[Federal Register Volume 60, Number 244 (Wednesday, December 20, 1995)]
[Rules and Regulations]
[Pages 65509-65515]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-30752]



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  Federal Register / Vol. 60, No. 244 / Wednesday, December 20, 1995 / 
Rules and Regulations  

[[Page 65509]]


DEPARTMENT OF ENERGY

10 CFR Part 600

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


Financial Assistance Rules: Eligibility Determination for Certain 
Financial Assistance Programs

AGENCY: Department of Energy.

ACTION: Final rule.

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

SUMMARY: The Department of Energy is amending its Financial Assistance 
Rules by adding a final statement of policy, including procedures and 
interpretations, to guide DOE officials in making determinations 
required by section 2306 of the Energy Policy Act of 1992 (EPACT) 
concerning eligibility to receive financial assistance under DOE 
programs authorized by Titles XX through XXIII of EPACT.

EFFECTIVE DATE: January 19, 1996.

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

SUPPLEMENTARY INFORMATION:

I. Background
II. Discussion of Public Comments
III. Procedural Requirements

I. Background

    This notice sets forth a final general statement of policy, 
including procedures and interpretations, concerning implementation of 
the requirements of section 2306 of EPACT (42 U.S.C. 13525). This 
general statement of policy will guide implementing DOE officials in 
making a special eligibility determination prerequisite to a financial 
assistance award to a company under Titles XX through XXIII of EPACT. 
Those titles relate to research, development, demonstration and 
commercialization programs in diverse areas of energy efficiency, 
energy supply, and related basic research.
    Section 2306 provides for a two-part determination. An applicant 
must be found to satisfy the conditions of both parts in order to be 
eligible. The first part, set out in section 2306(1), involves a 
finding with regard to whether an award of financial assistance to the 
applicant would be in the economic interest of the United States. 42 
U.S.C. 13525(1). The statute provides some illustrative examples of the 
kinds of evidence that would support such a finding: investments in the 
United States in research, development, and manufacturing; significant 
contributions to employment in the United States; and agreements, with 
respect to any technology arising from financial assistance provided, 
to promote the manufacture within the United States of products 
resulting from that technology and to procure parts and materials for 
such manufacture from competitive suppliers.
    The second part of the determination, section 2306(2), involves two 
subparts, one of which must be satisfied. 42 U.S.C. 13525(2). The first 
subpart is satisfied if the applicant is a ``United States-owned 
company.'' The second subpart is satisfied if the applicant is found to 
be incorporated in the United States and the applicant's parent company 
is incorporated in a foreign country that: (a) affords opportunities to 
United States-owned companies comparable to those afforded to any other 
company to participate in government-supported joint ventures in energy 
research and development; (b) affords opportunities to United States-
owned companies comparable to those afforded to any other company with 
regard to general investment opportunities; and (c) affords adequate 
and effective protection of intellectual property rights owned by 
United States-owned companies.
    The current list of covered programs is set forth below. This list 
will be updated as appropriate and published in the Federal Register to 
account for changes in activities undertaken in relation to Titles XX 
through XXIII of EPACT.

----------------------------------------------------------------------------------------------------------------
                      Covered programs                                          EPACT sections                  
----------------------------------------------------------------------------------------------------------------
Fossil energy R & D Petroleum: All Programs................  Sec.  2011, 2012                                   
Gas: Natural Gas Research..................................  Sec.  2013-2015, 2112                              
    All programs, including:                                                                                    
        Resource & Extraction..............................  Sec.  2013, 2014                                   
        Delivery & Storage.................................  Sec.  2013, 2014                                   
        Utilization........................................  Sec.  2013, 2014                                   
        Turbines...........................................  Sec.  2112                                         
        Environmental Research & Regulatory Analysis.......  Sec.  2013, 2014                                   
        Mid-continent Energy Research Center...............  Sec.  2013, 2015                                   
Fuel cells:                                                  Sec.  2115                                         
    All Programs, including:                                                                                    
        Advanced Research..................................  Sec.  2115                                         
        Molten Carbonate Systems...........................  Sec.  2115                                         
        Advanced Concepts..................................  Sec.  2115                                         
Energy conservation:                                                                                            
    Transportation.........................................  Sec.  2021-2025, 2027, 2028, 2112                  
    Alternative Fuels Utilization..........................  Sec.  2021, 2023                                   
    Materials Development..................................  Sec.  2021                                         

[[Page 65510]]
                                                                                                                
    Heat Engine Development................................  Sec.  2021, 2112                                   
    Electric & Hybrid Propulsion...........................  Sec.  2021, 2025                                   
    Development Implementation & Deployment................  Sec.  2021                                         
    Management.............................................  Sec.  2021                                         
    Capital Equipment......................................  Sec.  2021                                         
    Advanced Automotive Fuel Economy.......................  Sec.  2021, 2022                                   
    Biofuels User Facility.................................  Sec.  2021, 2024                                   
    Advanced Diesel Emissions Program......................  Sec.  2021, 2027                                   
    Telecommuting Study....................................  Sec.  2021, 2028                                   
Utility: All programs......................................  Sec.  2101                                         
Industry...................................................  Sec.  2101-2108                                    
    All Programs, including:                                                                                    
        Industrial Wastes..................................  Sec.  2101                                         
        Municipal Solid Wastes.............................  Sec.  2101                                         
        Cogeneration.......................................  Sec.  2101                                         
        Electric Drives....................................  Sec.  2101, 2105                                   
        Materials and Metals Processing....................  Sec.  2101, 2107                                   
        Other Process Efficiency...........................  Sec.  2101                                         
        Process Heating & Cooling..........................  Sec.  2101, 2102                                   
    Implementation & Deployment............................  Sec.  2101                                         
        Management.........................................  Sec.  2101                                         
        Capital Equipment..................................  Sec.  2101                                         
        National Advanced Manufacturing Tech...............  Sec.  2101, 2202                                   
        Initiative Pulp & Paper............................  Sec.  2101, 2103                                   
        Steel, Aluminum, and Metal Research................  Sec.  2101, 2106                                   
        Energy Efficient Environmental Program.............  Sec.  2101, 2108                                   
Buildings..................................................  Sec.  2101-2108                                    
    All Programs, including:                                                                                    
        Federal Energy Management Program..................  Sec.  2101                                         
        Implementation & Deployment........................  Sec.  2101                                         
        Management and Planning............................  Sec.  2101                                         
        Capital Equipment..................................  Sec.  2101                                         
        Advanced Buildings for 2005........................  Sec.  2101, 2104                                   
        Building Systems...................................  Sec.  2101                                         
        Building Envelope..................................  Sec.  2101                                         
        Building Equipment.................................  Sec.  2101                                         
        Codes and Standards................................  Sec.  2101                                         
Energy Supply R & D: Energy Research:......................                                                     
    Fusion Energy..........................................  Sec.  2114                                         
        All Programs, including:                                                                                
            Confinement Systems............................  Sec.  2114                                         
            Development & Technology.......................  Sec.  2114                                         
    Applied Plasma Physics.................................  Sec.  2114                                         
    Planning & Projects....................................  Sec.  2114                                         
    Inertial Fusion Energy.................................  Sec.  2114                                         
    Program Direction-Op Exp...............................  Sec.  2114                                         
    Capital Equipment & Construction.......................  Sec.  2114                                         
Basic Energy Sciences......................................  Sec.  2203                                         
    All Activities, including:                                                                                  
        Materials Sciences.................................  Sec.  2203                                         
        Chemical Sciences..................................  Sec.  2203                                         
        Energy Biosciences.................................  Sec.  2203                                         
        Engineering & Geosciences..........................  Sec.  2203                                         
        Applied Math Sciences..............................  Sec.  2203, 2204                                   
        Advanced Energy Projects...........................  Sec.  2203                                         
        Program Direction..................................  Sec.  2203                                         
        Capital Equipment..................................  Sec.  2203                                         
    Advisory & Oversight/Program Direction.................  Sec.  2203                                         
    Advanced Neutron Source................................  Sec.  2203                                         
    Energy Research Analysis...............................  Sec.  2203                                         
    University & Science Education Programs................  Sec.  2203                                         
    Experimental Program to Stimulate Competitive Research.  Sec.  2203                                         
    Laboratory Technology Transfer.........................  Sec.  2203                                         
    Multi-Program Laboratory Support.......................  Sec.  2203                                         
Nuclear Energy:                                                                                                 
    Light Water Reactor....................................  Sec.  2123, 2126                                   
    Advanced Reactor R & D.................................  Sec.  2121, 2122, 2124, 2126                       
    Facilities.............................................  Sec.  2126                                         
Solar & Renewables:                                                                                             
    Solar & Other Energy...................................  Sec.  2021, 2026, 2111, 2117                       
    All Programs, including:                                                                                    
        Photovoltaics......................................  Sec.  2111                                         
        Biofuels...........................................  Sec.  2021, 2013, 2024, 2111                       
        Solar Technology Transfer..........................  Sec.  2111                                         

[[Page 65511]]
                                                                                                                
        Program Direction--Other Solar Energy..............  Sec.  2111                                         
        Solar Building Technology Research.................  Sec.  2111, 2104                                   
        Solar Thermal Energy Systems.......................  Sec.  2111                                         
        Wind Energy Systems................................  Sec.  2111                                         
        Ocean Energy Systems...............................  Sec.  2111                                         
        International Solar Energy Program.................  Sec.  2111                                         
        Resource Assessment................................  Sec.  2111                                         
        Program Support....................................  Sec.  2111                                         
    Geothermal.............................................  Sec.  2111                                         
    Hydrogen Research......................................  Sec.  2026                                         
    Electric Energy Systems including: Superconductivity...  Sec.  2117, 2111                                   
    Energy Storage Systems.................................  Sec.  2111                                         
Environmental Rest & Waste Management:                                                                          
    Facility Transition--Fast Flux Test Facility...........  Sec.  2116                                         
    Civilian Waste R & D...................................  Sec.  2113                                         
    Electric & Magnetic Fields Research and Public           Sec.  2118                                         
     Dissemination Program.                                                                                     
    Spark M. Matsunaga Renewable Energy & Ocean Technology   Sec.  2111, 2119                                   
     Center.                                                                                                    
----------------------------------------------------------------------------------------------------------------



    On February 23, 1995, DOE published a proposed statement of policy 
for public comment in the Federal Register (60 FR 10296). The public 
comment period ended April 24, 1995. The Department received seven 
comments. In addition, a public hearing was held on April 19, 1995, in 
Washington, DC. Comments were received from the Delegation of the 
European Commission, individual corporations, and associations 
representing corporations and commercial interests. The official 
rulemaking record is available in the Department's Freedom of 
Information reading room.

II. Discussion of Public Comments

A. Applicability of Eligibility Requirements

    One commenter questioned the Department's overall approach of 
implementing section 2306 through a ``general statement of policy'' 
which allows DOE officials considerable flexibility. The commenter 
noted that Sec. 2306 is mandatory, not advisory, and that the 
Department's interpretation of what constitutes compliance with this 
provision should also be mandatory in the form of a final binding rule. 
In addition, the commenter expressed the view that allowing discretion 
in applying section 2306 will lead to arbitrary and inconsistent 
results.
    The policy statement recognizes the limitations of DOE's discretion 
by announcing that ``Department officials must, in all cases, comply 
with the requirements of the statute.'' The Department has decided to 
adopt a general statement of policy which provides uniform guidance for 
DOE officials and potential DOE program applicants, but allows 
implementing officials discretion in applying this policy to a large 
number of programs in diverse energy areas.
    Most importantly, the Department's general statement of policy sets 
forth a reasonable decisionmaking framework for the purpose of allowing 
full compliance with--not avoidance of--section 2306. This 
decisionmaking framework has been designed to avoid arbitrary 
decisionmaking by ensuring that all implementation actions under 
section 2306 comply with the requirements of that provision.
    Several comments were received concerning the ``retroactive'' 
application of section 2306 by the Department. One commenter asserted 
that the Department should not retroactively impose conditions on 
program participants granted awards prior to the enactment of EPACT.
    Section 2306, which governs the award of financial assistance 
covered by Titles XX to XXIII of EPACT, became effective on October 24, 
1992. The eligibility requirements will not be applied to financial 
assistance awards made prior to the effective date of the Act. This 
policy statement will apply to any new financial assistance awards or 
renewals of such awards under covered programs made after the effective 
date stated in this notice.
    Several commenters also raised retroactivity issues with respect to 
which programs are covered. One commenter asserted that section 2306 
applies to programs authorized by EPACT but commenced prior to the 
passage of that Act. Another commenter disagreed and asserted that DOE 
improperly proposed to apply section 2306 to programs that pre-date the 
enactment of EPACT. Departmental programs that pre-date EPACT but are 
referenced in Titles XX through XXIII of the Act will be considered 
covered programs as of the effective date of the Act.
    Two commenters expressed opposing views with respect to the scope 
of programs ``under Titles XX through XXIII'' of EPACT. One commenter 
asserted that the requirements of section 2306 should be applied 
broadly. Another commenter asserted that it would be inappropriate to 
apply section 2306 to programs not specifically authorized under titles 
XX through XXIII of EPACT. The Department has developed the list of 
covered programs set forth above to include both activities 
specifically authorized by Titles XX through XXIII of EPACT and other 
activities that are reasonably judged to be undertaken pursuant to 
program directions set out in those titles.

B. Definitions

    Two comments were received concerning the proposed definition of 
``financial assistance.'' One commenter agreed with the Department's 
proposal to define ``financial assistance'' to include grants and 
cooperative agreements and not contracts, subcontracts, and cooperative 
research and development agreements (CRADAs). Another commenter argued 
that the exclusion of contracts and subcontracts from the definition 
thwarts the intent of Congress and reduces the applicability of the 
statute to ``near zero.''
    The term ``financial assistance'' is not defined in EPACT, and the 
legislative history to that Act is silent as to its intended meaning. 
The Department has chosen to apply its pre-existing definition of the 
term ``financial assistance'', found at 10 CFR 600.3, which includes 
grants and cooperative agreements but does not include contracts, 
subcontracts or CRADAs. This definition is consistent with the usual 
connotations of the term.
    The Department invited comment on the definition of ``company'' in 
order to assess whether it was appropriate to exclude all non-profit 
organizations 

[[Page 65512]]
from that definition, or whether it would be more appropriate to 
exclude a narrower class of non-profit educational and charitable 
organizations. One commenter expressed the view that excluding all non-
profit organizations from the definition of that term would invite 
efforts to circumvent the purpose of section 2306.
    The Department has concluded that the definition of ``company'' 
should not exclude all not-for-profit organizations, but should instead 
exclude educational or charitable organizations.
    Accordingly, Sec. 600.501 defines ``company'' as ``any business 
entity other than an organization of the type described in section 
501(c)(3) of the Internal Revenue Code of 1954 (26 U.S.C. 
Sec. 501(c)(3)).'' This definition is intended to include corporations, 
general or limited partnerships, sole proprietorships, joint ventures, 
and other forms of business entities. It is not intended to include 
governmental entities. Not-for-profit corporations and associations are 
included unless they are educational or other institutions qualified 
under section 501(c)(3) of the Internal Revenue Code.
    One commenter noted that the term ``affiliates'' is not defined in 
the proposed rule and suggested that a definition be added. Section 
600.503, in which the term is used, simply provides that investment and 
employment in the U.S. by affiliates may be considered in assessing 
whether the applicant's participation is in the economic interests of 
the U.S. Accordingly, the Department does not believe that a technical 
definition of ``affiliates'' is necessary.
    Another commenter suggested a change to the definition of ``parent 
company'' to clarify that, in the case of indirect control, each 
company in a series must have a majority control of its subsidiary. 
Such a rigid approach could permit use of organizational structures 
designed to circumvent effective review under section 2306. Therefore, 
the definition has not been modified.

C. Economic Interest Determination

    Several comments were received concerning the scope of Departmental 
discretion in determining whether a company's participation is in the 
economic interest of the United States. One commenter, asserting that 
DOE has substantial discretion in this area, suggested that this 
determination should include a comparison of the records of applicant 
companies in particular areas, for example, in the area of providing 
U.S. jobs. A second commenter asserted that economic interest 
assessments must not be based simply on static comparisons among 
applicants. This same commenter emphasized that the Department should 
be flexible in the factors it considers in every case and should 
consider all available evidence in making its economic interest 
determination. A third commenter agreed, taking the position that the 
Department's economic interest determination should not be too narrowly 
focused. As an example, the third commenter noted that in certain cases 
there could be a clear economic benefit to the United States even 
though some prospective awardees have no presence in the United States 
and could not be expected to have any in the future.
    Determinations concerning the economic interest of the United 
States will be based on consideration of all available evidence. The 
statement of policy provides that any evidence that shows that an award 
would be in the economic interest of the United States can be 
considered. The Department also agrees with the position that economic 
interest assessments should not be based on comparisons among 
applicants.
    Several commenters cautioned that, in applying the economic 
interest criteria, DOE should not impose performance requirements or 
other similar conditions on applicants, directly or indirectly. Some of 
these comments refer to U.S. Government obligations under the World 
Trade Organization (WTO) Agreement on Subsidies and Countervailing 
Measures and the WTO Agreement on Trade-Related Investment Measures, 
which prohibit import substitution requirements and local purchasing 
requirements, respectively. The policy statement does not impose 
performance requirements or other similar conditions on applicants.

D. Section 2306(2)(B) Determination

    One commenter recommended that the sole basis for DOE's finding 
should be the outcome of proceedings conducted by the Office of the 
United States Trade Representative under section 301 of the Trade Act 
of 1974, as amended. This commenter notes that the Congress and the 
Executive Branch have established a comprehensive system of 
identifying, evaluating and eliminating foreign trade barriers under 
section 301. This commenter argues that such an approach would ensure 
that all concerned parties have an opportunity to express views; would 
ensure predictable results; and would ensure that DOE's finding 
supports U.S. market-opening efforts. Another commenter argued that DOE 
should consider evidence of compliance or non-compliance with laws and 
international agreements affecting trade, and should not limit its 
analysis to the outcome of section 301 proceedings. DOE agrees that 
section 301 proceedings are an important factor in making the necessary 
finding, but consideration of relevant evidence that is not produced as 
a result of a section 301 proceeding also is appropriate.
    One commenter urged DOE to consider whether U.S.-owned firms have 
non-discriminatory market access in making its determinations. The 
criteria contained in section 2306(2)(B) of EPACT address comparable 
access to research opportunities, comparable investment opportunities 
and adequate and effective intellectual property protections. Section 
2306(2)(B) does not provide for DOE to consider whether U.S.-owned 
firms have access to comparable trade opportunities in the relevant 
foreign country.

E. Comparable Access to Research Opportunities

    One commenter stated that it would defy common sense to find that a 
parent company incorporated in a country with no similar research 
program satisfies the requirements of section 2306. At the public 
hearing, the same commenter stated that section 2306 of EPACT requires 
DOE to disqualify any applicant if the applicant is headquartered in a 
country that has no comparable research program.
    Section 2306(2)(B) directs DOE to consider whether a foreign 
country affords U.S. companies ``opportunities, comparable to those 
afforded to any other company, to participate in any joint venture 
similar to those authorized under this Act.'' 42 U.S.C. 13525(2)(B). 
This finding relates to whether there is discrimination against U.S.-
owned firms relative to other firms with regard to access to any 
foreign-government-sponsored programs comparable to those covered under 
EPACT. The law does not provide for a finding that a foreign country 
has comparable energy research and development programs.

F. Comparable Access to Investment Opportunities

    One commenter stated that DOE should not limit its review to 
whether U.S.-owned firms have a legal right to foreign investment 
opportunities under international agreements. The commenter stated that 
DOE should not find an affected applicant eligible to participate in a 
DOE covered program unless U.S. firms have actual investment 
opportunities in the country of the applicant's parent company that are 
comparable to the opportunities 

[[Page 65513]]
available to foreign investors in the United States. Another commenter 
stated that DOE's main source of information on investment barriers 
should be the National Trade Estimates Report on Foreign Trade Barriers 
published annually by the Office of the United States Trade 
Representative.
    Section 2306(2)(B) provides that DOE must determine whether the 
country ``affords to United States-owned companies local investment 
opportunities comparable to those afforded to any other company.'' 42 
U.S.C. 13525(2)(B). DOE will consider available information on the 
legal regimes and de facto practices governing foreign investment in 
relevant countries. The statement of policy states that DOE may 
consider obligations of the country involved and local investment 
opportunities afforded to U.S.-owned companies in that country. DOE 
will consult with other Federal government agencies, as appropriate.

G. Protection of Intellectual Property Rights

    One commenter stated that DOE should use the annual National Trade 
Estimate Reports on Foreign Trade Barriers published by the Office of 
the U.S. Trade Representative as a main source of information 
concerning foreign government practices related to the protection of 
the intellectual property rights of U.S.-owned companies. The commenter 
recommended that DOE use the reports to allow foreign-owned companies 
to know whether or not they are likely to be eligible to participate in 
such programs prior to submitting an application. Two commenters 
recommended that DOE work with other federal agencies to ensure that 
DOE's policy is implemented in a manner that is predictable and 
consistent with U.S. Government trade policies, including intellectual 
property rights protection. Section 600.505 allows DOE to consider any 
information related to the protection of intellectual property rights 
of U.S.-owned companies and to seek and consider advice from other 
federal agencies concerning such information, as appropriate. To 
promote consistency, DOE has considered information on intellectual 
property rights protection developed by other federal agencies and has 
consulted with appropriate federal agencies in applying the section 
2306(2)(B) standards. DOE intends to continue this practice.

H. Administrative Issues

    DOE received several comments concerning the ``burden'' of 
requirements established in the proposed rulemaking imposed on 
applicants. One commenter expressed the view that DOE should avoid the 
imposition of requirements which divert scarce research and development 
resources to purposes of administration. This commenter also took issue 
with the proposed certification procedures including those set forth at 
Sec. 600.504(d) calling for a certification of status as a ``United 
States-owned company.'' The commenter viewed these requirements as 
overly legalistic and creating an unnecessary administrative burden and 
expense. The Department agrees that the administrative burden on 
applicants in complying with the requirements of section 2306 should be 
minimized wherever possible. The Department has modified Sec. 600.504 
(b) and (c) to provide for representations as opposed to certifications 
concerning ownership status and other factors. This approach will allow 
the applicant to demonstrate eligibility while minimizing any 
administrative burden or added expense.
    Another commenter, also urging that the administrative burden of 
complying with section 2306 should be minimized, argued that there is 
no reason to impose section 2306 requirements on firms meeting the 
definition of ``small business'' under the regulations of the Small 
Business Administration (SBA) because such firms, to be approved as a 
small business by SBA, must already meet most of the requirements of 
section 2306. The Department does not agree that qualifying for small 
business status is equivalent to satisfying the eligibility criteria of 
section 2306. Compare 13 CFR Sec. 121.403 with 42 U.S.C. 13525. 
However, DOE sought comment on how it should make the required section 
2306 determination in the context of relatively small financial 
assistance awards. DOE suggested that one possible alternative would be 
to ask applicants for awards below $100,000 to certify that they 
satisfy all the eligibility requirements of section 2306 (1) and 
(2)(A). The Department, in implementing this policy statement, expects 
to establish such self-certification procedures to minimize the compli-
ance burden for awards of less than $100,000. Guidance on the 
procedures for establishing eligibility is available from the DOE 
Office of Procurement and Assistance Management (202-586-8613).

III. Procedural Requirements

A. Review Under Executive Order 12866

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

B. Review Under Paperwork Reduction Act

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

C. Review Under the National Environmental Policy Act

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

D. Review Under Executive Order 12612

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

E. Review Under Executive Order 12778

    Section 2 of Executive Order 12778 instructs each agency to adhere 
to certain requirements in promulgating new regulations. These 
requirements, set forth in section 2 (a) and (b)(2), include 
eliminating drafting errors and needless ambiguity, drafting the 
regulations to minimize litigation, providing clear and certain legal 

[[Page 65514]]
standards for affected legal conduct, and promoting simplification and 
burden reduction. Agencies are also instructed to make every reasonable 
effort to ensure that regulations define key terms and are clear on 
such matters as exhaustion of administrative remedies and preemption. 
The Department certifies that today's regulatory action meets the 
requirements of section 2 (a) and (b)(2) of Executive Order 12778.


    Issued in Washington, DC, on this 13th day of December 1995.
Dan W. Reicher,
Acting Assistant Secretary for Policy.

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

PART 600--FINANCIAL ASSISTANCE RULES

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


    Authority: 42 U.S.C. 7254, 7256, 13525; 31 U.S.C. 6301-6308, 
unless otherwise noted.


    2. New subpart F, consisting of Secs. 600.500 through 600.505, is 
added to read as follows:
Subpart F--Eligibility Determination for Certain Financial Assistance 
Programs--General Statement of Policy
Sec.
600.500  Purpose and scope.
600.501  Definitions.
600.502  What must DOE determine.
600.503  Determining the economic interest of the United States.
600.504  Information an applicant must submit.
600.505  Other information DOE may consider.

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


Sec. 600.500  Purpose and scope.

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


Sec. 600.501  Definitions.

    The definitions in Sec. 600.3 of this part, including the 
definition of the term ``financial assistance,'' are applicable to this 
subpart. In addition, as used in this subpart:
    Act means the Energy Policy Act of 1992.
    Company means any business entity other than an organization of the 
type described in section 501(c)(3) of the Internal Revenue Code of 
1954 (26 U.S.C. Sec. 501 (c)(3)).
    Covered program means a program under Titles XX through XXIII of 
the Act. (A list of covered programs, updated periodically as 
appropriate, is maintained and published by the Department of Energy.)
    Parent company means a company that:
    (1) Exercises ultimate ownership of the applicant company either 
directly, by ownership of a majority of that company's voting 
securities, or indirectly, by control over a majority of that company's 
voting securities through one or more intermediate subsidiary companies 
or otherwise, and
    (2) Is not itself subject to the ultimate ownership control of 
another company.
    United States means the several States, the District of Columbia, 
and all commonwealths, territories, and possessions of the United 
States.
    United States-owned company means:
    (1) A company that has majority ownership by individuals who are 
citizens of the United States, or
    (2) A company organized under the laws of a State that either has 
no parent company or has a parent company organized under the laws of a 
State.
    Voting security has the meaning given the term in the Public 
Utility Holding Company Act (15 U.S.C. 15b(17)).


Sec. 600.502  What must DOE determine.

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


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

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


Sec. 600.504  Information an applicant must submit.

    (a) Any applicant for financial assistance under a covered program 
shall submit with the application for financial assistance, or at such 
later time as may be specified by DOE, evidence for DOE to consider in 
making findings required under Sec. 600.502(a) and findings concerning 
ownership status under Sec. 600.502(b).
    (b) If an applicant for financial assistance is submitting evidence 
relating to future undertakings, such as an agreement under 
Sec. 600.503(c) to promote manufacture in the United States of products 
resulting from a technology developed with financial assistance or to 
procure parts and materials from competitive suppliers, the applicant 
shall submit a representation affirming acceptance of these 
undertakings. The applicant should also briefly describe its plans, if 
any, for any manufacturing of products arising from the program-
supported research and development, including the location where such 
manufacturing is expected to occur.
    (c) If an applicant for financial assistance is claiming to be a 
United States-owned company, the applicant 

[[Page 65515]]
must submit a representation affirming that it falls within the 
definition of that term provided in Sec. 600.501.
    (d) DOE may require submission of additional information deemed 
necessary to make any portion of the determination required by 
Sec. 600.502.


Sec. 600.505  Other information DOE may consider.

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

[FR Doc. 95-30752 Filed 12-19-95; 8:45 am]
BILLING CODE 6450-01-P