[Federal Register Volume 60, Number 83 (Monday, May 1, 1995)]
[Rules and Regulations]
[Pages 21322-21364]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-9915]
[[Page 21321]]
_______________________________________________________________________
Part III
Department of Health and Human Services
_______________________________________________________________________
Office of the Secretary
_______________________________________________________________________
45 CFR Part 96
Block Grant Programs; Final Rule
Federal Register / Vol. 60, No. 83 / Monday, May 1, 1995 / Rules and
Regulations
[[Page 21322]]
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Office of the Secretary
45 CFR Part 96
Block Grant Programs
AGENCY: Administration for Children and Families, HHS.
ACTION: Final rule.
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SUMMARY: This final rule amends the regulations of the Department of
Health and Human Services (HHS) governing the administration of block
grant programs; it applies specifically to the low-income home energy
assistance program (LIHEAP). The rule revises, and makes final,
provisions included in an interim final rule that amended the block
grant regulations and implemented certain changes to the LIHEAP statute
made by the Augustus F. Hawkins Human Services Reauthorization Act of
1990. These changes involve the Department's response to complaints,
reduction in the percent of LIHEAP funds that grantees may carry
forward from one fiscal year to the next, waiver authority to increase
the percent of LIHEAP funds that grantees may use for weatherization, a
requirement for additional outreach and intake services under certain
circumstances, and a leveraging incentive program. This final rule also
makes several related, largely technical and conforming, amendments to
the block grant regulations.
EFFECTIVE DATE: This final rule is effective beginning May 31, 1995,
with the exception of section 96.87, Leveraging incentive program,
which is effective beginning October 1, 1995. Section 96.87 as included
in the interim final rule published in the Federal Register on January
16, 1992 (57 FR 1960), is effective through September 30, 1995.
FOR FURTHER INFORMATION CONTACT:
Janet M. Fox, 202-401-9351, or Ann Bowker, 202-401-5308.
SUPPLEMENTARY INFORMATION: The Low-Income Home Energy Assistance Act of
1981, title XXVI of the Omnibus Budget Reconciliation Act of 1981
(Public Law 97-35), established the low-income home energy assistance
program. On July 6, 1982, HHS issued final regulations for LIHEAP and
the six other blocks grants it administered at that time (45 FR 29472).
Since then, the statute and the block grant regulations have been
amended several times.
The Augustus F. Hawkins Human Services Reauthorization Act of 1990
(Pub. L. 101-501) was enacted on November 3, 1990. Title VII of Public
Law 101-501 contains amendments to the Low-Income Home Energy
Assistance Act, including several changes effective in FY 1991 and FY
1992. These changes concern HHS's response to formal complaints,
reduction in the maximum amount that grantees may carry forward from
one fiscal year to the next, waiver authority to increase the statutory
weatherization assistance maximum, a requirement for additional
outreach and intake services in certain cases, and a leveraging
incentive program.
On January 16, 1992, HHS published an interim final rule (57 FR
1960) amending the block grant regulations and implementing these
statutory changes, as required under Public Law 101-501. The interim
final rule allowed a 60-day comment period.
We received 25 letters commenting on the interim final rule--two
from members of Congress, twelve from State LIHEAP grantees, one from a
county, two from Indian tribal grantees, three from home energy
suppliers, and five from others. Based on the comments we received and
on our experience over the two and half years the interim rule has been
in effect, we have revised the interim rule as appropriate. It is now
being made final.
In addition to the statutory changes implemented by the interim
final rule published January 16, 1992, Public Law 101-501 includes
several changes scheduled to affect LIHEAP beginning in FY 1994. These
changes concern forward funding based on a program year of July 1
through June 30--whose implementation, initially set for FY 1993, was
delayed until FY 1994 by the Departments of Labor, Health and Human
Services, and Education, and Related Agencies Appropriations Act, 1993
(Public Law 102-394)--and the end of authority to transfer LIHEAP funds
to other HHS block grants. The Department published a notice of
proposed rule making (NPRM) regarding these changes, and other proposed
changes involving both LIHEAP and other HHS block grants, on November
16, 1993 (58 FR 60498). The NPRM allowed a 45-day comment period. Since
then, the Human Services Amendments of 1994 (Public Law 103-252),
enacted May 18, 1994, changed the forward (or advance) funding program
year to October 1 through September 30--the same dates as the current
Federal fiscal year, but funded one year in advance. The November 16,
1993, proposed rule also included some provisions that had originally
been included in a notice of proposed rulemaking issued by the
Department on July 17, 1992. Based on comments received on these
notices of proposed rulemaking, HHS intends to publish a separate final
rule implementing appropriate provisions, except for the provisions
described below, which are incorporated into the final rule published
today.
The final rule published today includes several changes proposed in
the November 1993 NPRM. They involve issues that were also addressed in
the January 1992 interim rule. One change gives grantees the option to
submit a preliminary request for a waiver to increase the statutory
weatherization maximum. Other changes relate to the end of grantees'
authority to transfer LIHEAP funds to other block grants after FY 1993,
and reduction in the amount grantees may carry forward from one fiscal
year to the next, and are included in the regulations' discussion of
the time period for obligation of LIHEAP funds. These technical
amendments implement provisions of Public Law 101-501. We received one
comment from a State LIHEAP grantee on the weatherization waiver in the
NPRM, and none on the end of transfer authority or reduction in maximum
carryover.
The final rule also makes a technical amendment deleting reference
to the transfer authority in the regulations' discussion of uses of
leveraging incentive funds, because this authority has ended.
Finally, the final rule makes a technical amendment changing the
due date of grantees' reports on their leveraging activities, in
accordance with the Human Services Amendments of 1994 (Pub. L. 103-
252). Title III of Public Law 103-252 contains amendments to the Low-
Income Home Energy Assistance Act. We plan to address most of these
statutory amendments in a proposed rule at a later date.
The provisions of the regulations, together with the comments we
received and our responses, are discussed below.
Section-by-Section Analysis of Changes in the Regulations
Subpart B--General Procedures
Section 96.14 Time Period for Obligation and Expenditure of Grant
Funds
Public Law 101-501 amended section 2607(b)(2) of the LIHEAP
statute, reducing the maximum amount of LIHEAP funds that grantees may
carry forward for obligation in the succeeding fiscal year, from 15 to
10 percent of the funds payable to the grantee and not transferred to
another HHS block grant. [[Page 21323]] This change was effective
beginning with FY 1991 funds carried forward to FY 1992. In addition,
Public Law 101-501 amended section 2604(f)(2) of the statute, ending
grantees' authority to transfer LIHEAP funds to other HHS block grants,
beginning in FY 1994.
The final rule makes technical and conforming corrections to
section 96.14(a)(2) of the block grant regulations, which concerns
obligation and carryover of LIHEAP funds, to reflect these statutory
changes. Consistent with a change to section 96.81 that was included in
the interim rule, the final rule specifies the current reduced amount
that grantees may carry forward to the next fiscal year. Also, it omits
reference to transfer of LIHEAP funds, beginning with FY 1994
allotments.
Also, the final rule clarifies that section 96.14(a)(2) applies to
regular LIHEAP block grant funds and not to LIHEAP leveraging incentive
funds. (Section 96.87 of the regulations deals with leveraging
incentive funds.)
These technical changes are consistent with language in the notice
of proposed rulemaking published November 16, 1993, except that the
final rule deletes references to funding on a program year cycle, since
Congress determined in the Human Services Amendments of 1994 that
LIHEAP will remain on a Federal fiscal year cycle. We received no
comments on these changes in the NPRM.
Subpart E--Enforcement
Section 96.50 Complaints
Public Law 101-501 amended section 2608(a)(2) of the LIHEAP
statute, effective beginning in FY 1991. Section 2608(a)(2) concerns
formal complaints of a substantial or serious nature that a grantee has
failed to used funds in accordance with the LIHEAP statute. The
previous statutory language had required HHS to ``respond in an
expeditious and speedy manner to'' such complaints. The amended
language sets a specific time period within which HHS must respond to
complaints; it requires HHS to ``respond in writing in no more than 60
days to matters raised in'' complaints.
As originally published in July 1982, the block grant regulations
stated at 45 CFR 96.50(d):
The Department will provide a written response to complaints
[concerning grantee administration of the block grants] within 180 days
after receipt. If a final resolution cannot be provided at that time,
the response will state the reasons why additional time is necessary.
Section 96.50(c) of the regulations provides that HHS will
``promptly furnish a copy of any complaint'' to the grantee against
which the complaint was made and that, in responding to the complaint,
HHS will consider any comments received from the grantee within 60
days, or a longer period agreed on by the grantee and HHS.
The preamble to the interim final rule published in January 1992
explained that our experience has shown that, because of the serious
and generally complex nature of the formal complaints we have received,
LIHEAP grantees usually require a full 60 days to respond to complaints
made against them. The interim rule therefore amended section 96.50(d)
by adding a new sentence stating that, within 60 days after HHS
receives a complaint concerning the low-income home energy assistance
program, it ``will provide a written response to the complainant,
stating the actions that it has taken to date and the timetable for
final resolution of the complaint.''
This amendment implemented the requirement in Public Law 101-501,
that HHS respond within 60 days to complaints, while acknowledging the
amount of time generally needed for grantees to respond to complaints,
and for HHS to review and resolve these complaints. The interim rule's
preamble explained that HHS will continue to provide final resolution
as soon as possible, consistent with our responsibility to provide the
affected grantee sufficient opportunity to respond and to provide
thorough Federal review, and that we will continue to advise the
complainant of the final action taken.
Public Comments, HHS Responses, and Change
We received three comments on this amendment. Two commenters said
that they believed the revised schedule for HHS response to complaints
was reasonable and adequate.
The third commenter said that, while HHS changed the regulation
``to provide a written response to complaints under the LIHEAP statute
within 60 days, rather than the previous 180 days, the response
envisioned by HHS' language appears to be no more than a status
report.'' The commenter also said that Public Law 101-501 requires HHS
to ``establish a procedure for reviewing and investigating any
complaint regarding State program compliance with Federal statutes and
regulations. . . .'' The commenter asserted that ``HHS does not
establish `a procedure for reviewing and investigating any complaint
regarding State program compliance''' and noted that 45 CFR 96.50(c),
``relating generally to block grants, states that HHS will conduct an
investigation of complaints [only] `where appropriate.''' The commenter
believed that ``this regulatory language is contrary to the statute''
and must be amended ``to establish for LIHEAP the procedure called for
by this statutory change.''
However, the language cited by the commenter is not the language of
Public Law 101-501. Further, the block grant regulations provide a
procedure under paragraphs (c), (d), and (e) of 45 CFR 96.50, for
reviewing the resolving complaints, and the January 1992 interim rule
modified that procedure to implement the requirement in Public Law 101-
501 for a written response within 60 days to complaints involving
LIHEAP.
Where section 96.50(c) states that HHS ``will conduct an
investigation of complaints where appropriate,'' ``investigation''
means a formal and systematic, thorough and detailed effort to learn
facts, that is carried out after a review conducted in response to a
complaint shows evidence of possible illegal action, such as commission
of fraud or theft. An investigation typically would result in a
recommendation for civil or criminal prosecution and/or administrative
sanctions. (This is consistent with the use of the term by the HHS
Office of Inspector General.) In most cases, complaints are resolved
without conducting a formal investigation. We will conduct an
investigation if our review of a complaint indicates a need to do so.
The same commenter also referred to Senate Report 101-421
accompanying H.R. 4151 (the predecessor to Public Law 101-501), that
``explains this proposed change as `designed to respond to concerns
regarding the need for a more expeditious and effective response to
complaints. . . .'''
Since the start of the LIHEAP block grant in FY 1982, we have tried
to respond expeditiously and effectively to the formal complaints we
have received. In addition, we have worked to reach expeditious and
effective resolution of other concerns expressed to us about grantee
LIHEAP programs. During this time, the only comments we have received
on the timeliness and effectiveness of our response to complaints have
been the cited sentence in the Senate Report and the comments of this
commenter. Neither included any specific examples.
In response to this commenter, the final rule adds the phrase, ``if
the complaint has not yet been fully resolved,'' to the last sentence
under [[Page 21324]] section 96.50(d), to indicate that we will fully
resolve complaints within 60 days whenever possible. That sentence now
reads,
Under the low-income home energy assistance program, within 60 days
after receipt of complaints, the Department will provide a written
response to the complainant, stating the actions that it has taken to
date and, if the complaint has not yet been fully resolved, the
timetable for final resolution of the complaint.
We will make every reasonable effort--while providing sufficient
time for grantees to respond to complaints and for HHS to review the
complainant's allegations and the grantee's response and to conduct an
investigation as necessary--to fully resolve complaints within 60 days
from the date we receive them. However, based on our experience over
the past decade, we believe that it would not serve the best interests
of the complainant, the grantee, or the Department to require by
regulation that HHS provide final resolution of formal complaints
within 60 days of their receipt.
Subpart H--Low-Income Home Energy Assistance Program
Section 96.83 Increase in Maximum Amount That May Be Sued for
Weatherization And Other Energy-Related Home Repair
Public Law 101-501 amended section 2605(k) of the LIHEAP statute,
beginning in FY 1991. It provides that grantees may request after March
31 of each fiscal year that HHS grant a waiver for the fiscal year that
increases from 15 percent to up to 25 percent of the LIHEAP funds
allotted or available to the grantee, the maximum amount of LIHEAP
funds the grantee may use for low-cost residential weatherization or
other energy-related home repair. Grantees that choose to apply for a
waiver may request authority to use for these purposes any amount
between 15 percent and 25 percent of their LIHEAP funds.
The statute provides that, after reviewing a grantee's waiver
request and any public comments, HHS may grant a waiver if it
determines that: (1) the number of households in the grantee's service
population that will receive LIHEAP heating assistance, cooling
assistance, and crisis assistance (energy crisis intervention) benefits
during the fiscal year will not be fewer than the number that received
such benefits in the preceding fiscal year; (2) the aggregate amount of
LIHEAP benefits that will be received during the fiscal year will not
be less than the aggregate amount received in the preceding fiscal
year; and (3) the weatherization activities have been demonstrated to
produce measurable savings in energy expenditures. The statue also
provides that HHS may grant a waiver if, in accordance with regulations
to be published by HHS, the grantee's waiver request demonstrates good
cause for failing to satisfy the requirements in the preceding
sentence.
The January 1992 interim final rule added a new section 96.83 to
the block grant regulations to implement procedures concerning
``standard'' and ``good cause'' waivers of the 15 percent
weatherization maximum.
The November 1993 NPRM on forward funding proposed that grantees be
allowed to submit preliminary weatherization waiver requests after
January 31 of the program year, to expedite review and provide more
time for obligation of funds.
Public Comments, HHS Responses, and Changes
We received several comments on the provisions in the LIHEAP
statute, the interim rule, and the November 1993 NPRM relating to
waiver of the weatherization maximum.
Two commenters supported the statutory waiver provision allowing an
increase in the percent of LIHEAP funds that can be used for
weatherization. One commenter opposed the statutory waiver provision,
stating that it makes LIHEAP ``cash'' heating/cooling/energy crisis
assistance and LIHEAP weatherization ``continue to compete for limited
resources.'' One commenter said that the rule ``reflects our
understanding'' of the statutory weatherization amendments.
Comment and Response
Another commenter believed that HHS ``should have been more
explicit in conveying'' to grantees that Congress intended that
weatherization waivers be granted only ``under the most limited of
circumstances.'' A different commenter said that the guidance in the
interim rule failed to state Congress' intent, per the Senate report,
that a ``good cause'' waiver be granted only when a grantee has
demonstrated ``compelling reasons.''
While we did not specifically state that waivers--especially ``good
cause'' waivers--would be granted only for compelling reasons and under
very limited circumstances, we believe it is clear that grantees must
demonstrate that they meet specific, stringent requirements in order to
receive a waiver. To date, we have received only eight weatherization
waiver requests. We approved the one request received in FY 1991 and
seven requests received in FY 1994. We approved standard waivers for
four of the FY 1994 requests.
Comment and Respronse
A commenter erroneously stated that the interim rule ``merely
requests that the Grantee submit an explanation of the specific
criteria under which the Grantee's weatherization activities have been
shown to produce measurable savings'' in energy expenditures. The
commenter believed that these savings must be ``substantial and long
term.'' The commenter proposed that HHS establish ``a standard
methodology * * * in the regulations for normalizing annual consumption
to ensure a common measure for energy savings'' and set ``a minimum
threshold'' for ``measurable savings.''
The interim rule--and this final rule--require at section
96.83(c)(5) that grantees include with their weatherization waiver
requests ``an explanation of the specific criteria under which the
grantee has determined whether'' all LIHEAP weatherization activities
to be carried out during the fiscal year for which the waiver is
requested ``have been shown to produce measurable savings in energy
expenditures.'' However, we decline to require that savings be
``substantial and long term,'' to establish a standard methodology to
measure energy savings, or to set a minimum threshold for savings. The
LIHEAP statute's third criterion for a ``standard'' waiver specifies
that the grantee's ``weatherization activities have been demonstrated
to produce measurable savings in energy expenditures by low-income
households.'' The regulation uses parallel language; it does not go
beyond the substance of the statutory criterion to specify a required
level or duration, or a standard measure, of energy savings. We believe
that it would be inconsistent with the block grant philosophy expressed
by Congress and implemented by HHS to impose such additional
requirements. The basic premise of the block grants is that, within the
parameters set by the statute, grantees should have maximum flexibility
to target resources to meet the needs of their citizens. The regulation
limits the circumstances under which waivers will be granted, in
accordance with the statutory language and what we understand to be the
legislative intent as expressed in the legislative history.
Comment and Response
Another commenter addressed the third criterion that must be met by
grantees applying for a ``standard'' [[Page 21325]] waiver--that the
weatherization activities to be carried out by the grantee in the
fiscal year for which the waiver is requested have been shown to
produce measurable savings in energy expenditures. The commenter
erroneously believed that the criterion applies only to
``weatherization'' and ``ignores [other] `low-cost energy related
repair.''' However, paragraph (a) of section 96.83, which describes the
scope of the section, states that ``low-cost residential weatherization
and other energy-related home repair'' is referred to (more briefly) as
``weatherization.''
Comment and Response
A commenter proposed that improvement in health and safety
resulting from weatherization be considered acceptable to meet the
third criterion. We cannot adopt this proposal, because it would
violate the LIHEAP statute's requirements for this criterion--that the
``weatherization activities have been demonstrated to produce
measurable savings in energy expenditures by low-income households.''
However, the statute and regulations provide for a waiver if a grantee
can demonstrate ``good cause'' for failing to meet one or more of the
three ``standard'' waiver criteria.
Comment and Response
The interim rule's preamble indicated that, when determining
whether to grant a ``good cause'' waiver, HHS would consider arguments
and documentation that greater benefits will accrue to recipients for
use of LIHEAP funds for weatherization than for cash assistance. A
commenter asserted that neither the statute nor the legislative history
supports considering this argument. However, the commenter mentions the
Senate report's reference to long-term benefits resulting from
weatherization improvements that reduce home energy costs. Consistent
with the Senate report's prominent discussion of the expanded
flexibility grantees have to provide energy conservation improvements
through the weatherization waiver and the reductions in home energy
costs resulting from these improvements, and with the statute's
designation of HHS to determine rules for ``good cause'' waivers, we
are not changing this policy.
Comment and Response
The commenter also believed that if the grantee operated a shorter
program, reduced outreach activities, and/or ``took other
administrative steps which may also have led to a reduction in
applications,'' this would be relevant in considering whether to grant
a ``good cause'' waiver. We agree. We therefore revised section
96.83(e) to provide that a grantee requesting a ``good cause'' waiver
must include with its request a comparison of its opening and closing
dates for applications, and a description of its outreach efforts, for
heating, cooling and crisis assistance, in the fiscal year for which
the waiver is requested and in the preceding fiscal year. The
comparison should address the actual dates and outreach efforts--or the
planned dates and planned outreach for future efforts expected to take
place later in the fiscal year for which the waiver is requested. If
the grantee's application period was longer and/or its outreach efforts
were greater in the preceding fiscal year for one or more of these
program components, the grantee must include an explanation
demonstrating good cause why a waiver should be granted in spite of
this fact. We also revised this section to provide that if the grantee
took, or will take, other actions that led, or will lead, to a
reduction in the number of applications for heating, cooling, and/or
crisis assistance in the fiscal year for which the waiver is requested,
the grantee must include with its request a description of these
actions, and an explanation demonstrating good cause why a waiver
should be granted in spite of these actions.
In addition, we made minor clarifying technical amendments to
section 96.83(e) describing information that must be included in
grantees' requests for ``good cause'' waivers under a newly designated
paragraph (1), and explaining the conditions under which HHS will grant
a ``good cause'' waiver under a newly-designated paragraph (2).
Comment and Response
A commenter believed that data from local home energy vendors are
most appropriate for documenting decreased home energy costs, because
Department of Energy data are mostly national or regional. We agree.
While we are not changing the regulation to require use of data from
local vendors, we encourage grantees submitting waiver requests that
document decreased home energy costs to use actual cost/price/
expenditure data from the State or local area. In most cases, compiling
the best available data probably would involve at least a sample of
vendors in the grantee's service area.
Comment and Response
A commenter said that HHS should require grantees submitting waiver
requests to include copies of public statements in full, including
transcripts of comments made during public hearings, because the
interim rule's requirement that grantees submit ``copies and/or
summaries of public comments'' affords grantees ``an opportunity to
selectively quote and characterize concerns expressed'' by the public.
The commenter quoted the Senate report statement that HHS ``should not
necessarily be guided only by the submissions from the state'' in
deciding whether to grant a waiver, to support the assertion that the
legislative history ``clearly'' intends HHS ``to independently consider
these comments.''
We decline to require grantees seeking waivers to submit ``copies
of public statements in full, including transcripts of comments made
during public hearings.'' We believe that the paperwork burden imposed
would outweigh the possible advantages of such a requirement. Use of
the words ``not necessarily'' in the Senate report indicates that HHS
may decide the extent to which it will review public comments. We
believe that grantees will make responsible decisions regarding
submission of relatively brief public comments in full and submission
of summaries of lengthy and/or numerous comments. We will independently
consider the comments and summaries submitted to us. During compliance
reviews, we will monitor the records/documentation of grantees that
submitted summaries of public comments with waiver requests, to assure
that these summaries accurately reflect the comments.
In response to this commenter's recommendations, however, we
changed section 96.83(b) of the regulations to require that written
public comments on a proposed waiver request be made available for
public inspection upon their receipt by grantees, and that any
summaries of written comments, and transcripts and/or summaries of any
verbal comments made on the request at public meetings or hearings also
be made available for public inspection. We also changed this section
to specify that transcripts and/or summaries of any comments made on
the request at public meetings or hearings must be included with waiver
requests submitted to HHS. Finally, we changed this section to require
that copies of actual waiver requests must be made available for public
inspection upon submission of the requests to HHS, enabling the public
to review the decisions made by the grantee and verify that comments
were accurately conveyed. These additional requirements strengthen
grantees' accountability to the public by assuring
[[Page 21326]] public access and the opportunity to respond to
comments, and by assuring that waiver requests submitted to HHS include
verbal as well as written public input.
The final rule also changes section 96.83(b) to require grantees to
make all weatherization waiver requests--including the preliminary
waiver requests described below--available for public inspection and
comment until at least March 15 of the fiscal year for which the waiver
is requested. Several grantees said in their FY 1994 LIHEAP plans that
they intended to request weatherization waivers in FY 1994. Public
participation in the development of the plan--before or early in the
fiscal year--took place before the severity of the winter, winter fuel
prices, etc., were known. Therefore, public inspection and comment this
far in advance of submission of a waiver request is not sufficient;
public participation would not be meaningful if the only public
notification was before the winter. There should be public notice about
a proposed request, after January 1 of the fiscal year for which the
waiver is to be requested.
We have tried to balance the interests of the public--the
recipients of LIHEAP assistance--and the valid concerns of grantees--
the primary administrators of the LIHEAP block grant. We have also
tried to write regulations that are consistent with the statute and
legislative history, that require grantees to address specific criteria
and provide specific information (including quantified data) to justify
use of additional funds for weatherization--without imposing
unnecessary and burdensome paperwork requirements and without making it
virtually impossible to receive a waiver. We are commented to assuring
program accountability and fair treatment, meaningful access to
information, and meaningful opportunity for input for the public.
However, it would be inconsistent with the block grant philosophy
clearly expressed by Congress and implemented by HHS to burden grantees
with regulatory requirements that do not clearly serve those ends and
that are not based on statutory requirements and/or legislative
history.
Comments and Response
Finally, the interim rule's preamble said that we were interested
in comments about whether the statutory starting date of April 1 for
weatherization waiver requests would create problems for administration
of grantee programs under forward funding. The forward funding program
year was scheduled to begin July 1 and end June 30, leaving only three
months for submission and review of waiver requests and for obligation
of most of the funds for which a waiver has been granted. We received
two comments in response. A State proposed that HHS ask Congress to
amend the LIHEAP statute to allow submission of waiver requests after
January 31 if forward funding is implemented. Another commenter said
that a submission date two to four weeks before March 31 might be
reasonable.
Our November 1993 NPRM on forward funding proposed that grantees be
permitted to submit a preliminary waiver request after January 31 of a
program year. This would provide sufficient time for HHS to review the
waiver request and obtain any additional information that might be
needed, and still allow the grantee to obligate its funds by June 30,
which was scheduled to be the end of the forward funding program year.
In a comment on the NPRM, a State proposed that weatherization waiver
requests be submitted with the grantee's initial LIHEAP application for
a program year, and that States not be required to submit new waiver
requests each time they wanted a waiver. The commenter objected to the
(statutory) requirement that HHS make decisions on waiver requests only
after March 31.
Seeking earlier feedback on their FY 1994 waiver requests, this
State and another submitted these requests before April 1, 1994. These
grantees confirmed and completed the requests, and HHS made the
decisions to approve them, after March 31.
The LIHEAP statute specifies that HHS may grant a waiver ``for a
fiscal year'' if the grantee submits a written request to the
Department ``after March 31 of such fiscal year'' and if HHS
``determines, after reviewing such request and any public comments,''
that the number of households that will receive LIHEAP benefits other
than weatherization, and the aggregate amount of these benefits, will
be greater in the fiscal year for which it requests a waiver than they
were in the preceding fiscal year, or there is good cause for not
meeting these conditions. The grantee cannot know until well into each
winter how many households it will (or is likely) to serve and the
amount of benefits it will provide, since this often depends on weather
and economic conditions that are not known before the winter.
However, the written comment on the NPRM, grantees' submission of
early weatherization waiver requests and statements of intent to apply
for waivers, and verbal comments indicated grantees' concern that April
1 is relatively late in the program year--and in the Federal fiscal
year as well. It would be mid-April, at the earliest, before a decision
was made. This would leave considerably less than three months for
additional weatherization funds to be obligated under the proposed July
1 to June 30 program year. It would leave considerably less than six
months under the Federal fiscal year.
As noted earlier, Congress has determined that LIHEAP will remain
on the Federal fiscal year funding cycle, so there will be more time
for weatherization to be implemented. But we have concluded that the
option for a grantee that wants a weatherization waiver, to submit a
preliminary waiver request between February 1 and March 31, is
appropriate for the fiscal year cycle as well as the program year
cycle. It will enable HHS to review the preliminary request and discuss
any issues or concerns with the grantee as winter is ending. Once the
grantee submits updated information and a confirmation of its request
after March 31, HHS can more quickly decide and respond, and the
grantee will have more time to carry out the weatherization.
This final rule therefore changes section 96.83(c) of the
regulations to permit grantees to submit preliminary waiver requests at
their option, between February 1 and March 31 of the fiscal year for
which the grantee seeks a waiver. The preliminary request should
contain the same information required for waiver requests submitted
after March 31. Because the LIHEAP statute permits grantees to submit
waiver requests for a fiscal year ``after March 31 of such fiscal
year,'' grantees that submit preliminary requests must submit formal
confirmation of their request after March 31, along with information on
any additional public comments received and any changes to the request.
HHS will make the decisions on whether to grant waivers after March 31.
Additional Information
The preamble to the January 1992 interim final rule included
additional information relating to ``standard'' and ``good cause''
waivers, public comment, submission and review of waiver requests, and
the effective period for waivers. With indicated modifications and
clarifications made in response to comments and our experience with
weatherization waiver requests, that information is still effective and
is included as the remainder of this final rule's preamble discussion
of section 96.83, as follows.
[[Page 21327]]
``Standard'' and ``Good Cause'' Waivers
The first criterion for a ``standard'' waiver requires that the
number of households in the grantee's service population that will
receive LIHEAP heating, cooling, and crisis assistance benefits will
not be fewer than the number that received such benefits in the
preceding fiscal year. This criterion applies to the total, combined,
aggregate number of households receiving these types of benefits in
each fiscal year. Grantees are to use their best estimates for each
fiscal year of (1) the total or combined number of all households
receiving each of these types of assistance (which may involve some
duplication, e.g., counting a household twice if it received both
regular heating assistance and heating crisis assistance); or (2) the
unduplicated number of households receiving heating assistance and
heating crisis assistance plus the unduplicated number of households
receiving cooling assistance and cooling crisis assistance. Grantees
must use the same method of calculation for both fiscal years. Numbers
for the earlier fiscal year should be consistent with the numbers
included in the grantee's official report of the number and income
levels of households it assisted during that year (as required by 45
CFR 96.82) or with a revised report.
The second criterion requires that the aggregate amount of LIHEAP
benefits in the current year will not be less than the aggregate amount
of LIHEAP benefits received in the preceding fiscal year. It applies to
the total, combined, aggregate amount, in dollars, of LIHEAP heating,
cooling, and crisis assistance benefits in each fiscal year--not to the
separate totals for each type of assistance. This final rule clarifies
at section 96.83(c)(2)(ii) that the LIHEAP benefit amounts must be
expressed in dollars. When items such as blankets and fans are provided
as benefits, the dollar amount of LIHEAP funds used to purchase them
should be included. When services such as emergency repair of furnaces
are provided, the dollar amount of LIHEAP funds used to pay for the
services should be included.
Grantees will need to project figures for any households to be
served and funds to be obligated from the date the waiver request is
submitted until the end of the fiscal year for which the waiver is
requested.
This final rule clarifies that the first and second criteria apply
respectively to the number of households receiving LIHEAP heating,
cooling, and crisis assistance, and to the amount of LIHEAP heating,
cooling, and crisis assistance, provided by the grantee's Federal
LIHEAP allotment from regular and supplemental appropriations. It
clarifies that assistance provided from other sources, such as the
grantee's own funds, oil overcharge funds, (other) leveraged resources,
and leveraging incentive funds, should not be included under these
criteria.
The third criterion requires that the weatherization activities
have been shown to produce measurable savings in energy expenditures.
It applies to all LIHEAP weatherization activities to be carried out by
the grantee during the fiscal year for which the waiver is requested,
not just to activities proposed to be carried out with amounts above 15
percent of the grantee's LIHEAP funds. Grantees will not meet this
criterion unless all of their LIHEAP weatherization activities for the
fiscal year have been shown to produce measurable savings.
The LIHEAP statute and the HHS block grant regulations do not name
specific activities which are allowable as weatherization and other
energy-related home repair under the LIHEAP program. However, the
statute and Federal regulations for the low-income weatherization
assistance program (LIWAP) administered by the Department of Energy
(DOE) do name certain weatherization measures that are allowable under
that program. The statute authorizing LIWAP is the Energy Conservation
in Existing Buildings Act of 1976 (title IV of the Energy Conservation
and Production Act, Public Law 94-385, as amended; 42 U.S.C. 6851 et
seq.). The Federal regulations implementing DOE's Weatherization
Assistance for Low-Income Persons are found at 10 CFR part 440. These
regulations include ``Standards for Weatherization Materials'' at
Appendix A. In addition, DOE has allowed other activities by program
notice and correspondence.
The DOE weatherization statute and regulations apply specifically
to LIWAP, and the LIHEAP statute and regulations apply to LIHEAP.
However, to promote consistency in their weatherization programs,
LIHEAP grantees may choose to use certain DOE weatherization provisions
as guidance in administering their LIHEAP weatherization programs, as
long as these provisions are consistent with the LIHEAP statute and
regulations.
(Public Law 103-252--the Human Services Amendments of 1994--allows
HHS to permit LIHEAP grantees to use LIHEAP weatherization funds under
DOE LIWAP rules that are not consistent with the LIHEAP statute. HHS
plans to address this new option in a proposed rule on Public Law 103-
252.)
HHS will accept the following as weatherization activities which
have been shown to produce measurable savings in energy expenditures,
as long as these activities also are consistent with the requirements
of the LIHEAP statute and regulations: installation of the specific
materials meeting the specific standards listed in Appendix A of the
DOE weatherization regulations at 10 CFR part 440; installation of
materials meeting the specific standards incorporated by reference in
Appendix A; and weatherization activities specifically allowed by
official DOE correspondence and memoranda. LIHEAP grantees requesting a
waiver of the LIHEAP statutory weatherization maximum who propose to
carry out these weatherization activities may cite these sources as the
criteria under which they have determined that these activities have
been shown to produce measurable savings.
In addition to listing requirements for a ``standard''
weatherization waiver for grantees that meet the three criteria
discussed above, this final rule sets criteria for a ``good cause''
waiver for grantees that wish to use more than 15 percent of their
LIHEAP funds for weatherization, but do not meet one or more of the
three criteria for a ``standard'' waiver. As noted earlier in this
preamble, the final rule includes additional requirements at section
96.83(e) for a ``good cause'' waiver, regarding the length of the
grantee's application period and the grantee's outreach efforts, for
heating, cooling, and/or crisis assistance applications, from the
preceding fiscal year to the fiscal year for which the waiver is
requested.
Requests for both ``standard'' and ``good cause'' waivers must
include comparison of the grantee's best estimates of service and
benefit totals for the year for which the waiver is requested with
service and benefit totals for the preceding fiscal year. The criteria
for a ``good cause'' waiver include the requirements that grantees
explain the reasons they are not maintaining the prior year's service
and/or benefit levels, as appropriate, demonstrating good cause for
failing to maintain these levels and justifying use of additional funds
for weatherization. Reasons for failing to maintain service levels
might include reduction in need and/or fewer applications for
assistance due to improvement in economic conditions and decline in
unemployment, warmer than normal winter weather, and/or lower home
energy costs for low-income households. As indicated earlier in this
[[Page 21328]] preamble, we also will consider arguments and
documentation (e.g., cost benefit analysis) that greater benefits will
accrue to recipients from use of funds for weatherization than for cash
assistance. Further, we will consider arguments that service or benefit
levels were higher in the preceding year because of supplemental
appropriations enacted in response to unusual conditions, such as
abnormally cold winter weather and/or large fuel price increases.
``Good cause'' waiver requests also must include a comparison of
the grantee's LIHEAP heating, cooling, and crisis assistance
eligibility standards (eligibility criteria), benefit levels,
application periods, and outreach efforts for the fiscal year of the
waiver request and for the preceding fiscal year. If the eligibility
standards were less restrictive, the benefit levels were higher, the
application periods were longer, and/or the outreach efforts were
greater for one or more of these program components in the preceding
year, the ``good cause'' waiver request must include an explanation
demonstrating good cause why a waiver should be granted in spite of
this fact. In addition, other actions that led to a reduction in the
number of applications for heating, cooling, and/or crisis assistance
must be addressed. We will review this information to determine whether
a waiver would be consistent with congressional intent to maintain
service and benefit levels.
``Good cause'' documentation should cite measurable, quantified
data, and the sources for these data. For example, grantees documenting
reduction in need for cash benefits may provide comparison of
unemployment statistics, Aid to Families with Dependent Children (AFDC)
and other public assistance recipiency data, and the number of
applications for LIHEAP assistance, for the current and the preceding
fiscal year. Grantees documenting milder weather may cite National
Weather Service data comparing heating or cooling degree days for their
service area, as appropriate. Grantees documenting decreased home
energy costs preferably should cite actual prices/costs in the local
service area, as discussed earlier in this preamble.
Public Ispection and Comment
Consistent with the requirements and legislative history of Public
Law 101-501, the final rule maintains the requirement from the interim
rule that grantees provide opportunity for timely and meaningful public
review of, and comment on, their proposed weatherization waiver
requests. The final rule adds the requirement that proposed waiver
requests, and any preliminary waiver requests, be made available until
at least March 15 of the fiscal year for which the waiver will be
requested. As discussed earlier in this preamble, it also adds the
requirement that written public comments on the proposed waiver request
must be made available for public inspection upon their receipt by
grantees, as must any summaries prepared of these written comments, and
transcripts and/or summaries of any verbal comments made on the request
at public meetings or hearings. Consistent with House of
Representatives Conference Report 101-816, this public comment
procedure does not require hearings. Once grantees have submitted
waiver requests to HHS, copies of the entire waiver request submission
must be made available for public inspection.
For example, we expect grantees to provide notification about
proposed waiver requests with enough lead time to allow interested
parties a reasonable period in which to comment. We also expect
grantees to specify what a LIHEAP weatherization waiver request is the
(or a) topic of a meeting or request for comments, rather than simply
to indicate that issues of general social services interest are
involved.
The final rule requires at section 96.83(c) that grantees include
with their waiver requests a description of how and when the proposed
waiver request was made available for timely and meaningful public
review and comment, copies or summaries of public comments received, a
statement of the method for reviewing public comments, and a statement
of the changes, if any, that were made in response to these comments.
Also, as discussed earlier in this preamble, the final rule adds the
requirement that waiver requests include transcripts and/or summaries
of any comments made on the request at public meetings or hearings.
Submission and Review of Waiver Requests
Requests for waiver of the weatherization maximum must be made by
the grantee's chief executive officer or designee, in writing. They
should be sent to the Director, Office of Community Services,
Administration for Children and Families, Department of Health and
Human Services, 370 L'Enfant Promenade, S.W., Washington, D.C. 20447.
HHS may require additional clarification or documentation as it
determines necessary to decide whether a grantee fully satisfies the
appropriate waiver requirements.
We will review all requests and make a decision within a maximum of
45 days of receipt of a completed request. We expect that most requests
will be handled much more quickly than this. A need for additional
information from the grantee will delay the start of this time period
and delay the decision.
HHS will approve all waiver requests that, in its judgment, meet
all statutory and regulatory requirements for either a ``standard'' or
a ``good cause'' waiver and that demonstrate adequate solicitation and
consideration of public comments.
No waiver will be granted after the end of the fiscal year for
which the funds are appropriated. Accordingly, waiver requests must be
submitted in sufficient time before the end of the fiscal year to allow
for HHS review and grantee obligation of funds that cannot be carried
forward.
Effective Period
Waivers will be effective from the date of HHS's written approval
until the funds are obligated in accordance with the LIHEAP statute and
regulations.
A grantee that has received a waiver is not required to use the
full approved amount for weatherization. If a grantee decides to use
less than the approved waiver amount for weatherization, it should
amend its LIHEAP plan to reflect this decision.
Funds for which a weatherization waiver is granted may be carried
over to the following fiscal year, consistent with standard statutory
and regulatory requirements for obligation and carryover of LIHEAP
funds, and may retain their designation as funds to be used for
weatherization, if the grantee so chooses. However, any carried-forward
``waiver funds'' that retain this designation may not be considered
``funds available'' or ``funds allotted'' for the purpose of
calculating the maximum amount that may be used for weatherization in
the succeeding fiscal year.
Section 96.84 Miscellaneous
The January 1992 interim final rule consolidated three brief
regulatory provisions under section 96.84. They are: a provision
relating to rights and responsibilities of territories, a provision
concerning applicability of the LIHEAP statutory assurances, and a
provision concerning prevention of waste, fraud, and abuse in grantee
LIHEAP programs. We consolidated these provisions due to space
limitations in the LIHEAP portion of the block grant regulations. Also,
the [[Page 21329]] interim rule amended the provision dealing with
applicability of the assurances to indicate that the new assurance 15,
discussed below, which was added to the LIHEAP statute as section
2605(b)(15) by Public Law 101-501, applies to heating, cooling, and
energy crisis intervention assistance.
We received no comments on this consolidation. The final rule makes
no change to section 96.84.
Section 96.86 Exemption From Requirement for Additional Outreach and
Intake Services
Public Law 101-501 added a new LIHEAP statutory assurance--
assurance 15--to which States must certify in their applications for
LIHEAP funding. Under the new section 2605(b)(15), beginning in FY
1992, States that provide outreach and intake for heating and cooling
assistance and crisis situations through State departments of public
welfare at the local level also must provide outreach and intake for
these types of assistance through additional State and local
governmental entities or community-based organizations. Examples of
community-based organizations listed in the statute are not-for-profit
neighborhood-based organizations, area agencies on aging, and community
action agencies. In States where such entities or organizations did not
administer these functions as of September 30, 1991, preference in
awarding grants or contracts for intake services is to be provided to
agencies that administer the low-income weatherization or energy crisis
intervention programs.
Exemption of Indian Tribes, Tribal Organizations, and Some Territories
The January 1992 interim final rule established a new section 96.86
that exempted Indian tribes and tribal organizations from this
requirement. This new section also exempted territories with annual
LIHEAP allotments of $200,000 or less from the requirement.
In the preamble to the interim rule, we explained the reasons for
this exemption. We concluded that the provision concerning alternate
outreach and intake services is not appropriate to American Indian
tribal grantees because of the nature of tribal governments and their
relationship to their service populations. Assurance 15 refers to
outreach and intake services ``offered by State Departments of Public
Welfare at the local level''--that is, by entities that administer
public welfare programs. The legislative history for Public Law 101-501
refers specifically to agencies that administer the Aid to Families
with Dependent Children (AFDC) program. However, Indian tribes do not
administer AFDC for their service populations. In accordance with
Federal law and regulations, States provide AFDC assistance to eligible
American Indians, including Indian people receiving LIHEAP assistance
from tribes that receive direct LIHEAP funding. Indian tribes therefore
do not have tribal departments or offices directly comparable to State
departments of public welfare. We also noted that Indian tribes are
close to their service populations. ``Tribal'' and ``local'' levels of
administration generally are the same. Consequently, requiring tribes
to provide for alternative outreach and intake services by additional
governmental entities or community-based organizations would be
inappropriate as well as inconsistent with the Federal government's
policy of Indian self-determination.
We also concluded that the new provision concerning alternate
outreach and intake services is not appropriate to territories with
regular LIHEAP allotments of $200,000 or less annually. Experience has
shown that each grantee incurs certain basic administrative costs in
developing and implementing a LIHEAP program. Most territories (and
tribes) receive relatively small LIHEAP allotments. We concluded that,
for territorial grantees with annual LIHEAP funding of $200,000 or
less, the additional resources that would be required to provide
alternative outreach and intake services would increase administrative
and other non-benefit costs prohibitively and would significantly
reduce the heating, cooling, crisis, and/or weatherization benefits
that the territory could provide. We doubted that territories with
LIHEAP allotments of $200,000 or less would have the ability to provide
meaningful LIHEAP benefit levels if they also were required to provide
for additional outreach and intake services. The time, effort, and
funds spent providing alternate outreach and intake services would be
significantly out of proportion to the direct LIHEAP benefits that
could be provided to eligible households.
In addition, the territories with current LIHEAP allotments of
$200,000 or less that do not consolidate LIHEAP funds under other
programs pursuant to Public Law 95-134, commonly referred to as the
Omnibus Territories Act, administer LIHEAP entirely at the central
territorial level. Because of their relatively small populations, they
do not have separate local administering agencies. We concluded that a
requirement for alternative local agencies would be inappropriate under
these circumstances.
This means that at current LIHEAP funding levels, all territories
except the Commonwealth of Puerto Rico are exempt from this provision.
The allotments of the territories in FY 1994, under the regular LIHEAP
appropriation of $1.437 billion, range from $14,937 to $68,807 for all
territories except Puerto Rico, whose allotment is $1,708,030.
We received one comment, from a tribal organization, supporting the
exemption of tribal and small territorial grantees from this
requirement. We received no comments opposing the exemption.
Consistent with our previously stated rationale and with this
comment, we are continuing to exempt Indian tribes and tribal
organizations, and territories with annual regular LIHEAP allotments of
$200,000 or less, from the requirement of section 2605(b)(15) of the
LIHEAP statute, as amended.
Although these tribal and territorial grantees are exempt from this
requirement for additional outreach and intake services, they are still
subject to the requirements in section 2605(b)(3) of the LIHEAP
statute--assurance 3--concerning outreach. Under this assurance, all
grantees must ``conduct outreach activities designed to assure that
eligible households, especially households with elderly individuals or
disabled individuals, or both, and households with high home energy
burdens, are made aware of'' LIHEAP and similar energy-related
assistance.
Other Comments and HHS Responses
The interim final rule provided guidance to States on
interpretation and implementation of the requirement for additional
outreach and intake services. The interim rule's preamble noted that
grantees had requested such guidance and that Senate Report 101-421
said that HHS is expected to provide guidance on compliance with this
requirement.
However, we did not provide detailed requirements on interpretation
and implementation in the regulation itself. The preamble stated:
``As the original block grant regulations and preamble explain,
consistent with statements of congressional intent, the Department's
philosophy on block grants is that grantees are to be given as much
flexibility as possible to implement the programs in their own
jurisdictions. We will accept a grantee's interpretation of a
statutory requirement unless the interpretation is clearly
erroneous.
* * * * *
``We will review the grantees' compliance with the appropriate
legislative and regulatory requirements in carrying out our
[[Page 21330]] responsibilities to conduct LIHEAP compliance
reviews, application reviews, complaint investigations, and
resolution of audit findings. However, consistent with the block
grant philosophy, we are not publishing Federal rules on how the
requirement for additional outreach and intake services must be
implemented by grantees, except to specify that it does not apply to
Indian tribes and tribal organizations or to territories receiving
$200,000 or less in annual LIHEAP allotments. This is also
consistent with our regulatory treatment of other application
assurances required by the statute.''
We received nine comments on the statutory and regulatory
provisions relating to the requirement for additional outreach and
intake services (including the comment from a tribal organization
mentioned previously).
Comments and Response
Two of the commenters were members of Congress who requested a
specific rule to explicitly implement assurance 15. Another letter
supported a rule that would include definitions of a number of terms
relating to this assurance.
We continue to believe that it would be inconsistent with the block
grant philosophy as expressed in law and legislative history to publish
Federal rules mandating specific ways in which States must implement
this statutory requirement. The LIHEAP statute specifies in section
2605(b), which contains the assurances: ``The Secretary may not
prescribe the manner in which the States will comply with the
provisions of this subsection.''
Another commenter believed that States might take assurance 15
``less seriously because it is not included in the regulations
themselves.'' However, the statute is paramount. Further, the chief
executive officer of each State must certify that the State agrees to
these assurances. Federal regulations are not intended simply to repeat
the law. It is consistent with our treatment of the LIHEAP statute's
other assurances--which are as important as assurance 15--not to issue
regulations mandating specific ways in which grantees must implement
them.
We will continue to carry out our responsibilities to help assure
that grantees comply with the statute. We review grantees' compliance
with the statutory assurances when we conduct compliance reviews
(including reviews for compliance purposes of funding applications),
and when we resolve audit findings and complaints. Public Law 103-252
(the Human Services Amendments of 1994) amends the LIHEAP statute to
require that States include in their LIHEAP applications a description
of how they will carry out assurance 15; this will help us in our
monitoring. We resolve grantee failure to comply with the statute
through appropriate enforcement proceedings. If we find while carrying
out our compliance responsibilities that several grantees have
misunderstood a statutory provision, it may be appropriate for us to
clarify by regulation, as we did in October 1987 regarding the
applicability of assurance 9's administrative cost requirements to
subgrantees and contractors as well as to grantees.
Comment and Response
One of the congressional commenters said that the final rule should
contain ``strong regulation'' stating that alternative outreach and
intake ``must be performed in a professional manner, with strict
contract standards for agency accountability and paid for as part of
the administrative or program expenditures of the LIHEAP program.''
We agree that the requirements of assurance 15 must be carried out
by States and by entities and persons acting on their behalf in a
competent manner, by qualified agencies with effective standards for
accountability. This is the case for all of the LIHEAP statutory
assurances. In applying for Federal LIHEAP funds, the State has
specifically assured the Federal government that it will carry out all
of these assurances. In accepting Federal LIHEAP grant funds, the State
has made a commitment to follow the requirements of all applicable
Federal laws and regulations.
However, we do not believe that assurance 15 requires that
alternative outreach and intake be ``paid for as part of * * * the
LIHEAP program''--i.e., always provided as a paid LIHEAP function or
activity and never provided on an unpaid, voluntary basis. The LIHEAP
statute does not specify that alternative outreach and intake must be
provided on a paid basis. And, as previously stated, the statute
specifies that HHS ``may not prescribe the manner in which the States
will comply'' with the assurances. Further, we believe that the
legislative history assumes that alternative outreach and intake
provided by appropriate entities/organizations on an unpaid, voluntary
basis will meet the assurance's requirements. Conference Report 101-816
specifies that if States ``are already offering alternate intake sites
in some areas, this section does not require them to modify their
system of program management in those areas.'' Senate Report 101-421
indicates that, if alternative services previously were provided
voluntarily, providers should continue to maintain comparable levels of
efforts voluntarily, stating that ``local entities now providing such
[outreach and intake] services voluntarily are expected to maintain
comparable levels of effort in addition to the new activities which may
be contracted to them pursuant to this provision.'' As we stated in the
preamble to the interim rule, assurance 15 should not be used as a
basis for reducing voluntary efforts.
While the law does not require that alternative outreach and intake
be provided by entities or organizations ``paid * * * as part of the *
* * expenditures of the LIHEAP program,'' States should not attempt to
compel local entities/organizations to provide these services on an
unpaid basis. Many--if not most--such entities do not have the
resources to provide LIHEAP outreach and intake without appropriate
payment. While we support the use of volunteer outreach and intake when
appropriate, our guidance is not intended to encourage States to
require local agencies to provide these services at no cost to the
State. The Senate report says that ``State LIHEAP programs are expected
to use LIHEAP administrative funding for any additional LIHEAP
activities required by this section, rather than relying on other
federal funds in local agencies.'' (We have found that grantees'
classification of certain outreach functions--such as energy
conservation education--as non-administrative is not clearly
erroneous.) Also, if an alternative governmental entity or community-
based organization freely--without pressure or coercion--agrees to
provide additional outreach and/or intake services without charge, we
believe that assurance 15 does not require the grantee to pay it for
providing these services.
Comments and Response
Several commenters indicated that the discussion in the interim
rule's preamble on the participation of utilities and other home energy
vendors in LIHEAP outreach might imply that these vendors could be
considered ``community-based organizations'' whose participation in
LIHEAP outreach and/or intake could meet assurance 15's requirement for
additional outreach and intake. These commenters said that utilities
and other vendors are not community-based organizations. One letter
rejected ``the notion that low-income clients may be given a choice by
the State of applying for LIHEAP at the AFDC office or at the office of
their creditor, the utility, to whom they would be required to submit
income documentation for scrutiny.'' Another noted that vendors'
relationships with their clients ``can be adversarial''--
[[Page 21331]] clients may need to bargain with their vendors over
payment agreements, arrearage payments, etc. ``They may even have to
resolve disputes in a regulatory setting. * * * In these circumstances,
the confusion between access to the program and contact with a creditor
that could be created by vendor outreach and intake may discourage the
very expansion of access that the law intends to encourage.'' Two
commenters asserted that `` community-based organizations'' must be
nonprofit local agencies/organizations.
We continue to encourage cooperation between grantee LIHEAP
programs and home energy vendors, and use of vendors to provide LIHEAP
outreach as appropriate. But upon further reflection, we agree with
these commenters that outreach and/or intake provided by home energy
vendors, including utility companies, does not meet assurance 15's
requirement for additional outreach and intake services. We agree that
the issues with respect to vendors' status as creditors are
significant. In addition, ``community-based organization''--
historically a ``term of art'' used in Federal anti-poverty programs--
generally refers to nonprofit entities; utilities and other home energy
vendors generally are for profit. (For example, regulations for the
former Community Services Administration at 45 CFR 1076.50-1(c) defined
``community-based organization'' as ``a cooperative or private
nonprofit organization at least 50 per centum of whose governing body
is composed of local area residents.* * *'')
Comment and Response
A commenter believed that ``the statute required States to ensure
that all interested organizations, including vendors, engage in
outreach. * * *'' The statute requires that, ``in addition to''
outreach and intake offered by State public welfare departments at the
local level, there must be outreach and intake for heating, cooling,
and crisis assistance ``that is administered by additional State and
local governmental entities or community-based organizations. * * *''
Comparable levels of outreach and intake services should be provided
for welfare and non-welfare households and, if feasible, States should
use a number of different service providers. However, we do not believe
that the statute requires States to ensure that ``all interested
organizations * * * engage in outreach.''
Comments and Response
A commenter believed that intake functions were ``appropriately
described in the guidance.'' Another commenter thought that intake
might be ``too narrowly defined, given the legislative history.'' The
statute does not define or otherwise indicate what ``intake'' includes;
both the conference report and the Senate report refer to ``intake or
application processing.'' The interim rule's guidance noted functions
that are ``generally'' included as intake (receipt of applications for
assistance and the opportunity for applicants to provide any missing
information for their applications). It also noted that States have
``the discretion to choose whether to include'' certain other functions
(income determination and verification, and preliminary eligibility or
benefit determination). We continue to believe that it is appropriate
for grantees to have this degree of flexibility in defining the term--
that they should not be required to include all application processing
tasks as part of ``intake.''
Comments and Response
A State noted that mail-in applications can be acceptable for
intake and recommended a similar accommodation for outreach.
Information sent by mail about LIHEAP can be an effective part of a
grantee's outreach effort. However, outreach by mail will not by itself
meet the requirement for alternate outreach services. Many low-income
households would not be reached, or adequately served, by outreach-by-
mail. As the Senate report explains, outreach efforts should be varied
and targeted to the different populations eligible for LIHEAP
assistance--such as welfare households, non-welfare households, and the
elderly--``to assure that these households have an effective way to
learn about the program and how to apply for benefits.''
The same State recommended that if ``the local welfare office has
an established local advisory board represented by those agencies that
are listed [in assurance 15] as potential alternative sites, that the
outreach requirement is met.'' However, assurance 15 requires more than
participation in an advisory or other board by alternate agencies. It
specifically requires that alternative outreach and intake functions be
``administered by additional State and local governmental entities or
community-based organizations,'' and is intended to provide information
directly to low-income individuals, not just to other agencies.
The State also proposed that a phone-in intake process for
households experiencing an energy crisis be considered to meet the
statutory requirements for crisis assistance. In some circumstances,
receiving a telephone call by a household experiencing an energy crisis
would be an appropriate and effective first step as intake, although
information on the crisis and the household's eligibility would need to
be verified. However, some low-income households do not have a
telephone or reasonable access to a telephone that they can
realistically use, and section 2604(c) of the LIHEAP statute
specifically requires each entity that administers LIHEAP crisis
assistance to accept crisis assistance applications ``at sites that are
geographically accessible to all households in the area.''
A commenter believed that the interim rule's preamble guidance
might ``inadvertently encourage'' welfare departments ``to conduct
exclusively mail-application intake.'' The guidance is not intended--
and should not be interpreted--as encouragement for exclusively mail-
application intake.
Comments and Response
Two States objected to the requirements of assurance 15. One
objected to the increased expenditures needed to provide additional
outreach and intake--with reduced funds therefore available for
benefits. The State said that the ``effort and funds spent'' to provide
additional services ``would be significantly out of proportion to the
direct benefits that could be provided to eligible households.''
Another State defended its effectiveness in reaching nonwelfare
households and objected ``to the use of limited funding to replicate a
function already being administered timely and effectively.'' The State
believed that it would be extremely difficult to meet the requirement
in section 2604(c) of the LIHEAP statute that assistance to resolve an
energy crisis be provided within 48 hours of an eligible household's
application for crisis assistance. This grantee requested that
assurance 15 be deleted, or waived for grantees ``already serving a
broad based population.''
Only Congress can ``delete'' a statutory provision, and HHS does
not have authority to waive statutory requirements for States. The
conference report states that the conferees ``recognize the potential
for significantly increased administrative expenses for some states to
comply with the new alternative site requirements, and intend to
monitor possible effects on the program and recipients.''
Guidance Regarding Additional Services
The preamble to the January 1992 interim final rule included
guidance [[Page 21332]] with respect to section 2605(b)(15) of the
LIHEAP statute. With modifications and clarifications contained in the
preamble to this final rule, that guidance is still effective and is
included as the remainder of this final rule's preamble discussion of
section 96.86 of the block grant regulations and of assurance 15.
The requirement for additional outreach and intake services applies
to States (including the District of Columbia) and to any territory
with a LIHEAP allotment larger than $200,000 for the fiscal year in
question, when local offices of the grantee department or agency that
administers AFDC or the territorial equivalent basic cash public
assistance program(s) provide outreach and intake for heating, cooling,
and/or crisis assistance in all or part of the State or territory. The
requirement applies in these cases whether or not that department or
agency is named ``State Department of Public Welfare'' or ``Department
of Public Welfare.''
The requirement applies whether or not the department or agency
provides some of these services outside its own offices. Section
2605(b)(15) requires that grantees ``provide, in addition to such
services as may be offered by State Departments of Public Welfare at
the local level, outreach and intake functions for crisis situations
and heating and cooling assistance that is administered by additional
State and local governmental entities or community-based
organizations.* * *.'' The provision does not refer to the locations
where the welfare department provides services. Therefore, stationing a
welfare department employee at a shopping mall, for example, will not
meet the requirement of this provision.
Consistent with Conference Report 101-816, if grantees are already
offering alternative services in some areas, they are not required to
modify their system in these areas. Consistent with Senate Report 101-
421, ``a reasonable share'' of outreach and intake functions is to be
administered through alternative agencies, assuring that, to the extent
possible, all eligible households in the grantee's service population
will have viable access to alternative service sites. However,
consistent with this Senate report, if the grantee finds no alternative
in an area or areas after engaging in an open solicitation process, the
grantee is not required to create new entities. (In such a case, the
grantee would not be required to solicit for alternate agencies each
succeeding year. However, periodic assessment of the situation will
enable the grantee to determine when further solicitation is likely to
provide an alternative and is therefore appropriate.)
Also consistent with the Senate report, if such services previously
were provided voluntarily, providers should continue to maintain
comparable levels of effort voluntarily. The new requirement should not
be used as a basis for reducing voluntary efforts. Neither should it be
used to compel or require voluntary efforts.
Consistent with the legislative history, we encourage the voluntary
participation of community groups and organizations, including
churches, and of utilities and other home energy vendors, in outreach
activities. Such entities often have excellent knowledge of and access
to low-income households who may need LIHEAP assistance. However, as
explained earlier in this preamble, utilities and other home energy
vendors are not ``community-based organizations'' for the purposes of
the requirement of section 2605(b)(15) for outreach and intake services
provided by ``additional State and local governmental entities or
community-based organizations. . . .''
In order to meet the requirement for alternative outreach and
intake services, the statute specifies that the alternative service
providers must be State or local governmental entities or community-
based organizations. Senate Report 101-421 mentions public or nonprofit
agencies including other State or local government agencies, and
community-based organizations such as community action agencies and
aging organizations.
The Senate report emphasizes the importance of providing sufficient
access to the LIHEAP program to the non-welfare poor and the elderly,
through additional outreach efforts and appropriate intake locations.
Grantees should provide varied outreach efforts targeted to the
different populations eligible for LIHEAP assistance. Further, grantees
should consult with low-income individuals and other interested parties
to determine the best ways to implement the requirement for additional
outreach and intake services. As a commenter stated, the intention of
assurance 15 is ``to broaden the access and availability of LIHEAP
services to those who are eligible but are not part of the welfare
system'' and ``to give preference for intake functions to those
agencies that provide weatherization and/or crisis assistance.''
Agencies with experience in successfully managing similar Federal grant
programs should be used when feasible.
The term ``intake'' generally includes receipt of applications for
assistance and the opportunity for applicants to provide any missing
information that is needed to complete their applications. Each grantee
has the discretion to choose whether to include income determination
and verification responsibilities, and preliminary eligibility or
benefit determination, as ``intake.'' The conference report states that
the ``conferees believe that intake or application processing'' is
``best provided by experienced service providers with approved federal
and state grant management systems.''
If a mail-in application system administered by a welfare
department is used for a grantee's heating and/or cooling assistance
programs, and if it is not necessary to designate local administering
agencies to carry out intake for these components, then there is no
need under section 2605(b)(15) to designate other State and local
governmental entities or community-based organizations to carry out
intake for these components. In such a case, the grantee should assure
that help is readily available to households that are unable to prepare
and/or mail their applications without such assistance. Also, grantees
should not change to a system of mail-in applications in order to avoid
designating additional local intake agencies.
Section 2604(c) of the LIHEAP statute requires each entity that
administers energy crisis assistance ``to accept applications for
energy crisis benefits at sites that are geographically accessible to
all households in the area to be served'' by the entity and to provide
to physically-infirm low-income persons the means to submit
applications for energy crisis benefits without leaving their
residences or to provide the means to travel to the sites at which the
entity accepts applications. The statute thus requires that there be
energy crisis intake sites and services at the local level. Therefore,
intake for crisis assistance provided solely by welfare departments
will not meet the requirement in section 2605(b)(15) concerning
additional intake services at the local level. Also, telephone intake
can be part of a State's intake process but will not by itself meet the
statutory requirements for intake services.
It is our experience that outreach normally is provided through
local administering agencies, and therefore additional outreach
services would be necessary if outreach currently is provided at the
local level only through the welfare department.
In enacting the requirement that additional outreach and intake
services be provided in certain cases, Congress has emphasized the
importance of adequate and appropriate outreach and intake functions in
grantee LIHEAP [[Page 21333]] programs. Congress also has specifically
limited the amount of Federal funds that can be used for costs of
LIHEAP administration and planning to 10 percent of the funds payable
to a State and not transferred to another HHS block grant program
(section 2605(b)(9) of the LIHEAP statute). (The block grant
regulations provide somewhat higher administrative cost limits for
Indian tribes, tribal organizations, and territories.) As we stated in
the preamble to the block grant regulations of July 6, 1982, ``The
consistent imposition of limits upon administrative expenditures under
the various block grants is indicative of congressional intent that
States devote a very high percentage of their block grant funds to
direct payments or services'' (47 FR 29477). Grantees should make every
effort to provide the maximum amount of direct LIHEAP assistance to
low-income households, consistent with the provision of adequate
support services.
Although grantees subject to the new requirement may categorize
some of their additional outreach expenses as non-administrative, many
of the additional costs will be administrative. Some grantees may have
difficulty providing additional outreach and intake services and
remaining within the statutory limitation on use of Federal funds for
costs of LIHEAP planning and administration. These grantees, in
particular, may need to examine all of their LIHEAP activities and
costs to determine ways to increase efficiency, to encourage voluntary
efforts, and to use their own funds to supplement Federal LIHEAP funds.
HHS does not have authority to waive the statutory limitation on
administrative costs. The requirement for additional outreach and
intake services does not relieve grantees of the need to comply with
this statutory limitation.
Consistent with Conference Report 101-816, HHS used FY 1992 LIHEAP
training and technical assistance funds to help thirteen States that
previously had provided outreach and intake solely through their public
welfare departments, to make the transition required by assurance 15.
Although this preamble modifies and clarifies some of the guidance
regarding assurance 15, the final rule makes no change to section 96.86
of the block grant regulations.
Section 96.87 Leveraging Incentive Program
Public Law 101-501 added a new section 2607A to the LIHEAP statute,
establishing a leveraging incentive program, and amended section 2602
of the LIHEAP statute, authorizing funds for this program. Under the
leveraging incentive program, beginning in FY 1992, HHS may allocate
supplementary LIHEAP funds--leveraging incentive funds--to grantees
that have acquired non-Federal leveraged resources and use these non-
Federal resources to expand the effect of Federal LIHEAP dollars.
The interim final rule published January 16, 1992, added a new
section 96.87 to the block grant regulations to implement the
leveraging incentive program. Consistent with the requirements of
section 2607A, the interim final rule included requirements for
countable leveraged resources and for calculation and documentation of
the value of leveraged resources, submission of leveraging reports to
HHS, calculation of grantee shares of leveraging incentive funds, and
use of leveraging incentive funds.
Discussing the leveraging program, Senate Report 101-421 notes
that, ``if the LIHEAP program uses its purchasing power (or `leverage')
to acquire the full economic value of its resources, it can acquire
substantial additional energy assistance resources and services for the
poor from state energy market sources.'' This report lists the
following examples of leveraged resources: ``state-appropriated funds,
quantifiable payments, discounts, credits, energy conservation
improvements or other measurable benefits to eligible households in
excess of the energy that could be purchased by the LIHEAP program at
commonly available residential rates.''
All LIHEAP grantees--States (including the District of Columbia),
Indian tribes, tribal organizations, and territories--may participate
in the leveraging incentive program. Grantees are not required to
participate in the leveraging program. We encourage grantees to
leverage additional resources to supplement their Federal LIHEAP funds,
whether or not they choose to request leveraging incentive funds.
Leveraged resources are counted in the ``base period'' in which
their benefits were provided to low-income households. For example,
grantee funds added to the LIHEAP program are countable only when the
benefits they pay for--such as heating assistance payments or
weatherization services--are provided to or on behalf of low-income
households.
Under the statute's terms, grantees that want to apply for
leveraging incentive funds must submit a report to HHS that quantifies
the grantee's leveraged resources for the preceding fiscal year (the
base period), less any costs incurred by the grantee to leverage the
resources and any costs imposed on federally eligible households.
Leveraging incentive funds to reward these leveraging activities are
awarded in the fiscal year following the fiscal year in which the
leveraged resources/benefits were provided to low-income households. In
other words, they are awarded later in the fiscal year in which the
leveraging reports are submitted, after HHS has reviewed the reports,
adjusted claimed resources and their valuation as appropriate, and
calculated leveraging incentive grant amounts. The leveraging incentive
program's first ``base period'' was FY 1991, and its first ``award
period'' was FY 1992; leveraging activities in FY 1991 were the basis
for the leveraging incentive grant awards HHS made in FY 1992. Section
2607A of the LIHEAP statute requires that grantees use leveraging
incentive funds awarded to them only ``for increasing or maintaining
benefits to households.''
As the interim rule's preamble explained, consistent with the block
grant legislation and legislative history, HHS' policy generally is to
provide maximum flexibility to grantees to operate their LIHEAP
programs. Grantees are the primary interpreters of the LIHEAP statute
and the primary administrators of the LIHEAP program. However, grantees
apply ``competitively'' to HHS for shares of a limited amount of
leveraging incentive funds. Shares are determined based on reports
submitted by grantees which describe, and quantify the value of, the
resources they have leveraged. It is therefore necessary that all
grantees applying for leveraging inventive funds use the same rules.
There must be standard criteria and methods for determining the
resources that are countable under the leveraging incentive program and
for quantifying the value of these resources. In the interim rule and
in this final rule, we have tried to make these criteria and methods as
clear and fair as possible, within the limits of the statute and
legislative history.
Public Comments, HHS Responses, and Changes: Section-by-Section
Discussion
Twenty-four of the 25 letters we received on the interim final rule
included comments on the leveraging incentive program. Several of the
commenters addressed the interim rule and its preamble in general. For
example, one believed that the complex statutory instructions for the
leveraging program require the implementing regulation to be
``instructive yet flexible'' and said that the interim rule ``generally
meets these sometimes [[Page 21334]] conflicting purposes in an
understandable and common-sense fashion.'' Another appreciated HHS'
philosophy of keeping the rules for the leveraging program ``within the
spirit of a block grant.'' A third supported HHS' decision to exempt
grantees' use of leveraging incentive funds from some requirements that
apply to regular LIHEAP funds.
Most comments concerned specific leveraging provisions. These
comments, and our responses, are discussed below under the appropriate
headings.
The section and subsection headings are essentially the same in the
interim final rule and the final rule. While we made some substantive
changes, we retained the structure and most of the content of the
interim rule. We made some nonsubstantive changes for clarity and
consistency, as well. The changes are based on the public comments on
the interim rule and on our experience in operating the leveraging
incentive program under the interim rule.
Scope and Eligible Grantees
Subsection (a) of Sec. 96.87 of the interim final rule explained
that Sec. 96.87 concerns the leveraging incentive program authorized by
section 2607A of the LIHEAP statute. We received no comments on this
statement of the scope of the section, and we retained it in the final
rule in a new paragraph (1) under Sec. 96.87(a).
After the comment period on the interim rule, we received an
informal comment from a tribal grantee about entities eligible to
receive leveraging incentive funds. A tribal organization and its
member tribes had leveraged resources while the organization received
direct regular LIHEAP funding on the tribes' behalf; the tribes wanted
to apply for their own direct regular funding--and the leveraging
incentive funds to reward the leveraged resources--in the next fiscal
year. However, the preamble to the interim rule stated that, in order
to receive leveraging incentive funds, ``grantees must receive regular
LIHEAP block grant funding directly from HHS in both the `base' year
for which their leveraging activities are reported and the `award' year
for which leveraging incentive funds are requested'' (57 FR 1965). We
agree with the tribal grantee that credit for leveraging should be
``portable'' when a tribe enters or leaves a tribal organization when
certain conditions are met--for example, a bribe or tribal organization
that applies for leveraging incentive funds also must apply for and
receive direct regular LIHEAP funding in the award period in order to
receive incentive funds. We do not want to require tribes to continue
existing administrative relationships in order to qualify for incentive
funds. We modified the statement of entities eligible for leveraging
incentive funds accordingly and added the revised statement in a new
paragraph (2) under Sec. 96.87(a) in the final rule itself, for clarity
and because of its importance.
Under the revised statement, if a tribe leveraged resources while
receiving regular LIHEAP services under a directly-funded tribal
organization in the base period, and then receives direct regular
LIHEAP funding on its own in the award period, the tribe is eligible to
receive leveraging incentive funds to reward these resources in the
award period. If a tribe leveraged resources while receiving direct
LIHEAP funding in the base period and receives LIHEAP services under a
tribal organization in the award period, the tribal organization is
eligible to receive leveraging incentive funds on the tribe's behalf to
reward these resources in the award period. If a directly-funded tribal
organization leveraged resources in the base period and one or more of
the tribes it had served apply for direct funding in the award period,
the tribes and/or the tribal organization should inform HHS in writing
about the desired fair and appropriate distribution of leveraging
incentive funds in the award period. If the tribes and/or the tribal
organization are unable to agree, HHS will determine the distribution
of the incentive funds among eligible applicants based on the
comparative role of each entity in obtaining and/or administering the
resources, and/or their relative numbers of LIHEAP-eligible households.
Definitions
Section 96.87(b) of the interim final rule defined five terms used
in the leveraging incentive program. We received no comments on four of
the definitions--of ``base period,'' ``home energy,'' ``low-income
households,'' and ``weatherization.'' These definitions remain
substantively unchanged in the final rule.
We received several comments relating to the fifth definition--
``countable petroleum violation escrow funds.'' These comments, and the
changes we made in response, are discussed later in this preamble,
under ``Countable Leveraged Resources and Benefits'' and ``Leveraging
Issues Relating to Tribal Grantees.''
We added two definitions in the final rule--of ``award period'' and
``countable loan fund.'' We defined ``award period'' because--like
``base period,'' which already was defined in the interim rule--``award
period'' is an important and basic term whose meaning must be clear.
Countable loan funds and issues related to them are discussed later in
this preamble, under ``Countable Leveraged Resources and Benefits'' and
``Resources and Benefits That Cannot Be Counted.''
LIHEAP Funds Used To Identify, Develop, and Demonstrate Leveraging
Programs
Section 96.87(c) of the interim final rule and of this final rule
concern LIHEAP funds used to identify, develop, and demonstrate
leveraging programs.
Section 2607A(c)(2) of the LIHEAP statute provided that, each
fiscal year, States may spend up to the greater of $35,000 or 0.0008
percent of their funds allocated under the LIHEAP statute to identify,
develop, and demonstrate leveraging programs. Consistent with
Sec. 96.87(g)(5) of the interim rule, in grantees' leveraging reports
to HHS, all funds from grantees' regular LIHEAP allotments that are
used under the authority of section 2607A(c)(2) to identify, develop,
and demonstrate leveraging programs are to be deducted as offsetting
costs in the base period in which these funds were obligated, whether
or not there are any resulting leveraged benefits.
As we noted in the interim rule's preamble, 0.0008 percent of the
largest FY 1991 State LIHEAP allotment was approximately $1,700;
clearly $35,000 was the larger in all cases, and $35,000 would be the
larger under all foreseeable LIHEAP appropriation levels. Therefore, we
determined that if the language were carried out as written, the result
would appear to be illogical and inconsistent with reason. We concluded
that the figure 0.0008 percent resulted from a typographical error and
that 0.0008 was intended to be the actual factor by which the State's
allotment is multiplied, rather than the percent. (When calculating
0.08 percent of a State's allotment, one multiplies the allotment by
the factor 0.0008.) In the interim final rule, we clarified that the
figure is 0.08 percent. This interpretation provided a meaningful
result, since 0.08 percent of the FY 1991 State LIHEAP allotments
ranged from approximately $1,200 for the State with the smallest
allotment to $170,000 for the State with the largest allotment; $35,000
was the larger in some cases, and 0.08 percent was the larger in other
cases. We received one comment agreeing with this interpretation and
none disagreeing.
Since then, the Human Services Amendments of 1994 (Public Law 103-
252) confirmed our interpretation and [[Page 21335]] corrected the
percent in the LIHEAP statue, which now says ``0.08 percent.'' We kept
this same, corrected figure in the final rule.
Comments and Response
In the interim rule we also determined that $35,000 would be a
disproportionate amount for most tribes, tribal organizations, and
territories to spend annually to identify, develop, and demonstrate
leveraging programs. (As the preamble noted, FY 1991 tribal allotments
ranged from approximately $1,100 to $1,038,000; the allotments of 84 of
the 115 tribal grantees were under $100,000. FY 1991 territorial
allotments ranged from approximately $15,000 to $1,711,000; the
allotments of five of the six territorial grantees were under
$100,000.) The interim rule therefore limited to two percent of their
annual LIHEAP allotments the amount that these grantees may spend each
fiscal year for these purposes. This is approximately the same percent
as the territory with the largest allotment would have spent if it had
used $35,000 of its FY 1991 allotment for these purposes ($35,000
divided by $1,711,284 equals 0.0204524 or 2.04524 percent).
We received no written comments on this provision. Several tribal
grantees have told us informally, however, that they believe that the
two percent limit is too low.
For most tribes and territories, we believe that two percent is a
realistic amount to use for these purposes. We recognize, however, that
two percent of the smallest allotments will provide very little. For
example, two percent of $2,500 is only $50. Therefore, in response to
the concerns of small tribal grantees, the final rule provides that
tribes, tribal organizations, and territories may use up to the greater
of two percent, or $100, of their annual LIHEAP allotments,
specifically to identify, develop, and demonstrate leveraging programs.
(For tribal organizations receiving LIHEAP funds on behalf of two or
more tribes, the base to which the two percent and $100 are applied is
the tribal organization's total regular LIHEAP allotment, not the
separate ``allotments'' of the individual tribes that designated the
tribal organization to administer LIHEAP for them.) For grantees with
allotments under $5,000, $100 is the larger and will provide a usable
amount. (In FY 1992, 22 of the 120 tribal grantees, and no territorial
grantees, had LIHEAP allotments under $5,000.) To allow use of more
than the greater of two percent or $100 for these purposes--in addition
to LIHEAP funds that can be used for planning and administration--would
adversely affect the grantee's ability to provide home energy
assistance with its LIHEAP funds, which is the basic purpose of the
LIHEAP program. We also note that the leveraging reports covering FY
1991, FY 1992, and FY 1993 leveraging activities show that most
grantees used no LIHEAP funds to identify, develop, or demonstrate
leveraging. Only two tribal grantees have reported using LIHEAP funds
to develop leveraging. Only seven of the 63 grantees that received
leveraging incentive funds for their FY 1992 leveraging activities said
they used any LIHEAP funds for this purpose; only two of the seven used
the maximum amount allowed.
Related Issues
The 0.08 percent maximum for States, and the two percent/$100
maximum for tribes, tribal organizations, and territories, are based on
and apply to the grantee's funds allocated under the LIHEAP statute.
For the purpose of this provision, we defined this in the interim rule
to mean the grantees' Federal LIHEAP allotments, including supplemental
funds except leveraging incentive funds. We received no comments on
this definition and have retained it in the final rule. Grantees may
spend additional monies from their own funds or other sources as
appropriate, to identify, develop, and demonstrate leveraging programs.
LIHEAP block grant funds that are used to identify, develop, and
demonstrate leveraging programs are likely to support both planning and
administrative activities and costs, and non-planning, non-
administrative (``program'') activities and costs. The interim rule
stated that LIHEAP funds used under section 2607A(c)(2) of the LIHEAP
statute to identify, develop, and demonstrate leveraging programs are
not subject to the statute's limitation on the maximum percent of
Federal funds that grantees may use for costs of planning and
administration. As we stated in the interim rule's preamble, we believe
that, if these funds were subject to the limitation, it would be a
disincentive to grantees to develop leveraging programs. However,
Congress established the leveraging incentive program to encourage--to
provide an incentive to--grantees to leverage funds. We therefore
concluded that LIHEAP funds used under section 2607A(c)(2) should be
available in addition to the regular LIHEAP planning and administration
limits. We received one comment supporting this decision. We have
retained this provision in the final rule.
In addition to the maximum set by Sec. 96.87(c) specifically for
identifying, developing, and demonstrating leveraging programs, a
grantee may find that part of the LIHEAP funds it spends for planning
and administrative costs also have the effect of helping to identify,
develop, and/or demonstrate leveraging programs. Since these are valid
LIHEAP planning or administrative activities, paid for from the portion
of a grantee's LIHEAP block grant funds that can be used for planning
and administration, they are not subject to the 0.08 percent/$35,000
limit for States or the two percent/$100 limit for tribes/territories
set by section 96.87(c). Thus, a grantee could, in effect, use somewhat
more than the maximum 0.08 percent/$35,000 or two percent/$100 set
specifically for identifying, developing, and demonstrating leveraging.
This option is available to all LIHEAP grantees.
Comment and Response
A commenter said that, because these funds ``are coming out of
program funds'' and do not count against the statutory limit on Federal
funds used for LIHEAP administration and planning, HHS should request
itemization of how they are spent. The commenter said that ``[w]ithout
this information, neither Congress nor advocates will have any sense of
how these additional non-benefit, non-administrative funds will have
been used.'' However, we have no indication that Congress wants HHS to
collect and report this information, and we do not believe that we need
to impose such an information collection and reporting burden on
grantees in order to assure program accountability. We therefore
decline to accept this suggestion. We do not require grantees to
specify how they use their LIHEAP planning and administrative funds,
and we are not requiring them to specify how they use their LIHEAP
leveraging development funds. Consistent with the block grant
philosophy and Federal paperwork reduction efforts, the only reports
that LIHEAP grantees are required to submit are those that provide
information necessary to meet requirements in the LIHEAP statute and
the Single Audit Act. The LIHEAP leveraging report form and our
voluntary LIHEAP telephone survey of States provide data on the
amount--if any--that grantees spend to identify, develop, and
demonstrate leveraging. We will check further on these activities when
carrying out our compliance responsibilities--for example, when we
conduct compliance reviews. [[Page 21336]]
Basic Requirements for Leveraged Resources and Benefits
Based on the provisions of section 2607A of the LIHEAP statute,
Sec. 96.87(d) of the regulation sets basic requirements for leveraged
resources and benefits.
Information and Comment on Basic Requirements, Paragraph (1)
In the interim rule, paragraph (1) of Sec. 96.87(d) listed four
criteria, all of which had to be met by countable leveraged resources/
benefits.
The first two criteria under paragraph (1) implement requirements
in section 2607A of the LIHEAP statute. They require that countable
leveraged resources/benefits be from non-Federal sources, and be
provided to the grantee's LIHEAP program or to federally qualified low-
income households. We received no comments on these criteria; they
remain the same in the final rule.
In accordance with the LIHEAP statute, leveraged resources that are
provided to households that do not meet the Federal eligibility
standards in section 2605(b)(2) of the statute cannot be counted under
the leveraging incentive program. Federally qualified (federally
eligible) low-income households are:
Households with incomes that do not exceed the greater of
150 percent of the poverty level for their State, or 60 percent of
State median income; and
Households in which one or more individuals receive Aid to
Families with Dependent Children, Supplemental Security income
payments, food stamps, or certain need-tested veterans' and survivors'
payments (payments under sections 415, 521, 541, or 542 of title 38 of
the U.S. Code or section 306 of the Veterans' and Survivors' Pension
Improvement Act of 1978).
If a countable leveraging program/activity provides benefits to
both federally eligible households and households that do not meet
Federal eligibility standards, the grantee should report only the
benefits for households that are federally eligible.
The LIHEAP statute allows grantees to set eligibility standards for
their LIHEAP programs that are more restrictive than these Federal
maximums. The statute permits grantees to set their LIHEAP programs'
income eligibility standard as low as 110 percent of the poverty level.
The statute also permits grantees to decide whether to have categorical
eligibility for their LIHEAP program and, if so, to decide which of the
programs listed above to include. State eligible (State qualified)
households are households that meet the eligibility requirements set by
a State for its LIHEAP program. A grantee may claim leveraged resources
provided to federally eligible households even if the grantee set lower
eligibility standards for its LIHEAP program, provided the resources
meet all the other statutory and regulatory requirements.
Criterion (iv) under paragraph (1) implements section 2607A(b)(1)
of the LIHEAP statute. Section 2607A(b)(1) states that countable
leveraged resources/benefits must ``represent a net addition to the
total energy resources available to State and federally qualified
households in excess of the amount of such resources that could be
acquired by such households through the purchase of energy at commonly
available household rates.'' The interim rule's preamble noted that
this language could be interpreted to limit countable leveraged
resources to energy credits and fuels purchased at discounted prices--
to mean, for example, that a grantee could not count leveraged donated
funds used to pay low-income households' actual fuel costs at normal
rates, because there would be no net addition to the resources these
households could acquire at ``commonly available household rates,'' or
that a grantee could not count tangible non-fuel items purchased at
discounted prices. We did not adopt this narrow interpretation in the
interim rule. In criterion (iv) under paragraph (1) in the interim
rule, we clarified the statutory language to state that countable
leveraged resources and benefits must ``represent a net addition to the
total home energy resources available to low-income households in
excess of the amount of such resources that could be acquired by these
households through the purchase of home energy, or the purchase of
items that help these households meet the cost of home energy, at
commonly available household rates or costs, or that could be obtained
with regular LIHEAP allotments provided under section 2602(b) of Public
Law 97-35. . . .''
We received one comment on this regulatory provision. The commenter
believed that the provision ``is consistent with the overall intent''
of the statutory leveraging provisions. We retained the same language
in the final rule.
Changes and recommendation
Based on our experience in operating the leveraging program, we
added a fifth criterion to Sec. 96.87(d)(1) in the final rule,
specifying and clarifying that countable resources/benefits must meet
the requirements for leveraged resources and benefits throughout
Sec. 96.87 of these regulations and section 2607A of the LIHEAP
statute. This is to assure consistent understanding and prevent
confusion about the fact that the criteria in Sec. 96.87(d) are not the
only requirements for countable leveraged resources/benefits. We also
added the word ``basic'' to the heading for this section--``Basic
requirements for leveraged resources and benefits''--to underscore this
point.
The third criterion under Sec. 96.87(d)(1) states that countable
resources/benefits must be measurable and quantifiable in dollars. We
made no change to this criterion in the final rule. However, based on
our experience in operating the leveraging program, we encourage
grantees to consolidate similar resources in their leveraging reports,
so that each counted resource has a gross dollar value of $200 or more
as determined in accordance with Sec. 96.87(g). Several grantees have
included in their leveraging reports separate resources valued at only
$10 or $20. Disproportionate amounts of time and effort are spent
preparing and reviewing information on such small resources. We
therefore urge grantees to consolidate similar resources in their
leveraging reports, especially resources valued at under $200, into
combined resources valued at $200 or more. For example, a grantee could
combine in-kind donations of space heaters and blankets by different
groups and/or individuals, which are separately valued at under $200,
into one resource with a value of $200 or more. Consolidation of
similar resources in the leveraging report is often helpful for larger
resources, as well. In almost all cases, grantees will be able to
consolidate very small resources into resources valued at $200 or more.
Information on Basic Requirements, Paragraph (2)
In the interim rule, paragraph (2) of section 96.87(d) listed three
additional basic requirements for countable leveraged resources.
Countable resources/benefits were required to meet at least one of
these three requirements.
Paragraph (2) implements section 2607A(b)(2) of the LIHEAP statute.
Section 2607A(b)(2) mandates that leveraged resources/benefits meet at
least one of the following three criteria relating to the role of the
grantee's LIHEAP program in the development or distribution of the
resources/benefits: (1) They ``result from the acquisition or
development by the State program of quantifiable benefits that are
obtained from energy vendors through negotiation, regulation or
competitive [[Page 21337]] bid''; or (2) they ``are appropriated or
mandated by the State for distribution . . . through the State
program''; or (3) they ``are appropriated or mandated by the State for
distribution . . . under the plan referred to in section 2605(c)(1)(A)
to federally qualified low-income households and such benefits are
determined by the Secretary to be integrated with the State program.''
The first criterion refers to the role of the grantee's LIHEAP
program in the acquisition or development of benefits obtained from
energy vendors. Based on the discretion in the statute, the interim
rule defined the phrase ``acquisition or development by the State
program'' to mean that the grantee's LIHEAP program must have
``substantial involvement in the acquisition or development of these
benefits. The involvement of the grantee's LIHEAP program'' must be
``considerable, important, material, and of real value or effect.''
The interim rule defined the second criterion to mean that the
leveraged resources and benefits must be ``provided to low-income
households eligible under the grantee's standards, as a part of
(through or within) the grantee's LIHEAP program, consistent with the
Federal statutes and regulations applicable to the LIHEAP program.''
The plan referred to in the third criterion is a part of each
grantee's annual application for regular LIHEAP funds; in the plan, the
grantee describes how it will carry out statutory assurances to which
its chief executive officer has certified and includes other
information required by statute. Based on the context in which it
appears in the statute, the interim rule defined the phrase,
``appropriated or mandated by the State for distribution . . . under
the plan . . .'', to mean that the leveraged resources and benefits
must be ``identified and described in the plan and distributed as
indicated in the plan; however, they are not provided to low-income
households as a part of (through or within) the grantee's LIHEAP
program.''
The third statutory criterion also requires that the leveraged
benefits be ``integrated with the State program.'' The interim rule
defined this to mean that the benefits must be ``coordinated with the
grantee's LIHEAP program and . . . provided in cooperation and in
conjunction with the LIHEAP program.''
We received ten letters that commented on one or more of these
three criteria.
Comment and Response
A commenter recommended ``that the rules applying'' to criteria (i)
and (ii) ``simply restate the language of the law.'' The commenter said
that HHS implemented an ``expanded interpretation'' of these criteria
that ``is unnecessary and inconsistent with the nature of a block
grant.''
Much of the language of the LIHEAP statute--including section
2607A--is subject to differing interpretations. As we stated earlier in
this preamble, the leveraging incentive program is different from the
regular LIHEAP block grant, where different grantees may adopt
different interpretations of a statutory provision, as long as the
interpretations are not clearly erroneous. In the regular LIHEAP
program, one grantee's statutory interpretations and program operations
generally do not depend on or affect another's. In the leveraging
program, however, where grantees are ``competing'' for shares of the
same limited amount of leveraging incentive funds, we need to apply
common rules to all proposed resources, and all concerned parties
should have common understandings about leveraged resources that are
countable, and resources that are not. This is why we do not ``simply
restate that language of the law'' in cases where conflicting
interpretations of provisions in section 2607A are likely.
Comments and Response
We received several verbal comments about the meaning of the
statutory phrase, ``the State program,'' in criterion (i). The same
phrase is used in the statute with respect to criteria (ii) and (iii),
where it clearly means the grantee's LIHEAP program, and not another
State agency or program. We believe it is logical and appropriate to
conclude that it has the same meaning in criterion (i). Through these
three criteria, the statute and regulations require that the grantee's
LIHEAP program have a clear, substantive role in developing, acquiring,
administering, and/or coordinating with leveraged resources countable
under the LIHEAP leveraging incentive program.
A commenter said that the requirement in criterion (i) that the
grantee's LIHEAP program have ``substantial involvement'' which is
``considerable, important, material, and of real value or effect'' in
acquisition or development of benefits ``is both overly restrictive and
subject to subjective interpretation.'' We do not believe it is overly
restrictive to require that the grantee's LIHEAP program play an active
role in acquiring or developing a resource under this criterion. The
statute requires that, in order to meet the criterion, the benefits
must ``result from the acquisition or development by the State program
of quantifiable benefits that are obtained from energy vendors through
negotiation, regulation or competitive bid.'' We do not believe that
this language should be understood to require the grantee's LIHEAP
program to acquire or develop the benefits entirely by itself. On the
other hand, in cases where other entities also were involved in the
acquisition or development, the grantee's LIHEAP program should have a
substantive role. If, for example, grantee LIHEAP staff had simply
attended a meeting at which other people negotiated reduced home energy
rates for low-income households, that attendance alone should not count
as meeting criterion (i). The interim rule therefore required that the
grantee's LIHEAP program have ``substantial involvement,'' and the
final rule requires that the actions/efforts of grantee LIHEAP program
staff be ``substantial and significant'' in obtaining a resource from a
vendor.
The same commenter believed that the statutory requirement for
criterion (i) is met as long as ``the source of leveraged funds are
[sic] energy vendors and the funds resulted from negotiation,
regulation, or competitive bidding,'' and the benefits ``go to * * *
the state program.'' We do not believe that a resource countable under
criterion (i) must ``go to'' (be administered through or within) the
LIHEAP program. Resources leveraged under this criterion are often
discounts or waivers for low-income households, not ``funds'' that can
be administered through the LIHEAP program. We believe that reduced
home energy rates and waivers of certain home energy charges that are
negotiated with home energy vendors by (or with substantive
participation of) LIHEAP program staff should be countable under this
criterion--even though reduced rates and waivers usually are not
administered through the LIHEAP program.
This commenter apparently assumed that ``development by the State
program'' means that the State program must be involved in developing
``a method of acquiring'' the resources, but that ``acquisition * * *
by the State program'' means only that the benefits must ``go to'' the
program. However, we continue to believe that the grantee's LIHEAP
program--at the central, regional, and/or local office level--should
play an active, substantial role in acquiring (obtaining) or developing
the resource from the home energy vendor, not simply passively
``acquire'' (receive) [[Page 21338]] a benefit in whose acquisition it
played no part. (Such a resource could be countable under criterion
(ii), if the resource is ``appropriated or mandated'' by the State,
tribe, or territory for distribution through the LIHEAP program.)
Benefits from vendors that are negotiated by or result from competitive
bidding conducted by (or with substantive participation of)
subrecipients (e.g., local administering entities) under a State,
tribal, or territorial LIHEAP program acting in that capacity, also are
countable under criterion (i) as long as all other requirements also
are met.
We agree that the interim rule's requirement that the involvement
of the grantee's LIHEAP program in the acquisition or development of
the resource be ``substantial'' and ``considerable, important,
material, and of real value or effect'' in some cases may be confusing
and subject to subjective interpretation. In grantees' leveraging
reports on FY 1991 and FY 1992 leveraging, most resources claimed under
criterion (i) clearly met this test, and several clearly did not.
However, there also were a number of claimed resources for which we had
to request additional information from the grantee to substantiate
``substantial'' involvement, and on several of these we still had to
make difficult judgments about whether to count the resource. Short of
requiring that the grantee LIHEAP program acquire or develop the
resource completely on its own, or saying that the grantee program need
have no role at all in acquiring or developing the resource--which we
do not believe to be appropriate--we see no way to write regulatory
language that would totally eliminate such situations.
We also have found that several grantees were confused about
whether criterion (i) applied only to resources obtained from energy
vendors. The statute clearly limits this criterion to resources/
benefits ``that are obtained from energy vendors through negotiation,
regulation, or competitive bid,'' not from charitable organizations,
etc.
To clarify criterion (i) without materially changing its substance,
we amended Sec. 96.87(d)(2)(i) as follows in the final rule:
``The grantee's LIHEAP program had an active, substantive role in
developing and/or acquiring the resource/benefits from home energy
vendor(s) through negotiation, regulation, and/or competitive bid. The
actions or efforts of one or more staff of the grantee's LIHEAP
program--at the central and/or local level--and/or one or more staff of
LIHEAP program subrecipient(s) acting in that capacity, were
substantial and significant in obtaining the resource/benefits from the
vendor(s).''
Comments and Response
There have been several questions about the statutory requirement
that resources countable under criterion (ii) be distributed
``through'' the grantee's (LIHEAP) program. The interim rule and this
final rule state that this means ``within'' and ``as a part of'' the
grantee's LIHEAP program. Under criterion (ii), the leveraged resource/
benefit is administered by the LIHEAP agency or agencies under the
LIHEAP statute and regulations, consistent with the eligibility
standards and benefit levels used by the grantee for its Federal LIHEAP
funds; it is considered a LIHEAP benefit. Resources counted under
criterion (ii) do not have to be specifically identified in the
grantee's LIHEAP plan if they are clearly covered by the plan. For
example, the plan would not have to say that leveraged cash resources
are used to provide heating assistance, as long as the plan describes a
heating assistance program that is funded with LIHEAP resources and the
leveraged resources are used in accordance with this description.
Five letters addressed the statutory and regulatory requirements
that resources countable under criteria (ii) and (iii) must be
``appropriated or mandated'' by the grantee ``for distribution''
through the grantee's LIHEAP program (criterion (ii)) or under the
grantee's LIHEAP plan and integrated with the LIHEAP program (criterion
(iii)).
Using similar language, two Congressional letters said the
regulation should ``make clear'' that leveraging initiatives that
qualify for incentive funds because they are ``mandated'' by State
action must be created by legislation, rule, contract, binding
agreement, or another specific action or identifiable ``mandate'' or
requirement--the grantee cannot merely list voluntary charitable
efforts in its LIHEAP plan in order to meet these criteria. Two other
commenters said that the interim rule was not sufficiently clear
regarding the requirements for ``mandated'' resources. One of these
commenters said that ``merely mentioning a program in the state's plan
do not constitute a mandate''; a mandate ``should be a regulation,
order, or other formal agreement or expression by the state agency
governing the control and the distribution of the leveraged resource.''
We agree that a mere list of voluntary charitable efforts in a
grantee's LIHEAP plan does not meet these two criteria. Resources/
benefits that are mentioned in the plan, but are neither provided
through nor integrated with the LIHEAP program, are not countable under
these criteria.
We do not believe that the statute or legislative history require
that resources countable under these criteria be ``created'' by State,
tribal, or territorial ``mandate,'' however. We therefore did not make
a change in response to comments supporting such a requirement. The
statute requires instead that the resource/benefits be ``appropriated
or mandated by the State [or tribal or territorial grantee] for
distribution'' through its LIHEAP program (criterion (ii)) or under its
LIHEAP plan and also integrated with its LIHEAP program (criterion
(iii)). For example, oil overcharge funds counted under criterion (ii)
would not be created by State mandate; they would be mandated by the
State for distribution through its LIHEAP program.
We believe that ``by the State'' means that the State, tribe,
tribal organization, or territory--the grantee--must appropriate or
mandate the resource/benefits for distribution. A subrecipient such as
a local nonprofit agency might actually ``distribute'' the resource/
benefits on behalf of the grantee, but the grantee must take the action
that meets the requirement to appropriate or mandate the resource/
benefits for distribution through its LIHEAP program or under its
LIHEAP plan, etc.
The grantee's LIHEAP application--which includes the plan--is an
official, formal document in which the grantee makes a binding
commitment to distribute resources in certain ways. We therefore
believe that it is reasonable to assume that the inclusion of the
leveraged resource/benefits in the LIHEAP plan means that the grantee
has ``mandated'' the resource for distribution as described in the
plan. Inclusion of appropriate information in the plan is documentation
of the mandate. Because the grantee's LIHEAP plan is a formal
expression by the grantee that governs the distribution of the
leveraged resource, we consider resources appropriately described in or
covered by the plan to be mandated by the grantee for distribution as
required by criteria (ii) and (iii).
Another commenter believed that criterion (ii) ``can reasonably be
read to require that some state entity (in the Executive, Legislative
or Judicial branch) provide the additional resources to the State
program for distribution by the program, that is, they were
appropriated or mandated by the Governor or legislature or by the
judiciary * * *.'' On the other hand, [[Page 21339]] this commenter
said that criterion (iii) ``is somewhat of a `catchall' for
independently initiated activities, so long as they are then
`integrated with' the state program. The advantage of this approach is
that the program does not have to assure that it is aware of every
instance when a CAP negotiates an arrearage forgiveness or a waived fee
for a LIHEAP client in time to amend its state plan to include such
activity.'' This commenter believed that resources under this criterion
``may clearly be available independently of state activity.''
However, the statute requires that resources countable under both
criterion (ii) and criterion (iii) be ``appropriated or mandated by the
State for distribution.'' We therefore do not believe it is appropriate
to conclude that criterion (ii) requires that a State entity provide
the resource for distribution by the LIHEAP program, but that under
criterion (iii), the resource may be available independent of State
activity. Also, criterion (iii) requires that the resource/benefits be
integrated with the grantee's LIHEAP program, and we do not believe
that a resource can be both integrated with the LIHEAP program and
``available independently of State activity.''
We agree that ``independently initiated'' resources/benefits that
are appropriated or mandated by the grantee for distribution in a way
that is integrated with the LIHEAP program can be countable under
criterion (iii) as long as all other relevant statutory and regulatory
requirements are met. However, we believe that, in order to be
distributed under the grantee's LIHEAP plan--as required by the statute
for criterion (iii)--the resource/benefits must be identified and
described in the plan. Also, because the statute requires that
resources countable under criterion (iii) be ``appropriated or mandated
by the State for distribution'' under the LIHEAP plan and
``integrated'' with the LIHEAP program, we believe that the grantee
needs to be aware of these resources. The grantee cannot legitimately
claim that it appropriated or mandated a resource and the resource was
integrated with the LIHEAP program--but the grantee did not know about
or document the resource during the base period in which the benefits
were provided to recipients. The identification and description of the
resource/benefits in the plan provides formal documentation of the
mandate by the grantee that the resource/benefits be distributed
``under the plan'' and ``integrated'' with the LIHEAP program. We
therefore continue to require that resources to be counted under
criterion (iii) must be included in the grantee's plan.
The preamble to the interim rule required (at 57 FR 1967) that the
resource be included in the plan during the base period for which the
resource is claimed--the period in which the resource/benefits are
provided to low-income households. For clarity, we added this
requirement to the final rule itself. As we stated in the interim
rule's preamble, grantees that did not identify and describe all of
their leveraging activities for a base period in their initial plans
covering this period may amend their plans to include such resources at
any time (before or) during the base period, but they may not amend
their plans to include such resources retroactively, after the base
period has ended. For clarity, the final rule requires that any LIHEAP
plan amendments needed to cover leveraging activities counted under
criteria (ii) and (iii) of section 96.87(d)(2) must be submitted before
the end of the base period. Resources/benefits provided under the
criterion (ii) must be distributed consistent with the grantee's LIHEAP
plan and program policies that were in effect during the base period.
The plan must identify and describe resources/benefits provided under
criterion (iii) before the base period ends.
In addition, the final rule reiterates the requirement in the
interim rule that the plan identify and describe the resources/benefits
to be counted under criterion (iii), and now also requires that the
plan identify and describe their sources, and the way in which they are
integrated/coordinated with the grantee's LIHEAP program. We added the
latter requirements because several grantees' plan ``descriptions'' of
leveraged resources were so vague (e.g., ``donations'') that they were
virtually meaningless. Each individual resource does not necessarily
need to be separately identified; similar resources may be grouped
together. For example, similar donations from a number of churches
might be covered as follows in the plan: ``In-kind contributions by
approximately five churches, of blankets, space heaters, and fans that
will be distributed by these churches to low-income households referred
by the LIHEAP program because the households' LIHEAP benefits do not
meet their need for these items.'' (Such related donations also could
be combined as one resource in the grantee's LIHEAP leveraging report.)
There have been several questions and comments about the statutory
requirement that resources countable under criterion (iii) must be
``integrated with the State program.'' A commenter said that
``integration'' should be defined ``to clearly require a higher form of
relationship than merely serving the same income-class of households.
An integrated program should have coordinated administrative
procedures, cooperative targeting of benefits and benefit levels, and
an integrated set of aims and purposes that rely on LIHEAP as the
keystone to fulfilling those common purposes.'' Another said that
``[t]here must be a direct connection [with the LIHEAP program] through
a set of mutual, explicit obligations and formalized arrangements.''
The statutory requirement that resources counted under criterion
(iii) be ``integrated'' with the grantee's LIHEAP program has been
difficult for HHS and grantees to implement. In the interim rule,
criterion (iii) required that resources/benefits be ``integrated'' and
``coordinated'' with the grantee's LIHEAP program, and ``provided in
cooperation and in conjunction'' with the LIHEAP program. A number of
grantees were confused about what constituted integration and
coordination. In practice, these terms were not sufficiently clear or
measurable, and they were subject to differing understandings and
interpretations. We needed a more objective way to determine whether a
resource was integrated with the LIHEAP program.
We therefore added eight ``conditions'' (``A'' through ``H'') in
the final rule, describing specific circumstances that demonstrate that
a resource is integrated with the grantee's LIHEAP program--that the
resource and LIHEAP function cooperatively and in coordination with
each other to provide an interrelated larger unit or whole. If a
leveraged resource meets at least one of these eight conditions, we
will consider it to be integrated and coordinated with the grantee's
LIHEAP program.
Based on the comments we received and on our experience in the
first three cycles of the leveraging program, we clarified requirements
for criteria (ii) and (iii) of Sec. 96.87(d)(2) in the final rule. We
amended criterion (ii) as follows:
The grantee appropriated or mandated the resource/benefits for
distribution to low-income households through (that is, within and as a
part of) its LIHEAP program. The resource/benefits are provided through
the grantee's LIHEAP program to low-income households eligible under
the grantee's LIHEAP standards, in accordance with the LIHEAP statute
and regulations and consistent with the grantee's LIHEAP plan and
program policies that were in effect during the base period, as if they
[[Page 21340]] were provided from the grantee's Federal LIHEAP
allotment.
We amended criterion (iii) as follows: The grantee appropriated or
mandated the resource/benefits for distribution to low-income
households as described in its LIHEAP plan * * *. The resource/benefits
are provided to low-income households as a supplement and/or
alternative to the grantee's LIHEAP program, outside (that is, not
through, within, or as a part of) the LIHEAP program. The resource/
benefits are integrated and coordinated with the grantee's LIHEAP
program. Before the end of the base period, the plan identifies and
describes the resource/benefits, their source(s), and their
integration/coordination with the LIHEAP program.
The Department will determine resources/benefits to be integrated
and coordinated with the LIHEAP program if they meet at least one of
the following eight conditions. If a resource meets at least one of
conditions A through F when the grantee's LIHEAP program is operating
(and meets all other applicable requirements), the resource also is
countable when the LIHEAP program is not operating.
(A) For all households served by the resource, the assistance
provided by the resource depends on and is determined by the assistance
provided to these households by the grantee's LIHEAP program in the
base period. The resource supplements LIHEAP assistance that was not
sufficient to meet households' home energy needs, and the type and
amount of assistance provided by the resource is directly affected by
the LIHEAP assistance received by the households.
(B) Receipt of LIHEAP assistance in the base period is necessary to
receive assistance from the resource. The resource serves only
households that received LIHEAP assistance in the base period.
(C) Ineligibility for the grantee's LIHEAP program, or denial of
LIHEAP assistance in the base period because of unavailability of
LIHEAP funds, is necessary to receive assistance from the resource.
(D) For discounts and waivers: Eligibility for and/or receipt of
assistance under the grantee's LIHEAP program in the base period, and/
or eligibility under the Federal standards set by section 2605(b)(2) of
Public Law 97-35 * * * is necessary to receive the discount or waiver.
(E) During the period when the grantee's LIHEAP program is
operating, staff of the grantee's LIHEAP program and/or staff assigned
to the LIHEAP program by a local LIHEAP administering agency or
agencies, and staff assigned to the resource communicate orally and/or
in writing about how to meet the energy needs of specific, individual
households. For the duration of the LIHEAP program, this communication
takes place before assistance is provided to each household to be
served by the resource, unless the applicant for assistance from the
resource presents documentation of LIHEAP eligibility and/or the amount
of LIHEAP assistance received or to be received.
(F) A written agreement between the grantee's LIHEAP program or
local LIHEAP administering agency, and the agency administering the
resource, specifies the following about the resource: eligibility
criteria; benefit levels; period of operation; how the LIHEAP program
and the resource are integrated/coordinated; and relationship between
LIHEAP eligibility and/or benefit levels, and eligibility and/or
benefit levels for the resource. The agreement provides for annual or
more frequent reports to be provided to the LIHEAP program by the
agency administering the resource.
(G) The resource accepts referrals from the grantee's LIHEAP
program, and as long as the resource has benefits available, it
provides assistance to all households that are referred by the LIHEAP
program and that meet the resource's eligibility requirements. Under
this condition, only the benefits provided to households referred by
the LIHEAP program are countable.
(H) Before the grantee's LIHEAP heating, cooling, crisis, and/or
weatherization assistance component(s) open and/or after the grantee's
LIHEAP heating, cooling, crisis, and/or weatherization assistance
component(s) close for the season or for the fiscal year, or before the
entire LIHEAP program opens and/or after the entire LIHEAP program
closes for the season or for the fiscal year, the resource is made
available specifically to fill the gap caused by the absence of the
LIHEAP component(s) or program. The resource is not available while the
LIHEAP component(s) or program is operating.
Additional Information
In order to be countable, a leveraged resource must meet the
requirements under at least one of criteria (i), (ii), and (iii). A
single resource cannot meet both criterion (ii) and criterion (iii),
because a resource cannot be provided to low-income households both as
a part of the LIHEAP program (criterion (ii)), and not as a part of,
but integrated with, the LIHEAP program (criterion (iii)). A resource
countable under criterion (iii) must meet all of the requirements in
the first part of the criterion, and at least one of the conditions
demonstrating integration/coordination in the second part of the
criterion.
In criterion (iii), conditions A through F describe acceptable
circumstances of integration/coordination while the grantee's LIHEAP
program is operating. If a resource meets at least one of these six
conditions while the grantee's LIHEAP program is operating (as well as
all other applicable requirements), the resource also is countable
during the base period when the LIHEAP program is not operating. The
circumstances described in a condition must apply to all assistance
provided by the resource, and all households assisted by the resource,
except for condition G. Condition G describes certain resources that
accept referrals from the grantee's LIHEAP program. It is possible that
some of the households served by a resource will not be referred to it
by the LIHEAP program. Under condition G, benefits provided by certain
resources to households that were referred by the LIHEAP program are
countable, but benefits provided to households that were not referred
by the LIHEAP program are not countable. Condition H describes certain
resources made available specifically because the grantee's entire
LIHEAP program has not yet opened or has closed, or because one or more
components of the LIHEAP program have not yet opened or have closed.
If a grantee sets its LIHEAP income eligibility standard below the
LIHEAP statute's maximum (for example, at 125 percent of the poverty
level), it could count leveraged benefits provided to households with
incomes between the State standard and the Federal maximum standard
(the greater of 150 percent of the poverty level or 60 percent of State
median income) under criterion (i) or criterion (iii), as long as the
benefits meet all other requirements for leveraged resources as well.
These criteria allow the counting of leveraged benefits that are
provided to households with incomes up to the Federal maximum and to
categorically eligible households, as described in section 2605(b)(2)
of the LIHEAP statute, whether or not the grantee's LIHEAP program has
more restrictive eligibility standards. Under criterion (ii), leveraged
benefits must be provided through the grantee's LIHEAP program, to
households eligible under the grantee's standards. [[Page 21341]]
Countable Leveraged Resources and Benefits
Section 96.87(e) of the interim rule and the final rule describes
resources and benefits that are countable under the LIHEAP leveraging
incentive program. This section describes the three types of countable
resources--certain cash resources, home energy discounts and waivers,
and third-party in-kind contributions--and lists examples of countable
resources/benefits under each. Countable resources/benefits are not
limited to the examples named. Additional resources may be countable as
well, provided that they also meet all applicable requirements.
Under both the interim rule and the final rule, we do not require
that leveraging activities be ``new'' in the base period in order to be
countable. Benefits provided by ongoing leveraging activities--such as
discounts in home energy bills and home energy assistance provided by
fuel funds--are countable as long as they meet the requirements of the
statute and these regulations, and the counted benefits are provided to
federally or State eligible low-income households during the base
period.
There is sometimes a distinction or difference between a resource
as it was acquired, and the benefits that the resource provided to low-
income households. Resources acquired in the form of cash can be used
to provide benefits in the form of certain cash payments, tangible
items, and/or services. However, when resources are acquired in the
form of discounts/waivers and in-kind contributions, the benefits are
essentially the same as the resources.
The interim rule listed the three types of countable leveraged
resources as ``cash resources,'' ``home energy discounts and credits,''
and ``third-party in-kind contributions.'' Because the word ``credits''
has more than one common meaning, we found that its use was confusing
on occasion. In some cases, a ``credit'' refers to and means a
discount. For example, a ``credit'' donated by a home energy vendor
toward the purchase of fuel from the vendor--with no payment received
for this amount--represents a discount/reduction in the price of the
fuel and should be classified as a discount. In other cases, however, a
``credit'' to a household's home energy account results from a payment
on behalf of the household and therefore refers to the benefit provided
by a cash resource. For example, a grantee's own funds used to provide
heating assistance benefits should be considered a cash resource.
However, in its leveraging report, a grantee mistakenly categorized
these funds under ``discount/credit'' because the benefits represented
``credits'' toward the recipients' accounts with their vendors. To
reduce confusion, therefore, this final rule refers to ``home energy
discounts and waivers,'' rather than ``home energy discounts and
credits'' as used in the interim rule. In cases where a grantee has
difficulty determining whether to classify a ``credit'' as a cash
resource or a discount/waiver, we will discuss the resource with the
grantee to determine the correct classification.
Comment and Response
We received one comment on resources listed as countable in
Sec. 96.87(e) of the interim rule. The commenter questioned whether
forgiveness of utility sales taxes for LIHEAP-eligible households
should be countable.
The interim rule listed as a countable resource/benefit ``partial
or full forgiveness of home energy bill arrearages''; the arrearage
amounts could include sales taxes and/or other extra charges, such as
special energy taxes, environmental surcharges, and late payment
charges. As long as such charges are included in the low-income
household's home energy bill and apply to all residential customers in
comparable situations, we do not believe that they should be excluded.
Use of leveraged funds to pay low-income households' home energy bills,
or portions of these bills, that include such charges would be
countable as well. We retained this provision in the final rule.
Comments and Changes
The final rule specifies that purchase and donation of space
heating and space cooling devices, equipment, and systems are
countable. Purchase and donation of space heating and space cooling
devices and equipment, such as furnaces, fans, and air conditioners,
already were specified as countable in the interim rule. Based on our
experience in operating the leveraging program, we found that the term
``devices and equipment'' was too limited. Therefore, we added the
broader term ``systems'' in the final rule. For clarity, the final rule
also specifies additional countable weatherization services:
Replacement and repair of weatherization materials (installation of
weatherization materials already was specified as countable);
installation, replacement, and repair of space heating and space
cooling devices, equipment, and systems (for example, installation of
energy efficient furnaces and repair of leaks in heating system ducts);
and installation, replacement, and repair of other tangible items that
help low-income households meet the costs of home energy and that are
specifically approved by HHS. Also, for clarity and in response to
comments urging that they be countable, the final rule adds the
following services when they are an integral part of weatherization to
help low-income households meet the costs of home energy: Installation,
replacement, and repair of windows, exterior doors, roofs, exterior
walls, and exterior floors; pre-weatherization home energy audits of
homes that were weatherized as a result of these audits; and post-
weatherization inspection of homes. Also, we agree with the informal
comments we received recommending that several safety-related aspects
of weatherization be countable when they are integral and necessary
parts of weatherization. In response to these comments, the final rule
adds: Installation, replacement, and repair of smoke/fire alarms that
are an integral part, and necessary for safe operation, of a home
heating or cooling system installed or repaired as a weatherization
activity; and asbestos removal that is an integral part of and
necessary to carry out weatherization to help low-income households
meet the costs of home energy. These services are countable if they are
paid for with leveraged cash resources, or provided as in-kind
contributions by volunteers or donated paid staff under the conditions
specified in the final rule. Discounts in the cost of these items and
services also are countable under the conditions specified in the final
rule.
A commenter recommended that weatherization ``audits'' and
inspections be countable, because they are essential to the success of
weatherization and ``ensure the net addition of energy resources to the
household.'' We adopted this recommendation, with respect to home
energy audits to determine households' weatherization needs, and
inspections to assure that weatherization has been properly carried
out, when these audits and inspections are integral parts of
weatherization to help low-income households meet the costs of home
energy. Only the home energy audits of low-income households' homes
that were weatherized as a result of these audits are countable.
Because these countable services involving smoke/fire alarms,
asbestos removal, pre-weatherization audits, and post-weatherization
inspections must be an integral part of weatherization carried out to
help specific low-income [[Page 21342]] households meet the costs of
home energy, they generally should be counted in the base period in
which these households' homes were weatherized. Pre-weatherization
audits--which are countable as an integral part of resulting
weatherization--should be counted in the base period in which the
weatherization is carried out. This will prevent counting the audits of
homes when the follow-up weatherization was not done. However, homes
might be weatherized using leveraged funds or volunteer services in one
base period and therefore counted in that base period, but the post-
weatherization inspections of these homes might take place and be
counted in the following base period.
Also, based on our experience in operating the leveraging incentive
program, we added a clarification to the final rule at
Sec. 96.87(e)(1)(i), naming several specific examples of countable
benefits provided by leveraged cash resources: Heating, cooling, and
energy crisis assistance payments and cash benefits made in the base
period to or on behalf of low-income households toward their home
energy costs--including home energy bills, taxes on home energy sales/
purchases and services, connection and reconnection fees, application
fees, late payment charges, bulk fuel tank rental or purchase costs,
and security deposits that are retained for six months or longer.
Also as a clarification, we added language at the beginning of
paragraph (2) of Sec. 96.87(e), which describes countable home energy
discounts and waivers, stating that countable discounts/waivers must
``pertain to generally applicable prices, rates, fees, charges, costs,
and/or requirements.'' This language applies to all of the sub-
paragraphs under this paragraph. We therefore deleted similar language
from subparagraph (ii).
Finally, we added clarifying language specifying that the following
are countable: Partial or full waivers of bulk fuel tank rental or
purchase costs; and reductions in, and partial or full waivers of, non-
Federal taxes on home energy sales/purchases and services (such as
furnace repairs) and of other non-Federal taxes provided as tax
``credits'' to low-income households to offset their home energy costs,
unless Federal funds or Federal tax ``credits'' provide payment or
reimbursement of these costs.
As long as a fuel is used wholly or partly for home energy by the
low-income recipient household, the full amount of leveraged heating,
cooling, and crisis assistance benefits for the fuel, and the full
amount of leveraged discounts and waivers (including arrearage
forgiveness) relating to the fuel, are countable, even if they may
exceed the home energy portion of the household's bill. It is often
difficult or impossible to determine the exact portion of a household's
fuel bill that covers home energy--that is, home heating and cooling
rather than other residential uses. Also, it is often necessary to pay
a household's entire fuel bill--not just the heating and cooling
portion--to prevent service shut-off or termination.
Tangible items that are installed or repaired using leveraged
services must be items that would be countable if they were leveraged,
or must be specifically approved by HHS upon request by the grantee.
(For example, donated services to install a washing machine would not
be countable, because this appliance, even if it was purchased with
non-Federal funds or donated, would not be countable.) However, these
items themselves do not have to be leveraged resources. Only the
leveraged resource/benefit (for example, leveraged cash used to pay for
installation of non-leveraged insulation) is countable in such cases.
We deleted as separate countable resources all services involving
delivery and transportation--that is, delivery of fuel, weatherization
materials, and other items. We also deleted purchase, rental, donation,
and loan of supplies and equipment used to deliver these things and
used to install weatherization materials. Therefore, cash resources
used to pay for these services and items, discounts in their cost, and
in-kind contributions of these services and items are no longer
countable as separate resources. (Although delivery services are no
longer separately countable, delivery costs sometimes are included in
the fair market price of delivered bulk fuel--such as fuel oil,
propane, coal, and wood--and as part of the purchase and/or
installation costs of weatherization materials and space heating and
space cooling devices, equipment, and systems.)
We deleted delivery services, and supplies and equipment used for
delivery and installation services, for several reasons, based on our
experience with the leveraging program. These services often are not
actually direct benefits to specific low-income households. Valuation
was a problem. The value of equipment such as trucks that would be used
for a number of years and by a number of different users might have
been pro-rated for the items' expected useful life and anticipated
other users. However, it would be virtually impossible to get
consistent estimates of, and pro-rating for, the useful life of
equipment, and accurate pro-rating for other users, even if we issued
extensive regulatory instructions. If the entire value of expensive
equipment that was to be used over a period of years was counted for
only one base period, this would inflate the resource's effect for that
base period--and still leave the question of how to account for other
users. We also found that several grantees' leveraging reports tried to
stretch countable delivery-related services and items beyond the letter
and intent of the interim rule--for example, to count a ``discount'' in
the cost of gasoline used in a vehicle that transported fuel oil.
Finally, the amount of effort necessary to estimate and document
valuation, and to review these calculations and documentation, is
disproportionate for such marginal resources.
Comments and Response
Since the end of the comment period on the interim rule, questions
have arisen about whether certain types of borrowed funds are countable
under the leveraging incentive program. The interim rule said that
borrowed funds were not countable. The interim rule's preamble
indicated that borrowed funds were not countable because they must be
repaid, and therefore there is no net addition to households' home
energy resources. This is the case if a low-income household borrows
funds, uses these funds to pay a home energy bill or weatherize its
home, etc., and then repays the loan with its own funds. It is also the
case if, for example, a grantee borrows funds, uses these funds to pay
home energy bills or weatherize homes, etc., and then repays the loan
with Federal LIHEAP funds.
In general, benefits or services paid for with borrowed funds and
interest on those funds are not countable under the leveraging
incentive program. We clarified in the final rule that this prohibition
also applies to loans made to low-income households to help them pay
their home energy costs, including weatherization, and to loans made by
low-income households.
However, we now recognize that borrowed or repaid funds from
certain revolving loan funds and similar loan arrangements can be
countable. We revised the final rule accordingly, at Secs. 96.87(b)(3)
and 96.87(f)(2). The final rule defines ``countable loan fund'' in
Sec. 96.87(b)(3) as follows:
Countable loan fund means revolving loan funds and similar loan
instruments in which:
[[Page 21343]]
(i) The sources of both the loaned and the repaid funds meet the
requirements of this section, including the prohibitions of paragraphs
(f)(1), (f)(2), and (f)(3);
(ii) Neither the loaned nor the repaid funds are Federal funds or
payments from low-income households, and the loans are not made to low-
income households; and
(iii) The benefits provided by the loaned funds meet the
requirements of this section for countable leveraged resources and
benefits.
In this definition, ``payments from low-income households'' do not
include normal rent payments. Any interest paid on funds borrowed from
a revolving loan fund would not be countable when paid to the fund, but
could be countable when borrowed later and used for countable benefits.
An example of a countable loan fund is a resource in which a State
used oil overcharge funds in its LIHEAP program to establish a
revolving loan fund for landlords to install weatherization materials
for low-income households. The funds are used by landlords to provide
weatherization that helps the households reduce their home energy
needs, with a requirement that the landlords repay the loans to the
State. Repaid funds are then used to make loans to landlords for
additional weatherization. This has the result of increasing the amount
of weatherization carried out, with non-Federal funds and without
putting any burden on low-income households. The resources are
countable in the base period in which the weatherization takes place.
When repaid funds are used again, the additional weatherization is
countable in the base period in which it is provided. Such activities
are countable if neither Federal funds nor payments from low-income
households are used for the loans or to repay the loans, charges to the
households (including rent) are neither increased nor imposed as a
result, and all other statutory and regulatory requirements are met.
Also, as long as all requirements of Sec. 96.87 for countable
leveraged resources and benefits are met, if a grantee or other entity
borrows funds (commercially or otherwise, consistent with all
applicable laws and regulations), uses these funds to provide benefits
that would otherwise be countable, and repays the loan with countable
non-Federal funds in the base period in which the benefits were
provided, the benefits are countable based on the countable non-Federal
character of the repaid funds and the benefits' net addition to low-
income households' home energy resources.
Comments and Response
We made several changes in the final rule involving countable
petroleum violation escrow (PVE or oil overcharge) funds. Oil
overcharge funds result from settlements of cases of overcharges which
violated petroleum price controls in effect from 1973 to 1981, under
the Emergency Petroleum Allocation Act of 1973. Since 1981, over $4.5
billion in oil overcharge funds have been distributed by the Department
of Energy (DOE) to the 50 States, the District of Columbia, and most
U.S. territories; additional oil overcharge funds are expected to be
distributed in the future. LIHEAP is one of the programs under which
most of these funds can be used.
Senate Report 101-421 on the 1990 LIHEAP reauthorization law states
that the Senate Committee on Labor and Human Resources
believes there are very limited circumstances under which Petroleum
Violation Escrow Funds should be considered as leveraged resources.
Therefore, if the Secretary chooses to count Petroleum Violation
Escrow Funds as leveraged resources, he or she may only count funds
that are distributed after October 1, 1990, and that were not
previously required to be allocated to low-income households.
In the interim final rule, we defined ``countable petroleum
violation escrow funds'' in section 96.87(b) as ``petroleum violation
escrow (oil overcharge) funds that were distributed to a State or
territory after October 1, 1990, were added to and used as a part of
the State or territory's LIHEAP program, and were not previously
required to be allocated to low-income households.'' We said in the
interim rule's preamble that oil overcharge funds ``may be counted
under the LIHEAP leveraging incentive program only by the 50 States,
the District of Columbia, and the territories to which they were
distributed directly * * *.'' Three States commented on the interim
rule's treatment of oil overcharge funds.
Two of these States disagreed with the interim rule's requirement
that only PVE funds distributed to States and territories after October
1, 1990, are countable. One of the two States believed that
countability of PVE funds should depend on the date a State or
territory added them to its LIHEAP program. The second State believed
that all PVE funds added to and used as part of a State's LIHEAP
program during a base period should be countable.
We do not agree with these comments. We believe that it is
consistent with the Senate Report to provide that oil overcharge funds
distributed to States and territories by DOE on or before October 1,
1990, cannot be counted under the leveraging program. Also, we believes
that it would be unfair to count remaining oil overcharge funds that
were distributed to States and territories by DOE before the LIHEAP
leveraging incentive program was established--before grantees knew that
they might receive leveraging incentive funds if they used oil
overcharge funds in certain ways. This would unfairly penalize grantees
that used these funds in a timely way, soon after receiving them--as
the terms of distribution encouraged them to do. It would unfairly
reward grantees that did not use these funds in a timely way. We
therefore retained and clarified the requirement that only PVE funds
that were distributed to a State or territory by DOE after October 1,
1990 (and used consistent with all other relevant regulatory and
statutory requirements) are countable.
In correspondence relating to its leveraging report on FY 1991
leveraging activities, a third State argued that oil overcharge funds
it used for home energy, but not under LIHEAP, should be countable.
Under the interim final rule, these funds were not countable because
they were not ``added to and used as a part of'' the State's LIHEAP
program. However, after further reflection, we agree that PVE funds
that are used under other programs to provide home energy to low-income
households should be countable as long as they meet the requirements
under section 96.87. Therefore, this final rule changes the definition
of countable petroleum violation escrow funds in section 96.87(b)(4) to
state, in part, that they must be
* * * used to assist low-income households to meet the costs of
home energy through (that is, within and as a part of) a State or
territory's LIHEAP program, another Federal program, or a non-
Federal program, in accordance with a submission for use of these
petroleum violation escrow funds that was approved by DOE * * *.
Because the LIHEAP statute limits the percent of LIHEAP funds that
can be used for weatherization, a grantee that wanted to use large
amounts of PVE funds for weatherization would use them under DOE's low-
income weatherization assistance program or under a non-Federal
weatherization program that meets the requirements for use of PVE
funds. With this change in the regulations, these PVE funds could be
countable under the LIHEAP leveraging incentive program as long as they
meet all applicable requirements for countable leveraged resources.
The final rule also specifies the requirements under
Sec. 96.87(d)--``Basic [[Page 21344]] requirements for leveraged
resources and benefits''--that countable PVE funds must meet: all of
the criteria under paragraph (d)(1), as well as criterion (ii) or
criterion (iii) under paragraph (d)(2). Paragraph (d)(1) includes the
requirement that countable leveraged resources meet the requirements in
the leveraging incentive program section of the final rule. This
clarifies that, for example, like other countable leveraged resources,
countable PVE funds cannot be used as matching or cost sharing for any
Federal program--such as emergency assistance under title IV of the
Social Security Act--and they cannot be counted for any other Federal
leveraging incentive program. This clarification is based on our
experience in operating the leveraging incentive program and is
intended to prevent misunderstanding.
Because the grantee's LIHEAP program does not have an active,
substantive role in developing or acquiring PVE funds from home energy
vendors through negotiation, regulation, or competitive bid, PVE funds
cannot be counted under criterion (i) under paragraph (d)(2). Countable
PVE funds added to and used as a part of the grantee's LIHEAP program
would be counted under criterion (ii) of paragraph (d)(2). Countable
PVE funds used under another program would be counted under criterion
(iii); therefore, grantees that want to count such funds must be sure
to meet the requirements of criterion (iii) for inclusion in the LIHEAP
plan and integration with the LIHEAP program.
In its comments on the interim rule, a State urged HHS to allow
tribes to count oil overcharge funds under some circumstances; several
tribal grantees have verbally agreed with that comment. Upon further
consideration, we agree that there are certain circumstances under
which tribes should be able to count oil overcharge funds. We describe
those circumstances later in this preamble, under ``Leveraging Issues
Relating to Tribal Grantees.''
Finally, we changed the definition of countable petroleum violation
escrow funds at Sec. 96.87(b)(4) in the final rule to include interest
earned on PVE funds distributed to a State or territory by DOE after
October 1, 1990 (as long as all other applicable statutory and
regulatory requirements also are met). Interest earned on PVE funds
generally is treated like the PVE funds themselves; this change
clarifies that this practice is acceptable in the leveraging program.
Resources and Benefits That Cannot Be Counted
Section 96.87(f) of the interim rule and the final rule describes
resources and benefits that are not countable under the LIHEAP
leveraging incentive program. Thirteen of the letters we received
included comments on this section.
Comment and Response
A commenter proposed that low-income households' co-payments for
home energy be countable as leveraged funds. Similarly, in its
leveraging report on FY 1991 leveraging, a grantee proposed to count
the services of a householder who installed weatherization materials in
his own home. We cannot count such payments and services under the
leveraging incentive program. In the first instance, the household
would simply be helping to pay its own bill. In both cases, these are
the households' own ``contributions,'' not leveraged contributions, and
they do not add to the households' net resources. We therefore
clarified in the final rule at paragraph (1) under this section that
the following are not countable: resources (or portions of resources)
obtained, arranged, provided, contributed, and/or paid for, by a low-
income household for its own benefit, or which a low-income household
is responsible for obtaining or required to provide for its own benefit
or for the benefit of others, in order to receive a benefit of some
type.
We also note that the LIHEAP statute and these regulations require
that any costs and charges imposed on low-income households in order to
receive counted resources/benefits must be offset from the value of
these resources.
Comment and Response
Another commenter disagreed with the interim rule's exclusion of
leveraged resources counted under the leveraging incentive program(s)
of the low-income weatherization assistance program administered by the
Department of Energy, or any other Federal leveraging incentive
program. However, we continue to believe that leveraged resources
should be countable only once--under one Federal leveraging program
only--and therefore we retained this exclusion in the final rule.
Comment and Response
A commenter said that funds used as matching for other Federal
programs should not be excluded from consideration as leveraged
resources, because counting such funds ``constitutes increasing the
total amount of funds available from all sources to assist low-income
households with their home heating needs.'' We do not agree. As with
resources counted under another Federal leveraging program, we continue
to believe that ``leveraged'' resources should be countable only once.
In addition, the matching funds are required in order to receive
Federal funds under the other program, and thus nothing new has been
added to help low-income households that would not otherwise have been
added.
Comment and Response
Another commenter recommended that interest paid on borrowed funds,
and reductions in interest paid on borrowed funds, be countable ``when
it can be demonstrated that they do increase the amount of heat
available to households.'' Interest paid by a borrower to a commercial
lender does not represent a net addition to the home energy resources
of low-income households. On the other hand, if a late payment charge
or ``interest'' is included in a low-income household's home energy
bill and is paid with leveraged funds or is waived, the amount paid or
waived could be countable. Also, as discussed earlier in this preamble,
interest paid on funds borrowed from a revolving loan fund would not be
countable when paid to the fund, but could be countable later when,
like repaid principal, it is borrowed from the revolving loan fund and
used for countable benefits. Reductions in interest paid on borrowed
funds are not in themselves countable; leveraged funds that might have
been used for interest but instead are used to provide countable
benefits would be countable.
Comment and Response
A commenter stated that the value/costs of space, equipment, and
paid staff donated by local agencies and energy suppliers should be
countable because they are ``crucial and an integral part of the
service delivery system'' and counting them would ``facilitate more
donations in these areas.'' ``Donation'' of office or other space,
office equipment, and paid or unpaid administrative staff do not
provide direct, quantifiable home energy benefits for low-income
households or result in a direct, quantifiable addition to these
households' home energy resources. Therefore they are not countable. As
we stated in the preamble to the interim rule,
donated materials such as office supplies and equipment do not
result directly in a specific net addition to low-income households'
total energy resources, as required by section 2607A(b)(1) of the
LIHEAP statute. The same [[Page 21345]] can be said of donations of
time by volunteers or staff to perform office or administrative
chores. Even though this may result in the grantee being able to
free some of its funds for other uses, it would be extremely
difficult to assure and to document that any savings are used for
direct benefits to low-income households.
Comments and Response
Nine commenters proposed that some or all energy conservation
education costs be countable. As one of these commenters stated, these
``efforts can yield significant cost savings for low-income consumers,
and produce tangible benefits.'' Another stated that energy
conservation education that ``employs a proven curriculum'' provides
``a valid energy saving measure'' and should be countable. Another
suggested that the value of conservation education be quantified as
three percent of the recipient households' energy bills, based on the
commenter's understanding that these education programs ``consistently
result in an average 3% reduction in energy usage.''
We agree that a well designed and implemented energy conservation
education program presented to receptive households should result in
reduced home energy consumption and costs. However, while the cost of
providing energy conservation education can be quantified, we do not
know a reliable way to determine the value of education as a net
addition to the total energy resources of low-income households that
would apply to all grantees. The quality of the education provided, the
condition of different homes, and the motivation of different
households to implement conservation measures are highly variable. We
believe that the education activities themselves do not provide direct,
quantifiable benefits or quantifiable net additions to households' home
energy resources. The final rule therefore continues to exclude energy
conservation education.
One of the nine commenters claimed that if energy education/case
management activities are not countable under the leveraging program,
``there will not be an incentive to the CAP agencies to provide energy
case management services although it has been proven to be
successful.'' Section 2607A of the LIHEAP statute allows the counting
only of limited kinds of activities and services as leveraging. There
are many additional worthwhile activities and services that benefit the
program and the low-income households it exists to serve. (Local
administering agencies and their staff generally are paid for providing
these services.) Grantees should not change successful activities that
help low-income households simply to substitute activities that will
count as leveraging.
Changes
Based on our experience in implementing the leveraging incentive
program under the interim final rule and on comments we received on the
interim rule, we retained most of the list at Sec. 96.87(f) of
resources and benefits that are not countable. For example, like the
interim rule, the final rule does not allow the counting of office
supplies and equipment, services for administrative activities, or any
other services that do not result in a direct, net, quantifiable
addition to low-income households' total energy resources, as required
by section 2607A(b)(1) of the LIHEAP statute. Based on our experience
in operating the leveraging program and on public comments indicating
that some of the leveraging requirements in the interim rule were
unclear or too loose, and to assure consistent understanding and avoid
misunderstanding, we changed Sec. 96.87(f) in the final rule by
clarifying and tightening language in several places and by specifying
that the following are not countable:
Resources obtained, arranged, provided, contributed, and/
or paid for, by a low-income household for its own benefit, or which a
low-income household is responsible for obtaining or required to
provide in order to receive some type of benefit;
Resources provided, contributed, and/or paid for by
building owners, building managers, and/or home energy vendors, if the
cost of rent, home energy, or other charges to the recipient were or
will be increased, or if other charges to the recipient were or will be
imposed, as a result;
Resources directly provided, contributed, and/or paid for
by member(s) of the recipient household's family (parents,
grandparents, great-grandparents, sons, daughters, grandchildren,
great-grandchildren, brothers, sisters, aunts, uncles, first cousins,
nieces, and nephews, and their spouses), regardless of whether the
family member(s) lived with the household, unless the family member(s)
also provided the same resource to other low-income households during
the base period and did not limit the resource to members of their own
family;
Delivery, and discounts in the cost of delivery, of fuel,
weatherization materials, and all other items;
Purchase, rental, donation, and loan, and discounts in the
cost of purchase and rental, or supplies and equipment used for
delivery, installation, and repairs;
Oil overcharge funds that do not meet the definition in
Sec. 96.87(b)(4) of the regulations;
Interest earned/paid on oil overcharge funds that were
distributed to a State or territory by DOE on or before October 1,
1990;
Interest earned/paid on Federal funds (grantees should
draw down Federal funds only as needed for ``immediate'' use);
Interest earned/paid on customers' security deposits,
utility deposits, etc., except when forfeited by the customer and used
to provide countable benefits (interest is generally earned on such
deposits and therefore would not be a leveraged benefit obtained for
low-income households);
Borrowed funds that do not meet the requirements in
Sec. 96.87(b)(3) of the regulations (including loans made by and/or to
low-income households);
Resources for which Federal payment or reimbursement has
been or will be provided;
Training;
Installation, replacement, and repair of lighting fixtures
and light bulbs (countable weatherization must be directly related to
home energy, consistent with the definitions of ``home energy'' and
``weatherization'' in Sec. 96.87(b) of the regulations); and
Activities involving smoke/fire alarms and asbestos
removal that are not described in the final rule as countable.
Also, in response to questions raised during the first two years of
the leveraging program, we clarified the regulatory language regarding
non-countable tax deductions and tax credits. The revised language
specifies that tax deductions and tax credits received by donors of
resources for these donations, and by vendors for providing discounts,
waivers, etc., are not countable. If they meet the requirements in the
LIHEAP statute and these regulations, the items and services donated
and discounts/waivers provided would be countable. Counting tax
deductions and tax credits received by the donors/vendors essentially
would result in double counting the same benefit. In addition, tax
deductions and tax credits received by donors of resources do not
represent a net addition to the home energy resources available to low-
income households, as required by the LIHEAP statute and these
regulations. (On the other hand, as noted earlier, special non-Federal
tax ``credits'' provided to low-income households to offset their home
energy costs can be countable as discounts/waivers, and non-Federal
[[Page 21346]] payments to low-income households from tax authorities
to offset their home energy costs can be countable as cash resources/
benefits--as long as Federal funds are not used to pay for these
``credits'' and payments, and they are not generally available to other
households.)
Leveraging Issues Relating to Tribal Grantees
A number of leveraging issues relate specifically to Indian tribes
and tribal organizations. These issues include countability of oil
overcharge funds, resources obtained from trust lands, resources
obtained from National Forests and Bureau of Land Management areas, and
Public Law 93-638 funds. Several grantees have commented, formally in
response to the January 1992 interim final rule, or informally, and
asked questions concerning these issues. While researching these
issues, we consulted with the Office of the General Counsel in HHS, the
Office of the Solicitor and the Bureau of Land Management in the
Department of the Interior, and the Office of the General Counsel and
the Forest Service in the Department of Agriculture.
In addition, questions have been raised about the possibility of
both a tribe and a State claiming the same leveraged resource.
The guidance that follows addresses these issues. We advised
grantees of most of this guidance in LIHEAP Information Memorandum 92-
19, dated June 25, 1992.
Oil Overcharge Funds
In accordance with Federal law, court orders, and agreements, the
Department of Energy distributes petroleum violation escrow--PVE or oil
overcharge--funds to States and territories, but not to Indian tribes
or tribal organizations. In the preamble to the January 1992 interim
final rule, we stated that, because oil overcharge funds are not
distributed directly to tribes or tribal organizations, tribal LIHEAP
grantees cannot count them under the LIHEAP leveraging incentive
program. We noted that if a tribe receives PVE funds under a State
LIHEAP program, the tribe would be a subgrantee or contractor of the
State's program for the administration of these funds, and the funds
would be used by the tribe as part of the State's LIHEAP program. Also,
we noted that if a tribe and State agree that the tribe's direct
Federal LIHEAP allotment is to be increased in lieu of the tribe
receiving PVE funds under the State's LIHEAP program, the increased
funds received by the tribe would be regularly appropriated Federal
LIHEAP funds, not PVE funds; the State would retain the actual PVE
funds.
Several tribal grantees told us informally that they believe that
tribes that obtain oil overcharge funds from the State(s) in which they
are located and use these funds for home energy assistance should be
able to count them under the leveraging incentive program, since the
tribes in fact have leveraged those funds. Also, in its formal comments
on the January 1992 preamble and interim rule, a State encouraged HHS
``to allow tribes to offer as countable resources any oil overcharge
funds [provided to them by the States in which they are located] that
meet other criteria defined in the law'' for countable leveraged
resources.
After considering these comments, we determined that tribal LIHEAP
grantees that receive oil overcharge funds from the State in which they
are located (and/or interest the State earned on oil overcharge funds)
and use these funds (and/or interest the tribes or tribal organizations
earn on these funds) for home energy assistance (generally as
subrecipients--subgrantees, contractors, or subcontractors--of the
State) can count these funds under the leveraging program, as long as
these funds meet all applicable statutory and regulatory requirements
for countable leveraged resources, and the requirements in the
following paragraphs.
If a tribe or tribal organization wants to count oil overcharge
funds (and/or interest earned on oil overcharge funds) that it has used
for home energy assistance as a subrecipient of the State, it must
include with its leveraging report documentation or verification that
(1) these particular oil overcharge funds (and/or the oil overcharge
funds on which the interest was earned) were distributed by the
Department of Energy to the State in which the tribal grantee is
located after October 1, 1990, and (2) the State is not counting these
particular funds as leveraged resources. A copy of a written statement
from the State providing this information will meet this requirement.
(As explained earlier in this preamble, consistent with the legislative
history, the regulations require that countable PVE funds must be
distributed by the Department of Energy after October 1, 1990. It is
the State that knows when particular PVE distributions were made to it
by DOE.)
In general, the criterion in Sec. 96.87(d)(2) of this final rule
under which a tribe would count these funds is criterion (iii), where
the resource is distributed under the tribe's LIHEAP plan and
integrated with its LIHEAP program. (The tribe's LIHEAP program did not
develop or acquire these funds from vendors through negotiation,
regulation, or competitive bid, as required under criterion (i).)
Tribes should be sure to meet all of the requirements for criterion
(iii) in order to claim these oil overcharge funds under this
criterion. Also, for purposes of leveraging, when a tribe uses oil
overcharge funds received from its State in accordance with the LIHEAP
statute and regulations and the tribe's LIHEAP application, essentially
as if they were regular Federal LIHEAP funds, then the tribe may count
these oil overcharge funds under criterion (ii). (Because the tribe
received the overcharge funds from the State, rather than from the
Federal government, the tribe is accountable to the State for their
use.)
On the other hand, we have determined that Federal funds added to
tribal grantees' LIHEAP allotments, in lieu of overcharge funds, cannot
be counted as leveraged resources, because of the statutory requirement
that countable leveraged resources be from non-Federal sources. In this
case, the State has retained the actual oil overcharge funds, and the
increased funds awarded to the tribe by HHS are regularly appropriated
Federal LIHEAP funds from the State's gross LIHEAP allotment.
Resources Obtained From Trust Land
Tribes may obtain home energy resources, such as wood used to heat
low income households' homes, from tribal or individual trust land.
These trust lands are not Federal lands. Therefore, resources obtained
from these lands are countable under the LIHEAP leveraging incentive
programs, as long as they meet all relevant statutory and regulatory
requirements.
It is important to trace the source of a resource/benefit to its
origin, to determine whether it is countable. For example, if a tribe
cuts firewood from tribal trust land and gives that firewood to low-
income households, the fair market value of the wood at the time of
``donation'' is countable. However, if a tribe uses Federal LIHEAP
funds to purchase firewood cut from an individual's trust land at fair
market value, the wood is not countable, because it was bought with
Federal funds and there was no discount in its price. If a tribe uses
Federal funds to purchase firewood from an individual's trust land at a
discount, then the amount of the discount is countable, as long as all
relevant statutory and regulatory requirements for leveraged resources
are met. The amount actually paid is not countable, because Federal
funds were used. (If a tribe uses non- [[Page 21347]] Federal tribal
funds to purchase firewood from an individual's trust land and gives
the wood to low-income households, the wood's fair market value is
countable.)
Donated or paid services specifically to cut firewood, mine coal,
etc., are not countable under the leveraging incentive program.
However, in many cases, the value of these services would be included
in the fair market value of donated or purchased firewood, coal, etc.,
that is obtained from non-Federal land.
Resources Obtained From National Forests and Bureau of Land Management
Areas
There are some circumstances under which free firewood can be cut
from National Forest land; the Department of Agriculture sometimes
issues permits to cut dead or downed trees or ``slash'' without a
charge or fee. Also, there might possibly be situations where there is
no charge or fee to cut firewood on Bureau of Land Management (BLM)
land. The following two paragraphs discuss the countability of home
energy resources obtained for free from National Forest and/or BLM
land.
Resources such as firewood that are obtained from National Forests
and BLM areas in general are considered Federal resources. Therefore,
in general, they are not countable as leveraged resources under the
LIHEAP leveraging incentive program. Donated or paid services to obtain
such resources (e.g., to cut such firewood) also would not be
countable.
In some cases, an Indian tribe might have treaty rights to
specified timber or firewood resources on Federal lands administered by
the Forest Service or the BLM. Where they exist, such treaty provisions
may confer a right to usufruct, that is, a nonpossessory right to use
timber, usually for domestic purposes. HHS will recognize such rights
where they have been adjudicated by a court of competent jurisdiction
or are recognized by the Federal agency administering the land in
question. (HHS cannot make such determinations itself.) Where the
usufructuary right is so adjudicated or recognized, a resource such as
firewood would be considered a tribal or Indian resource--that is, non-
Federal. Therefore, a home energy resource like firewood that is
obtained in such a case would be countable under the leveraging
incentive program, as long as the resource met all applicable statutory
and regulatory requirements for leveraged resources.
More often, firewood is cut from National Forest or BLM land for
payment, rather than for free. A tribe might pay for a permit to cut
firewood for domestic use, and/or it might pay for the amount of wood
actually cut. If, for example, the tribe uses tribal funds to pay for
this permit and/or to pay for the wood actually cut, then the tribal
funds are the leveraged resource--the resource is cash; and the
firewood, which is obtained in return for payment of the cash, is the
benefit that is provided to low-income households. In this case,
because the resource is non-Federal cash, the resource is countable, as
long as all applicable statutory and regulatory requirements for
leveraged resources and benefits are met. The value of the resource/
benefit would be the amount that was actually paid for the permit and/
or for the wood itself. If the wood is paid for with LIHEAP or other
Federal funds, it would not be countable under the leveraging incentive
program.
Public Law 93-638 Contract and Grant Funds
Several tribal grantees informally asked us whether contract and
grant funds provided to them under Public Law 93-638, the Indian Self-
Determination and Education Assistance Act, by the Bureau of Indian
Affairs/Department of the Interior and the Indian Health Service/HHS
are countable under the leveraging incentive program. Also, in its
formal comments on the interim rule, a tribal organization requested
that these funds be countable.
Contract and grant funds provided to tribes under Public Law 93-638
are considered to be Federal funds. Because they retain their character
as Federal funds, they cannot be counted as leveraged resources under
the LIHEAP leveraging incentive program.
Under certain circumstances, Public Law 93-638 contract and grant
funds can be used as matching shares for other programs. However, the
LIHEAP leveraging incentive program is not a matching (cost sharing or
cost participation) program for which grantees provide matching shares.
(If the Federal Public Law 93-638 funds were used as matching shares
for a program other than LIHEAP, they still would not be countable
under the leveraging incentive program, because Federal funds, and
funds used as matching for other Federal programs, are not countable
under the leveraging program.)
Resources That Might Be Claimed by Both a Tribe and a State
In some cases, a leveraged resource might be claimed by both a
tribe or tribal organization and the State in which it is located. For
example, countable oil overcharge funds used by a tribe as a
subrecipient of a State's LIHEAP program could be claimed by both. (The
tribe might count these funds under criterion (iii) of
Sec. 96.87(d)(2), and the State might count them under criterion (ii).)
Also, donation of weatherization materials might be negotiated with a
home energy vendor by a State LIHEAP program (criterion (i)), but then
a tribe might install the weatherization materials for its service
population through its LIHEAP program (criterion (ii)) or under its
LIHEAP plan and integrated with its LIHEAP program (criterion (iii)).
We have concluded that households served by such resources can be
counted only once. It would be unfair to other grantees applying for
leveraging incentive fund to count some households twice, for both a
tribe and a State. We encourage tribes and States themselves to
determine which should claim such a resource--or to have one claim some
of the tribal households served and the other claim the remainder.
(Under the formula for allocating leveraging incentive funds, the
tribe, with its smaller regular LIHEAP allotment, would receive a
comparatively larger ``return'' for the resource than the State would.
However, as explained later in this preamble, under the final rule, no
grantee can receive a leveraging incentive funds award greater than the
smaller of its net regular LIHEAP allotment during the base period, or
twice the final net value of its countable leveraged resources for the
base period.) If a tribe and State cannot resolve the issue, HHS will
decide on a case-by-case basis how such a resource should be claimed,
depending on the comparative role of each grantee in obtaining and/or
administering the resource in question.
Valuation of Leveraged Resources
Section 96.87(g) of the interim rule and the final rule concerns
valuation and documentation of leveraged resources and offsetting
costs.
The benefits of countable leveraging activities must be measurable
and quantifiable in dollars. Using the best data available to them,
grantees applying for leveraging incentive funds must quantify the
actual value in dollars of countable leveraged resources/benefits
provided to low-income households during the base period. Anticipated
future benefits--for example, savings expected in home energy bills as
a result of weatherization--cannot be counted.
The statute requires that grantees deduct from the gross value of
leveraged [[Page 21348]] resources any costs the grantee incurred in
leveraging the resources and any costs imposed on low-income
households. These costs are discussed under ``Valuation of Offsetting
Costs'' later in this preamble.
We received no comments regarding valuation of leveraged resources
and offsetting costs.
Because the final rule adds discounts in the cost of specified
services as countable resources (under Sec. 96.87(e)(2)), we revised
the valuation of countable paid services under Sec. 96.87(g) as
follows, for consistency:
Installation, replacement, and repair of weatherization
materials, and other countable services, will be valued at rates
consistent with those ordinarily paid for similar work, by persons
of similar skill in this work, in the grantee's or subrecipient's
organization in the local area, at the time these services were
provided. If the grantee or subrecipient does not have employees
performing similar work, the rates will be consistent with those
ordinarily paid by other employers for similar work, by persons of
similar skill in this work, in the same labor market, at the time
these services were provided. Fringe benefits and overhead costs
will not be counted.
Because the final rule deletes delivery services and rented and
loaned supplies and equipment as separate countable resources, we made
a conforming change to Sec. 96.87(g) to delete valuation of these
services and items.
The final rule's other requirements for valuation of leveraged
resources/benefits are substantially unchanged from the interim rule.
They are summarized below.
Third-party donations of fuel, weatherization materials, and other
countable tangible items must be valued at their fair market value at
the time of donation, according to the best data available to the
grantee.
Unpaid volunteer services must be valued at rates consistent with
those ordinarily paid for similar work, by persons of similar skill in
this work, in the grantee's or subrecipient's organization. If the
grantee or subrecipient does not have employees doing similar work, the
rates must be consistent with those ordinarily paid by other employers
for similar work, by persons of similar skill in this work, in the same
labor market. Fringe benefits and overhead costs cannot be counted.
Valuation of volunteers' services must vary according to the skill of
the volunteer at the task. For example, the services of professional
weatherization installers working at a volunteer weatherization project
would be more highly valued than the services of unskilled
weatherization volunteers.
When an employer other than a grantee or subrecipient furnishes
free of charge the services of an employee in the employee's normal
line of work, the services must be valued at the employee's regular
rate of pay, excluding the employee's fringe benefits and overhead
costs. If the services are in a different line of work, the valuation
described in the previous paragraph applies.
The benefits provided by leveraged resources other than in-kind
contributions must be valued as explained in the following paragraphs.
Cash benefits for heating, cooling, and energy crisis assistance
must be valued at their actual amount at the time they were provided
to, or on behalf of, the recipient household. Purchased fuel,
weatherization materials, and other countable tangible items must be
valued at their actual fair market value at the time of purchase,
according to the best data available to the grantee. The fair market
value of a fuel or tangible non-fuel item is the price or cost normally
charged a customer in the same customer class, in the same local area,
as the recipient household. Countable services, including installation,
replacement, and repair of weatherization materials, must be valued as
described earlier. Home energy discounts and credits must be valued at
their actual value--the actual amount of the discount, reduction,
waiver, or forgiveness.
Fuel purchased with leveraged cash at a discounted price and
provided without charge to low-income households would be valued at the
actual fair market value of the fuel--the commonly available household
rate or cost--at the time it was purchased. Fuel purchased with
leveraged cash at a discounted price and provided at a discount to low-
income households would be valued at the actual fair market value of
the fuel--the commonly available household rate or cost--at the time it
was purchased, less (minus) the amount paid by the recipients. Only the
amount of the net addition to recipient households' home energy
resources may be counted.
When low-income households pay discounted prices or reduced rates
for home energy (such as fuel oil or electricity), only the amount of
the discount or reduction is countable. When low-income households
receive home energy at no cost to themselves (for example, a LIHEAP
grantee which has purchased fuel oil with leveraged resources or
received donated fuel oil provides the oil to a household at no cost to
the household), the amount the fuel would have cost the household at
``commonly available household rates'' is countable.
Grantees may use leveraged funds, regularly appropriated LIHEAP
funds, and leveraging incentive funds awarded to them, to purchase fuel
or other approved tangible items at discounted prices. If the grantee
uses leveraged funds, the gross value of the resource/benefit is the
amount it would have cost the recipient households at the commonly
available household rate or cost. This means that a grantee may count
as leveraged resources both the leveraged funds and savings obtained
through buying at a discount. For example, a grantee might use $10,000
of its own funds to purchase fuel oil at a discount, so that it obtains
oil that would be worth $12,500 at commonly available household rates/
costs. The grantee would have leveraged $10,000 in cash and $2,500 in
discounts. If the grantee uses regular LIHEAP funds or leveraging
incentive funds--that is, funds that are not countable leveraged
resources--to purchase fuel or other approved tangible items at
discounted prices, the gross value of the resource/benefit is the
amount of the discount--the difference between the amount the item
would have cost the recipient household at the commonly available
household rate or cost and the reduced amount actually paid. For
example, if the grantee had purchased the same fuel oil as above, at
the same discounted price but with regular LIHEAP funds, it could count
as leveraging only the $2,500 in discounts.
Valuation of Offsetting Costs
Section 2607A(d) of the LIHEAP statute requires that, to determine
the net dollar value of grantees' leveraged resources, grantees must
subtract from the gross dollar value of leveraged resources they
received or acquired during the base period any costs they incurred to
leverage such resources and any costs imposed on federally eligible
low-income households.
Funds from grantees' regular LIHEAP allotments that are used
specifically to identify, develop, and demonstrate leveraging programs
under section 2607A(c)(2) of the LIHEAP statute must be deducted as
offsetting costs in leveraging reports covering the base period in
which these funds were obligated, whether or not there were any
leveraged benefits resulting from these particular funds. However, if a
grantee does not submit a leveraging report covering the base period in
which these funds were obligated, they should not be offset in future
reports. Also, any funds from the grantee's LIHEAP planning and
administrative funds that [[Page 21349]] are used to identify, develop,
and demonstrate leveraging should not be deducted as offsetting costs.
Such funds are likely to serve more than one planning/administrative
purpose, and exact amounts spent to identify, develop, and demonstrate
leveraging are likely to be difficult to identify and isolate.
Costs incurred from grantees' own funds to identify, develop, and
demonstrate leveraging programs must be deducted in the first base
period in which resulting leveraged benefits are provided to low-income
households. If there is no resulting leveraged benefit from the
expenditure of the grantee's own funds, the grantee's expenditure
should not be counted or deducted.
Any costs assessed or charged to counted low-income households on a
continuing or on-going basis, year after year, specifically to
participate in a counted leveraging program or to receive counted
leveraged resources must be deducted in the base period these costs are
paid. Any one-time costs or charges to counted low-income households
specifically to participate in a counted leveraging program or to
receive counted leveraged benefits must be deducted in the first base
period the program or resource is counted, even if those charges were
made before this base period. These costs/charges are to be subtracted
from the gross value of a counted resource/benefit for low-income
households whose benefits are counted, but not for any low-income or
other households whose benefits are not counted. On the other hand,
nonspecific costs imposed on low-income households--such as costs
resulting from increases in a utility company's general rates to pay
for or support benefits for households in special programs--should not
be deducted.
Documentation of Resources, Benefits, and Costs
Section 96.87(g)(8) of the interim rule required that grantees
maintain, or have readily available, records sufficient to document
leveraged resources and benefits, and offsetting costs and charges,
and their valuation. These records must be retained for three years
after the end of the base period whose leveraged resources and
benefits they document.
In addition, the preamble contained guidance regarding
documentation, including a listing of the specific types of
documentation that should be included in leveraging records maintained
by, or readily available to, grantees.
Comment and Response
We received one comment concerning leveraging documentation. The
commenter stated that grantees competing for leveraging incentive funds
``have a right to expect each other to keep archives of material
clearly documenting the flow of benefits claimed.'' The commenter
agreed that HHS should require applicants to keep documentation for
three years and make it available to HHS when needed. We retained these
requirements in the final rule.
Guidance on Documentation
We retained--and repeat below for easy reference--most of the
interim rule's preamble guidance on documentation.
Grantees should have clear, consistent, documented policies and
procedures for documenting leveraged resources, benefits, and costs.
Grantees are to maintain, or have readily available, records adequate
to document leveraged resources and benefits, and offsetting costs and
charges, and their valuation. (For example, a grantee--and/or
subrecipients--should maintain records to document counted oil
overcharge funds. A grantee should maintain and/or have easy access to
documentation relating to counted fuel fund benefits.) These records
are to consist of written and/or printed papers, etc., furnishing
evidence that substantiates the claims made in the grantees' leveraging
reports. These records are to be retained for three years after the end
of the base period whose leveraged resources they document.
These records should include:
Documentation of the sources of leveraged resources;
Documentation of the negotiations, competitive bids,
written agreements, legislation, regulations, and mandates through
which leveraged resources were acquired or developed and under which
they were provided;
Documentation of recipient households' Federal
eligibility, or eligibility for the grantee's LIHEAP program, as
appropriate;
Documentation of the type, amount, and value of leveraged
benefits provided, including documentation of commonly available, local
market household home energy rates or costs charged;
Documentation of the type, amount, and value of in-kind
contributions;
Documentation of the costs incurred by the grantee to
leverage resources and of the costs imposed on low-income households;
Documentation of the calculation of the net addition to
recipient households' home energy resources; and
Documentation of the integration of leveraged resources
with the grantee's LIHEAP program, as appropriate.
Recipient eligibility documentation should document each
household's income or categorical eligibility. Benefit documentation
should document the delivery and value of each benefit, including the
amount or quantity and unit price, as appropriate.
We are requiring submission of some of this documentation with
grantees' leveraging reports. We may require submission of additional
documentation to clarify or support information submitted in a
leveraging report.
Many of the resources submitted during the first three years of the
leveraging incentive program were provided and administered at the
subrecipient level. As discussed elsewhere in this preamble, such
resources are countable if they meet all of the requirements for
countable resources. In such cases, records likely will be kept at the
local level, and information required for the leveraging report likely
will be provided to State officials by local agencies. Again, this is
acceptable, as long as the documentation discussed above is maintained
and readily available both to State and Federal officials.
However, we emphasize that it is important for grantees to develop
and institute procedures to ensure that this documentation is accurate
and complete. In some cases, when we asked States for more information
about particular resources administered by subrecipients, we found that
the States not only had virtually no knowledge about the resources, but
also were unable to obtain the necessary additional information from
the local agencies.
We expect grantees to ensure that local agencies that provide and/
or administer leveraged resources/benefits will receive adequate
instruction or training in the requirements for countable resources and
their valuation. Also, we expect grantees to institute monitoring
procedures to ensure that such agencies maintain required documentation
and provide accurate reports. In addition, as previously discussed in
this preamble, resources counted under criteria (ii) and (iii) of
Sec. 96.87(d)(2) must be ``appropriated or mandated'' by the grantee--
the State, tribe, tribal organization, or territory--for distribution
to low-income households, either through its LIHEAP program (criterion
(ii)) or as described in its LIHEAP plan and integrated and
[[Page 21350]] coordinated with its LIHEAP program (criterion (iii))--
not provided independently by local agencies.
Leveraging Report
Section 2607A(e) of the LIHEAP statute provides that grantees
desiring leveraging incentive funds must submit a report to HHS that
quantifies the grantee's leveraged resources for the base period. These
reports are grantees' applications for leveraging incentive funds.
Section 96.87(h) of the regulations lists requirements for these
reports. In both the interim rule and this final rule, we included in
the list only the information we believe we need to know in order to
fulfill our responsibility to evaluate grantees' leveraged resources/
benefits and to determine appropriate grantee shares of leveraging
incentive funds.
HHS does not prescribe a format for grantees' annual applications
for regular LIHEAP funds. However, because leveraging applications must
include specific, comparable data for grantees ``competing'' for shares
of a limited amount of leveraging incentive funds, the interim rule and
this final rule specify that leveraging reports must be in a format
established by HHS. The LIHEAP leveraging report form has received
Office of Management and Budget clearance through May 1995 and was used
by grantees applying for leveraging incentive funds in fiscal years
1992, 1993, and 1994.
Grantee leveraging reports must describe the leveraged resources/
benefits provided to low-income households during the base period, and
must indicate the grantee's valuation of these resources and of the
costs of leveraging them. Grantees should report these amounts as whole
numbers rounded to the nearest whole dollar or rounded to the nearest
multiple of 10 or 100.
We received four letters commenting on Sec. 96.87(h) of the interim
final rule. This section includes the requirements that leveraging
reports indicate the geographical area (for example, the cities and/or
counties) in which the leveraged resources/benefits were provided to
low-income households and state the month(s) and year(s) when these
benefits were provided during the base period.
Comments and Response
Two States commented that grantees should not be required to
include in their leveraging reports either the geographical area or the
months and years in which benefits were provided. One of these comments
recommended instead that grantees provide ``assurance that the reported
resources were provided during the required base period and in the
grantee's LIHEAP service area.''
However, we retained these requirements in the final rule, for the
following reasons. This information helps to identify each resource. We
have found it to be useful and believe that Congress and other
interested parties may find it useful as well. It should not be
difficult for grantees to include in their reports. Also, while
reviewing reports on leveraging activities, we have found that several
grantees that indicated the appropriate base period at the top of their
leveraging report forms included dates in the report itself, where they
were required to state the month(s) and year(s) of the base period in
which benefits were provided, that showed that the benefits actually
were not provided in the base period for which the report was
submitted. The requirement thus serves as a check to assure that
benefits were provided in the proper base period.
However, in response to commenters' concerns about reporting
requirements and paperwork burden, we changed the final rule to remove
the requirement that grantees explain how reported resources/benefits
valued under $5,000 meet criterion (i) or criterion (iii), as
appropriate, under Sec. 96.87(d)(2). The interim rule required that
grantees explain how all resources reported for these criteria meet the
appropriate criterion or criteria; the final rule requires this
explanation only for resources valued at $5,000 or more. It is not
intended that grantees divide large resources into smaller components
of less than $5,000 in order to avoid the documentation requirement.
Resources valued under $5,000 are subject to verification by HHS during
compliance reviews, as are larger resources.
Comment and Response
Section 2607A(f) of the LIHEAP statute provides that HHS ``may
request any documentation'' that it ``determines necessary for the
verification'' of grantees' applications for leveraging incentive
funds. Section 96.87(h) of the interim rule required that leveraging
reports state the dollar value of each resource/benefit, ``indicate the
source(s) of the data used, and describe how the grantee quantified the
value and calculated the total amount.'' It also provided that HHS
may require submission of additional documentation and/or
clarification as it determines necessary to verify information in a
grantee's leveraging report, to determine whether a leveraged
resource is countable, and/or to determine the net valuation of a
resource. In such cases, the Department will set a date by which it
must receive information sufficient to document countability and/or
valuation.
A commenter believed that HHS should require grantees to provide
with their leveraging reports an ``extensive annotated listing'' of
their documentation, detailing the data contained in each document,
``the claim to resources it supports and its physical location.''
We decline to require grantees to submit routinely with their
leveraging reports the additional documentation proposed by this
commenter. We believe that the burden of compiling and submitting the
``extensive annotated listing'' on a routine basis would clearly
outweigh the possible benefits. Further, the regulations require that
detailed documentation be readily available and submitted to HHS upon
request. In addition, we monitor grantees' leveraging records when we
conduct compliance reviews.
However, to reduce the chance of misunderstanding regarding the
importance of grantees' maintaining accurate records that properly
document their claimed resources and submitting any additional
information requested by HHS, we have added the following clarification
to section 96.87(h)(3): in cases when HHS requires submission of
additional documentation and/or clarification, ``if the Department does
not receive information that it considers sufficient to document
countability and/or valuation by the date it has set, then the
Department will not count the resource (or portion of resource) in
question.''
Submission Dates for Leveraging Reports
Section 2607A(e) of the LIHEAP statute as amended in 1990 provided
that grantees must submit their leveraging reports to HHS by July 31 of
each year in order to qualify for leveraging incentive funds. Public
Law 102-394, which provided FY 1993 LIHEAP appropriations, anticipated
that, beginning in July 1994, LIHEAP funds would be available on the
basis of the ``forward funding'' program year of July 1 through June
30. As we explained in the interim rule's preamble, we believe it was
reasonable to assume that Congress intended the July 31 date to apply
only after ``forward funding'' began, when July 31 would be one month
after the end of the program year or base period whose leveraging
activities were reported. Grantees would then be able to report
leveraging activities for the entire program year. [[Page 21351]]
However, with LIHEAP funds available for obligation on the basis of
the Federal fiscal year starting October 1, if grantees were required
to submit leveraging reports by July 31, they would not be able to
include leveraging activities for the last two or three months of the
fiscal year. The interim rule therefore modified the reporting dates
for reports to be submitted before forward funding began. The deadline
for submission of reports while LIHEAP funding is provided to grantees
on the basis of the Federal fiscal year of October 1 through September
30 was set as October 31 of the fiscal year for which leveraging
incentive funds are requested--on month after the end of the fiscal
year or base period for which leveraging activities are reported.
In a comment on the interim rule, a State recommended that HHS
change the leveraging report submission deadline to two months after
the end of the base period, to allow local entities at least one month
to report leveraging results for the full base period to States, and to
allow a ``reasonable amount of time'' for States to analyze the reports
and include allowable resources in their leveraging reports.
The Human Services Amendments of 1994, Public Law 103-252, enacted
May 18, 1994, reauthorizing LIHEAP through FY 1999, provides for
forward or advance funding (that is, funding appropriated one year in
advance) on the basis of the Federal fiscal year of October 1 through
September 30. Thus, the July through June program year will not be
implemented.
Public Law 103-252 specifies that leveraging reports are to be
submitted ``2 months after the close of the fiscal year'' during which
the grantee provided the leveraged resources to eligible households.
The final rule makes this technical change to the regulations at
Sec. 96.87(h)(2), stating that ``Leveraging reports must be postmarked
or hand-delivered not later than November 30 of the fiscal year for
which leveraging incentive funds are requested.'' Leveraging reports
submitted later will not be considered for a share of leveraging
incentive funds. The new deadline is two months after the end of the
base period and two months ``into'' the award period, effective with
the leveraging reports to be submitted on FY 1994 leveraging
activities. (The report on FY 1994 leveraging activities must be
submitted by November 30, 1994. Any LIHEAP plan amendments necessary to
qualify FY 1994 leveraging activities under criterion (ii) or criterion
(iii) of section 96.87(d)(2) must be submitted by September 30, 1994.)
Leveraging reports should be mailed or delivered to the following
address: Director, Office of Community Services, Administration for
Children and Families, Department of Health and Human Services, 370
L'Enfant Promenade, S.W., Washington, D.C. 20447.
Determination of Grantee Shares of Leveraging Incentive Funds
Section 96.87(i) of the interim final rule set the formula used to
allocate leveraging incentive funds among grantees submitting
leveraging reports. The formula in the interim rule was used to
allocate leveraging incentive funds in fiscal years 1992, 1993, and
1994. As indicated under ``Effective Date'' near the beginning of this
preamble, it also will be used to allocate leveraging incentive funds
in FY 1995 that reward FY 1994 leveraging activities. This means that
the revised formula included in this final rule and described below
will be used beginning with leveraging incentive funds awarded in FY
1996 to reward FY 1995 leveraging activities.
Section 2607A of the LIHEAP statute requires HHS to develop a
formula for allocating leveraging incentive funds that takes into
account the size of the grantee's regular LIHEAP allotment
(allocation), and the value of the grantee's leveraged resources in
relation to its regular allotment amount. The legislative history also
includes recommendations for the formula.
After considering ideas for possible formulas, and then three
different formulas under three different scenarios, we selected the
two-part formula that was in the interim rule. The formula we selected,
which we called ``Formula One,'' was intended to carry out Congress'
intent to give the largest reward to the grantees that were most
successful in leveraging their LIHEAP dollars. We included in the
preamble to the interim rule a detailed discussion of the three
formulas, with examples of how allocations would differ under each.
(See pp. 1972-1976 of the Federal Register dated January 16, 1992; 57
FR 1972-1976.)
Under the interim rule's formula, we distributed half of the
leveraging incentive funds for an award period based on the value of
the leveraged resources/benefits provided by a grantee during the base
period relative to its net allotment under the regular LIHEAP program
during the base period, as a proportion of the total value of leveraged
resources/benefits provided by all grantees in relation to their
regular net allotments during the same period. We distributed the
remaining half of the funds based on the value of leveraged resources/
benefits that a grantee provided during the base period as a proportion
of the total value of leveraged resources/benefits provided by all
grantees. No grantee could receive a leveraging incentive award larger
than its regular LIHEAP allotment during the base period. When the
formula would have resulted in a grantee receiving an incentive award
larger than its regular allotment, the ``excess'' funds were
reallocated to the other grantees receiving leveraging incentive funds.
The leveraging figures used in these calculations were based on the net
value of the countable leveraged resources in grantees' leveraging
reports, as approved by HHS.
We received eleven comments regarding the formula used to determine
grantee shares of leveraging incentive funds. Some of the commenters
supported our selection of Formula One, while others suggested using a
different formula or modifying our selection in some way.
In determining what allocation formula to adopt in this final rule,
we considered not only the comments we received, but also experience we
have gained in the last three grant periods in using Formula One for
allocations based on the actual leveraging reports submitted by
grantees. We reconsidered all three of the formulas discussed in the
preamble to the interim rule and calculated what leveraging grant
awards would have been in FY 1994 if we had used each of them. The
actual FY 1994 awards--based on Formula One--are shown below, as are
the allocations that would have resulted if we had used Formula Two and
Formula Three, and State and territorial allocations that would have
resulted if we had distributed the funds under the regular LIHEAP block
grant allocation formula, rather than using them in the leveraging
incentive program.
[[Page 21352]]
Low-Income Home Energy Assistance Program--Final Totals for Fiscal Year 1994 Leveraging Incentive Grants
--------------------------------------------------------------------------------------------------------------------------------------------------------
Formula one Formula two Formula
Fiscal year total share total share three total Regular block
Grantee Fiscal year 1993 regular of $25 M for of $25 M for share of $25 grant
1993 lev $ allot $ fiscal year fiscal year M for fiscal allocationformula1
1994 1994 year 1994
--------------------------------------------------------------------------------------------------------------------------------------------------------
Alabama.................................................... $4,806,142 $11,280,337 $345,359 $701,732 $113,424 $214,720
Alaska..................................................... 5,962,440 4,717,311 767,112 2,081,738 417,434 137,061
Arizona.................................................... 3,734,137 4,834,769 471,567 1,272,070 159,749 103,841
Arkansas................................................... 296,071 8,655,748 24,941 56,336 561 163,842
California................................................. 62,681,576 60,489,538 2,422,358 1,706,696 3,597,770 1,151,911
Colorado................................................... 12,845,031 21,218,391 677,400 997,055 430,717 401,635
Connecticut................................................ 10,408,642 27,680,140 496,176 619,330 216,797 523,947
Delaware................................................... 302,815 3,674,006 47,354 135,748 1,382 69,544
Dist. of Col............................................... 1,515,878 4,298,771 209,438 580,787 29,609 81,370
Florida.................................................... 196,428 17,935,527 11,140 18,038 119 339,751
Idaho...................................................... 776,651 8,154,122 67,966 156,872 4,097 156,665
Illinois................................................... 2,769,870 76,613,847 102,605 59,545 5,547 1,450,196
Indiana.................................................... 3,045,067 34,688,598 134,922 144,579 14,806 656,608
Iowa....................................................... 137,864 24,584,274 6,863 9,236 43 465,347
Kentucky................................................... 796,475 18,051,829 45,034 72,669 1,947 341,697
Louisiana.................................................. 292,500 11,589,893 20,699 41,566 409 219,518
Maine...................................................... 4,740,507 17,332,318 273,066 450,469 71,817 339,434
Maryland................................................... 18,267,659 21,194,333 963,820 1,419,580 872,127 401,180
Massachusetts.............................................. 40,715,017 55,359,810 1,602,173 1,211,314 1,658,626 1,048,068
Michigan................................................... 27,757,124 72,601,649 1,037,432 629,687 587,809 1,376,834
Minnesota.................................................. 7,119,144 52,403,709 283,485 223,750 53,571 991,931
Mississippi................................................ 493,047 9,714,872 38,673 83,589 1,386 184,089
Missouri................................................... 1,221,353 30,602,562 56,280 65,732 2,700 579,265
Montana.................................................... 1,322,366 8,238,065 114,959 264,377 11,757 183,758
Nevada..................................................... 839,136 2,576,577 176,024 536,396 15,138 48,771
New Hampshire.............................................. 2,153,023 10,480,307 161,422 338,354 24,500 198,378
New Jersey................................................. 77,849,703 51,321,226 3,114,419 2,498,368 6,541,100 972,969
New Mexico................................................. 430,906 6,369,423 44,529 111,424 1,615 130,002
New York................................................... 136,047,801 167,660,542 4,595,541 1,336,464 6,114,853 3,176,890
North Carolina............................................. 1,894,735 24,477,911 94,445 127,488 8,124 473,453
North Dakota............................................... 508,805 9,365,661 40,808 89,477 1,531 199,616
Ohio....................................................... 23,155,352 67,776,399 875,896 562,690 438,186 1,282,915
Oklahoma................................................... 1,504,870 9,678,967 118,301 256,075 12,960 197,372
Oregon..................................................... 3,998,678 16,445,150 236,066 400,475 53,855 311,284
Pennsylvania............................................... 63,174,400 90,152,177 2,283,149 1,154,148 2,452,110 1,706,458
Rhode Island............................................... 1,945,150 9,076,024 159,061 352,983 23,091 172,518
South Carolina............................................. 550,490 9,009,177 45,222 100,638 1,863 170,531
South Dakota............................................... 282,427 7,292,137 26,602 63,789 606 162,123
Tennessee.................................................. 422,992 18,286,116 23,779 38,098 542 346,131
Utah....................................................... 1,682,970 9,693,988 132,178 285,937 16,184 186,641
Vermont.................................................... 980,437 7,855,363 87,904 205,565 6,778 148,691
Virginia................................................... 1,471,001 25,817,067 71,888 93,843 4,643 488,682
Washington................................................. 15,620,693 25,953,922 761,918 991,274 520,753 512,020
Wisconsin.................................................. 19,992,724 47,170,863 815,604 698,063 469,358 892,880
Wyoming.................................................... 61,886 3,947,822 9,142 25,819 54 74,727
Northern Mariana........................................... 100,809 22,355 22,355 22,355 22,355 423
AK Tanana Chiefs........................................... 14,078 648,973 10,428 35,728 17 ..................
AK Tlingit & Haida......................................... 17,940 384,423 22,048 76,862 46 ..................
AZ Quechan Tribe........................................... 12,265 1,054 1,054 1,054 7,905 ..................
CA Rincon Band............................................. 12,401 10,523 10,523 10,523 809 ..................
CA San Pasqual Band........................................ 100 1,796 1,796 1,796 0 ..................
ID Shoshone-Bannock........................................ 17,299 92,612 86,558 92,612 179 ..................
MI Inter-Tribal Cnl........................................ 11,303 31,196 31,196 31,196 227 ..................
MI Sault Ste. Marie........................................ 22,760 86,569 86,569 86,569 331 ..................
MS Band of Choctaw......................................... 2,960 10,554 10,554 10,554 46 ..................
MT Assin & Sioux........................................... 27,000 287,713 44,056 154,561 140 ..................
MT Blackfeet Tribe......................................... 31,566 465,164 32,232 111,766 119 ..................
MT C Salish Kootenai....................................... 15,967 266,686 28,068 98,609 53 ..................
OK Cherokee Nation......................................... 37,000 342,717 50,867 177,813 221 ..................
OK Choctaw Nation.......................................... 21,750 197,057 51,505 181,787 133 ..................
OK Kiowa Tribe............................................. 15,651 14,668 14,668 14,668 925 ..................
OK Seneca-Cayuga Trb....................................... 2,276 2,296 2,296 2,296 125 ..................
SD Sisseton-Wahpeton....................................... 45,065 116,073 116,073 116,073 969 ..................
SD Yankton Sioux Trb....................................... 27,000 64,631 64,631 64,631 625 ..................
WA Colville Conf Trb....................................... 44,000 239,114 86,109 239,114 448 ..................
WA Kalispel Ind Comm....................................... 2,394 4,463 4,463 4,463 71 ..................
WA Lummi Tribe............................................. 9,600 67,598 65,701 67,598 76 ..................
[[Page 21353]]WA Muckleshoot Tribe......................... 30,112 24,129 24,129 24,129 2,081 ..................
WA Port Gamble S'Kl........................................ 970 11,145 11,145 11,145 5 ..................
WA Yakima Nation........................................... 15,000 267,855 26,256 92,233 47 ..................
--------------------------------------------------------------------------------------------
Total................................................ 567,309,248 1,229,982,602 25,000,000 25,000,000 25,000,000 23,435,689
--------------------------------------------------------------------------------------------------------------------------------------------------------
1The ``Regular Block Grant Allocation Formula'' column does not add to $25 million because under this formula a portion is set aside for all states and
territories, including those that did not apply for leveraging incentive funds. In addition, we have not calculated awards for the tribal grantees
whose share of regular block grant funds comes out of their States' allotments.
We also considered several other options to determine whether we
could devise a new formula that resulted in a fairer distribution of
the funds, but we found that these other formulas were hard to
understand and use and even harder to explain, and did not provide
results that were any fairer than Formula One's. After consideration
of all these results and the comments we received, we decided to
continue with Formula One, with modifications as outlined below.
Comments and Response
Two of the commenters agreed with our choice of Formula One. Two
others suggested the use of Formula Two from the interim rule's
preamble, which would have distributed all of the funds based on the
first half of Formula One (that is, based on the amount of
leveraging each grantee carried out relative to the size of its
regular allotment, as a proportion of the total amount of leveraging
carried out by all grantees relative to their regular allotments).
We seriously considered selecting Formula Two at the time we
published the interim final rule, but felt then that Formula One was
fairer overall. Our experience in the last three grant periods with
our formula pointed out an unexpected result with the first half of
Formula One, and thus with Formula Two as well. The actual FY 1994
leveraging incentive grant awards, determined using Formula One, are
shown below, along with details of how the allocations were
calculated. (Some numbers were affected by rounding.)
Low-Income Home Energy Assistance Program--Final Totals for FY 1994 Leveraging Incentive Grants Formula One
--------------------------------------------------------------------------------------------------------------------------------------------------------
Grantee Final total
FY 1993 lev FY 1993 regular Lev $ Grantee Part one percent Part two Preliminary share of
Grantee $ allot $ div. by percent share of lev share total share $25 M for
allot $ $ of $25 M FY 1994
A B C D E F G H I J
--------------------------------------------------------------------------------------------------------------------------------------------------------
Alabama.................................. $4,806,142 $11,280,337 0.4261 1.11 $139,319 0.85 $105,898 $245,217 $345,359
Alaska................................... 5,962,440 4,717,311 1.2639 3.31 413,301 1.05 131,375 544,676 767,112
Arizona.................................. 3,734,137 4,834,769 0.7724 2.02 252,552 0.66 82,277 344,829 471,567
Arkansas................................. 296,071 8,655,748 0.0342 0.09 11,185 0.05 6,524 17,709 24,941
California............................... 62,681,576 60,489,538 1.0362 2.71 338,841 11.05 1,381,116 1,719,957 2,422,358
Colorado................................. 12,845,031 21,218,391 0.6054 1.58 197,952 2.26 283,025 480,977 677,400
Connecticut.............................. 10,408,642 27,680,140 0.3760 0.98 122,960 1.83 229,342 352,302 496,176
Delaware................................. 302,815 3,674,006 0.0824 0.22 26,951 0.05 6,672 33,623 47,354
Dist. of Col............................. 1,515,878 4,298,771 0.3526 0.92 115,307 0.27 33,401 148,708 209,438
Florida.................................. 196,428 17,935,527 0.0110 0.03 3,582 0.03 4,328 7,910 11,140
Idaho.................................... 776,651 8,154,122 0.0952 0.25 31,145 0.14 17,113 48,258 68,966
Illinois................................. 2,769,870 76,613,847 0.0362 0.09 11,822 0.49 61,031 72,853 102,605
Indiana.................................. 3,045,067 34,688,598 0.0878 0.23 28,704 0.54 67,095 95,799 134,922
Iowa..................................... 137,864 24,584,274 0.0056 0.01 1,835 0.02 3,038 4,873 6,863
Kentucky................................. 796,475 18,051,829 0.0441 0.12 14,427 0.14 17,549 31,976 45,034
Louisiana................................ 292,500 11,589,893 0.0252 0.07 8,252 0.05 6,445 14,697 20,699
Maine.................................... 4,740,507 17,332,318 0.2735 0.72 89,434 0.84 104,452 193,886 273,066
Maryland................................. 18,267,659 21,194,333 0.8619 2.25 281,838 3.22 402,507 684,345 963,820
Massachusetts............................ 40,715,017 55,359,810 0.7355 1.92 240,490 7.18 897,108 1,137,598 1,602,173
Michigan................................. 27,757,124 72,601,649 0.3823 1.00 125,016 4.89 611,596 736,612 1,037,432
Minnesota................................ 7,119,144 52,403,709 0.1359 0.36 44,422 1.25 156,862 201,284 283,485
Mississippi.............................. 493,047 9,714,872 0.0508 0.13 16,595 0.09 10,864 27,459 38,673
Missouri................................. 1,221,353 30,602,582 0.0399 0.10 13,050 0.22 26,911 39,961 56,280
Montana.................................. 1,322,366 8,238,065 0.1605 0.42 52,488 0.23 29,137 81,625 114,959
Nevada................................... 839,136 2,576,577 0.3257 0.85 106,494 0.15 18,489 124,983 176,024
New Hampshire............................ 2,153,023 10,480,307 0.2054 0.54 67,176 0.38 47,439 114,615 161,422
New Jersey............................... 77,849,703 51,321,226 1.5169 3.97 496,017 13.72 1,715,328 2,211,345 3,114,419
New Mexico............................... 430,906 6,369,423 0.0677 0.18 22,122 0.08 9,495 31,617 44,529
New York................................. 136,047,801 167,660,542 0.8114 2.12 265,337 23.98 2,997,655 3,262,992 4,595,541
North Carolina........................... 1,894,735 24,477,911 0.0774 0.20 25,311 0.33 41,748 67,059 94,445
North Dakota............................. 508,805 9,365,661 0.0543 0.14 17,764 0.09 11,211 28,975 40,808
Ohio..................................... 23,155,352 67,776,399 0.3416 0.89 111,715 4.08 510,201 621,916 875,896
Oklahoma................................. 1,504,870 9,678,967 0.1555 0.41 50,840 0.27 33,158 83,998 118,301
[[Page 21354]]
Oregon................................... 3,998,678 16,445,150 0.2432 0.64 79,509 0.70 88,106 167,615 236,066
Pennsylvania............................. 63,174,400 90,152,177 0.7008 1.83 229,140 11.14 1,391,974 1,621,114 2,283,149
Rhode Island............................. 1,945,150 9,076,024 0.2143 0.56 70,080 0.34 42,859 112,939 159,061
South Carolina........................... 550,490 9,009,177 0.0611 0.16 19,980 0.10 12,129 32,109 45,222
South Dakota............................. 282,427 7,292,137 0.0387 0.10 12,665 0.05 6,223 18,888 26,602
Tennessee................................ 422,992 18,286,116 0.0231 0.06 7,564 0.07 9,320 16,884 23,779
Utah..................................... 1,682,970 9,693,988 0.1736 0.45 56,769 0.30 37,082 93,851 132,178
Vermont.................................. 980,437 7,855,363 0.1248 0.33 40,812 0.17 21,603 62,415 87,904
Virginia................................. 1,471,001 25,817,067 0.0570 0.15 18,631 0.26 32,412 51,043 71,888
Washington............................... 15,620,693 25,953,922 0.6019 1.57 196,804 2.75 344,184 540,988 761,918
Wisconsin................................ 19,992,724 47,170,863 0.4238 1.11 138,591 3.52 440,516 579,107 815,604
Wyoming.................................. 61,886 3,947,822 0.0157 0.04 5,127 0.01 1,364 6,491 9,142
Northern Mariana......................... 100,809 22,355 4.5094 11.80 1,474,550 0.02 2,221 1,476,771 22,355
Alaska:
Tanana Chiefs Conf................... 14,078 648,973 0.0217 0.06 7,094 0.00 310 7,404 10,428
Tlingit & Haida CC................... 17,940 384,423 0.0467 0.12 15,260 0.00 395 15,655 22,048
Arizona: Quechan Tribe................... 12,265 1,054 11.6366 30.44 3,805,080 0.00 270 3,805,350 1,054
California:
Rincon Band.......................... 12,401 10,523 1.1785 3.08 385,345 0.00 273 385,618 10,523
San Pasqual Band..................... 100 1,796 0.0557 0.15 18,207 0.00 3 18,210 1,796
Idaho: Shoshone-Bannock Tr............... 17,299 92,612 0.1868 0.49 61,078 0.00 381 61,459 86,558
Michigan:
Inter-Tribal Coun.................... 11,303 31,196 0.3623 0.95 118,476 0.00 249 118,725 31,196
Sault Ste. Marie Tr.................. 22,760 86,569 0.2629 0.69 85,969 0.00 501 86,470 86,569
Mississippi: MS Band of Choctaw In....... 2,960 10,554 0.2805 0.73 91,709 0.00 65 91,774 10,554
Montana:
Assin & Sioux (Ft Peck).............. 27,000 287,713 0.0938 0.25 30,686 0.00 595 31,281 44,056
Blackfeet Tribe...................... 31,566 465,164 0.0679 0.18 22,190 0.01 696 22,886 32,232
Con Salish Kootenai.................. 15,967 266,686 0.0599 0.16 19,577 0.00 352 19,929 28,068
Oklahoma:
Cherokee Nat of OK................... 37,000 342,717 0.1080 0.28 35,302 0.01 815 36,117 50,867
Choctaw Nat of OK.................... 21,750 197,057 0.1104 0.29 36,091 0.00 479 36,570 51,505
Kiowa Tribe.......................... 15,651 14,668 1.0670 2.79 348,906 0.00 345 349,251 14,668
Seneca-Cayuga Tribe.................. 2,276 2,296 0.9913 2.59 324,143 0.00 50 324,193 2,296
South Dakota:
Sisseton-Wahpeton.................... 45,065 116,073 0.3882 1.02 126,954 0.01 993 127,947 116,073
Yankton Sioux Tribe.................. 27,000 64,631 0.4178 1.09 136,603 0.00 595 137,198 64,631
Washington:
Colville Conf Tribe.................. 44,000 239,114 0.1840 0.48 60,171 0.01 969 61,140 86,109
Kalispel Ind Comm.................... 2,394 4,463 0.5364 1.40 175,402 0.00 53 175,455 4,463
Lummi Tribe.......................... 9,600 67,598 0.1420 0.37 46,438 0.00 212 46,650 65,701
Muckleshoot Tribe.................... 30,112 24,129 1.2480 3.26 408,072 0.01 663 408,735 24,129
Port Gamble S'Kl Tr.................. 970 11,145 0.0871 0.23 28,469 0.00 22 28,491 11,145
Yakima Nation........................ 15,000 267,855 0.0560 0.15 18,312 0.00 331 18,643 26,256
--------------------------------------------------------------------------------------------------------------
Total............................ 567,309,248 1,229,982,602 38.2273 100.00 12,500,000 100.00 12,500,000 25,000,000 25,000,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
In this table, the following information is included in the
columns:
Column A is the individual grantee.
Column B is the dollar value of countable leveraged resources that
the grantee provided to low-income households during the base period,
after deducting offsetting costs, as approved by HHS.
Column C is the amount of the grantee's regular LIHEAP allotment
during the base period, net of any set-asides for direct-grant Indian
tribes and tribal organizations in the case of a State.
Column D is the amount of a grantee's net countable leveraged
resources as a proportion of its regular allotment (column B divided by
column C).
Column E is the amount of a grantee's net countable leveraged
resources divided by its regular allotment, as a proportion of the net
countable resources leveraged by all grantees relative to their regular
allotments, with the resulting figure expressed as a percent (column D
divided by the total for column D).
Column F is the amount of leveraging incentive funds that a grantee
would receive under the first part of the formula (column E multiplied
by one-half of the leveraging funds available, in this case
$12,500,000).
Column G is the grantee's net countable leveraged resources as a
proportion of the net countable resources leveraged by all grantees
(column B divided by the total for column B). [[Page 21355]]
Column H is the amount of leveraging incentive funds that a grantee
would receive under the second part of the formula (column G multiplied
by one-half of the leveraging funds available, in this case
$12,500,000).
Column I is a preliminary calculation of the total amount of
leveraging incentive funds a grantee would receive under this two-part
formula, if there were no limit on the amount of funds a grantee could
receive (column F plus column H).
Column J is the final calculation of the total amount of leveraging
incentive funds a grantee received. Because the interim rule provided
that no grantee may receive a leveraging incentive award larger than
its regular LIHEAP allotment, where the amount in column I exceeds the
amount in column C, the ``excess'' funds were distributed on a
proportionate basis to the other leveraging grantees.
We were surprised that this formula resulted in some tribal
grantees receiving very large grants in proportion to the amount of
leveraging they carried out (and the awards would have been even larger
for half of the tribal grantees in FY 1994, had it not been for the
limit that no grantee could receive a leveraging incentive award larger
than its regular LIHEAP allotment). Under the first part of the formula
in FY 1994, each grantee received about $12,000 for each tenth of a
percent (0.1 percent) that appears in column E in the chart above, no
matter how large the grantee's regular allotment or the value of its
approved leveraging activities. The basic determining factor in this
first half of the formula is the value of the leveraging activities an
individual grantee carries out in relation to the size of its regular
allotment. For example, the State of Virginia leveraged $1,471,001 and
had a regular allotment in FY 1993 of $25,817,067, which means it
leveraged 5.7 percent of its regular grant amount, translating to 0.15
percent in column E. Based on these results, Virginia received $18,631
under the first part of the formula. By comparison, the Yakima Indian
Nation of Washington State leveraged $15,000 and had a regular
allotment in FY 1993 of $267,855, which means it leveraged 5.6 percent
of its regular grant amount, translating to 0.15 percent in column E.
Based on these results, the Yakima Nation received $18,312 under the
first part of the formula. (Numbers are slightly different because of
rounding.) Grantees that leveraged large dollar amounts made up for any
``shortfall'' under the first half of the formula by receiving large
amounts under the second half of the formula, which rewards grantees
based on the amount of leveraging they accomplished as a proportion of
the amount leveraged by all grantees. In this case, Virginia carried
out 0.26 percent of all the leveraging activities carried out by all
grantees for the year and received $32,412 under the second half of the
formula, while the Yakima Nation carried out 0.00264 percent of all the
leveraging activities for the year (rounded to 0.00 percent in the
chart above) and received $331 under the second half of the formula.
(Both Virginia and the Yakima Nation received additional funds when
``excess awards'' for other grantees were redistributed.) Grantees that
carried out more leveraged activities did even better under the second
half of the formula, as can be seen in the table above.
Based on these results, we do not believe it would be fair to all
grantees to distribute the leveraging incentive funds on the basis of
Formula Two. We believe the second half of Formula One balances out the
first half, and makes it more fair to all. In addition, the first table
above shows that Formula Three would skew the leveraging allocations
much too heavily in favor of larger grantees, and thus would remove or
reduce the incentive for smaller grantees to leverage resources. For
these reasons, we decided to retain Formula One in the final rule.
Comments and Response
Some tribal grantees expressed concern that prohibiting a grantee
from receiving a leveraging incentive award that is larger than the
size of its regular allotment would unfairly affect tribal grantees,
which are generally in greater need than State grantees. The
prohibition against receiving more in leveraging incentive funds than
in regular block grant funds affected only tribal grantees in fiscal
years 1992 and 1993, and tribal and territorial grantees in FY 1994.
Tribes in general did very well under the interim rule's formula, in
most cases receiving considerably more than the value of the leveraging
activities they carried out. (The amount awarded to tribal grantees
under this formula was still relatively small compared with the amount
awarded to States. In FY 1992, the eight tribal grantees receiving
leveraging incentive funds received 2.27 percent of the leveraging
incentive funds awarded. In FY 1993, the 19 tribal leveraging fund
recipients received 4.58 percent of the leveraging incentive funds
awarded. In FY 1994, the 24 tribal leveraging fund recipient received
3.53 percent of the leveraging incentive funds awarded.) As noted,
several of the tribes would have received more than their regular grant
amount under this formula were it not for the prohibition against this
(we redistributed those ``excess'' funds on a proportionate basis among
the other grantees). In an extreme example, shown in the table above,
the Port Gamble S'Klallam Tribe of Washington State leveraged $970 in
FY 1993 and received a leveraged grant award in FY 1994 of $11,145, the
same amount as its regular allotment in the base period of FY 1993. It
would have received a grant award of $28,491 had it not been for the
limit on receiving no more than the size of its regular allotment. We
think the actual grant award of $11,145, based on $970 in countable
leveraging activities, is disproportionate and unfair to other
grantees. An award of $28,491 clearly would have been excessive.
Accordingly, we considered various ways of changing the formula or its
limits to make the awards for tribes and other small grantees more
equitable, while still giving them an advantage to compensate for their
smaller size, reduced leverage, and generally higher level of poverty,
compared with States.
Therefore, this final rule changes the formula at section 96.87(i)
to provide that a grantee cannot receive a leveraging incentive award
that is more than the smaller of (1) its regular LIHEAP net allotment
during the base period, or (2) twice the net value of its countable
leveraged resources for the base period. This means that the Port
Gamble S'Klallam Tribe's leveraging award in FY 1994 would have been
$1,940 (twice the amount of the $970 in countable leveraging carried
out in the base period of FY 1993), rather than the $11,145 the tribe
received (the same amount as its regular FY 1993 allotment). We believe
that this revision will be fairer to all grantees.
Comments and Response
Four commenters expressed concern that the bulk of the leveraging
incentive funds should not go to one or just a few large grantees that
carry out a large amount of leveraging, leaving little for others.
Several other persons made similar comments informally. In general, we
found that the formula as a whole tended to favor smaller grantees and
to dampen the effect of large amounts of leveraging carried out by
large grantees. For example, New York had countable leveraging
activities in FY 1993 valued at $136 million (with a regular FY 1993
allotment of $167.7 million), which is about 24 percent of the total
amount of $567.3 million in leveraging carried out by all grantees. Its
incentive grant award, however, was $4.6 million, which is about 18.4
[[Page 21356]] percent of the $25 million in incentive grants. By
comparison, Wyoming had countable leveraging activities of $61,886
(0.01 percent of the total amount of leveraging for all grantees) and a
regular allotment of $3.9 million, and received a leveraging incentive
award of $9,142, which is 0.04 percent of the $25 million.
However, we recognize the potential for just a few grantees
receiving the bulk of the available leveraging incentive funds in the
future. In FY 1992, the four grantees with the largest amount of
leveraged resources received a total of $11,924,159, or 47.7 percent of
the $25 million distributed. In FY 1993, the four grantees with the
most leveraging received $11,658,428, or 47 percent of the $24.8
million distributed. In FY 1994, the four grantees with the most
leveraging received $12,415,467, or 49.7 percent of the $25 million
distributed.
Accordingly, we changed the formula to stipulate that no grantee
can receive a leveraging award larger than 12 percent of the total
amount of leveraging incentive funds available for distribution in any
award period. At a funding level of $25 million for the leveraging
incentive program, that means that no grantee could receive an award of
more than $3 million. We believe this allows for adequate compensation
to a grantee that does a large amount of leveraging, while still
leaving significant incentive for other grantees. We do not expect a
large number of grantees to earn this maximum grant amount. (In FY
1992, FY 1993, and FY 1994, each of two States received more than 12
percent of the available leverging funds.)
Reexamining the Formula
Public Law 103-252, enacted in May 1994, and the conference report
on Public Law 103-252, do not mention the formula for distributing
leveraging incentive funds. However, the Senate and House committee
reports on predecessor bills do. Senate Report 103-251 states that ``it
would be appropriate for the Secretary to reconsider the regulations
for the fund in order to give greater weight to rewarding initiatives
affecting energy regulations, markets, and terms of service to LIHEAP-
eligible households.'' House of Representatives Report 103-483 uses
essentially the same language, except that it refers to ``rewarding new
initiatives affecting energy regulations, markets, and terms of
service.'' We believe the public should have opportunity to comment on
reconsideration of the formula based on this report language. We
therefore will reexamine the formula based on this language in our
forthcoming proposed rule to implement Public Law 103-252.
Uses of Leveraging Incentive Funds
Section 96.87(j) of the interim rule and the final rule concerns
allowable and unallowable uses of leveraging incentive funds awarded to
grantees by HHS. Regular LIHEAP funds and LIHEAP leveraging incentive
funds are separately authorized in the LIHEAP statute--the former at
section 2602(b), and the latter at section 2602(d). Section 2607A of
the LIHEAP statute directs that leveraging incentive funds must be used
to increase or maintain benefits to households--that is, they must be
used for LIHEAP heating, cooling, crisis, and/or weatherization
assistance, and they cannot be used for some of the purposes for which
regular LIHEAP funds can be used.
Comment and Response
We received one comment on this section of the interim rule: a
State agreed with the exemption of leveraging incentive funds from the
weatherization maximum applied to regular LIHEAP funds, providing
flexibility to grantees. We retained this provision in the final rule.
Clarifications
In accordance with the requirements of section 2607A, leveraging
incentive funds cannot be used for costs of planning and
administration. However, if a grantee receives more than a minimal
leveraging fund award, it likely will need to use additional monies to
administer these funds. We therefore said in the interim rule that
leveraging incentive funds can be counted in the base for calculating
the grantee's maximum planning and administrative costs. This is
consistent with the treatment of oil overcharge funds under section 155
of Public Law 97-377 (the Warner Amendment) and Exxon oil overcharge
funds. However, leveraging incentive funds may be obligated by the
grantee either in the award period--the fiscal year in which they were
awarded to the grantee--or in the following fiscal year. We believe it
would not be appropriate to permit grantees to count the same
leveraging incentive funds in the base for calculating administrative
costs--thereby reducing the amount of regular LIHEAP grant funds used
for benefits--in both years. In response to questions from grantees
about the year in which to count incentive funds in the administrative
cost calculation base, the final rule clarifies that leveraging
incentive funds cannot be counted in the base for calculating maximum
administrative and planning costs in both the award period and the
following fiscal year. The entire leveraging award does not have to be
counted in the base in the same year--some may be counted in the award
year and the remainder in the next. (Presumably they would be counted
in the base in the year in which carrying out the activities they
support increases the grantee's administrative/planning costs.) While
the grantee has the discretion and flexibility to choose how much to
count in the base in each year, the total amount from the leveraging
award that is included in the base in both years combined cannot exceed
the amount of the leveraging award.
As we said in the interim rule's preamble, grantees are to include
the uses of their leveraging incentive funds in their LIHEAP plans.
Uses must be covered in the plan for the fiscal year in which these
funds will be used--either in the plan as originally submitted to HHS
or in amendment(s) to the plan. We added this requirement to the final
rule at a new Sec. 96.87(j)(2), because of its importance, and to
clarify and avoid misunderstanding. If the plan covers the uses of the
leveraging incentive funds, it does not have to specify that leveraging
incentive funds are involved. If the original plan does not cover these
uses, then these uses must be added. For example, if leveraging
incentive funds are to be used along with regular LIHEAP funds for
cooling assistance that is described in the plan, then the plan need
not specify that some of this assistance will be provided with
leveraging incentive funds. However, if the grantee does not have a
regular LIHEAP cooling assistance component and leveraging incentive
funds are to be used for cooling assistance, the plan must include the
cooling assistance supported by the leveraging funds.
The interim rule's preamble said that grantees are to document uses
of leveraging incentive funds in the same way they document uses of
regular LIHEAP funds, and that leveraging incentive funds are subject
to the same audit requirements as regular LIHEAP funds. Because of
their importance, and to clarify and avoid misunderstanding, we added
these requirements to the final rule at section Sec. 96.87(j)(2).
Finally, consistent with Public Law 101-501, which ended grantees'
authority to transfer LIHEAP funds effective in FY 1994, the final rule
deletes reference to transfers in Sec. 96.87(j).
Period of Obligation for Leveraging Incentive Funds
Section 96.87(k) of the interim rule and the final rule concerns
the period of [[Page 21357]] time during which grantees can use
leveraging incentive funds awarded to them by HHS.
Incentive funds are awarded during the course of each award period,
rather than at the beginning, since grantees' leveraging reports are to
be submitted two months after each fiscal year begins, and since
Federal review of these reports will follow. (Also, in fiscal years
1992 and 1993, Congress required HHS to make leveraging incentive fund
awards in late September, at the end of the fiscal year/award period.)
We therefore determine that leveraging incentive funds are not subject
to the statutory and regulatory carryover and reallotment requirements
that apply to regular LIHEAP funds. (Section 2607(b) of the LIHEAP
statute provides that grantees may carry forward for use in the
succeeding fiscal year no more than 10 percent of their regular LIHEAP
funds payable for the prior fiscal year.) Instead, the interim rule
provided that all leveraging incentive funds are available for
obligation from the date they are awarded to a grantee until the end of
the succeeding fiscal year. Thus, grantees could use these funds during
the remainder of the fiscal year in which they were awarded, and
throughout the following fiscal year.
Comments and Response
We received one written comment on this section in the interim
rule: a State supported the exemption of leveraging incentive funds
from the carryover limit applied to regular LIHEAP funds.
Based on informal grantee comments urging that we allow use of
leveraging incentive funds to pay for appropriate activities carried
out during the entire award period, this final rule changes
Sec. 96.87(k) to provide that leveraging incentive funds ``are
available for obligation during both the award period and the fiscal
year following the award period, without regard to limitations on
carryover of funds in section 2607(b)(2)(B)'' of the LIHEAP statute.
Grantees therefore can use leveraging incentive funds to reimburse
themselves for appropriate obligations made in the award period before
the leveraging award was made.
Any leveraging incentive funds not obligated for allowable purposes
by the end of this obligation period must be returned to HHS. HHS will
return such funds to the U.S. Treasury.
Paperwork Reduction Act of 1980
There are no new information collection requirements in this final
rule which require approval under the Paperwork Reduction Act. The
information collection requirements affected by this final rule have
previously been approved.
Section 96.87 of this final rule contains information collection
requirements relating to applications for leveraging incentive funds.
Section 2607A of the Low-Income Home Energy Assistance Act requires
grantees to submit these leveraging reports in order to qualify for
leveraging incentive funds. These reports are the only source of the
information HHS needs in order to allocate leveraging incentive funds
among grantees. ACF estimates the reporting burden on applicants for
leveraging incentive funds to be 40 hours per applicant. As required by
the Paperwork Reduction Act, HHS submitted these information collection
requirement to the Office of Management and Budget (OMB) for its
review. OMB approved these requirements and the LIHEAP leveraging
report form (form no. ACF-119) through May 1995 (OMB clearance no.
0970-0121).
Section 96.83 of this final rule requires grantees to submit a
waiver request if they wish to obligate more than 15 percent of their
LIHEAP funds allotted or funds available in any fiscal year for
weatherization activities. We expect to receive less than 10 waiver
requests per year, and thus this provision is not subject to the
Paperwork Reduction Act. We received only one waiver request in FY
1991, and no waiver requests in FY 1992 and FY 1993. We received seven
waiver requests in FY 1994.
Regulatory Impact Analysis
Executive Order 12866 requires that regulations be reviewed to
ensure that they are consistent with the priorities and principles set
forth in the Executive Order. The Department has determined that this
rule is consistent with these priorities and principles. An assessment
of the costs and benefits of available regulatory alternatives
(including not regulating) demonstrated that the approach taken in the
regulation is the most cost-effective and least burdensome while still
achieving the regulatory objectives.
Regulatory Flexibility Act
The Regulatory Flexibility Act (Pub. L. 96-354) requires the
Federal government to anticipate and reduce the impact of regulations
and paperwork requirements on small entities. The primary impact of
these regulations is on State, tribal, and territorial governments.
Therefore, the Department of Health and Human Services certifies that
this final rule will not have a significant economic impact on a
substantial number of small entities because it affects payments to
States, tribes, and territories. Thus, a regulatory flexibility
analysis is not required.
Catalog of Federal Domestic Assistance Program Number
The Catalog of Federal Domestic Assistance program number for the
low-income home energy assistance program (LIHEAP) is 93.568.
List of Subjects in 45 CFR Part 96
Energy, Grant programs-energy, Grant programs-Indians, Income
assistance, Leveraging incentive program, Low and moderate income
housing, Reporting and recordkeeping requirements, Weatherization.
Approved: April 4, 1995.
Mary Jo Bane,
Assistant Secretary for Children and Families.
For the reasons set forth in the preamble, part 96 of Title 45 of
the Code of Federal Regulations as amended in the interim rule
published in the Federal Register issue of January 16, 1992 (57 FR
1960) is adopted as final with the following changes and part 96 is
further amended as set forth below:
PART 96--[AMENDED]
1. The authority citation for part 96 continues to read as follows:
Authority: 42 U.S.C. 300w et seq.; 42 U.S.C. 300x et seq.; 42
U.S.C. 300y et seq.; 42 U.S.C. 701 et seq.; 42 U.S.C. 8621 et seq.;
42 U.S.C. 9901 et seq.; 42 U.S.C. 1397 et seq.; 31 U.S.C. 1243 note.
Subpart B--General Procedures
2. Section 96.14(a)(2) is revised as follows:
Sec. 96.14 Time period of obligation and expenditure of grant funds.
(a) * * *
(2) Low-income home energy assistance. Regular LIHEAP block grant
funds authorized under section 2602(b) of Public Law 97-35 (42 U.S.C.
8621(b)) are available only in accordance with section 2607(b)(2)(B) of
Public Law 97-35 (42 U.S.C. 8626(b)(2)(B)), as follows. From allotments
for fiscal year 1982 through fiscal year 1984, a maximum of 25 percent
may be held available for the next fiscal year. From allotments for
fiscal year 1985 through fiscal year 1990, a maximum of 15 percent of
the amount payable to a grantee and not transferred to another block
grant according to section 2604(f) of Public Law 97-35 (42 U.S.C.
8623(f)) may be held available for the next fiscal year. From
allotments for fiscal year 1991 through fiscal year 1993, a maximum of
10 percent of the amount payable to a [[Page 21358]] grantee and not
transferred to another block grant according to section 2604(f) of
Public Law 97-35 (42 U.S.C. 8623(f)) may be held available for the next
fiscal year. Beginning with allotments for fiscal year 1994, a maximum
of 10 percent of the amount payable to a grantee may be held available
for the next fiscal year. No funds may be obligated after the end of
the fiscal year following the fiscal year for which they were allotted.
* * * * *
Subpart E--Enforcement
3. Section 96.50 is amended by revising the last sentence of
paragraph (d) as follows:
Sec. 96.50 Complaints.
* * * * *
(d) . . . Under the low-income home energy assistance program,
within 60 days after receipt of complaints, the Department will provide
a written response to the complainant, stating the actions that it has
taken to date and, if the complaint has not yet been fully resolved,
the timetable for final resolution of the complaint.
* * * * *
Subpart H--Low-income Home Energy Assistance Program
4. Section 96.83 is revised as follows:
Sec. 96.83 Increase in maximum amount that may be used for
weatherization and other energy-related home repair.
(a) Scope. This section concerns requests for waivers increasing
from 15 percent to up to 25 percent of LIHEAP funds allotted or
available to a grantee for a fiscal year, the maximum amount that
grantees may use for low-cost residential weatherization and other
energy-related home repair for low-income households (hereafter
referred to as ``weatherization''), pursuant to section 2605(k) of
Public Law 97-35 (42 U.S.C. 8624(k)).
(b) Public inspection and comment. Before submitting waiver
requests to the Department, grantees must make proposed waiver requests
available for public inspection within their jurisdictions in a manner
that will facilitate timely and meaningful review of, and comment upon,
these requests. Written public comments on proposed waiver requests
must be made available for public inspection upon their receipt by
grantees, as must any summaries prepared of written comments, and
transcripts and/or summaries of verbal comments made on proposed
requests at public meetings or hearings. Proposed waiver requests, and
any preliminary waiver requests, must be made available for public
inspection and comment until at least March 15 of the fiscal year for
which the waiver is to be requested. Copies of actual waiver requests
must be made available for public inspection upon submission of the
requests to the Department.
(c) Waiver request. After March 31 of each fiscal year, the chief
executive officer (or his or her designee) may request a waiver of the
weatherization obligation limit for this fiscal year, if the grantee
meets criteria in paragraphs (c)(2)(i), (c)(2)(ii), and (c)(2)(iii) of
this section, or can show ``good cause'' for obtaining a waiver despite
a failure to meet one or more of these criteria. (If the request is
made by the chief executive officer's designee and the Department does
not have on file written evidence of the designation, the request also
must include evidence of the appropriate delegation of authority.)
Waiver requests must be in writing and must include the information
specified in paragraphs (c)(1) through (c)(6) of this section. The
grantee may submit a preliminary waiver request for a fiscal year,
between February 1 and March 31 of the fiscal year for which the waiver
is requested. If a grantee chooses to submit a preliminary waiver
request, the preliminary request must include the information specified
in paragraphs (c)(1) through (c)(6) of this section; in addition, after
March 31 the chief executive officer (or his or her designee) must
submit the information specified in paragraphs (c)(7) through (c)(10)
of this section, to complete the preliminary waiver request.
(1) A statement of the total percent of its LIHEAP funds allotted
or available in the fiscal year for which the waiver is requested, that
the grantee desires to use for weatherization.
(2) A statement of whether the grantee has met each of the
following three criteria:
(i) In the fiscal year for which the waiver is requested, the
combined total (aggregate) number of households in the grantee's
service population that will receive LIHEAP heating, cooling, and
crisis assistance benefits that are provided from Federal LIHEAP
allotments from regular and supplemental appropriations will not be
fewer than the combined total (aggregate) number that received such
benefits in the preceding fiscal year;
(ii) In the fiscal year for which the waiver is requested, the
combined total (aggregate) amount, in dollars, of LIHEAP heating,
cooling, and crisis assistance benefits received by the grantee's
service population that are provided from Federal LIHEAP allotments
from regular and supplemental appropriations will not be less than the
combined total (aggregate) amount received in the preceding fiscal
year; and
(iii) All LIHEAP weatherization activities to be carried out by the
grantee in the fiscal year for which the wavier is requested have been
shown to produce measurable savings in energy expenditures.
(3) With regard to criterion in paragraph (c)(2)(i) of this
section, a statement of the grantee's best estimate of the appropriate
household totals for the fiscal year for which the wavier is requested
and for the preceding fiscal year.
(4) With regard to criterion in paragraph (c)(2)(ii) of this
section, a statement of the grantee's best estimate of the appropriate
benefit totals, in dollars, for the fiscal year for which the waiver is
requested and for the preceding fiscal year.
(5) With regard to criterion in paragraph (c)(2)(ii) of this
section, a description of the weatherization activities to be carried
out by the grantee in the fiscal year for which the wavier is requested
(with all LIHEAP funds proposed to be used for weatherization, not just
with the amount over 15 percent), and an explanation of the specific
criteria under which the grantee has determined whether these
activities have been shown to produce measurable savings in energy
expenditures.
(6) A description of how and when the proposed wavier request was
made available for timely and meaningful public review and comment,
copies and/or summaries of public comments received on the request
(including transcripts and/or summaries of any comments made on the
request at public meetings or hearings), a statement of the method for
reviewing public comments, and a statement of the changes, if any, that
were made in response to these comments.
(7) To complete a preliminary waiver request: Official confirmation
that the grantee wishes approval of the waiver request.
(8) To complete a preliminary waiver request: A statement of
whether any public comments were received after preparation of the
preliminary waiver request and, if so, copies and/or summaries of these
comments (including transcripts and/or summaries of any comments made
on the request at public meetings or hearings), and a statement of the
changes, if any, that were made in response to these comments.
(9) To complete a preliminary waiver request: A statement of
whether any [[Page 21359]] material/substantive changes of fact have
occurred in information included in the preliminary waiver request
since its submission, and, if so, a description of the change(s).
(10) To complete a preliminary waiver request: A description of any
other changes to the preliminary request.
(d) ``Standard waiver. If the Department determines that a grantee
has meet the three criteria in paragraph (c)(2) of this section, has
provided all information required by paragraph (c) of this section, has
shown adequate concern for timely and meaningful public review and
comment, and has proposed weatherization that meets all relevant
requirements of title XXVI of Public Law 97-35 (42 U.S.C. 8621 et seq.)
and 45 CFR part 96, the Department will approve a ``standard'' waiver.
(e) ``Good cause'' waiver.
(1) If a grantee does not meet one or more of the three criteria in
paragraph (c)(2) of this section, then the grantee may submit
documentation that demonstrates good cause why a waiver should be
granted despite the grantee's failure to meet this criterion or these
criteria. ``Good cause'' waiver requests must include the following
information, in addition to the information specified in paragraph (c)
of this section:
(i) For each criterion under paragraph (c)(2) of this section that
the grantee does not meet, an explanation of the specific reasons
demonstrating good cause why the grantee does not meet the criterion
and yet proposes to use additional funds for weatherization, citing
measurable, quantified data, and stating the source(s) of the data
used;
(ii) A statement of the grantee's LIHEAP heating, cooling, and
crisis assistance eligibility standards (eligibility criteria) and
benefits levels for the fiscal year for which the waiver is requested
and for the preceding fiscal year; and, if eligibility standards were
less restrictive and/or benefit levels were higher in the preceding
fiscal year for one or more of these program components, an explanation
of the reasons demonstrating good cause why a waiver should be granted
in spite of this fact;
(iii) A statement of the grantee's opening and closing dates for
applications for LIHEAP heating, cooling, and crisis assistance in the
fiscal year for which the waiver is requested and in the preceding
fiscal year, and a description of the grantee's outreach efforts for
heating, cooling, and crisis assistance in the fiscal year for which
the waiver is requested and in the preceding fiscal year, and, if the
grantee's application period was longer and/or outreach efforts were
greater in the preceding fiscal year for one or more of these program
components, an explanation of the reasons demonstrating good cause why
a waiver should be granted in spite of this fact; and
(iv) If the grantee took, or will take, other actions that led, or
will lead, to a reduction in the number of applications for LIHEAP
heating, cooling, and/or crisis assistance, from the preceding fiscal
year to the fiscal year for which the waiver is requested, a
description of these actions and an explanation demonstrating good
cause why a waiver should be granted in spite of these actions.
(2) If the Department determines that a grantee requesting a ``good
cause'' waiver has demonstrated good cause why a waiver should be
granted, has provided all information required by paragraphs (c) and
(e)(1) of this section, has shown adequate concern for timely and
meaningful public review and comment, and has proposed weatherization
that meets all relevant requirements of title XXVI of Public Law 97-35
(42 U.S.C. 8621 et seq.) and 45 CFR part 96, the Department will
approve a ``good cause'' waiver.
(f) Approvals and disapprovals. After receiving the grantee's
complete waiver request, the Department will respond in writing within
45-day, informing the grantee whether the request is approved on either
a ``standard'' or ``good cause'' basis. The Department may request
additional information and/or clarification from the grantee. If
additional information and/or clarification is requested, the 45-day
period for the Department's response will start when the additional
information and/or clarification is received. No waiver will be granted
for a previous fiscal year.
(g) Effective period. Waivers will be effective from the date of
the Department's written approval until the funds for which the waiver
is granted are obligated in accordance with title XXVI of Public Law
97-35 (42 U.S.C. 8621 et seq.) and 45 CFR part 96. Funds for which a
weatherization waiver was granted that are carried over to the
following fiscal year and used for weatherization shall not be
considered ``funds allotted'' or ``funds available'' for the purposes
of calculating the maximum amount that may be used for weatherization
in the succeeding fiscal year.
5. Section 96.87 is revised as follows:
Sec. 96.87 Leveraging incentive program.
(a) Scope and eligible grantees.
(1) This section concerns the leveraging incentive program
authorized by section 2607A of Public Law 97-35 (42 U.S.C. 8626(a).
(2)(i) The only entities eligible to receive leveraging incentive
funds from the Department are States (including the District of
Columbia), Indian tribes, tribal organizations, and territories that
received direct Federal LIHEAP funding under section 2602(b) of Public
Law 97-35 (42 U.S.C. 8621(b)) in both the base period for which
leveraged resources are reported, and the award period for which
leveraging incentive funds are sought; and tribes and tribal
organizations described in paragraphs (a)(2)(ii) and (a)(2)(iii) of
this section.
(ii) Indian tribes that received LIHEAP services under section
2602(b) of Public Law 97-35 (42 U.S.C. 8621(b)) through a directly-
funded tribal organization in the base period for which leveraged
resources are reported, and receive direct Federal LIHEAP funding under
section 2602(b) in the award period, will receive leveraging incentive
funds allocable to them if they submit leveraging reports meeting all
applicable requirements. If the tribal organization continues to
receive direct funding under section 2602(b) in the award period, the
tribal organization also will receive incentive funds allocable to it
if it submits a leveraging report meeting all applicable requirements.
In such cases, incentive funds will be allocated among the involved
entities that submit leveraging reports, as agreed by these entities.
If they cannot agree, HHS will allocate incentive funds based on the
comparative role of each entity in obtaining and/or administering the
leveraged resources, and/or their relative number of LIHEAP-eligible
households.
(iii) If a tribe received direct Federal LIHEAP funding under
section 2602(b) of Public Law 97-35 (42 U.S.C. 8621(b)) in the base
period for which resources leveraged by the tribe are reported, and the
tribe receives LIHEAP services under section 2602(b) through a
directly-funded tribal organization in the award period, the tribal
organization will receive leveraging incentive funds on behalf of the
tribe for the resources if the tribal organization submits a leveraging
report meeting all applicable requirements.
(b) Definitions.
(1) Award period means the fiscal year during which leveraging
incentive funds are distributed to grantees by the Department, based on
the countable leveraging activities they reported to the Department for
the preceding fiscal year (the base period). [[Page 21360]]
(2) Base period means the fiscal year for which a grantee's
leveraging activities are reported to the Department; grantees'
countable leveraging activities during the base period or base year are
the basis for the distribution of leveraging incentive funds during the
succeeding fiscal year (the award period or award year). Leveraged
resources are counted in the base period during which their benefits
are provided to low-income households.
(3) Countable loan fund means revolving loan funds and similar loan
instruments in which:
(i) The sources of both the loaned and the repaid funds meet the
requirements of this section, including the prohibitions of paragraphs
(f)(1), (f)(2), and (f)(3) of this section;
(ii) Neither the loaned nor the repaid funds are Federal funds or
payments from low-income households, and the loans are not made to low-
income households; and
(iii) The benefits provided by the loaned funds meet the
requirements of this section for countable leveraged resources and
benefits.
(4) Countable petroleum violation escrow funds means petroleum
violation escrow (oil overcharge) funds that were distributed to a
State or territory by the Department of Energy (DOE) after October 1,
1990, and interest earned in accordance with DOE policies on petroleum
violation escrow funds that were distributed to a State or territory by
DOE after October 1, 1990, that:
(i) Were used to assist low-income households to meet the costs of
home energy through (that is, within and as a part of) a State or
territory's LIHEAP program, another Federal program, or a non-Federal
program, in accordance with a submission for use of these petroleum
violation escrow funds that was approved by DOE;
(ii) Were not previously required to be allocated to low-income
households; and
(iii) Meet the requirements of paragraph (d)(1) of this section,
and of paragraph (d)(2)(ii) or (d)(2)(iii) or this section.
(5) Home energy means a source of heating or cooling in residential
dwellings.
(6) Low-income households mean federally eligible (federally
qualified) households meeting the standards for LIHEAP income
eligibility and/or LIHEAP categorical eligibility as set by section
2605(b)(2) of Public Law 97-35 (42 U.S.C. 8624(b)(2)).
(7) Weatherization means low-cost residential weatherization and
other energy-related home repair for low-income households.
Weatherization must be directly related to home energy.
(c) LIHEAP funds used to identify, develop, and demonstrate
leveraging programs.
(1) Each fiscal year, States (excluding Indian tribes, tribal
organizations, and territories) may spend up to the greater of $35,000
or 0.08 percent of their net Federal LIHEAP allotments (funds payable)
allocated under section 2602(b) of Public Law 97-35 (42 U.S.C. 8621(b))
specifically to identify, develop, and demonstrate leveraging programs
under section 2607A(c)(2) of Public Law 97-35 (42 U.S.C. 8626a(c)(2)).
Each fiscal year, Indian tribes, tribal organizations, and territories
may spend up to the greater of two (2.0) percent of $100 of their
Federal LIHEAP allotments allocated under section 2602(b) of Public law
97-35 (42 U.S.C. 8621(b)) specifically to identify, develop, and
demonstrate leveraging programs under section 2607A(c)(2) of Public Law
97-35 (42 U.S.C. 8625a(c)(2)). For the purpose of this paragraph,
Federal LIHEAP allotments include funds from regular and supplemental
appropriations, with the exception of leveraging incentive funds
provided under section 2602(d) of Public Law 97-35 (42 U.S.C. 8621(d)).
(2) LIHEAP funds used under section 2607A(c)(2) of Public Law 97-35
(42 U.S.C. 8626a(c)(2)) specifically to identify, develop, and
demonstrate leveraging programs are not subject to the limitation in
section 2605(b)(9) of Public Law 97-35 (42 U.S.C. 8624(b)(9)) on the
maximum percent of Federal funds that may be used for costs of planning
and administration.
(d) Basic requirements for leveraged resources and benefits.
(1) In order to be counted under the leveraging incentive program,
leveraged resources and benefits must meet all of the following five
criteria:
(i) They are from non-Federal sources.
(ii) They are provided to the grantee's low-income home energy
assistance program, or to federally qualified low-income households as
described in section 2605(b)(2) of Public Law 97-35 (42 U.S.C.
8624(b)(2)).
(iii) They are measurable and quantifiable in dollars.
(iv) They represent a net addition to the total home energy
resources available to low-income households in excess of the amount of
such resources that could be acquired by these households through the
purchase of home energy, or the purchase of items that help these
households meet the cost of home energy, at commonly available
household rates or costs, or that could be obtained with regular LIHEAP
allotments provided under section 2602(b) of Public Law 97-35 (42
U.S.C. 8621(b)).
(v) They meet the requirements for countable leveraged resources
and benefits throughout this section and section 2607A of Public Law
97-35 (42 U.S.C. 8626a).
(2) Also, in order to be counted under the leveraging incentive
program, leveraged resources and benefits must meet at least one of the
following three criteria:
(i) The grantee's LIHEAP program had an active, substantive role in
developing and/or acquiring the resource/benefits from home energy
vendor(s) through negotiation, regulation, and/or competitive bid. The
actions or efforts of one or more staff of the grantee's LIHEAP
program--at the central and/or local level--and/or one or more staff of
LIHEAP program subrecipient(s) acting in that capacity, were
substantial and significant in obtaining the resource/benefits from the
vendor(s).
(ii) The grantee appropriated or mandated the resource/benefits for
distribution to low-income households through (that is, within and as a
part of) its LIHEAP program. The resource/benefits are provided through
the grantee's LIHEAP program to low-income households eligible under
the grantee's LIHEAP standards, in accordance with the LIHEAP statute
and regulations and consistent with the grantee's LIHEAP plan and
program policies that were in effect during the base period, as if they
were provided from the grantee's Federal LIHEAP allotment.
(iii) The grantee appropriated or mandated the resource/benefits
for distribution to low-income households as described in its LIHEAP
plan (referred to in section 2605(c)(1)(A) of Public Law 97-35) (42
U.S.C. 8624(c)(1)(A). The resource/benefits are provided to low-income
households as a supplement and/or alternative to the grantee's LIHEAP
program, outside (that is, not through, within, or as a part of) the
LIHEAP program. The resource/benefits are integrated and coordinated
with the grantee's LIHEAP program. Before the end of the base period,
the plan identifies and describes the resource/benefits, their
source(s), and their integration/coordination with the LIHEAP program.
The Department will determine resources/benefits to be integrated and
coordinated with the LIHEAP program if they meet at least one of the
following eight conditions. If a resource meets at least one of
conditions A through F when the grantee's LIHEAP program is operating
(and meets all other applicable requirements), the resource also is
[[Page 21361]] countable when the LIHEAP program is not operating.
(A) For all households served by the resource, the assistance
provided by the resource depends on and is determined by the assistance
provided to these households by the grantee's LIHEAP program in the
base period. The resource supplements LIHEAP assistance that was not
sufficient to meet households' home energy needs, and the type and
amount of assistance provided by the resource is directly affected by
the LIHEAP assistance received by the households.
(B) Receipt of LIHEAP assistance in the base period is necessary to
receive assistance from the resource. The resource serves only
households that received LIHEAP assistance in the base period.
(C) Ineligibility for the grantee's LIHEAP program, or denial of
LIHEAP assistance in the base period because of unavailability of
LIHEAP funds, is necessary to receive assistance from the resource.
(D) For discounts and waivers: eligibility for and/or receipt of
assistance under the grantee's LIHEAP program in the base period, and/
or eligibility under the Federal standards set by section 2605(b)(2) of
Public Law 97-35 (42 U.S.C. 8624(b)(2)), is necessary to receive the
discount or waiver.
(E) During the period when the grantee's LIHEAP program is
operating, staff of the grantee's LIHEAP program and/or staff assigned
to the LIHEAP program by a local LIHEAP administering agency or
agencies, and staff assigned to the resource communicate orally and/or
in writing about how to meet the home energy needs of specific,
individual households. For the duration of the LIHEAP program, this
communication takes place before assistance is provided to each
household to be served by the resource, unless the applicant for
assistance from the resource presents documentation of LIHEAP
eligibility and/or the amount of LIHEAP assistance received or to be
received.
(F) A written agreement between the grantee's LIHEAP program or
local LIHEAP administering agency, and the agency administering the
resource, specifies the following about the resource: eligibility
criteria; benefit levels; period of operation; how the LIHEAP program
and the resource are integrated/coordinated; and relationship between
LIHEAP eligibility and/or benefit levels, and eligibility and/or
benefit levels for the resource. The agreement provides for annual or
more frequent reports to be provided to the LIHEAP program by the
agency administering the resource.
(G) The resource accepts referrals from the grantee's LIHEAP
program, and as long as the resource has benefits available, it
provides assistance to all households that are referred by the LIHEAP
program and that meet the resource's eligibility requirements. Under
this condition, only the benefits provided to households referred by
the LIHEAP program are countable.
(H) Before the grantee's LIHEAP heating, cooling, crisis, and/or
weatherization assistance component(s) open and/or after the grantee's
LIHEAP heating, cooling, crisis, and/or weatherization assistance
component(s) close for the season or for the fiscal year, or before the
entire LIHEAP program/opens and/or after the entire LIHEAP program
closes for the season or for the fiscal year, the resource is made
available specifically to fill the gap caused by the absence of the
LIHEAP component(s) or program. The resource is not available while the
LIHEAP component(s) or program is operating.
(e) Countable leveraged resources and benefits. Resources and
benefits that are countable under the leveraging incentive program
include but are not limited to the following, provided that they also
meet all other applicable requirements:
(1) Cash resources: State, tribal, territorial, and other public
and private non-Federal funds, including countable loan funds and
countable petroleum violation escrow funds as defined in paragraphs
(b)(3) and (b)(4) of this section, that are used for:
(i) Heating, cooling, and energy crisis assistance payments and
cash benefits made in the base period to or on behalf of low-income
households toward their home energy costs (including home energy bills,
taxes on home energy sales/purchases and services, connection and
reconnection fees, application fees, late payment charges, bulk fuel
tank rental or purchase costs, and security deposits that are retained
for six months or longer);
(ii) Purchase of fuels that are provided to low-income households
in the base period for home energy (such as fuel oil, liquefied
petroleum gas, and wood);
(iii) Purchase of weatherization materials that are installed in
recipients' homes in the base period;
(iv) Purchase of the following tangible items that are provided to
low-income households and/or installed in recipients' homes in the base
period: blankets, space heating devices, equipment, and systems; space
cooling devices, equipment, and systems; and other tangible items that
help low-income households meet the costs of home energy and are
specifically approved by the Department as countable leveraged
resources;
(v) Installation, replacement, and repair of the following in the
base period: weatherization materials; space heating devices,
equipment, and systems; space cooling devices, equipment, and systems;
and other tangible items that help low-income households meet the costs
of home energy and are specifically approved by the Department;
(vi) The following services, when they are an integral part of
weatherization to help low-income households meet the costs of home
energy in the base period: installation, replacement, and repair of
windows, exterior doors, roofs, exterior walls, and exterior floors;
pre-weatherization home energy audits of homes that are weatherized as
a result of these audits; and post-weatherization inspection of homes;
and
(vii) The following services, when they are provided (carried out)
in the base period: installation, replacement, and repair of smoke fire
alarms that are an integral part, and necessary for safe operation, of
a home heating or cooling system installed or repaired as a
weatherization activity; and asbestos removal and that is an integral
part of, and necessary to carry out, weatherization to help low-income
households meet the cost of home energy.
(2) Home energy discounts to waivers that are provided in the base
period to low-income households and pertain to generally applicable
prices, rates, fees, charges, costs and/or requirements, in the amount
of the discount, reduction, waiver, or forgiveness, or that apply to
certain tangible fuel and non-fuel items and to certain services, that
are provided in the base period to low-income households and help these
households meet the costs of home energy, in the amount of the discount
or reduction.
(i) Discounts or reductions in utility and bulk fuel prices, rates,
or bills;
(ii) Partial or full forgiveness of home energy bill arrearages;
(iii) Partial or full waivers of utility and other home energy
connection and reconnection fees, application fees, late payment
charges, bulk fuel tank rental or purchase costs, and home energy
security deposits that are retained for six months or longer;
(iv) Reductions in and partial or full waivers of non-Federal taxes
on home energy sales/purchases and services, and reductions in and
partial or full waivers of other non-Federal taxes provided as tax
``credits'' to low-income [[Page 21362]] households to offset their
home energy costs, except when Federal funds or Federal tax ``credits''
provide payment or reimbursement for these reductions/waivers;
(v) Discounts or reductions in the cost of the following tangible
items that are provided to low-income households and/or installed in
recipients' homes: weatherization materials; blankets; space heating
devices, equipment, and systems; space cooling devices, equipment, and
systems; and other tangible items that are specifically approved by the
Department;
(vi) Discounts or reductions in the cost of installation,
replacement, and repair of the following: weatherization materials;
space heating devices, equipment, and systems; space cooling devices,
equipment, and systems; and other tangible items that help low-income
households meet the costs of home energy and are specifically approved
by the Department;
(vii) Discounts or reductions in the cost of the following
services, when the services are an integral part of weatherization to
help low-income households meet the costs of home energy: installation,
replacement, and repair of windows, exterior doors, roofs, exterior
walls, and exterior floors; pre-weatherization home energy audits of
homes that were weatherized as a result of these audits; and post-
weatherization inspection of homes; and
(viii) Discounts or reductions in the cost of installation,
replacement, and repair of smoke/fire alarms that are an integral part,
and necessary for safe operation, of a home heating or cooling system
installed or repaired as a weatherization activity; and discounts or
reductions in the cost of asbestos removal that is an integral part of,
and necessary to carry out, weatherization to help low-income
households meet the costs of home energy.
(3) Certain third-party in-kind contributions that are provided in
the base period to low-income households:
(i) Donated fuels used by recipient households for home energy
(such as fuel oil, liquified petroleum gas, and wood);
(ii) Donated weatherization materials that are installed in
recipients' homes;
(iii) Donated blankets; donated space heating devices, equipment,
and systems; donated space cooling devices, equipment, and systems; and
other donated tangible items that help low-income households meet the
costs of home energy and are specifically approved by the Department as
countable leveraged resources;
(iv) Unpaid volunteers' services specifically to install, replace,
and repair the following: weatherization materials; space heating
devices, equipment, and systems; space cooling devices, equipment, and
systems; and other items that help low-income households meet the costs
of home energy and are specifically approved by the Department;
(v) Unpaid volunteers' services specifically to provide (carry out)
the following, when these services are an integral part of
weatherization to help low-income households meet the costs of home
energy: installation, replacement, and repair of windows, exterior
doors, roofs, exterior walls, and exterior floors; pre-weatherization
home energy audits of homes that were weatherized as a result of these
audits; and post-weatherization inspection of homes;
(vi) Unpaid volunteers' services specifically to: install, replace,
and repair smoke/fire alarms as an integral part, and necessary for
safe operation, of a home heating or cooling system installed or
repaired as a weatherization activity; and remove asbestos as an
integral part of, and necessary to carry out, weatherization to help
low-income households meet the costs of home energy;
(vii) Paid staff's services that are donated by the employer
specifically to install, replace, and repair the following:
weatherization materials; space heating devices, equipment, and
systems; space cooling devices, equipment, and systems; and other items
that help low-income households meet the costs of home energy and are
specifically approved by the Department;
(viii) Paid staff's services that are donated by the employer
specifically to provide (carry out) the following, when these services
are an integral part of weatherization to help low-income households
meet the costs of home energy: installation, replacement, and repair of
windows, exterior doors, roofs, exterior walls, and exterior floors;
pre-weatherization home energy audits of homes that were weatherized as
a result of these audits; and post-weatherization inspection of homes;
and
(ix) Paid staff's services that are donated by the employer
specifically to: install, replace, and repair smoke/fire alarms as an
integral part, and necessary for safe operation, of a home heating or
cooling system installed or repaired as a weatherization activity; and
remove asbestos as an integral part of, and necessary to carry out,
weatherization to help low-income households meet the costs of home
energy.
(f) Resources and benefits that cannot be counted. The following
resources and benefits are not countable under the leveraging incentive
program:
(1) Resources (or portions of resources) obtained, arranged,
provided, contributed, and/or paid for, by a low-income household for
its own benefit, or which a low-income household is responsible for
obtaining or required to provide for its own benefit or for the benefit
of others, in order to receive a benefit of some type;
(2) Resources (or portions of resources) provided, contributed,
and/or paid for by building owners, building managers, and/or home
energy vendors, if the cost of rent, home energy, or other charge(s) to
the recipient were or will be imposed, as a result;
(3) Resources (or portions of resources) directly provided,
contributed, and/or paid for by member(s) of the recipient household's
family (parents, grandparents, great-grandparents, sons, daughters,
grandchildren, great-grandchildren, brothers, sisters, aunts, uncles,
first cousins, nieces, and nephews, and their spouses), regardless of
whether the family member(s) lived within the household, unless the
family member(s) also provided the same resource to other low-income
households during the base period and did not limit the resource to
members of their own family;
(4) Deferred home energy obligations;
(5) Projected future savings from weatherization;
(6) Delivery, and discounts in the cost of delivery, of fuel,
weatherization materials, and all other items;
(7) Purchase, rental, donation, and loan, and discounts in the cost
of purchase and rental, of: supplies and equipment used to deliver
fuel, weatherization materials, and all other items; and supplies and
equipment used to install and repair weatherization materials and all
other items;
(8) Petroleum violation escrow (oil overcharge) funds that do not
meet the definition in paragraph (b)(4) of this section;
(9) Interest earned/paid on petroleum violation escrow funds that
were distributed to a State or territory by the Department of Energy on
or before October 1, 1990;
(10) Interest earned/paid on Federal funds;
(11) Interest earned/paid on customers' security deposits, utility
deposits, etc., except when forfeited by the customer and used to
provide countable benefits;
(12) Borrowed funds that do not meet the requirements in paragraph
(b)(3) above (including loans made by and/or to low-income households),
interest [[Page 21363]] paid on borrowed funds, and reductions in
interest paid on borrowed funds;
(13) Resources (or portions of resources) for which Federal payment
or reimbursement has been or will be provided/received;
(14) Tax deductions and tax credits received from any unit(s) of
government by donors/contributors of resources for these donations, and
by vendors for providing rate reductions, discounts, waivers, credits,
and/or arrearage forgiveness to or for low-income households, etc.;
(15) Funds and other resources that have been or will be used as
matching or cost sharing for any Federal program;
(16) Leveraged resources counted under any other Federal leveraging
incentive program;
(17) Costs of planning and administration, space costs, and intake
costs;
(18) Outreach activities, budget counseling, case management, and
energy conservation education;
(19) Training;
(20) Installation, replacement, and repair of lighting fixtures and
light bulbs;
(21) Installation, replacement, and repair of smoke/fire alarms
that are not an integral part, and necessary for safe operation, of a
home heating or cooling system installed or repaired as a
weatherization activity;
(22) Asbestos removal that is not an integral part of, and
necessary to carry out, weatherization to help low-income households
meet the costs of home energy;
(23) Paid services where payment is not made from countable
leveraged resources, unless these services are donated as a countable
in-kind contribution by the employer;
(24) All in-kind contributions except those described in paragraph
(e)(3) of this section; and
(25) All other resources that do not meet the requirements of this
section and of section 2607A of Public Law 97-35 (42 U.S.C. 8626a).
(g) Valuation and documentation of leveraged resources and
offsetting costs.
(1) Leveraged cash resources will be valued at the fair market
value of the benefits they provided to low-income households, as
follows. Payments to or on behalf of low-income households for heating,
cooling, and energy crisis assistance will be valued at their actual
amount or value at the time they were provided. Purchased fuel,
weatherization materials, and other countable tangible items will be
valued at their fair market value (the commonly available household
rate or cost in the local market area) at the time they were purchased.
Installation, replacement, and repair of weatherization materials, and
other countable services, will be valued at rates consistent with those
ordinarily paid for similar work, by persons of similar skill in this
work, in the grantee's or subrecipient's organization in the local
area, at the time these services were provided. If the grantee or
subrecipient does not have employees performing similar work, the rates
will be consistent with those ordinarily paid by other employers for
similar work, by persons of similar skill in this work, in the same
labor market, at the time these services were provided. Fringe benefits
and overhead costs will not be counted.
(2) Home energy discounts, waivers, and credits will be valued at
their actual amount or value.
(3) Donated fuel, donated weatherization materials, and other
countable donated tangible items will be valued at their fair market
value (the commonly available household cost in the local market area)
at the time of donation.
(4) Donated unpaid services, and donated third-party paid services
that are not in the employee's normal line of work, will be valued at
rates consistent with those ordinarily paid for similar work, by
persons of similar skill in this work, in the grantee's or
subrecipient's organization in the local area, at the time these
services were provided. If the grantee or subrecipient does not have
employees performing similar work, the rates will be consistent with
those ordinarily paid by other employers for similar work, by persons
of similar skill in this work, in the same labor market, at the time
these services were provided. Fringe benefits and overhead costs will
not be counted. Donated third-party paid services of employees in their
normal line of work will be valued at the employee's regular rate of
pay, excluding fringe benefits and overhead costs.
(5) Offsetting costs and charges will be valued at their actual
amount or value.
(i) Funds from grantees' regular LIHEAP allotments that are used
specifically to identify, develop, and demonstrate leveraging programs
under section 2607A(c)(2) of Public Law 97-35 (42 U.S.C. 8626a(c)(2))
will be deducted as offsetting costs in the base period in which these
funds are obligated, whether or not there are any resulting leveraged
benefits. Costs incurred from grantees' own funds to identify, develop,
and demonstrate leveraging programs will be deducted in the first base
period in which resulting leveraged benefits are provided to low-income
households. If there is no resulting leveraged benefit from the
expenditure of the grantee's own funds, the grantee's expenditure will
not be counted or deducted.
(ii) Any costs assessed or charged to low-income households on a
continuing or on-going basis, year after year, specifically to
participate in a counted leveraging program or to receive counted
leveraged resources/benefits will be deducted in the base period these
costs are paid. Any one-time costs or charges to low-income households
specifically to participate in a counted leveraging program or to
receive counted leveraged resources/benefits will be deducted in the
first base period the leveraging program or resource is counted. Such
costs or charges will be subtracted from the gross value of a counted
resource or benefit for low-income households whose benefits are
counted, but not for any households whose benefits are not counted.
(6) Only the amount of the net addition to recipient low-income
households' home energy resources may be counted in the valuation of a
leveraged resource.
(7) Leveraged resources and benefits, and offsetting costs and
charges, will be valued according to the best data available to the
grantee.
(8) Grantees must maintain, or have readily available, records
sufficient to document leveraged resources and benefits, and offsetting
costs and charges, and their valuation. These records must be retained
for three years after the end of the base period whose leveraged
resources and benefits they document.
(h) Leveraging report.
(1) In order to qualify for leveraging incentive funds, each
grantee desiring such funds must submit to the Department a report on
the leveraged resources provided to low-income households during the
proceedings base period. These reports must contain the following
information in a format established by the Department.
(i) For each separate leveraged resource, the report must:
(A) Briefly describe the specific leveraged resource and the
specific benefit(s) provided to low-income households by this resource,
and state the source of the resource;
(B) State whether the resource was acquired in cash, as a discount/
waiver, or as an in-kind contribution;
(C) Indicate the geographical area in which the benefit(s) were
provided to recipients;
(D) State the month(s) and year(s) when the benefit(s) were
provided to recipients;
[[Page 21364]]
(E) State the gross dollar value of the countable benefits provided
by the resource as determined in accordance with paragraph (g) of this
section, indicate the source(s) of the data used, and describe how the
grantee quantified the value and calculated the total amount;
(F) State the number of low-income households to whom the
benefit(s) were provided, and state the eligibility standard(s) for the
low-income households to whom the benefit(s) were provided;
(G) Indicate the agency or agencies that administered the resource/
benefit(s); and
(H) Indicate the criterion or criteria for leveraged resources in
paragraph (d)(2) of this section that the resource/benefits meet, and
for criteria in paragraphs (d)(2)(i) and (d)(2)(iii) of this section,
explain how resources/benefits valued at $5,000 or more meet the
criterion or criteria.
(ii) State the total gross dollar value of the countable leveraged
resources and benefits provided to low-income households during the
base period (the sum of the amounts listed pursuant to paragraph
(h)(1)(i)(E) of this section).
(iii) State in dollars any costs incurred by the grantee to
leverage resources, and any costs and charges imposed on low-income
households to participate in a counted leveraging program or to receive
counted leveraged benefits, as determined in accordance with paragraph
(g)(5) of this section. Also state the amount of the grantee's regular
LIHEAP allotment that the grantee used during the base period
specifically to identify, develop, and demonstrate leveraging programs
under section 2607A(c)(2) of Public Law 97-35 (42 U.S.C. 8626a(c)(2)).
(iv) State the net dollar value of the countable leveraged
resources and benefits for the base period. (Subtract the amounts in
paragraph (h)(1)(iii) of this section from the amount in paragraph
(h)(1)(ii) of this section.)
(2) Leveraging reports must be postmarked or hand-delivered not
later than November 30 of the fiscal year for which leveraging
incentive funds are requested.
(3) The Department may require submission of additional
documentation and/or clarification as it determines necessary to verify
information in a grantee's leveraging report, to determine whether a
leveraged resource is countable, and/or to determine the net valuation
of a resource. In such cases, the Department will set a date by which
it must receive information sufficient to document countability and/or
valuation. In such cases, if the Department does not receive
information that it considers sufficient to document countability and/
or valuation by the date it has set, then the Department will not count
the resource (or portion of resource) in question.
(i) Determination of grantee shares of leveraging incentive funds.
Allocation of leveraging incentive funds to grantees will be computed
according to a formula using the following factors and weights:
(1) Fifty (50) percent based on the final net value of countable
leveraged resources provided to low-income households during the base
period by a grantee relative to its net Federal allotment of funds
allocated under section 2602(b) of Public Law 97-35 (42 U.S.C. 8621(b))
during the base period, as a proportion of the final net value of the
countable leveraged resources provided by all grantees during the base
period relative to their net Federal allotment of funds allocated under
that section during the base period; and
(2) Fifty (50) percent based on the final net value of countable
leveraged resources provided to low-income households during the base
period by a grantee as a proportion of the total final net value of the
countable leveraged resources provided by all grantees during the base
period; except that: No grantee may receive more than twelve (12.0)
percent of the total amount of leveraging incentive funds available for
distribution to grantees in any award period; and no grantee may
receive more than the smaller of its net Federal allotment of funds
allocated under section 2602(b) of Public Law 97-35 (42 U.S.C. 8621(b))
during the base period, or two times (double) the final net value of
its countable leveraged resources for the base period. The calculations
will be based on data contained in the leveraging reports submitted by
grantees under paragraph (h) of this section as approved by the
Department, and allocation data developed by the Department.
(j) Uses of leveraging incentive funds.
(1) Funds awarded to grantees under the leveraging incentive
program must be used to increase or maintain heating, cooling, energy
crisis, and/or weatherization benefits through (that is, within and as
a part of) the grantee's LIHEAP program. These funds can be used for
weatherization without regard to the weatherization maximum in section
2605(k) of Public Law 97-35 (42 U.S.C. 8624(k)). However, they cannot
be counted in the base for calculation of the weatherization maximum
for regular LIHEAP funds authorized under section 2602(b) of Public Law
97-35 (42 U.S.C. 8621(b)). Leveraging incentive funds cannot be used
for costs of planning and administration. However, in either the award
period or the fiscal year following the award period, they can be
counted in the base for calculation of maximum grantee planning and
administrative costs under section 2605(b)(9) of Public Law 97-35 (42
U.S.C. 8624(b)(9)). They cannot be counted in the base for calculation
of maximum carryover of regular LIHEAP funds authorized under section
2602(b) of Public Law 97-35 (42 U.S.C. 8621(b)).
(2) Grantees must include the uses of leveraging incentive funds in
their LIHEAP plans (referred to in section 2605(c)(1)(A) of Public Law
97-35) (42 U.S.C. 8624(c)(1)(A)) for the fiscal year in which the
grantee obligates these funds. Grantees must document uses of
leveraging incentive funds in the same way they document uses of
regular LIHEAP funds authorized under section 2602(b) of Public Law 97-
35 (42 U.S.C. 8621(b)). Leveraging incentive funds are subject to the
same audit requirements as regular LIHEAP funds.
(k) Period of obligation for leveraging incentive funds. Leveraging
incentive funds are available for obligation during both the award
period and the fiscal year following the award period, without regard
to limitations on carryover of funds in section 2607(b)(2)(B) of Public
Law 97-35 (42 U.S.C. 8626(b)(2)(B)). Any leveraging incentive funds not
obligated for allowable purposes by the end of this period must be
returned to the Department.
[FR Doc. 95-9915 Filed 4-28-95; 8:45 am]
BILLING CODE 4110-60-M