. 2013-2015,   
                                                       2112             
All programs, including:                                                
  Resource & Extraction.............................  Sec. 2013, 2014   
  Delivery & Storage................................  Sec. 2013, 2014   
  Utilization.......................................  Sec. 2013, 2014   
  Turbines..........................................  Sec. 2112         
  Environmental Research & Regulatory Analysis......  Sec. 2013, 2014   
  Midcontinent Energy Research Center...............  Sec. 2013, 2015   
Fuel cells:                                           Sec. 2115         
  All Programs, including:                                              
    Advanced Research...............................  Sec. 2115         
    Molten Carbonate Systems........................  Sec. 2115         
    Advanced Concepts...............................  Sec. 2115         
Energy conservation:                                                    
  Transportation....................................  Sec. 2021-2025,   
                                                       2027, 2028, 2112 
  Alternative Fuels Utilization.....................  Sec. 2021, 2023   
  Materials Development.............................  Sec. 2021         
  Heat Engine Development...........................  Sec. 2021, 2112   
  Electric & Hybrid Propulsion Development..........  Sec. 2021, 2025   
  Implementation & Deployment.......................  Sec. 2021         
  Management........................................  Sec. 2021         
  Capital Equipment.................................  Sec. 2021         
  Advanced Automotive Fuel Economy..................  Sec. 2021, 2022   
  Biofuels User Facility............................  Sec. 2021, 2024   
  Advanced Diesel Emissions Program.................  Sec. 2021, 2027   
  Telecommuting Study...............................  Sec. 2021, 2028   
Utility:                                              Sec. 2101         
  All programs......................................                    
Industry............................................  Sec. 2101-2108    
  All Programs, Including:                                              
    Industrial Wastes...............................  Sec. 2101         
    Municipal Solid Wastes..........................  Sec. 2101         
    Cogeneration....................................  Sec. 2101         
    Electric Drives.................................  Sec. 2101, 2105   
    Materials and Metals Processing.................  Sec. 2101, 2107   
    Other Process Efficiency........................  Sec. 2101         
    Process Heating & Cooling.......................  Sec. 2101, 2102   
    Implementation & Deployment.....................  Sec. 2101         
    Management......................................  Sec. 2101         
    Capital Equipment...............................  Sec. 2101         
    National Advanced Manufacturing Tech Initiative.  Sec. 2101, 2202   
    Pulp & Paper....................................  Sec. 2101, 2103   
    Steel, Aluminum, and Metal Research.............  Sec. 2101, 2106   
    Energy Efficient Environmental Program..........  Sec. 2101, 2108   
  Buildings.........................................  Sec. 2101-2108    
    All Programs, including:                                            
      Federal Energy Management Program.............  Sec. 2101         
      Implementation & Deployment...................  Sec. 2101         
[[Page 10298]]                                                          
                                                                        
      Management and Planning.......................  Sec. 2101         
      Capital Equipment.............................  Sec. 2101         
      Advanced Buildings for 2005...................  Sec. 2101, 2104   
      Building Systems..............................  Sec. 2101         
      Building Envelope.............................  Sec. 2101         
      Building Equipment............................  Sec. 2101         
      Codes and Standards...........................  Sec. 2101         
  Energy Supply R & D                                                   
    Energy Research                                                     
      Fusion Energy.................................  Sec. 2114         
        All Programs, including:                                        
          Confinement Systems.......................  Sec. 2114         
          Development & Technology..................  Sec. 2114         
          Applied Plasma Physics....................  Sec. 2114         
          Planning & Projects.......................  Sec. 2114         
          Inertial Fusion Energy....................  Sec. 2114         
          Program Direction-Op Exp..................  Sec. 2114         
          Capital Equipment & Construction..........  Sec. 2114         
        Basic Energy Sciences                         Sec. 2203         
          All Activities, including: Materials        Sec. 2203         
           Sciences.                                                    
          Chemical Sciences.........................  Sec. 2203         
          Energy Biosciences........................  Sec. 2203         
          Engineering & Geosciences.................  Sec. 2203         
          Applied Math Sciences.....................  Sec. 2203, 2204   
          Advanced Energy Projects..................  Sec. 2203         
          Program Direction.........................  Sec. 2203         
          Capital Equipment.........................  Sec. 2203         
  Advisory & Oversight/Program Direction............  Sec. 2203         
  Advanced Neutron Source Sec. 2203.................                    
  Energy Research Analysis..........................  Sec. 2203         
  University & Science Education Programs...........  Sec. 2203         
  Experimental Program to Stimulate Competitive       Sec. 2203         
   Research.                                                            
  Laboratory Technology Transfer....................  Sec. 2203         
  Multi-Program Laboratory Support..................  Sec. 2203         
Nuclear Energy:                                                         
  Light Water Reactor...............................  Sec. 2123, 2126   
  Advanced Reactor R & D............................  Sec. 2121, 2122,  
                                                       2124, 2126       
  Facilities........................................  Sec. 2126         
Solar & Renewables:                                                     
  Solar & Other Energy..............................  Sec. 2021, 2026,  
                                                       2111, 2117       
  All Programs, including:                                              
    Photovoltaics...................................  Sec. 2111         
    Biofuels........................................  Sec. 2021, 2013,  
                                                       2024, 2111       
    Solar Technology Transfer.......................  Sec. 2111         
    Program Direction--Other Solar Energy...........  Sec. 2111         
    Solar Building Technology Research..............  Sec. 2111, 2104   
    Solar Thermal Energy Systems....................  Sec. 2111         
    Wind Energy Systems.............................  Sec. 2111         
    Ocean Energy Systems............................  Sec. 2111         
    International Solar Energy Program..............  Sec. 2111         
    Resource Assessment.............................  Sec. 2111         
    Program Support.................................  Sec. 2111         
  Geothermal........................................  Sec. 2111         
  Hydrogen Research.................................  Sec. 2026         
  Electric Energy Systems including:                  Sec. 2117, 2111   
   Superconductivity.                                                   
  Energy Storage Systems............................  Sec. 2111         
Environmental Rest & Waste Management:                                  
  Facility Transition--Fast Flux Test Facility......  Sec. 2116         
  Civilian Waste R & D..............................  Sec. 2113         
  Electric & Magnetic Fields Research and Public      Sec. 2118         
   Dissemination Program.                                               
  Spark M. Matsunaga Renewable Energy & Ocean         Sec. 2111, 2119   
   Technology Center.                                                   
------------------------------------------------------------------------

    The term ``parent company'' is defined as a company that exercises 
ultimate ownership of the applicant company. The parent company would 
be identified by first determining whether any company owns a majority 
of the applicant company's voting securities. If so, then the same test 
would be applied to that company, i.e., does any company own a majority 
of that company's voting securities? The parent company would be the 
company that exercises control over the applicant company by means of 
this chain of majority stock ownership, and which itself is not subject 
to the majority stock ownership of any other company.
    DOE would interpret the term ``parent company'' to mean the 
ultimate parent company as just described in order to avoid confusion 
in cases where an applicant company and its immediate parent are both 
organized in the U.S., but where the immediate parent is, in turn, 
owned by a company organized abroad.
    The Department recognizes that there may be situations in which one 
company effectively controls the actions of another without owning a 
majority of its voting securities. However, given that the sole purpose 
of this inquiry into corporate lineage would be to identify the foreign 
country with which a non-U.S.-owned applicant can be most directly 
associated, this approach is felt to be both adequate and appropriate.
    The definition of ``United States'' is a standard definition used 
in many of the Department's programs. It includes the 50 States, the 
District of Columbia, and all commonwealths, territories and 
possessions of the United States.
    The term ``United States-owned company'' is a key part of section 
2306(2). The Department proposes to permit an applicant to use either 
of two alternative definitions of this term: (1) A company that has 
majority ownership by individuals who are citizens of the United 
States, or (2) a company organized under the laws of a State that 
either has no parent company or has an ultimate parent company that is 
organized under the laws of a State.
    The first alternative is based on the statutory definition of the 
term ``United States-owned company'' used in a similar eligibility 
limitation, which defines United States-owned company in terms of 
majority ownership or control by citizens of the United States. 15 
U.S.C. 278n(j)(2). This test of ownership is based on the citizenship 
of individual owners or shareholders. Where an applicant company is a 
wholly- or majority-owned subsidiary of a parent company, or a majority 
of its stock is held by other corporations or institutional investors 
rather than individuals, the ownership analysis would be applied to 
these corporations or institutional investors to determine whether they 
are owned by individuals who are citizens of the United States.
    The second alternative definition of United States-owned company is 
a company organized under the laws of a State that either has no parent 
company or has an ultimate parent organized under the laws of a State. 
This alternative is based on a presumption that companies incorporated 
or organized in the U.S. that are not majority-owned by a foreign 
company will not have sufficiently strong connection to any foreign 
country to justify using the section 2306(2)(B) reciprocity 
determinations. The Department will request applicants claiming to be 
U.S.-owned companies to make a certification to that effect.
    The term ``voting security,'' which is used in the definition of 
parent company, is defined by reference to the statutory definition in 
the Public Utility Holding Company Act. 15 U.S.C. 15b(17). This broad 
definition includes any security that gives the holder a vote 
[[Page 10299]] in the direction or management of the company, such as 
common stock in a corporation and partnership interests in a 
partnership.


Sec. 600.502  What DOE Must Determine

    This section follows the sequence of provisions of section 2306 
which provide for the two mandatory elements of the eligibility 
determination. The first mandatory element is a finding that the 
applicant's participation in a particular program is in the economic 
interest of the United States. The second mandatory element has two 
alternative subparts--either (a) the company is a U.S.-owned company; 
or (b) the company is found to be incorporated in the U.S. and the 
government of the parent company's country of incorporation affords 
U.S.-owned companies local investment opportunities comparable to those 
offered to any other company on investment and access to energy 
research and development, and protects U.S.-owned intellectual property 
in that country.
    In order to avoid seemingly unintended consequences in interpreting 
section 2306(2)(B), the Department proposes interpreting the statutory 
phrase ``company * * * incorporated in the United States'' to include 
both corporations incorporated in the U.S. and other companies, defined 
as for-profit business entities, organized under the laws of any State 
in the U.S. Thus, for example, a partnership organized under State law 
in the U.S. would be included. Similarly, the Department proposes 
interpreting the statutory phrase ``parent company which is 
incorporated'' in a foreign country to include both corporations and 
other for-profit business entities organized under foreign law.
    The Department invites comment on how to make the required 
determination in the context of relatively small financial assistance 
awards. Under the proposed rule, all applicants would need to submit 
the same types of information and the Department would undertake the 
same type of determination. One possible alternative is to ask 
applicants for awards below $100,000 to certify that they satisfy all 
the eligibility requirements of section 2306(1) and (2)(a), if 
applicable, and to rely on such a certification unless the Department 
has reason to believe that further investigation is warranted. This 
approach would permit the Department to target its administrative 
resources to making eligibility determinations for larger awards, and 
at the same time preserve the Department's appropriate role in 
reviewing eligibility for smaller awards where there is reason to 
question an applicant's eligibility. The Department invites comment on 
such an alternative for small awards.


Sec. 600.503  Determining the economic interest of the United States.

    This section provides guidelines as to information that may support 
an affirmative determination that a financial assistance award would be 
in the economic interest of the United States. Section 600.503 
describes examples, based on the statute, of the type of evidence that 
may be considered. Section 600.503 of the general statement of policy 
makes it clear that any other evidence that shows that an award would 
be in the economic interest of the United States can be considered. 
Determinations concerning the economic interest of the United States 
will be based on consideration of all available evidence.
    The evidence to be considered concerning investments or employment 
in the U.S. may include evidence related to affiliates of the applicant 
company (e.g., the parent company of an applicant corporation, the 
general partners in an applicant partnership). DOE will consider the 
facts relating to each applicant in context.
    Where the applicant for financial assistance is a joint venture, 
DOE would apply the economic interest test of section 2306(1) to the 
joint venture as a whole. Under section 2306(2), however, DOE would 
apply the relevant tests to each company participating in the joint 
venture.
    In evaluating whether an applicant's participation is in the 
economic interest of the United States, DOE may consider the activities 
of the applicant's contractors or suppliers or other companies that 
would have a significant role in the government-supported work. In 
determining which contractors, suppliers or other companies may be 
considered in assessing an applicant's eligibility, DOE would consider 
whether the company's participation is a factor advanced by the 
applicant for consideration in evaluating the merits of the 
application. For example, where an applicant chooses to rely on the 
qualifications of named component suppliers or other contractors in 
making an application to a covered program, the activities of any such 
named contractors or suppliers may be evaluated in determining whether 
the applicant's participation is in the economic interest of the United 
States.


Sec. 600.504  Information an applicant must submit.

    This section makes clear that the burden of producing information 
to support an affirmative determination concerning the economic 
interest of the United States and the ownership status of the applicant 
would rest on the applicant. The allocation of this burden to the 
applicant is appropriate because the applicant will usually be in the 
best position to provide relevant information. The Department may 
request that information needed to make an eligibility determination be 
submitted with the application for financial assistance, or may 
specify, in the solicitation, a later stage in the process for 
submission of such information.
    If an applicant for financial assistance proposes to demonstrate 
that an award is in the economic interest of the United States by 
asserting that it will undertake future action, such as promoting 
manufacture of products in the United States or procuring parts and 
materials from competitive suppliers, DOE will require it to provide an 
appropriate certification concerning such future action. In support of 
such certifications, the applicant should also provide a brief 
commercialization plan for the technology that is expected to result 
from the program-supported research and development. The Department 
expects to give considerable weight to these plans in assessing whether 
the applicant's participation is in the economic interest of the United 
States.
    In order to be treated as a ``United States-owned company'' for 
eligibility purposes, an applicant would be required to submit an 
appropriate certification that it satisfies the definition in 
Sec. 600.501.
    The section concludes with a paragraph providing for DOE requests 
for information in addition to that submitted with the application for 
financial assistance, if necessary.


Sec. 600.505  Other information DOE may consider.

    This section identifies certain kinds of information, in addition 
to the information provided by the applicant, that may be relevant in 
making the required findings. DOE, in making the findings required 
under section 2306(2)(B), intends to consult with and seek information 
from a number of sources, including, but not limited to, appropriate 
agencies of the federal government as well as publicly available 
information.
    With respect to whether a foreign government ``affords to United 
States-owned companies opportunities, [[Page 10300]] comparable to 
those afforded to any other company, to participate in any joint 
venture similar to those authorized by the Act,'' DOE expects to 
consider the regime that governs eligibility of U.S.-owned companies 
seeking to participate in research and development sponsored by that 
government.
    The DOE analysis of this issue would consider discrimination 
against foreign subsidiaries of U.S.-owned companies relative to any 
other company in providing access to research and development programs. 
DOE would consider both discriminatory policies and discriminatory 
practices. Where a foreign government does not have research and 
development programs comparable to those authorized by EPAct, the 
absence of such programs would not preclude companies headquartered in 
that country from participating in DOE programs.
    The statutory phrase ``joint venture similar to those authorized 
under this Act'' has uncertain meaning given that EPAct authorizes a 
number of government-supported programs, but the Department has not, to 
date, used joint ventures per se. Given the apparent intent of the 
statute to promote opportunities comparable to those afforded to any 
other company in energy research and development programs, DOE would 
construe this phrase to mean government-supported research and 
development programs similar to those covered by section 2306.
    With regard to whether a foreign country ``affords to United 
States-owned companies local investment opportunities comparable to 
those afforded to any other company,'' DOE expects to consider a review 
of applicable international obligations to provide to U.S. investors 
opportunities comparable to those offered to other companies.
    With regard to protection of intellectual property rights in 
foreign countries, DOE expects to consider certain lists that contain 
relevant information prepared by other Executive agencies, such as the 
``Special 301 Priority Foreign Country List,'' issued by the U.S. Trade 
Representative.
    In making the determinations required under section 2306(2)(B), the 
Department expects to seek the advice of other appropriate federal 
agencies.

IV. Procedural Requirements

A. Review Under Executive Order 12866

    Today's regulatory action has been determined to be a ``significant 
regulatory action'' under Executive Order 12866, ``Regulatory Planning 
and Review,'' 58 FR 51735 (October 4, 1993). Accordingly, today's 
action was reviewed by the Office of Information and Regulatory 
Affairs.
    The draft of today's action and any other documents submitted to 
OIRA for review have been made a part of the rulemaking record and are 
available for public review as provided in the ADDRESSES section of 
this notice.

B. Review Under Paperwork Reduction Act

    No new information collection requirements subject to the Paperwork 
Reduction Act, 44 U.S.C. 3501 et seq., are imposed by today's 
regulatory action.

C. Review Under the National Environmental Policy Act

    Pursuant to the Council on Environmental Quality Regulations (40 
CFR parts 1500-1508), the Department of Energy has established 
regulations for its compliance with the National Environmental Policy 
Act of 1969 (42 U.S.C. 4321 et seq.). Pursuant to appendix A of subpart 
D of 10 CFR part 1021, the Department has determined that today's 
regulatory action is categorically exempt as a procedural rule for 
implementation of statutory requirements.

D. Review Under Executive Order 12612

    Executive Order 12612, 52 FR 41685 (October 30, 1987), requires 
that rules be reviewed for any substantial direct effect 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 direct effects, then 
the Executive Order requires preparation of a federalism assessment to 
be used in all decisions involved in promulgating and implementing a 
policy action. Today's action interprets the section 2306 eligibility 
requirements to be inapplicable to State applications for financial 
assistance. Therefore, the Department has determined that they will not 
have a substantial direct effect on the institutional interests or 
traditional functions of States.

E. 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 regulations define key terms and are clear on such 
matters as exhaustion of administrative remedies and preemption. The 
Department certifies that today's regulatory action meets the 
requirements of section 2(a) and (b)(2) of Executive Order 12778.

V. Opportunity for Public Comment

A. Written Comments

    Interested persons are invited to participate in this proceeding by 
submitting data, views, or comments with respect to today's notice.
    Nine copies of written comments should be submitted to the address 
indicated in ADDRESSES section of this notice. Comments should be 
identified on the outside of the envelope and on the documents 
themselves with the designation ``Financial Assistance Rules: 
Eligibility Determination for Certain Financial Assistance Programs, 
Docket No. PO-RM-95-101.'' In the event any person wishing to provide 
written comments cannot provide nine copies, alternative arrangements 
can be made in advance with the Department.
    All 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, 1E-
090, Forrestal Building, 1000 Independence Avenue, S.W., Washington, 
D.C. 20585, 202-586-6020, between 9 a.m. and 4 p.m., Monday through 
Friday, except Federal holidays.
    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. The Department 
reserves the right to determine the confidential status of the 
information and to treat it accordingly under 10 CFR 1004.11.

B. Public Hearing

    One public hearing will be held pursuant to this notice at the 
time, date and place indicated above in the DATES and ADDRESSES 
sections of this notice. Any person who has an interest in making an 
oral presentation should make a written request to speak. Such a 
request should be sent to the address given in the ADDRESSES section of 
this notice and must be received by 4:30 p.m. on the date specified in 
the DATES section. The person also should provide a daytime phone 
number where the person may be reached. Those persons requesting an 
opportunity to make an [[Page 10301]] oral presentation should bring 
nine (9) copies of their statement to the hearing.
    DOE will establish the procedures governing the conduct of the 
hearing. The length of each presentation will be limited to ten (10) 
minutes. A DOE official will preside at the hearing, and may ask 
questions. Any further procedural rules needed for the proper conduct 
of the hearing will be announced by the presiding officer.
    If DOE must cancel the hearing, DOE will make every effort to give 
advance notice of the cancellation. The hearing may be cancelled in the 
event no requests to speak are received by the deadline for submission 
of such a request.

List of Subjects in 10 CFR Part 600

    Administrative practice and procedure, Grant programs.

    Issued in Washington, D.C., on this 17th day of February 1995.
Susan F. Tierney,
Assistant Secretary, Policy, Planning, and Program Management.

    For the reasons stated in the preamble, part 600 of title 10, 
Subchapter H of the Code of Federal Regulations is proposed to be 
amended as set forth below:

Part 600--FINANCIAL ASSISTANCE RULES

    1. The authority citation for part 600 continues to read as 
follows:

    Authority: 42 U.S.C. 7254, 7256; 31 U.S.C. 6301-6308, unless 
otherwise noted.

    2. New subpart F, consisting of Secs. 600.500 through 600.505, is 
added to read as follows:

Subpart F--Eligibility Determination for Certain Financial Assistance 
Programs--General Statement of Policy

Sec.
600.500  Purpose and scope.
600.501  Definitions.
600.502  What must DOE determine.
600.503  Determining the economic interest of the United States.
600.504  Information an applicant must submit.
600.505  Other information DOE may consider.

Subpart F--Eligibility Determination for Certain Financial 
Assistance Programs--General Statement of Policy


Sec. 600.500  Purpose and scope.

    This subpart implements section 2306 of the Energy Policy Act of 
1992, 42 U.S.C. 13525, and sets forth a general statement of policy, 
including procedures and interpretations, for the guidance of 
implementing DOE officials in making mandatory pre-award determinations 
of eligibility for financial assistance under Titles XX through XXIII 
of that Act.


Sec. 600.501  Definitions.

    The definitions in Sec. 600.3 of this part are applicable to this 
subpart, and in addition, as used in this subpart:
    Act means the Energy Policy Act of 1992.
    Company means any for-profit business entity.
    Covered program means a program under Titles XX through XXIII of 
the Act, as listed separately and updated annually by the Department of 
Energy for each fiscal year.
    Parent company means a company that:
    (1) Exercises ultimate ownership of the applicant company either 
directly, by ownership of a majority of that company's voting 
securities, or indirectly, by control over a majority of that company's 
voting securities through a series of one or more intermediate 
subsidiary companies, and
    (2) Is not itself subject to the ultimate ownership control of 
another company.
    United States means the several States, the District of Columbia, 
and all commonwealths, territories, and possessions of the United 
States.
    United States-owned company means:
    (1) A company that has majority ownership by individuals who are 
citizens of the United States, or
    (2) A company organized under the laws of a State that either has 
no parent company or has a parent company organized under the laws of a 
State.
    Voting security has the meaning given the term in the Public 
Utility Holding Company Act (15 U.S.C. 15b(17)).


Sec. 600.502  What must DOE determine.

    A company shall be eligible to receive financial assistance only if 
DOE finds that--
    (a) Consistent with Sec. 600.503, the company's participation in a 
covered program would be in the economic interest of the United States; 
and
    (b) The company is either--
    (1) A United States-owned company; or
    (2) Incorporated or organized under the laws of any State and has a 
parent company which is incorporated or organized under the laws of a 
country which--
    (i) Affords to the United States-owned companies opportunities, 
comparable to those afforded to any other company, to participate in 
any joint venture similar to those authorized under the Act;
    (ii) Affords to United States-owned companies local investment 
opportunities comparable to those afforded to any other company; and
    (iii) Affords adequate and effective protection for the 
intellectual property rights of United States-owned companies.


Sec. 600.503  Determining the economic interest of the United States.

    In determining whether participation of an applicant company in a 
covered program would be in the economic interest of the United States 
under paragraph (a) of Sec. 600.502, DOE may consider any evidence 
showing that a financial assistance award would be in the economic 
interest of the United States including, but not limited to--
    (a) Investments by the applicant company and its affiliates in the 
United States in research, development, and manufacturing (including, 
for example, the manufacture of major components or subassemblies in 
the United States);
    (b) Significant contributions to employment in the United States by 
the applicant company and its affiliates; and
    (c) An agreement by the applicant company, with respect to any 
technology arising from the financial assistance being sought--
    (1) To promote the manufacture within the United States of products 
resulting from that technology (taking into account the goals of 
promoting the competitiveness of United States industry); and
    (2) To procure parts and materials from competitive suppliers.


Sec. 600.504  Information an applicant must submit.

    (a) Any applicant for financial assistance in a covered program 
shall submit with the application for financial assistance, or at such 
later time as may be specified by DOE, evidence for DOE to consider in 
making findings required under Sec. 600.502(a) and findings concerning 
ownership status under Sec. 600.502(b).
    (b) The applicant for financial assistance has the burden of 
producing sufficient information to warrant making each required 
finding under Sec. 600.502.
    (c) If an applicant for financial assistance is submitting evidence 
relating to future undertakings, such as an agreement under paragraph 
(c) of Sec. 600.503 to promote manufacture in the United States of 
products resulting from a technology developed with financial 
assistance or to procure parts and materials from competitive 
suppliers, the applicant shall submit a certification affirming 
acceptance of these undertakings. The applicant should also 
[[Page 10302]] briefly describe its plans, if any, for any 
manufacturing of products arising from the program-supported research 
and development, including the location where such manufacturing is 
expected to occur.
    (d) If an applicant for financial assistance is claiming to be a 
United States-owned company, the applicant must submit a certification 
affirming that it falls within the definition of that term provided in 
Sec. 600.501.
    (e) DOE may require submission of additional information deemed 
necessary to make any portion of the determination required by 
Sec. 600.502.


Sec. 600.505  Other information DOE may consider.

    In making the determination under paragraph (b)(2) of Sec. 600.502, 
DOE may--
    (a) consider information on the relevant international and domestic 
law obligations of the country of incorporation of the parent company 
of an applicant;
    (b) consider information relating to the policies and practices of 
the country of incorporation of the parent company of an applicant with 
respect to:
    (1) The eligibility criteria for, and the experience of United 
States-owned company participation in, energy-related research and 
development programs;
    (2) Local investment opportunities afforded to United States-owned 
companies; and
    (3) Protection of intellectual property rights of United States-
owned companies;
    (c) seek and consider advice from other federal agencies, as 
appropriate; and
    (d) consider any publicly available information in addition to the 
information provided by the applicant.

[FR Doc. 95-4425 Filed 2-22-95; 8:45 am]
BILLING CODE 6450-01-P