[Title 10 CFR ]
[Code of Federal Regulations (annual edition) - January 1, 2000 Edition]
[From the U.S. Government Printing Office]



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                    10


          Part 500 to end

                         Revised as of January 1, 2000

Energy





          Containing a Codification of documents of general 
          applicability and future effect
          As of January 1, 2000
          With Ancillaries
          Published by:
          Office of the Federal Register
          National Archives and Records
          Administration

A Special Edition of the Federal Register



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                     U.S. GOVERNMENT PRINTING OFFICE
                            WASHINGTON : 2000



               For sale by U.S. Government Printing Office
 Superintendent of Documents, Mail Stop: SSOP, Washington, DC 20402-9328



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                            Table of Contents



                                                                    Page
  Explanation.................................................       v

  Title 10:
          Chapter II--Department of Energy (Continued)               3
          Chapter III--Department of Energy                        255
          Chapter X--Department of Energy (General Provisions)     571
          Chapter XVII--Defense Nuclear Facilities Safety 
          Board                                                    847
  Finding Aids:
      Table of CFR Titles and Chapters........................     875
      Alphabetical List of Agencies Appearing in the CFR......     893
      List of CFR Sections Affected...........................     903



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

                     Cite this Code:  CFR
                     To cite the regulations in 
                       this volume use title, 
                       part and section number. 
                       Thus,  10 CFR 500.1 refers 
                       to title 10, part 500, 
                       section 1.

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

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                               EXPLANATION

    The Code of Federal Regulations is a codification of the general and 
permanent rules published in the Federal Register by the Executive 
departments and agencies of the Federal Government. The Code is divided 
into 50 titles which represent broad areas subject to Federal 
regulation. Each title is divided into chapters which usually bear the 
name of the issuing agency. Each chapter is further subdivided into 
parts covering specific regulatory areas.
    Each volume of the Code is revised at least once each calendar year 
and issued on a quarterly basis approximately as follows:

Title 1 through Title 16.................................as of January 1
Title 17 through Title 27..................................as of April 1
Title 28 through Title 41...................................as of July 1
Title 42 through Title 50................................as of October 1

    The appropriate revision date is printed on the cover of each 
volume.

LEGAL STATUS

    The contents of the Federal Register are required to be judicially 
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evidence of the text of the original documents (44 U.S.C. 1510).

HOW TO USE THE CODE OF FEDERAL REGULATIONS

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    To determine whether a Code volume has been amended since its 
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Sections Affected (LSA),'' which is issued monthly, and the ``Cumulative 
List of Parts Affected,'' which appears in the Reader Aids section of 
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Register page number of the latest amendment of any given rule.

EFFECTIVE AND EXPIRATION DATES

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Register since the last revision of that volume of the Code. Source 
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inserted following the text.

OMB CONTROL NUMBERS

    The Paperwork Reduction Act of 1980 (Pub. L. 96-511) requires 
Federal agencies to display an OMB control number with their information 
collection request.

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Many agencies have begun publishing numerous OMB control numbers as 
amendments to existing regulations in the CFR. These OMB numbers are 
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OBSOLETE PROVISIONS

    Provisions that become obsolete before the revision date stated on 
the cover of each volume are not carried. Code users may find the text 
of provisions in effect on a given date in the past by using the 
appropriate numerical list of sections affected. For the period before 
January 1, 1986, consult either the List of CFR Sections Affected, 1949-
1963, 1964-1972, or 1973-1985, published in seven separate volumes. For 
the period beginning January 1, 1986, a ``List of CFR Sections 
Affected'' is published at the end of each CFR volume.

CFR INDEXES AND TABULAR GUIDES

    A subject index to the Code of Federal Regulations is contained in a 
separate volume, revised annually as of January 1, entitled CFR Index 
and Finding Aids. This volume contains the Parallel Table of Statutory 
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    An index to the text of ``Title 3--The President'' is carried within 
that volume.
    The Federal Register Index is issued monthly in cumulative form. 
This index is based on a consolidation of the ``Contents'' entries in 
the daily Federal Register.
    A List of CFR Sections Affected (LSA) is published monthly, keyed to 
the revision dates of the 50 CFR titles.

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in the Code of Federal Regulations.

INQUIRIES

    For a legal interpretation or explanation of any regulation in this 
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the top of odd-numbered pages.
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or write to the Director, Office of the Federal Register, National 
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ELECTRONIC SERVICES

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CFR Sections Affected), The United States Government Manual, the Federal 
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gpoaccess@gpo.gov.

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    The Office of the Federal Register also offers a free service on the 
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                              Raymond A. Mosley,
                                    Director,
                          Office of the Federal Register.

January 1, 2000.



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                               THIS TITLE

    Title 10--Energy is composed of four volumes. The parts in these 
volumes are arranged in the following order: parts 1-50, 51-199, 200-499 
and part 500-end. The first and second volumes containing parts 1-199 
are comprised of chapter I-- Nuclear Regulatory Commission. The third 
and fourth volumes containing part 200-end are comprised of chapters II, 
III and X--Department of Energy, and chapter XVII--Defense Nuclear 
Facilities Safety Board. The contents of these volumes represent all 
current regulations codified under this title of the CFR as of January 
1, 2000.

    For this volume, Melanie L. Marcec was Chief Editor. The Code of 
Federal Regulations publication program is under the direction of 
Frances D. McDonald, assisted by Alomha S. Morris.

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                            TITLE 10--ENERGY




                  (This book contains part 500 to end)

  --------------------------------------------------------------------
                                                                    Part

chapter ii--Department of Energy (Continued)................         500

chapter iii--Department of Energy...........................         706

chapter x--Department of Energy (General Provisions)........        1000

chapter xvii--Defense Nuclear Facilities Safety Board.......        1703

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               CHAPTER II--DEPARTMENT OF ENERGY--CONTINUED




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

                      SUBCHAPTER E--ALTERNATE FUELS
Part                                                                Page
500             Definitions.................................           5
501             Administrative procedures and sanctions.....          13
503             New facilities..............................          38
504             Existing powerplants........................          57
508             [Reserved]
516             [Reserved]

     SUBCHAPTER G--NATURAL GAS (ECONOMIC REGULATORY ADMINISTRATION)
580             Curtailment priorities for essential 
                    agricultural uses.......................          66
590             Administrative procedures with respect to 
                    the import and export of natural gas....          67
                  SUBCHAPTER H--ASSISTANCE REGULATIONS
600             Financial assistance rules..................          82
601             New restrictions on lobbying................         157
602             Epidemiology and other health studies 
                    financial assistance program............         168
605             The Office of Energy Research Financial 
                    Assistance Program......................         175
                     SUBCHAPTER I--SALES REGULATION
622             Contractual provisions......................         187
624             Contract clauses............................         187
625             Price competitive sale of Strategic 
                    Petroleum Reserve petroleum.............         188

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                      SUBCHAPTER E--ALTERNATE FUELS


PART 500--DEFINITIONS--Table of Contents




Sec.
500.1  Purpose and scope.
500.2  General definitions.
500.3  Electric regions--electric region groupings for reliability 
          measurements under the Powerplant and Industrial Fuel Use Act 
          of 1978.

    Authority: Department of Energy Organization Act, Pub. L. 95-91, 91 
Stat. 565 (42 U.S.C. Sec. 7101 et seq.); Powerplant and Industrial Fuel 
Use Act of 1978, Pub. L. 95-620, 92 Stat. 3289 (42 U.S.C. 8301 et seq.); 
Energy Security Act, Pub. L.96-294, 94 Stat. 611 (42 U.S.C. 8701 et 
seq.); E.O. 1209, 42 FR 46267, September 15, 1977.

    Source: 46 FR 59884, Dec. 7, 1981, unless otherwise noted.

OMB Control No.: 1903-0075. See 46 FR 63209, Dec. 31, 1981.



Sec. 500.1  Purpose and scope.

    Unless otherwise expressly provided or the context clearly indicates 
otherwise, this section defines the terms used in these regulations. The 
use of the male gender is to include female; the use of singular to 
include plural.



Sec. 500.2  General definitions.

    For purposes of this part and parts 501-507 term(s):
    Act means Powerplant and Industrial Fuel Use Act of 1978, 42 U.S.C. 
8301 et seq.
    Action means a prohibition by rule or order, in accordance with 
sections 301(b) and (c) of FUA; any order granting or denying an 
exemption in accordance with sections 211, 212, 311 and 312 of FUA; a 
modification or rescission of any such order, or rule; an 
interpretation; a notice of violation; a remedial order; an interpretive 
ruling; or a rulemaking undertaken by DOE.
    Affiliate, when used in relation to person, means another person who 
controls, is controlled by, or is under common control, with such 
person.
    Aggrieved, for purposes of administrative proceedings, describes and 
means a person (with an interest sought to be protected under FUA) who 
is adversely affected by an action proposed or undertaken by DOE.
    Air pollution control agency means any of the following:
    (1) A single State agency designated as the official State air 
pollution control agency;
    (2) An agency established by two or more States and having 
substantial powers or duties pertaining to the prevention and control of 
air pollution;
    (3) A city, county, or other local government health authority or, 
in the case of any city, county, or other local unit of government in 
which there is an agency other than the health authority charged with 
responsibility for enforcing ordinances or laws relating to the 
prevention and control of air pollution, such other agency; or
    (4) An agency or two or more municipalities located in the same 
State or in different States and having substantial powers or duties 
pertaining to the prevention and control of air pollution.
    Alternate fuel means electricity or any fuel, other than natural gas 
or petroleum. The term includes, but is not limited to :
    (1) Coal;
    (2) Solar energy;
    (3) Petroleum coke; shale oil; uranium; biomass, tar sands, oil-
impregnated diatomaceous earth; municipal, industrial, or agricultural 
wastes; wood; and renewable and geothermal energy sources (For purposes 
of this paragraph (3), the term industrial does not include 
refineries.);
    (4) Liquid, solid or gaseous waste by-products of refinery or 
industrial operations which are commercially unmarketable, either by 
reason of quality or quantity. (For purposes of this paragraph (4), the 
term waste by-product is defined as an unavoidable by-product of the 
industrial or refinery operation.) A waste by-product of a refinery or 
industrial operation is commercially unmarketable if it meets the 
criteria listed in the definition of ``commercial unmarketability,'' set 
forth below;
    (5) Any fuel derived from an alternate fuel; and
    (6) Waste gases from industrial operations. (For purposes of this 
subsection, the term industrial does not include refineries.)

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    Applicable environmental requirements includes:
    (1) Any standard, limitation, or other requirement established by or 
pursuant to Federal or State law (including any final order of any 
Federal or State Court) applicable to emissions of environmental 
pollutants (including air and water pollutants) or disposal of solid 
waste residues resulting from the use of coal or other alternate fuels, 
natural gas, or petroleum as a primary energy source or from the 
operation of pollution control equipment in connection with such use, 
taking into account any variance of law granted or issued in accordance 
with Federal law or in accordance with State law to the extent 
consistent with Federal law; and
    (2) Any other standard, limitation, or other requirement established 
by, or pursuant to, the Clean Air Act, the Federal Water Pollution 
Control Act, the Solid Waste Disposal Act, the Resource Conservation and 
Recovery Act of 1976, or the National Environmental Policy Act of 1969.
    Base load powerplant means a powerplant, the electrical generation 
of which in kilowatt hours exceeds, for any 12-calendar-month period, 
such powerplant's design capacity multiplied by 3,500 hours.
    Boiler means a closed vessel in which water is heated electrically 
or by the combustion of a fuel to produce steam of one percent or more 
quality.
    Btu means British thermal unit.
    Capability to use alternate fuel, for the purposes of Title II 
prohibitions relating to construction of new powerplants, means the 
powerplant to be constructed:
    (1) Has sufficient inherent design characteristics to permit the 
addition of equipment (including all necessary pollution devices) 
necessary to render such electric powerplant capable of using coal or 
another alternate fuel as its primary energy source; and
    (2) Is not physically, structurally, or technologically precluded 
from using coal or another alternate fuel as its primary energy source.
    Capability to use coal or another alternate fuel shall not be 
interpreted to require any such powerplant to be immediately able to use 
coal or another alternate fuel as its primary energy source on its 
initial day of operation. In addition, the owner or operator of a 
baseload powerplant need not have adequate on-site space for either a 
coal gasifier or any facilities for handling coal or related fuels.
    Certification means a document, signed by an official of the owner 
or operator, notarized, and submitted to OFE, which declares that a new 
powerplant will have the ``capability to use alternate fuel'' (as 
defined herein).
    Certifying powerplant means an existing powerplant whose owner or 
operator seeks to obtain a prohibition order against the use of natural 
gas or petroleum either totally or in a mixture with coal or an 
alternate fuel by filing a certification as to both the technical 
capability and financial feasibility of conversion to coal or another 
alternate fuel pursuant to section 301 of FUA, as amended.
    Clean Air Act means the Clean Air Act, 42 U.S.C. 7401 et seq. 
(1970), as amended by Public Law 93-319, 88 Stat. 246, and Public Law 
95-91, 91 Stat. 685.
    Coal means anthracite, bituminous and sub-bituminous coal, lignite, 
and any fuel derivative thereof.
    Cogeneration facility means an electric powerplant that produces:
    (1) Electric power; and
    (2) Any other form of useful energy (such as steam, gas or heat) 
that is, or will be used, for industrial, commercial, or space heating 
purposes. In addition, for purposes of this definition, electricity 
generated by the cogeneration facility must constitute more than five 
(5) percent and less than ninety (90) percent of the useful energy 
output of the facility.

    Note-- Any cogeneration facility selling or exchanging less than 
fifty percent (50%) of the facility's generated electricity is 
considered an industrial cogenerator and is exempt from the fuel use 
prohibitions of FUA.

    Combined cycle unit means an electric power generating unit that 
consists of a combination of one or more combustion turbine units and 
one or more steam turbine units with a substantial portion of the 
required energy input of the steam turbine unit(s) provided by the 
exhaust gas from the combustion turbine unit(s).
    Substantial amounts of supplemental firing for a steam turbine or 
waste heat

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boiler to improve thermal efficiency will not affect a unit's 
classification as a combined cycle unit.
    Combustion turbine means a unit that is a rotary engine driven by a 
gas under pressure that is created by the combustion of any fuel.
    Commercial unmarketability as used in the definitions of ``alternate 
fuel,'' ``natural gas'' and ``petroleum'' shall be determined as 
follows:
    (1) A waste by-product of industrial or refinery operations is 
commercially unmarketable by reason of:
    (i) Quality, where the cost of processing (limited to upgrading the 
waste by-product to commercial quality), storing, and distributing the 
waste by-product would not be covered by reasonably expected revenues 
from its sale;
    (ii) Quantity, where the cost of aggregating the waste by-product 
into commercial quantities through storing and distributing the waste 
by-product would not be covered by reasonably expected revenues from its 
sale.
    (2) A fuel will not be classified as ``natural gas'' when it is 
commercially unmarketable by reason of:
    (i) Quality, where the cost of producing, upgrading to commercial 
quality, storing, and distributing the fuel would not be covered by 
reasonably expected revenues from its sale; or
    (ii) Quantity, where the quantities of the fuel are so small that 
the revenues to be reasonably expected from its sale would not cover the 
cost of its production, distribution or storage.
    (3) Costs associated with upgrading, storing, distributing, and 
aggregating a by-product or other fuel (to determine if such fuel is 
natural gas) may properly include a reasonable rate of return on any 
capital investment required to overcome the problems posed by the 
quality or quantity of a fuel because the return on investment is a 
normal aspect of any investment decision. A firm may account for this 
reasonable rate of return by using its customary discount rate for an 
investment of similar risk.
    (4) As part of any consideration of the rate of return on 
investment, the cost of replacing the Btu's lost if the by-product or 
other fuel were upgraded and sold instead of used as a fuel may be taken 
into consideration. The actual expense that would result from burning a 
replacement fuel in lieu of the by-product or other fuel in question may 
therefore be considered. The costs associated with using a replacement 
fuel are indirect costs that result from upgrading and selling the fuel, 
instead of burning it. These indirect costs as well as the direct costs 
associated with the upgrading, storing, distributing, and aggregating of 
by-products or other fuel may be considered in any assessment of 
commercial unmarketability.
    Conference means an informal meeting incident to any proceeding, 
between DOE and any interested person.
    Construction means substantial physical activity at the unit site 
and includes more than clearance of a site or installation of foundation 
pilings.
    Costs means total costs, both operating and capital, incurred over 
the estimated remaining useful life of an electric powerplant, 
discounted to the present, pursuant to rules established in parts 503 
and 504 of these regulations.
    DEOA means the Department of Energy Organization Act (Pub. L. 95-91) 
(42 U.S.C. 7101 et seq.) as implemented by Executive Order 12009 (42 FR 
46267, September 15, 1977).
    Design capability defined in section 103(a)(7) of FUA, shall be 
determined as follows:
    (1) Boiler and associated generator turbines. The design fuel heat 
input rate of a steam-electric generating unit (Btu/hr) shall be the 
product of the generator's nameplate rating, measured in kilowatts, and 
3412 (Btu/kWh), divided by the overall boiler-turbine-generator unit 
design efficiency (decimal); or if the generator's nameplate does not 
have a rating measured in kilowatts, the product of the generator's 
kilovolt-amperes nameplate rating, and the power factor nameplate 
rating; and 3412 (Btu/kWh), divided by the boiler turbine-generator 
unit's design efficiency (decimal). (The number 3412 converts kilowatt-
hours (absolute) into Btu's (mean).)
    (2) Combustion turbine and associated generator. The design fuel 
heat input rate of a combustion turbine (Btu/hr) shall be the product of 
its nameplate rating, measured in kilowatts, and 3412

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(Btu/kWh), divided by the combustion turbine-generator unit's design 
efficiency (decimal), adjusted for peaking service at an ambient 
temperature of 59 degrees Fahrenheit (15 degrees Celsius) at the unit's 
elevation. (The number 3412 converts kilowatt-hours (absolute) into 
Btu's (mean).)
    (3) Combined cycle unit. The design fuel heat input rate of a 
combined cycle unit (Btu/hr) shall be the summation of the product of 
its generator's nameplate rating, measured in kilowatts, and 3412 (Btu/
kWh), divided by the overall combustion turbine-generator unit's 
efficiency (decimal), adjusted for peaking service at an ambient 
temperature of 59 degrees Fahrenheit (15 degrees Celsius) and at the 
unit's evaluation, plus the product of the maximum fuel heat input to 
any supplemental heat recovery steam generator/boiler in gallons or 
pounds per hour and the fuel's heat content. If the generator's 
nameplate does not have a rating measured in kilowatts, the product of 
the generator's kilowatt-amperes nameplate rating and power factor 
nameplate rating must be substituted for kilowatts. (The number 3412 
converts kilowatt-hours (absolute) into Btu's (mean).)
    Design capacity of a powerplant pursuant to section 103(a)(18) of 
FUA, is determined according to 18 CFR 287.101.
    DOE or the Department means the United States Department of Energy, 
as defined in sections 201 and 301(a) of the DEOA, including the 
Secretary of Energy or his designee.
    Duly authorized representative means a person who is authorized to 
appear before DOE in connection with a proceeding on behalf of a person 
interested in or aggrieved by that proceeding. Such appearance may 
include the submission of applications, petitions, requests, statements, 
memoranda of law, other documents, or of a personal appearance, oral 
communication, or any other participation in a proceeding.
    Electing powerplant means an existing powerplant, which (1) has been 
issued a proposed prohibition order under former section 301 (b) or (c) 
of FUA prior to August 13, 1981, the date of enactment of the Omnibus 
Budget Reconciliation Act of 1981, Public Law 97-35 (OBRA); and (2) 
files an election to continue the current prohibition order proceeding 
under provisions of the former section 301 of FUA, rather than under 
amended section 301 of FUA.1Under the election provisions, an 
existing powerplant which has an order pending against it under section 
2 of the Energy Supply and Environmental Coordination Act of 1974, as 
amended, 15 U.S.C. 791 et seq. (ESECA), as of August 13, 1981, may also 
elect to continue the current proceeding under section 2 of ESECA. 
Electing powerplants under ESECA are not included in the FUA definition 
of ``electing powerplant''. Relevant regulations governing ESECA 
proceedings are found at 10 CFR part 303 and 305. These elections must 
have been filed with DOE by November 30, 1981 in the case of FUA orders 
and by January 14, 1982 in the case of ESECA orders.
---------------------------------------------------------------------------

    1 The election provisions are published at 46 FR 48118 
(October 1, 1981) and will not be codified in the Code of Federal 
Regulations.
---------------------------------------------------------------------------

    Electric generating unit does not include:
    (1) Any electric generating unit subject to the licensing 
jurisdiction of the Nuclear Regulatory Commission (NRC); and
    (2) Any cogeneration facility from which less than 50 percent of the 
net annual electric power generation is sold or exchanged for resale. 
Excluded from `sold or exchanged for resale' are sales or exchanges to 
or with an electric utility for resale by the utility to the 
cogenerating supplier, and sales or exchanges among owners of the 
cogeneration facility.

    Note: For purposes of subparagraph (1) of this definition, OFE will 
not consider any unit located at a site subject to NRC's licensing 
authority to be jurisdictional for purposes of FUA.

    Electric powerplant means any stationary electric generating unit 
consisting of (a) a boiler, (b) a gas turbine, or (c) a combined cycle 
unit which employs a generator to produce electric power for purposes of 
sale or exchange and has the design capabilityf consuming any fuel (or 
mixture thereof) at a fuel heat input rate of 100 million Btu's per hour 
or greater. In accordance with section 103(a)(7)(C) of FUA, the 
Secretary has determined that it is

[[Page 9]]

appropriate to exclude from this definition any unit which has a design 
capability to consume any fuel (including any mixture thereof) that does 
not equal or exceed 100 million Btu's per hour.
    Electric Region is as defined in Sec. 500.3 of this part.
    Electric utility means any person, including any affiliate, or 
Federal agency, which sells electric power.
    Emission offset means emission reductions as defined by EPA's 
regulations set forth at 40 CFR part 51, appendix S.
    EPA means the United States Environmental Protection Agency.
    ESECA means the Energy Supply and Environmental Coordination Act of 
1974, as amended, 15 U.S.C. 791 et seq.
    Existing powerplant means any powerplant other than a new 
powerplant.
    Federal Water Pollution Control Act means the Federal Water 
Pollution Control Act, 33 U.S.C. 1251 et seq., as amended.
    FERC means the Federal Energy Regulatory Commission.
    Firm means a parent company and the consolidated or unconsolidated 
entities (if any) that it directly or indirectly controls.
    Fluidized bed combustion means combustion of fuel in connection with 
a bed of inert material, such as limestone or dolomite, that is held in 
a fluid-like state by the means of air or other gases being passed 
through such materials.
    FTC means the Federal Trade Commission.
    FUA means the Powerplant and Industrial Fuel Use Act of 1978, 42 
U.S.C. 8301 et seq.
    Fuel Use Act means FUA.
    Fuel use order means a directive issued by OFE pursuant to 
Sec. 501.167 of these regulations.
    Gas turbine means ``combustion turbine''.
    High-priority user, for purposes of subsection 312(j) of FUA, means 
any residential user of natural gas, or any commercial user whose 
consumption of natural gas on peak day is less than 50 MCF.
    Internal combustion engine means a heat engine in which the 
combustion that generates the heat takes place inside the engine proper.
    Interpretation means a written statement issued by the DOE General 
Counsel or his delegate, in response to a written request, that applies 
the regulations, rulings, and other precedents previously issued by the 
DOE to the particular facts of a prospective or completed act or 
transaction.
    Mcf means 1,000 cubic feet of natural gas.
    Mixture, when used in relation to fuels used in a unit, means a 
mixture of petroleum or natural gas and an alternate fuel, or a 
combination of such fuels, used simultaneously or alternately in such 
unit.
    Natural gas means any fuel consisting in whole or in part of natural 
gas, including components of natural gas such as methane and ethane; 
liquid petroleum gas; synthetic gas derived from petroleum or natural 
gas liquids; or any mixture of natural gas and synthetic gas. Natural 
gas does not include:
    (1) Gaseous waste by-products or waste gas specifically designated 
as an alternate fuel in Sec. 500.2 of these regulations;
    (2) Natural gas which is commercially unmarketable, as defined in 
these rules;
    (3) Natural gas produced by the user from a well, the maximum 
efficient production rate of which is less than 250 million Btu's per 
day. For purposes of paragraph (3) of this definition:
    (i) Produced by the user means:
    (A) All gas produced by the well, when such gas is delivered for use 
in the user's facility through a gas delivery, gathering, or 
transportation system which could not deliver such gas to any other 
user; or
    (B) Only that amount which represents the user's net working 
(mineral) interest in the gas produced from such well, where such gas is 
delivered for use in the user's facility through a gas delivery, 
gathering, or transportation system which could deliver such gas to any 
other user.
    (ii) Maximum efficient production rate (MEPR) means that rate at 
which production of natural gas may be sustained without damage to the 
reservoir or the rate which may be sustained without damage to the 
ultimate recovery of oil or gas through the well.

[[Page 10]]

    (4) Occluded methane in coal seams within the meaning of section 
107(c)(3) of the Natural Gas Policy Act of 1978 (NGPA);
    (5) The following gas from wells spudded prior to January 1, 1990:
    (i) Gas produced from geopressurized brine, within the meaning of 
section 107(c)(2) of the NGPA;
    (ii) Gas produced from Devonian shale, within the meaning of section 
107(c)(4) of the NGPA;
    (iii) Gas produced from tight sands, as designated by the FERC in 
accordance with section 107(c)(5) of the NGPA; and
    (iv) Other gases designated by FERC as ``high-cost natural gas'' in 
accordance with section 107(c)(5) of the NGPA, except as specifically 
designated as ``natural gas'' by OFE;
    (6)(i) Synthetic gas derived from coal or other alternate fuel, the 
heat content of which is less than 600 Btu's per cubic foot at 14.73 
pounds per square inch (absolute) and 60 deg. F; and
    (ii) Commingled natural gas and synthetic gas derived from coal 
consumed as part of the necessary process of a major fuel burning 
installation used in the iron and steel industry, so long as the average 
annual Btu heat content of the commingled stream as consumed within a 
major fuel burning installation does not exceed 600 Btu's per cubic foot 
at 14.73 pounds per square inch (absolute) and 60 deg. F;
    (7) Mixtures of natural gas and synthetic gas derived from alternate 
fuels for which the person proposing to use the gas certifies to OFE 
that:
    (i) He owns, or is entitled to receive at the point of manufacture, 
synthetic gas derived from alternate fuels;
    (ii) He delivers, or arranges for the delivery of such synthetic gas 
to a pipeline which by transport or displacement is capable of 
delivering such synthetic gas, mixed with natural gas, to facilities 
owned by the user;
    (iii) The total annual Btu content of the synthetic gas delivered to 
a pipeline is equal to or greater than the total annual Btu content of 
the natural gas delivered to the facilities owned by the user, plus the 
approximate total annual Btu content of any natural gas consumed or lost 
in transportation; and
    (iv) All necessary permits, licenses, or approvals from appropriate 
Federal, State, and local agencies (including Indian tribes) have been 
obtained for construction and operation of the facilities for the 
manufacture of the synthetic gas involved, except that for purposes of 
the prohibition under section 201(2) of FUA against powerplants being 
constructed without the capability of using coal or another alternate 
fuel, only permits, licenses, and approvals for the construction of such 
synthetic gas facilities shall be required under this subparagraph, to 
be certified and documented; and
    (8) A mixture of natural gas and an alternate fuel when such mixture 
is deliberately created for purposes of (i) Complying with a prohibition 
order issued pursuant to section 301(c) of the Act, or (ii) Qualifying 
for a fuel mixtures exemption under the Act, provided such exemption is 
granted.
    NEPA means the National Environmental Policy Act of 1969, as 
amended, 42 U.S.C. 4321 et seq.
    New electric powerplant means any electric powerplant: (1) That was 
not classified as existing under part 515 of this subchapter; (2) That 
was reconstructed, as defined in these rules under the definition of 
``reconstruction''; or (3) For which construction was begun after 
November 9, 1978.
    NGPA means the Natural Gas Policy Act of 1978, 15 U.S.C. 3301 et 
seq.
    Nonboiler means any powerplant which is not a boiler and consists of 
either a combustion turbine unit or combined cycle unit.
    Notice of violation means a written statement issued to a person by 
DOE that states one or more alleged violations of the provisions of 
these regulations, any order issued pursuant thereto, or the Act.
    OBRA means the Omnibus Budget Reconciliation Act of 1981, Public Law 
97-35.
    OFE means the Office of Fossil Energy of OFE.
    Offset means ``emission offset''.
    Order means a final disposition, other than the issuance of a rule, 
issued by DOE pursuant to these regulations or the Act.
    Person means any:

[[Page 11]]

    (1) Individual, corporation, company, partnership, association, 
firm, institution, society, trust, joint venture, or joint stock 
company;
    (2) Any State; or
    (3) Any Federal, State, or local agency or instrumentality 
(including any municipality) thereof.
    Petroleum means crude oil and products derived from crude oil, other 
than:
    (1) Petroleum products specifically designated as alternate fuels 
pursuant to these regulations;
    (2) Synthetic gas derived from crude oil;
    (3) Liquid petroleum gas;
    (4) Petroleum coke or waste gases from industrial operations; and
    (5) A liquid, solid, or gaseous waste by-product of refinery 
operations which is commercially unmarketable under the definition of 
``commercial unmarketability'' in these rules.

    Note: For the purposes of this subparagraph, waste by-proucts do not 
include components (such as butane and propane) that can be extracted 
from the waste by-product by reasonable further processing of the waste 
by-product at the refinery, nor do they include final products that use 
the waste by-product as a blend stock at the refinery.

    Petition means a formal request for any action including an 
exemption submitted to DOE under these regulations.
    Powerplant means ``electric powerplant.''
    Product or process requirements means that product or process for 
which the use of an alternate fuel is not technically feasible due to 
the necessity to maintain satisfactory control of product quality and 
for which the substitution of steam is not technically feasible due to 
process requirements.
    Primary energy source means the fuel or fuels used by any existing 
or new electric powerplant except:
    (1) Minimum amounts of fuel required for unit ignition, startup, 
testing, flame stabilization, and control uses. OFE has determined that, 
unless need for a greater amount is demonstrated, twenty-five (25) 
percent of the total annual Btu heat input of a unit shall be 
automatically excluded under this paragraph.
    (2) Minimum amounts of fuel required to alleviate or prevent:
    (i) Unanticipated equipment outages as defined in Sec. 501.191 of 
these regulations; and
    (ii) Emergencies directly affecting the public health, safety, or 
welfare that would result from electric power outages as defined in 
Sec. 501.191 of these regulations.

    Note: (1) Any fuel excluded under the provisions of paragraph (1) of 
this definition is in addition to any fuel authorized to be used in any 
order granting a fuel mixtures exemption under parts 503 and 504 of 
these rules. The exclusion of fuel under paragraph (1), together with 
the authority for such additive treatment, shall apply to any 
jurisdictional facility, regardless of whether or not it had received an 
order granting an exemption as of the date these rules are promulgated.

    (2) If an auxiliary unit to an electric powerplant consumes fuel 
only for the auxiliary functions of unit ignition, startup, testing, 
flame stabilization, and other control uses, its use of minimum amounts 
of natural gas or petroleum is not prohibited by FUA. The measurement of 
such minimum amounts of fuel is discussed in Associated Electric 
Cooperative, et al., Interpretation 1980-42 [45 FR 82572, Dec. 15, 
1980].

    Prohibition order means:
    (1) An order issued pursuant to section 301(b) of the Act that 
prohibits a powerplant from burning natural gas or petroleum as its 
primary energy source; or
    (2) An order issued pursuant to section 301(c) of the Act that 
prohibits excessive use of natural gas or petroleum in mixtures burned 
by a powerplant as its primary energy source.
    Rated capacity for the purpose of determining reduction in the rated 
capacity of an existing powerplant, means design capacity, or, at the 
election of the facility owner or operator, the actual maximum sustained 
energy output per unit of time that could be produced, measured in power 
output, expressed in kilowatts, per unit of time.
    Reconstruction means the following:
    (1) Except as provided in paragraph (2) of this definition, 
reconstruction shall be found to have taken place whenever the capital 
expenditures for refurbishment or modification of an electric powerplant 
on a cumulative basis for the current calendar year and

[[Page 12]]

preceding calendar year, are equal to or greater than fifty (50) percent 
of the capital costs of an equivalent replacement unit of the same 
capacity, capable of burning the same fuels.
    (2) Notwithstanding paragraph (1) of this definition, reconstruction 
shall not be found to have taken place whenever:
    (i) The capital expenditures for refurbishment or modification of an 
electric powerplant, on a cumulative basis for the current calendar year 
and preceding calendar year, are not greater than eighty (80) percent of 
the capital costs of an equivalent replacement unit of the same 
capacity, capable of burning the same fuels and the unit, as refurbished 
or modified, will not have a greater fuel consumption capability than 
the unit it replaces;
    (ii) The unit being refurbished or modified was destroyed, in whole 
or substantial part, in a plant accident and the unit, as refurbished or 
modified, will not have a greater fuel consumption capability than the 
unit it replaces; or
    (iii) Refurbishment or modification of the unit is undertaken 
primarily for the purpose of increasing fuel burning efficiency of the 
unit, and will not result in:
    (A) Increased remaining useful plant life, or
    (B) Increased total annual fuel consumption.
    Resource Conservation and Recovery Act of 1976 means the Resource 
Conservation and Recovery Act of 1976, 42 U.S.C. 6901 et seq.
    SIP means State Implementation Plan pursuant to section 10 of the 
Clean Air Act.
    Site limitation means a specific physical limitation associated with 
a particular site that relates to the use of an alternate fuel as a 
primary energy source for the powerplant such as:
    (1) Inaccessibility to alternate fuels;
    (2) Lack of transportation facilities for alternate fuels;
    (3) Lack of adequate land for facilities for the handling, use and 
storage of alternate fuels;
    (4) Lack of adequate land or facilities for the control or disposal 
of wastes from such powerplant, including lack of land for pollution 
control equipment or devices necessary to assure compliance with 
applicable environmental requirements; and
    (5) Lack of an adequate and reliable supply of water, including 
water for use in compliance with applicable environmental requirements.
    Solid Waste Disposal Act means the Solid Waste Disposal Act, 42 
U.S.C. 6901 et seq., as amended.
    State regulatory authority means any State agency that acts as 
ratemaking or power supply authority with respect to the sale of 
electricity by any State regulated electric utility.
    Synthetic fuel means any fuel derived from an alternate fuel and 
does not include any fuels derived from petroleum or natural gas.
    Wetlands areas means, for purposes of section 103(a)(12) of the Act, 
those geographical areas designated as wetlands areas by State or local 
environmental regulatory authorities, or in the absence of any such 
geographic designation, those areas that are inundated by surface or 
ground water with frequency sufficient to support, and under normal 
circumstances does or would support, a prevalence of vegetation or 
aquatic life that requires saturated, seasonably saturated, or tidally 
saturated soil conditions for growth or reproduction.

(Department of Energy Organization Act, Pub. L. 95-91, 42 U.S.C. 7101 et 
seq.; Energy Supply and Environmental Coordination Act of 1974, Pub. L. 
93-319, as amended by Pub. L. 94-163, Pub. L. 95-70, and Pub. L. 95-620, 
(15 U.S.C. 719 et seq.); Powerplant and Industrial Fuel Use Act of 1978, 
Pub. L. 95-620, as amended by Pub. L. 97-35 (42 U.S.C. 8301 et seq.); 
Omnibus Budget Reconciliation Act of 1981, Pub. L. 97-35)

[46 FR 59884, Dec. 7, 1981, as amended at 47 FR 15313, 15314, Apr. 9, 
1982; 47 FR 17041, Apr. 21, 1982; 47 FR 29210, July 6, 1982; 47 FR 
34972, Aug. 12, 1982; 54 FR 52889, Dec. 22, 1989]



Sec. 500.3  Electric regions--electric region groupings for reliability measurements under the Powerplant and Industrial Fuel Use Act of 1978.

    (a) The following is a list of electric regions for use with regard 
to the Act. The regions are identified by FERC Power Supply Areas 
(PSA's) as authorized by section 202(a) of the Federal Power Act except 
where noted. They will be reviewed annually by ERA.

[[Page 13]]

Each grouping meets one or more of the following criteria:
    (1) Existing centrally dispatched pools and hourly power brokers;
    (2) Systems with joint planning and construction agreements;
    (3) Systems with coordination agreements in the areas of:
    (i) Generation reserve and system reliability criteria;
    (ii) Capacity and energy exchange policies;
    (iii) Maintenance scheduling; and
    (iv) Emergency procedures for dealing with capacity or fuel 
shortages; or
    (4) Systems within the same National Electric Reliability Council 
(NERC) region with historical coordination policies.
    (b) The PSA's referred to in the definition of electric regions in 
paragraph (a) of this section were first defined by the Federal Power 
Commission in 1936. The most recent reference to them is given in the 
1970 National Power Survey, Vol. 1, Pg. 1-3-16. In cases where a 
petitioner finds an ambiguity in a regional assignment, he shall consult 
with DOE for an official determination.

    Electric Region Groupings and FERC PSA's:
    1. Allegheny Power System (APS)--7, except Duquesne Light Company.
    2. American Electric Power System (AEP)--entire AEP System.
    3. New England Planning Pool (NEPOOL)--1, 2.
    4. New York Planning Pool (NYPP)--3, 4.
    5. Pennsylvania--New Jersey--Maryland interconnection (PJM)--5, 6.
    6. Commonwealth Edison Company--14.
    7. Florida Coordination Group (FCG)--24.
    8. Middle South Utilities--25.
    9. Southern Company--22, 23.
    10. Gulf States Group--35.
    11. Tennessee Valley Authority (TVA)--20.
    12. Virginia--Carolina Group (VACAR)--18, 21.
    13. Central Area Power Coordination Group (CAPCO)--Cleveland 
Electric Illuminating Company, Toledo Edison Company, Ohio Edison 
Company, Duquesne Light Company.
    14. Cincinnati, Columbus, Dayton Group (CCD)--Cincinnati Gas and 
Electric Company, Columbus and Southern Ohio Electric Company, Dayton 
Power and Light Company.
    15. Kentucky Group--19.
    16. Indiana Group--Indiana Utilities except AEP.
    17. Illinois--Missouri Group (ILLMO)--15, 40.
    18. Michigan Electric Coordinated Systems (MECS)--11.
    19. Wisconsin--Upper Michigan Group (WUMS)--13.
    20. Mid-Continent Area Power Pool (MAAP)--16, 17, 26, 27, 28.
    21. Missouri--Kansas Group (MOKAN)--24, 29.
    22. Oklahoma Group--33, 36.
    23. Texas Interconnected Systems (TIS)--37, 38.
    24. Rocky Mountain Power Pool (RMPP)--31, 32.
    25. Northwest Power Pool (NWPP)--30, 42, 43, 44, 45.
    26. Arizona--New Mexico Group--39, 48 within Arizona. in Nevada and 
California.
    27. Southern California--Nevada--47, 48.
    28. Northern California--Nevada--46.
    29. Alaska (non-interconnected systems to be considered 
separately)--49.
    30. Idaho--Utah Group--41.



PART 501--ADMINISTRATIVE PROCEDURES AND SANCTIONS--Table of Contents




                      Subpart A--General Provisions

Sec.
501.1  Purpose and scope.
501.2  Prepetition conference.
501.3  Petitions.
501.4-501.5  [Reserved]
501.6  Service.
501.7  General filing requirements.
501.8  [Reserved]
501.9  Effective date of orders or rules.
501.10  Order of precedence.
501.11  Address for filing documents.
501.12  Public files.
501.13  Appeal.
501.14  Notice to Environmental Protection Agency.

Subpart B  [Reserved]

  Subpart C--Written Comments, Public Hearings and Conferences During 
                       Administrative Proceedings

501.30  Purpose and scope.
501.31  Written comments.
501.32  Conferences (other than prepetition conferences).
501.33  Request for a public hearing.
501.34  Public hearing.
501.35  Public file.

    Subpart D--Subpoenas, Special Report Orders, Oaths and Witnesses

501.40  Issuance.

                 Subpart E--Prohibition Rules and Orders

501.50  Policy.

[[Page 14]]

501.51  Prohibitions by order--electing powerplants.
501.52  Prohibitions by order--certifying powerplants.
501.53-501.56  [Reserved]

                Subpart F--Exemptions and Certifications

501.60  Purpose and scope.
501.61  Certification contents.
501.62  Petition contents.
501.63  Notice of the commencement of an administrative proceeding on an 
          exemption petition.
501.64  Publication of notice of availability of tentative staff 
          analysis.
501.65  Publication of notice of availability of draft EIS.
501.66  OFE evaluation of the record, decision and order.
501.67  Petition redesignations.
501.68  Decision and order.
501.69  Judicial review.

  Subpart G--Requests for Modification or Rescission of a Rule or Order

501.100  Purpose and scope.
501.101  Proceedings to modify or rescind a rule or order.
501.102  OFE evaluation of the record, decision and order for 
          modification or rescission of a rule or order.
501.103  OFE decision.

                      Subpart H--Requests for Stay

501.120  Purpose and scope.
501.121  Filing and notice of petitions for stays.
501.122  Contents.
501.123  Evaluation of the record.
501.124  Decision and order.

                 Subpart I--Requests for Interpretation

501.130  Purpose and scope.
501.131  Filing a request for interpretation.
501.132  Contents of a request for interpretation.
501.133  DOE evaluation.
501.134  Issuance and effect of interpretations.

                           Subpart J--Rulings

501.140  Purpose and scope.
501.141  Criteria for issuance.
501.142  Modification or rescission.
501.143  Comments.

                         Subpart K--Enforcement

501.160  Purpose and scope.
501.161  Filing a complaint.
501.162  Contents of a complaint.
501.163  OFE evaluation.
501.164  Decision to initiate enforcement proceedings.
501.165  Commencement of enforcement proceedings.
501.166  Hearings and conferences.
501.167  Fuel use order.

  Subpart L--Investigations, Violations, Sanctions and Judicial Actions

501.180  Investigations.
501.181  Sanctions.
501.182  Injunctions.
501.183  Citizen suits.

      Subpart M--Use of Natural Gas or Petroleum for Emergency and 
                 Unanticipated Equipment Outage Purposes

501.190  Purpose and scope.
501.191  Use of natural gas or petroleum for certain unanticipated 
          equipment outages and emergencies defined in section 
          103(a)(15)(B) of the act.
501.192  [Reserved]

    Authority: 42 U.S.C. 7101 et seq.; 42 U.S.C. 8301 et seq.; 42 U.S.C. 
8701 et seq.; E.O. 12009, 42 FR 46267; 28 U.S.C. 2461 note.

    Source: 46 FR 59889, Dec. 7, 1981, unless otherwise noted.

OMB Control No.: 1903-0075. See 46 FR 63209, Dec. 31, 1981.



                      Subpart A--General Provisions



Sec. 501.1  Purpose and scope.

    Part 501 establishes the procedures to be used in proceedings before 
DOE under parts 500-508 of this chapter except as otherwise provided.



Sec. 501.2  Prepetition conference.

    (a) Owners and operators of powerplants may request a prepetition 
conference with OFE for the purpose of discussing the applicability of 
10 CFR parts 503 and 504 to their situations and the scope of any 
exemption or other petition that OFE would accept as adequate for filing 
purposes.
    (b) The owner or operator who requests a prepetition conference may 
personally represent himself or may designate a representative to appear 
on his behalf. A prepetition conference or a request for a prepetition 
conference does not commence a proceeding before OFE.
    (c) If OFE agrees to waive any filing requirements under 
Sec. 501.3(d), a memorandum of record stating this fact will

[[Page 15]]

be furnished to the potential petitioner within thirty (30) days after 
the conference. Copies of all applicable memoranda of record must be 
attached to any subsequently-filed petition.
    (d) A record of all prepetition conferences will be included in the 
public file. OFE may provide for the taking of a formal transcript of 
the conference and the transcript will be included in the public file.

[46 FR 59889, Dec. 7, 1981, as amended at 54 FR 52891, Dec. 22, 1989]



Sec. 501.3  Petitions.

    (a) Filing of petitions. Petitions for exemptions are to be filed 
with OFE at the address given in Sec. 501.11.
    (b) Acceptance of petition. (1) Upon acceptance (as distinguished 
from filing) of the petition, OFE shall publish in the Federal Register 
a Notice of Acceptance of Petition or, in the case of an exemption by 
certification, a Notice of Acceptance and Availability of Certification, 
signifying that an exemption proceeding has commenced.
    (2) OFE will notify each petitioner in writing within thirty (30) 
days of receipt of the petition that it has been accepted or rejected 
and, if rejected, the reasons therefor.
    (3) A petition, including supporting documents, will be accepted if 
the information contained appears to be sufficient to support an OFE 
determination. Additional information may be requested during the course 
of the proceeding, and failure to respond to such a request may 
ultimately result in denial of the requested exemption.
    (4) Acceptance of petition does not constitute a determination that 
the requested exemption will be granted.
    (c) Rejection of petition. (1) OFE will reject a petition if it does 
not meet the information of certification requirements established for 
the relevant exemptions under parts 503 and 504 of this chapter. A 
written explanation of the reasons for rejection will be furnished with 
notification of the rejection.
    (2) A timely-filed petition rejected as inadequate will not be 
rendered untimely if resubmitted in amended form within ninety (90) days 
of the date of rejection.
    (3) OFE will, within thirty (30) days of receipt of a petition that 
is found to be incomplete due to minor deficiencies, notify the 
petitioner of the deficiencies and allow ninety (90) days from the date 
of notification to cure the specified deficiencies. The failure to cure 
the deficiencies during this time may result in denial of the requested 
exemption.
    (d) Waiver of filing requirements. Upon its own motion or at the 
request of a petitioner, OFE may waive some or all of the regulatory 
requirements if the purposes of FUA would be best achieved by doing so.



Secs. 501.4-501.5  [Reserved]



Sec. 501.6  Service.

    (a) DOE will serve all orders, notices interpretations or other 
documents that it is required to serve, personally or by mail, unless 
otherwise provided in these regulations.
    (b) DOE will consider service upon a petitioner's duly authorized 
representative to be service upon the petitioner.
    (c) Service by mail is effective upon mailing.

[54 FR 52891, Dec. 22, 1989]



Sec. 501.7  General filing requirements.

    Except as indicated otherwise, all documents required or permitted 
to be filed with OFE or DOE in connection with a proceeding under parts 
503 and 504 shall be filed in accordance with the following provisions:
    (a) Filing of documents. (1) Documents including, but not limited 
to, applications, requests, complaints, petitions (including petitions 
for exemption), and other documents submitted in connection therewith, 
filed with OFE are considered to be filed upon receipt.
    (2) Notwithstanding the provisions of paragraph (a)(1) of this 
section, an application for modification or rescission in accordance 
with subpart G of this part, a reply to a notice of violation, a 
response to a denial of a claim of confidentiality, or a comment 
submitted in connection with any proceeding transmitted by registered or 
certified mail and addressed to the appropriate office is considered to 
be filed upon mailing.
    (3) Timeliness. Documents are to be filed with the appropriate DOE 
or OFE office listed in Sec. 501.11. Documents that

[[Page 16]]

are to be considered filed upon receipt under paragraph (a)(1) of this 
section and that are received after regular business hours are deemed 
filed on the next regular business day. Regular business hours are 8 
a.m. to 4:30 p.m.
    (4) Computation of time. In computing any period of time prescribed 
or allowed by FUA, these regulations or by an order, the day of the act, 
event, or default from which the designated period of time begins to run 
is not to be included. The last day of the period so computed is to be 
included unless it is a Saturday, Sunday, or Federal legal holiday in 
which event the period runs until the end of the next day that is 
neither a Saturday, Sunday, nor a Federal legal holiday.
    (5) Additional time after service by mail. Whenever a person is 
required to perform an act, to cease and desist therefrom, or to 
initiate a proceeding under this part within a prescribed period of time 
and the order, notice, interpretation or other document is served by 
mail, three (3) days shall be added to the prescribed period.
    (6) Extension of time. When a document is required to be filed 
within a prescribed time, an extension of time to file may be granted 
upon good cause shown.
    (7) Signing. All applications, petitions, requests, comments, and 
other documents that are required to be signed, shall be signed by the 
person filing the document or a duly authorized representative. Any 
application, petition, request, complaint, or other document filed by a 
duly authorized representative shall contain a statement by such person 
certifying that he is a duly authorized representative, unless an OFE 
form otherwise requires. (A false certification is unlawful under the 
provisions of 18 U.S.C. 1001 (1970).)
    (8) Labeling. An application, petition, or other request for action 
by DOE or OFE should be clearly labeled according to the nature of the 
action involved, e.g., ``Petition for Temporary Exemption;'' ``Petition 
for Extension (or Renewal) of Temporary Exemption,'' both on the 
document and on the outside of the envelope in which the document is 
transmitted.
    (9) Obligation to supply information. A person who files an 
application, petition, complaint, or other request for action is under a 
continuing obligation during the proceeding to provide DOE or OFE with 
any new or newly discovered information that is relevant to that 
proceeding. Such information includes, but is not limited to, 
information regarding any other application, petition, complaint, or 
request for action that is subsequently filed by that person with any 
DOE office or OFE office.
    (10) The same or related matters. In filing a petition or other 
document requesting OFE action, the person must state whether, to the 
best of his knowledge, the same or a related issue, act or transaction 
has been or presently is being considered or investigated by a DOE 
office, other Federal agency, department or instrumentality, or a State 
or municipal agency.
    (11) Request for confidential treatment. (i) If any person filing a 
document with DOE or OFE claims that some or all of the information 
contained in the document is exempt from the mandatory public disclosure 
requirements of the Freedom of Information Act (5 U.S.C. 552); is 
information referred to in 18 U.S.C. 1905; or is otherwise exempt by law 
from public disclosure, and if such person requests DOE or OFE not to 
disclose such information, such person shall make a filing in accordance 
with paragraph (b)(2) of this section. The person shall indicate in the 
original document that it is confidential or contains confidential 
information and may file a statement specifying the justification for 
non-disclosure of the information for which confidential treatment is 
claimed. If the person states that the information comes within the 
exception in 5 U.S.C. 552(b)(4) for trade secrets and commercial or 
financial information, such person shall include a statement specifying 
why such information is privileged or confidential. If a document is not 
so filed, OFE may assume that there is no objection to public disclosure 
of the document in its entirety, unless the person subsequently files a 
claim of confidentiality prior to public disclosure of the document.
    (ii) DOE or OFE retains the right to make its own determination with 
regard to any claim of confidentiality.

[[Page 17]]

Notice of the decision by DOE or OFE to deny such claim, in whole or in 
part, and an opportunity to respond or take other appropriate action to 
avoid release shall be given to a person claiming confidentiality of 
information no less than seven (7) days prior to its public disclosure.
    (iii) The above provisions in paragraphs (a)(11) (i) and (ii) of 
this section do not apply to information submitted on OFE forms that 
contain their own instructions concerning the treatment of confidential 
information.
    (12) Separate applications, petitions or requests. Each application, 
petition, or request for DOE or OFE action shall be submitted as a 
separate document, even if the applications, petitions, or requests deal 
with the same or a related issue, act, or transaction, or are submitted 
in connection with the same proceeding.
    (b) Number of documents to be filed. (1) A petitioner must file an 
executed original and fourteen (14) copies of all exemption requests 
submitted to DOE. For certification requests, an original and three (3) 
copies shall be submitted.
    (2) Where the petitioner requests confidential treatment of some or 
all of the information submitted, an original and eleven (11) copies of 
the confidential document and three (3) copies of the document with 
confidential material deleted must be filed.

[46 FR 59889, Dec. 7, 1981, as amended at 47 FR 15314, Apr. 9, 1982; 54 
FR 52891, Dec. 22, 1989]



Sec. 501.8  [Reserved]



Sec. 501.9  Effective date of orders or rules.

    (a) When OFE issues a rule or order imposing a prohibition or 
granting an exemption (or permit) under FUA, the rule or order will be 
effective sixty (60) days after publication in the Federal Register, 
unless it is stayed, modified, suspended or rescinded.
    (b) If the appropriate State regulatory authority has not approved a 
powerplant for which a petition has been filed, such exemption, to the 
extent it applies to the prohibition under section 201 of FUA against 
construction without the capability of using coal or another alternate 
fuel, shall not take effect until all approvals required by such State 
regulatory authority which relate to construction have been obtained.

[54 FR 52891, Dec. 22, 1989]



Sec. 501.10  Order of precedence.

    If there is any conflict or inconsistency between the provisions of 
this part and any other provisions or parts of this chapter, except for 
general procedures which are unique to part 515 of this chapter, the 
provisions of this part will control respect to procedure.

[54 FR 52891, Dec. 22, 1989]



Sec. 501.11  Address for filing documents.

    Send all petitions, self-certifications and written communications 
to the following address: Office of Fossil Energy, Office of Fuels 
Programs, Coal and Electricity Division, Mail Code FE-52, 1000 
Independence Avenue, SW., Washington, DC 20585.

[54 FR 52891, Dec. 22, 1989]



Sec. 501.12  Public files.

    DOE will make available at the Freedom of Information reading room, 
room 1E190, 1000 Independence Avenue SW., Washington, DC for public 
inspection and copying any information required by statute and any 
information that OFE determines should be made available to the public.

[54 FR 52891, Dec. 22, 1989]



Sec. 501.13  Appeal.

    There is no administrative appeal of any final administrative action 
to which this part applies.



Sec. 501.14  Notice to Environmental Protection Agency.

    A copy of any proposed rule or order that imposes a prohibition, 
order that imposes a prohibition, or a petition for an exemption or 
permit, shall be transmitted for comments, if any, to the Administrator 
and the appropriate Regional Administrator of the Environmental 
Protection Agency (EPA). The Administrator of EPA shall be given the 
same opportunity to comment and question as is given other interested 
persons.

[[Page 18]]


[54 FR 52891, Dec. 22, 1989]  Subpart B  [Reserved]



  Subpart C--Written Comments, Public Hearings and Conferences During 
                       Administrative Proceedings



Sec. 501.30  Purpose and scope.

    This subpart establishes the procedures for requests for and the 
conduct of public hearings; for submission of written comments; and for 
requests for and conduct of conferences pursuant to an administrative 
proceeding before OFE. Hearings shall be convened at the request of any 
interested person, in accordance with section 701(d) of FUA, and shall 
be held at a time and place to be decided by the Presiding Officer.



Sec. 501.31  Written comments.

    (a) New facilities. Except as may be provided elsewhere in these 
regulations, OFE shall provide a period of at least forty-five (45) 
days, commencing with publication of the Notice of Acceptance of 
Petition, of in the case of certification exemptions, Notice of 
Acceptance and availability of Certification, in the Federal Register in 
accordance with Sec. 501.63(a), for submission of written comments 
concerning a petition for an exemption. Written comments shall be made 
in accordance with Sec. 501.7.
    (b) Existing facilities. Except as may be provided elsewhere in 
these regulations, OFE shall provide a period of at least 45 days for 
submission of written comments concerning a proposed prohibition rule or 
order or a petition for a permit. In the case of a proposed prohibition 
rule or order issued to an existing electing powerplant, OFE shall also 
provide for a period of at least 45 days for submission of written 
comments concerning a Tentative Staff Analysis. This period shall 
commence on the day after publication of the Notice of Availability of 
the Tentative Staff Analysis in the Federal Register. In the case of 
prohibition order proceedings for certifying powerplants under section 
301 of FUA, as amended, OFE shall provide a period of at least 45 days, 
beginning the day after the Notice of Acceptance of certification is 
published, for submission of written comments concerning the 
certification and OFE's proposed prohibition order, and requests for 
public hearings. Prohibition order proceedings under section 301, as 
amended by OBRA, will have only one period of 45 days, since no 
Tentative Staff Analysis will be prepared. The comment period may be 
extended by OFE in accordance with Sec. 501.7. See Sec. 501.52(b) of 
this part for further information with respect to the comment period. 
Written comments shall be filed in accordance with Sec. 501.7.

(Department of Energy Organization Act, Pub. L. 95-91, 91 Stat. 565 (42 
U.S.C. 7101 et seq.); Powerplant and Industrial Fuel Use Act of 1978, 
Pub. L. 95-620, 92 Stat. 3289 (42 U.S.C. 8301 et seq.); Omnibus Budget 
Reconciliation Act of 1981 (Pub. L. 97-35); E.O. 12009, 42 FR 46267, 
Sept. 15, 1977)

[46 FR 59889, Dec. 7, 1981, as amended at 47 FR 50848, Nov. 10, 1982; 54 
FR 52892, Dec. 22, 1989]



Sec. 501.32  Conferences (other than prepetition conferences).

    (a) At any time following commencement of a proceeding before OFE, 
an interested person may request a conference with the staff of OFE to 
discuss a petition, permit or any other issue pending before OFE. The 
request for a conference should generally be in writing and should 
indicate the subjects to be covered and should describe the requester's 
interest in the proceeding. Conferences held after the commencement of 
an administrative proceeding before OFE shall be convened at the 
discretion of OFE or the Presiding Officer.
    (b) When OFE convenes a conference in accordance with this section, 
any person invited may present views as to the issue or issues involved. 
Documentary evidence may be submitted at the conference and such 
evidence, to the extent that it is not deemed to be confidential, will 
be included in the administrative record. OFE will not normally have a 
transcript of the conference prepared but may do so at its discretion.
    (c) Because a conference is solely for the exchange of views 
incident to a proceeding, there will be no formal report or findings by 
OFE unless OFE in its discretion determines that the preparation of a 
report or findings would be

[[Page 19]]

advisable. OFE will, however, place in the public file a record of any 
conference.



Sec. 501.33  Request for a public hearing.

    (a) New facilities. In the case of a petition for an exemption under 
title II of FUA, any interested person may submit a written request that 
OFE convene a public hearing in accordance with section 701 of FUA no 
later than forty-five (45) days after publication of either the Notice 
of Acceptance of a petition, or in the case of a certification 
exemption, the publication of the Notice of Acceptance of Certification. 
This time period may be extended at the discretion of OFE.
    (b) Existing powerplants. In the case of a petition for an exemption 
from a prohibition imposed by a final rule or order issued by OFE to an 
electing powerplant under former sections of title III of FUA or a 
petition for a permit under Sec. 504.1, any interested person may submit 
a written request that OFE convene a public hearing in accordance with 
section 701 of FUA within 45 days after the notice of the filing of a 
petition is published in the Federal Register. In the case of a proposed 
prohibition rule or order issued to an electing powerplant under former 
section 301, the 45 day period in which to request a public hearing 
shall commence upon the publication of the Notice of Availability of the 
Tentative Staff Analysis. In the case of a proposed prohibition order to 
be issued to certifying powerplants under section 301 of FUA, as 
amended, the 45 day period in which to request a public hearing 
commences upon publication of the Notice of Acceptance of Certification. 
This time limit may be extended at the discretion of OFE in accordance 
with Sec. 501.7.
    (c) Contents of request. A request for a public hearing must be in 
writing and must include a description of the requesting party's 
interest in the proceeding and a statement of the issues involved. The 
request should, to the extent possible, identify any witnesses that are 
to be called, summarize the anticipated testimony to be given at the 
hearing, and outline questions that are to be posed.

(Department of Energy Organization Act, Pub. L. 95-91, 91 Stat. 565 (42 
U.S.C. 7101 et seq.); Powerplant and Industrial Fuel Use Act of 1978, 
Pub. L. 95-620, 92 Stat. 3269 (42 U.S.C. 8301 et seq.); Omnibus Budget 
Reconciliation Act of 1981 (Pub. L. 97-35); E.O. 12009, 42 FR 46267, 
Sept. 15, 1977)

[46 FR 59889, Dec. 7, 1981, as amended at 47 FR 50848, Nov. 10, 1982; 54 
FR 52892, Dec. 22, 1989]



Sec. 501.34  Public hearing.

    (a) A public hearing under this subsection is for the purpose of 
insuring that all issues are fully and properly developed, but is not a 
formal adjudicatory hearing subject to the provisions of 5 U.S.C. 554 
and 556.
    (b) Opportunity to be heard at a public hearing. (1) Any interested 
person, may request, and OFE will provide, an opportunity to present 
oral or written data, views and arguments at a public hearing on any 
proposed prohibition rule or order, or on any petition for an exemption 
or permit. An interested person may file a request to be listed as a 
party to a hearing on the service list prepared by the Presiding Officer 
pursuant to Sec. 501.34(d) of this part.
    (2) Participants at the public hearing will have an opportunity to 
present oral or written data, views and arguments.
    (3) A request for a public hearing may be withdrawn by the requestor 
at any time. If other persons have requested to participate as parties 
in the public hearing, OFE may cancel the hearing only if all parties 
agree to cancellation. OFE will give notice, whenever possible, in the 
Federal Register of the cancellation of any hearings for which there has 
been prior notice.
    (c) Presiding Officer. OFE will appoint a Presiding Officer to 
conduct the public hearing.
    (d) Powers of the Presiding Officer. The Presiding Officer is 
responsible for orderly conduct of the hearing and for certification of 
the record of the public hearing. The Presiding Officer will not prepare 
any recommended findings, conclusions, or any other recommendations for 
disposition of a particular

[[Page 20]]

case, except those of a procedural nature. The Presiding Officer has, 
but is not limited to the following powers:
    (1) Administer oaths, affirmations and protective orders;
    (2) Issue administrative subpoenas and rule on motions to modify or 
withdraw subpoenas that he has issued;
    (3) Rule on questions as to relevance and materiality of evidence;
    (4) Regulate the course of the public hearing;
    (5) Hold conferences for the simplification of issues by consent of 
the parties;
    (6) Require submission of evidence in writing where appropriate;
    (7) Establish service lists;
    (8) Dispose of procedural requests and similar matters; and
    (9) Take other actions authorized by these rules.

The Presiding Officer may also limit the number of witnesses to be 
presented by any party and may impose reasonable time limits for 
testimony. The Presiding Officer shall establish and maintain a service 
list that contains the names and addresses of all parties to the OFE 
proceeding. At the time the Presiding Officer certifies the record, he 
will provide the staff of OFE with an index of the issues addressed in 
the record.
    (e) Notice. OFE will convene a public hearing only after publishing 
a notice in the Federal Register that states the time, place and nature 
of the public hearing.
    (f) Opportunity to question at the public hearing. At any public 
hearing requested pursuant to paragraph (b) of this section, with 
respect to disputed issues of material fact, OFE will provide any 
interested person an opportunity to question:
    (1) Other interested persons who make oral presentations;
    (2) Employees and contractors of the United States who have made 
written or oral presentations or who have participated in the 
development of the proposed rule or order or in the consideration of the 
petition for an exemption or permit; and
    (3) Experts and consultants who have provided information to any 
person who makes an oral presentation and which is contained in or 
referred to in such presentation.
    (g) OFE encourages persons who wish to question Government witnesses 
to submit their questions at least ten (10) days in advance of the 
hearing.
    (h) The Presiding Officer will allow questions by any interested 
person to be asked of those making presentations or submitting 
information, data, analyses or views at the hearing. The Presiding 
Officer may restrict questioning if he determines that such questioning 
is duplicative or is not likely to result in a timely and effective 
resolution of issues pending in the administrative proceeding for which 
the hearing is being conducted.
    (i) The Presiding Officer or OFE may exercise discretion to control 
a hearing by denying, temporarily or permanently, the privilege of 
participating in a particular OFE hearing if OFE finds, for example, 
that a person:
    (1) Has knowingly made false or misleading statements, either orally 
or in writing;
    (2) Has knowingly filed false affidavits or other writings;
    (3) Lacks the specific authority to represent the person seeking an 
OFE action; or
    (4) Has disrupted or is disrupting a hearing.
    (j) Evidence. (1) The Presiding Officer is responsible for orderly 
submission of information, data, materials, views or other evidence into 
the record of the public hearing. The Presiding Officer may exclude any 
evidence that is irrelevant, immaterial or unduly repetitious. Judicial 
rules of evidence do not apply.
    (2) Documentary material must be of a size consistent with ease of 
handling, transportation and filing, and a reasonable number of copies 
should be made available at the public hearing for the use of interested 
persons. An original and fourteen (14) copies shall be furnished to the 
Presiding Officer and one copy to each party listed on the service list. 
Large exhibits that are used during the hearing must be provided on no 
larger than 11\1/2\"x14" legal size paper if they are to be submitted 
into the hearing record.
    (k) Hearing record. OFE will have a verbatim transcript made of the 
public

[[Page 21]]

hearing. The hearing record shall remain open for a period of fourteen 
(14) days following the public hearing, unless extended by OFE, during 
which time the participants at the hearing may submit additional written 
statements which will be made part of the administrative record and will 
be served by the Presiding Officer upon those parties listed on the 
service list. OFE may also request additional information, data or 
analysis following the hearing in order to resolve disputed issues in 
the record. If OFE receives or obtains any relevant information or 
evidence that is placed in the record after the close of the public 
hearing or comment period, it will so notify all participants, and allow 
an additional fourteen (14) days for submission of evidence in rebuttal. 
In addition, OFE may, in its discretion, re-open the hearing at the 
request of a party or participant, to permit further rebuttal of 
evidence or statements submitted to OFE and made part of the hearing 
record after the close of the hearing. The transcript, together with any 
written comments submitted in the course of the proceeding, will be made 
part of the record available for public inspection and copying at the 
OFE Public Information Office, as provided in Sec. 501.12.



Sec. 501.35  Public file.

    (a) Contents. The public file shall consist of the rule, order, or 
petition, with supporting data and supplemental information, and all 
data and information submitted by interested persons. Materials which 
are claimed by any party to be exempt from public disclosure under the 
Freedom of Information Act (5 U.S.C. 552) shall be excised from the 
public file provided OFE has made a determination that the material is 
confidential in accordance with Sec. 501.7(a)(11) of this part.
    (b) Availability. The public file shall be available for inspection 
at room 1E190, 1000 Independence Avenue SW., Washington, DC. Photocopies 
may be made available, on request. The charge for such copies shall be 
made in accordance with a written schedule.

[46 FR 59889, Dec. 7, 1981, as amended at 54 FR 52892, Dec. 22, 1989]



    Subpart D--Subpoenas, Special Report Orders, Oaths and Witnesses



Sec. 501.40  Issuance.

    (a) Authority. As authorized by section 711 of FUA and section 645 
of the DEOA, the Administrator, his duly authorized agent or a Presiding 
Officer may, in accordance with 10 CFR 205.8, sign, issue, and serve 
subpoenas; issue special report orders (SRO); administer oaths and 
affirmations; take sworn testimony, compel attendance of and sequester 
witnesses; control the dissemination of any record of testimony taken 
pursuant to this section; and subpoena and reproduce books, papers, 
correspondence, memoranda, contracts, agreements, or other relevant 
records of tangible evidence including, but not limited to, information 
retained in computerized or other automated systems in the possession of 
the subpoenaed person.
    (b) Petition to withdraw or modify. Prior to the time specified for 
compliance in the subpoena or SRO, the person to whom the subpoena or 
SRO is directed may apply for its withdrawal or modification as provided 
in 10 CFR 205.8, except that if the subpoena or SRO is issued by a duly 
appointed Presiding Officer, the request to withdraw or modify must be 
addressed to that Presiding Officer, and its grant or denial will be 
decided by him.



                 Subpart E--Prohibition Rules and Orders



Sec. 501.50  Policy.

    Except in conjunction with a prohibition order requested by the 
intended recipient, OFE shall not propose to prohibit or prohibit by 
rule or order the use of petroleum or natural gas either as a primary 
energy source or in amounts in excess of the minimum amount necessary to 
maintain reliability of operation consistent with reasonable fuel 
efficiency in an existing installation unless and until OFE adopts rules 
establishing regulatory requirements governing the issuance of such 
orders and rules in accordance

[[Page 22]]

with the applicable procedural and substantive requirements of law.

(Department of Energy Organization Act, Pub. L. 95-91, 91 Stat. 565 (42 
U.S.C. 7101 et seq.); Powerplant and Industrial Fuel Use Act of 1978, 
Pub. L. 95-620, 92 Stat. 3269 (42 U.S.C. 8301 et seq.); Omnibus Budget 
Reconciliation Act of 1981 (Pub. L. 97-35); E.O. 12009, 42 FR 46267, 
Sept. 15, 1977)

[47 FR 50848, Nov. 10, 1982]



Sec. 501.51  Prohibitions by order--electing powerplants.

    (a) OFE may prohibit by order the use of petroleum or natural gas as 
a primary energy source or in amounts in excess of the minimum amount 
necessary to maintain reliability of operation consistent with 
reasonable fuel efficiency in an electing powerplant, if:
    (1) That facility has not been identified as a member of a category 
subject to a final rule at the time of the issuance of such order; and
    (2) The requirements of Sec. 504.6 have been met.
    (b) Notice of order and public participation. (1) OFE may hold a 
conference with the proposed order recipient prior to issuing the 
proposed order.
    (2) Pursuant to section 701 of FUA, prior to the issuance of a final 
order to an electing powerplant, OFE shall publish a proposed order in 
the Federal Register together with a statement of the reasons for the 
order. In the case of a proposed order that would prohibit the use of 
petroleum or natural gas as a primary energy source, the finding 
required by former section 301(b)(1) of the Act shall be published with 
such proposed order.
    (3) OFE shall provide a period for the submission of written 
comments of at least three months after the date of the proposed order. 
During this period, the recipient of the proposed order and any other 
interested person must submit any evidence that they have determined at 
that time to support their respective positions as to each of the 
findings that OFE is required to make under section 301(b) of the Act. A 
proposed order recipient may submit additional new evidence at any time 
prior to the close of the public comment period which follows 
publication of the Tentative Staff Analysis or prior to the close of the 
record of any public hearing, whichever occurs later. A request by the 
proposed order recipient for an extension of the three-month period may 
be granted at OFE's discretion.
    (4) Subsequent to the end of the comment period, OFE will issue a 
notice of whether OFE intends to proceed with the prohibition order 
proceeding.
    (5) An owner or operator of a facility that may be subject to an 
order may demonstrate prior to issuance of a final prohibition order 
that the facility would qualify for an exemption if the prohibition had 
been established by rule. OFE will not delay the issuance of a final 
prohibition order or stay the effective date of such an order for the 
purpose of determining whether a proposed order recipient qualifies for 
a particular exemption unless the demonstration or qualification is 
submitted prior to or during the second three-month comment period, 
commencing after issuance of a notice of intention to proceed, or unless 
materials submitted after the period (i) could not have been submitted 
during the period through the exercise of due diligence, (ii) address 
material changes in fact or law occurring after the close of the period, 
or (iii) consist of amplification or rebuttal occasioned by the 
subsequent course of the proceeding. A request by the proposed order 
recipient for an extension of this time period may be granted at OFE's 
discretion.
    (6) Subsequent to the end of the second three (3) month period, OFE 
will, if it intends to issue a final prohibition order, prepare and 
issue a Notice of Availability of a Tentative Staff Analysis. Interested 
persons wishing a hearing must request a hearing within forty-five (45) 
day after issuance of the Notice of Availability of the Tentative Staff 
Analysis. During this forty-five (45) days period, interested persons 
may also submit written comments on the Tentative Staff Analysis.
    (7) If a hearing has been requested, OFE shall provide interested 
persons with an opportunity to present oral data, views and arguments at 
a public hearing held in accordance with subpart C of this part. The 
hearing will consider the findings which OFE must make in order to issue 
a final prohibition order and any exemption for which the proposed order 
recipient submitted

[[Page 23]]

its demonstration in accordance with paragraph (b)(5) of this section.
    (8) Upon request by the recipient of the proposed prohibition order, 
the combined public comment periods provided for in this section may be 
reduced to a minimum of forty-five (45) days from the time of 
publication of the proposed order.
    (9) OFE may terminate a prohibition order proceeding at any time 
prior to the date upon which a final order shall become effective. 
Should OFE terminate the proceeding, it will notify the proposed order 
recipient, and publish a notice in the Federal Register.
    (c) Decision to issue a final order. (1) OFE will base its 
determination to issue an order on consideration of the whole record or 
those parts thereof cited by a party and supported by and in accordance 
with reliable, probative and substantial evidence.
    (2) OFE shall include in the final order a written statement of the 
pertinent facts, a statement of the basis upon which the final order is 
issued, a recitation of the conclusions regarding the required findings 
and qualifications for exemptions. The final order shall state the 
effective date of the prohibition contained therein. If it is 
demonstrated that the facility would have been granted a temporary 
exemption, the effective date of the prohibition contained in the final 
order shall be delayed until such time as the temporary exemption would 
have terminated. If it is demonstrated that a facility will need a 
period of time to comply with the final order, the effective date of the 
prohibition contained in the final order may be delayed, in OFE's 
discretion, so as to allow an order recipient to comply with the final 
order.
    (3) OFE will enclose with a copy of the final order, where 
appropriate, a schedule of steps that should be taken by a stated date 
(a compliance schedule) to ensure that the affected facility will be 
able to comply with the prohibitions stated in the order by the 
effective date of the prohibition contained in the final order. The 
compliance schedule may require the affected person to take steps with 
regard to a unit 60 days after service of the final order.
    (4) A copy of the final order and a summary of the basis therefore 
will be published in the Federal Register. The order will become 
effective 60 days after publication in the Federal Register.
    (d) Request for order. (1) A proceeding for issuance of a 
prohibition order to a specific unit may be commenced by OFE, in its 
sole discretion, in response to a request for an order filed by the 
owner or operator of a facility.
    (2) A petition requesting OFE to commence a prohibition order 
proceeding should include the following information for all units to be 
covered by the prohibition order:
    (i) A statement of the reasons the owner or operator is seeking the 
issuance of a prohibition order; and
    (ii) Sufficient information for OFE to make the findings required by 
section 301(b) of FUA.
    (3) If OFE determines to accept the request, OFE shall publish a 
proposed order in the Federal Register together with a statement of the 
reasons for the order.

(Department of Energy Organization Act, Pub. L. 95-91, 91 Stat. 565 (42 
U.S.C. 7101 et seq.); Energy Supply and Environmental Coordination Act 
of 1974; Pub. L. 93-319, as amended by Pub. L. 94-163, Pub. L. 95-70, 
(15 U.S.C. 719 et seq.); Powerplant and Industrial Fuel Use Act of 1978, 
Pub. L. 95-620, 92 Stat. 3269 (42 U.S.C. 8301 et seq.); Omnibus Budget 
Reconciliation Act of 1981, (Pub. L. 97-35); E.O. 12009, 42 FR 46267, 
Sept. 15, 1977)

[46 FR 59889, Dec. 7, 1981, as amended at 47 FR 17042, Apr. 21, 1982; 47 
FR 50848, Nov. 10, 1982; 54 FR 52892, Dec. 22, 1989]



Sec. 501.52  Prohibitions by order--certifying powerplants.

    (a) OFE may prohibit by order the use of petroleum or natural gas as 
a primary energy source or in amounts in excess of the minimum amount 
necessary to maintain reliability of operation consistent with 
maintaining reasonable fuel efficiency in an existing powerplant if the 
owner or operator of the powerplant certifies, and OFE concurs in such 
certification in accordance with the requirements of Secs. 504.5, 504.6 
and 504.8.
    (b) Notice of order and participation. (1) OFE may hold a conference 
with the

[[Page 24]]

proposed order recipient, at the recipient's election, prior to issuing 
the proposed order. The conference may resolve any questions regarding 
the certification required by section 301 of the Act, as amended, and 
Secs. 504.5, 504.6, and 504.8, and OFE's review and concurrence therein.
    (2) Pursuant to section 701(b) of FUA, prior to the issuance of a 
final order to a certifying powerplant owner or operator, OFE must 
publish in the Federal Register, a proposed prohibition order stating 
the reasons for such order. OFE will review all of the information 
submitted by a proposed order recipient within 60 days after receipt by 
OFE. If the certification is complete, OFE will, within 30 days after 
the end of the 60 day review period, publish in the Federal Register a 
Notice of Acceptance of certification together with a proposed 
prohibition order stating therein the reasons for such order. This 
commences the prohibition order proceeding. If OFE does not believe it 
is able to concur in the certification, OFE shall notify the proposed 
order recipient and shall publish a Notice of Proposed Non-Concurrence 
in the Federal Register within 30 days after the end of the 60 day 
review period. If OFE finds that the certification with compliance 
schedule is incomplete, OFE will notify the proposed prohibition order 
recipient as to the deficiencies, and provide an additional period of 30 
days for the certification to be amended and resubmitted. If a complete 
certification is not submitted within this period, the proceeding shall 
be terminated in accordance with Sec. 501.52(b)(5). OFE will notify the 
proposed order recipient and other parties to the proceeding of the 
termination and publish a notice in the Federal Register. OFE, on its 
own motion, may extend any period of time by publishing a notice to that 
effect in the Federal Register.
    (3) The publication of the Notice of Acceptance or Notice of 
Proposed Non-Concurrence commences a period of 45 days during which 
interested persons may submit written comments or request a public 
hearing. During this period, the recipient of the proposed order and any 
other interested person may submit any evidence that they have available 
relating to the proposed order, the certification or the concurrence 
that OFE must make. A proposed order recipient may submit additional new 
evidence at any time prior to the close of the public comment period 
which follows the commencement of the proceeding or prior to the close 
of the record of any public hearing, whichever occurs later. A request 
for an extension of the 45 day period may be granted at OFE's 
discretion. In the case of a Notice of Acceptance, as set forth in 
Sec. 504.9, no final prohibition order can be issued until any necessary 
environmental review pursuant to the National Environmental Policy Act 
of 1969, 42 U.S.C 4321 et seq. (NEPA) has been completed. Upon 
completion of the NEPA review and unless OFE determines on the basis of 
the record of the proceeding that the certification fails to meet the 
requirements of Secs. 504.5, 504.6, and 504.8, OFE shall publish a final 
prohibition order, together with the information required by paragraph 
(c) of this section. In the case of a Notice of Proposed Non-
Concurrence, at the end of the 45 day comment period, OFE will notify 
the proposed order recipient and parties to the proceeding and publish a 
final Notice of Non-Concurrence in the Federal Register, if OFE 
determines it cannot concur in the certification based upon additional 
information submitted during the proceeding. If, at the end of the 45 
day period, OFE believes it can concur in the certification, OFE will 
notify the proposed order recipient and parties to the proceeding and 
publish a Notice of Acceptance followed by a new 45 day comment period.
    (4) If a hearing has been requested, OFE shall provide interested 
persons with an opportunity to present oral data, views and arguments at 
a public hearing held in accordance with subpart C of this part. The 
hearing may consider, among other matters, the sufficiency of the 
certification of the owner or operator of the powerplant required by 
section 301 of FUA, as amended, and Secs. 504.5, 504.6, and 504.8 of 
these regulations.
    (5) OFE may terminate a prohibition order proceeding at any time 
prior to the date upon which a final prohibition order is issued 
whenever OFE believes,

[[Page 25]]

from any information contained in the record of the proceeding, that the 
certification does not meet the requirements of section 301 of the Act, 
as amended, or Secs. 504.5, 504.6, and 504.8 of these regulations. If 
OFE terminates the proceeding or publishes a final Notice of Non-
Concurrence, or the proposed order recipient fails to submit a complete 
certification, OFE will notify the proposed order recipient and other 
parties to the proceeding and publish a notice in the Federal Register. 
In such event, the proposed order recipient may submit a new 
certification under any provision of section 301 of the Act, as amended, 
at a later date. Specifically, a Notice of Non-Concurrence under either 
section 301(b) or 301(c) shall not affect a proposed order recipient's 
ability to make a certification under the other subsection.
    (c) Record and decision to issue a final order. (1) OFE will base 
its determination to issue an order on consideration of the whole record 
or those parts thereof cited by a party and supported by and in 
accordance with reliable, probative and substantial evidence.
    (2) OFE shall include in the final order a written statement of the 
basis upon which the final order is issued, and its concurrence in the 
required certification. A copy of the final order and a summary of the 
basis therefor will be published in the Federal Register. While the 
prohibition order is final for purposes of judicial review under section 
702 of FUA, the prohibitions contained in the final order shall not 
become effective for purposes of amendment under section 301(d) of FUA, 
as amended, and Sec. 501.52(d) of these regulations until the effective 
date of the prohibitions stated in the order, or, where the order is 
subject to one or more conditions subsequent listed in the prohibition 
order compliance schedule, until all its conditions are met.
    (d) Amendment to certifications under Secs. 504.5 and 504.6. The 
proposed prohibition order recipient may amend its compliance schedule 
under Sec. 504.5(d), or its certification under section 301 of FUA, as 
amended, and Secs. 504.5, 504.6 and 504.8 of these regulations in order 
to take into account changes in relevant facts and circumstances at any 
time prior to the effective date of the prohibitions contained in the 
final prohibition order.
    (e) Rescission of prohibition orders. The rescission or modification 
of final prohibition orders issued to existing electric powerplants will 
be governed by the procedure in Sec. 501.101 of these regulations.

(Approved by the Office of Management and Budget under control number 
1903-0077)

(Department of Energy Organization Act, Pub. L. 95-91, 42 U.S.C. 7101 et 
seq.; Energy Supply and Environmental Coordination Act of 1974, Pub. L. 
93-319, as amended by Pub. L. 94-163, Pub. L. 95-70, and Pub. L. 95-620, 
15 U.S.C. 719 et seq.; Powerplant and Industrial Fuel Use Act of 1978, 
Pub. L. 95-620, as amended by Pub. L. 97-35, 42 U.S.C. 8301 et seq.; 
Omnibus Budget Reconciliation Act of 1981, (Pub. L. 97-35))

[47 FR 17042, Apr. 21, 1982]



Secs. 501.53-501.56  [Reserved]



                Subpart F--Exemptions and Certifications



Sec. 501.60  Purpose and scope.

    (a) (1) If the owner or operator plans to construct a new baseload 
powerplant and the unit will not be in compliance with the prohibition 
contained in section 201(a) of FUA, this subpart establishes the 
procedures for filing a petition requesting a temporary or permanent 
exemption under, respectively, sections 211 and 212 of FUA.
    (2) Self-certification alternative. If the owner or operator plans 
to construct a new baseload powerplant not in compliance with the 
prohibitions contained in section 201(a) of FUA, this subpart 
establishes the procedures for the filing of a self-certification under 
section 201(d) of FUA.
    (3) If the petitioner owns, operates or controls a new powerplant, 
this subpart provides the procedures for filing a petition requesting 
extension of a temporary exemption granted under sections 211 or 311 of 
FUA.
    (4) If the petitioner owns, operates or controls a new or existing 
powerplant or MFBI, this subpart provides the procedures for filing a 
petition requesting extension of a temporary exemption granted under 
section 211 or section 311 of FUA.

[[Page 26]]

    (b) If the petition is for an extension of a temporary exemption, 
the petitioner must apply for this extension at least (90) days prior to 
the expiration of the temporary exemption.

(Department of Energy Organization Act, Pub. L. 95-91, 91 Stat. 565 (42 
U.S.C. 7101 et seq.); Powerplant and Industrial Fuel Use Act of 1978, 
Pub. L. 95-620, 92 Stat. 3269 (42 U.S.C. 8301 et seq.); Omnibus Budget 
Reconciliation Act of 1981, Pub. L. 97-35; E.O. 12009, 42 FR 46267, 
Sept. 15, 1977)

[46 FR 59889, Dec. 7, 1981, as amended at 47 FR 50849, Nov. 10, 1982; 54 
FR 52892, Dec. 22, 1989]



Sec. 501.61  Certification contents.

    (a) A self-certification filed under section 201(d) of FUA should 
include the following information:
    (1) Owner's name and address.
    (2) Operator's name and address.
    (3) Plant location and address.
    (4) Plant configuration (combined cycle, simple cycle, topping 
cycle, etc.)
    (5) Design capacity in megawatts (MW).
    (6) Fuel(s) to be used by the new facility.
    (7) Name of utility purchasing electricity from the proposed 
facility and percent of total output to be sold.
    (8) Date unit is expected to be placed in service.
    (9) Certification by an officer of the company or his designated 
representative certifying that the proposed facility:
    (i) Has sufficient inherent design characteristics to permit the 
addition of equipment (including all necessary pollution devices) 
necessary to render such electric powerplant capable of using coal or 
another alternate fuel as its primary energy source; and
    (ii) Is not physically, structurally, or technologically precluded 
from using coal or another alternate fuel as its primary energy source.
    (b) A self-certification filed pursuant to Sec. 501.61(a) shall be 
effective to establish compliance with the requirement of section 201(a) 
of FUA as of the date filed.
    (c) OFE will publish a notice in the Federal Register within fifteen 
days reciting that the certification has been filed. Publication of this 
notice does not serve to commence a public comment period.
    (d) OFE will notify the owner or operator within 60 days if 
supporting documentation is needed to verify the certification.

[54 FR 52892, Dec. 22, 1989]



Sec. 501.62  Petition contents.

    (a) A petition for exemption should include the following 
information:
    (1) The name of the petitioner;
    (2) The name and location of the unit for which an exemption is 
being requested;
    (3) The specific exemption(s) being requested; and
    (4) The name, address, and telephone number of the person who can 
supply further information.
    (b) Table of contents. Include only those sections contained in the 
petition.
    (c) Introduction. Include the following:
    (1) Description of the facility under consideration;
    (2) Description of the unit and fuel the petitioner proposes to burn 
in that unit, including the purpose of and need for the unit; and
    (3) Description of the operational requirements for the unit, 
including size (capacity, input and output in millions of Btu's per 
hour), output in terms of product or service to be supplied, fuel 
capability, and operating mode, including capacity factor, utilization 
factor, and fluctuations in the load.
    (d) General requirements. The evidence required under part 503 
subpart B for each exemption(s) for which the petitioner is applying:
    (1) No alternate power supply (Sec. 503.8):
    (2) Use of mixtures (Sec. 503.9);
    (3) Alternative site (Sec. 503.11);
    (4) Compliance Plan (Sec. 503.12);
    (5) Environmental impact analysis (Sec. 503.13);
    (6) Fuels search (Sec. 503.14).
    (e) Specific evidence. Evidence required for each exemption, 
segregated by exemption (part 503 subparts C and D).
    (f) References. (1) Specify the reports, documents, experts, and 
other sources consulted in compiling the petition. Cite these sources in 
accordance with acceptable documentation standards,

[[Page 27]]

and indicate the part of the petition to which they apply. If the source 
is unusual or little known, briefly describe its contents.
    (2) Identify at the end of each section of the petition any 
information or any statement based, in whole or in part, on information 
or principles which, to petitioner's knowledge, represent significant 
innovations to or departures from generally accepted facts or 
principles.
    (g) Appendices. Include in the appendices material which the 
petitioner believes substantiates any analyses fundamental to the 
petition, materials prepared in connection with it, and any other 
documents, studies, or analyses which are believed to be relevant to the 
decision to be made. Also, include in the appendices copies of any forms 
submitted as part of the petition.
    (h) List of preparers. List the names with the qualifications and 
professional credentials of the principal contributors to the 
preparation of the petition. Indicate the sections or subject matters 
for which each principal contributor was responsible.
    (i) Incorporation by reference. Pertinent information may be 
incorporated into the petition by reference when this can be done 
without impeding agency and public review. Referenced materials must be 
specifically identified and their contents briefly described in the 
petition. To incorporate by reference, the material must be submitted 
with the petition, or if previously submitted, the office to which it 
was submitted must be identified in the petition. The petitioner cannot 
incorporate by reference material based on proprietary data not 
available to OFE for review.

(Department of Energy Organization Act, Pub. L. 95-91, 91 Stat. 565 (42 
U.S.C. 7101 et seq.); Powerplant and Industrial Fuel Use Act of 1978, 
Pub. L. 95-620, 92 Stat. 3269 (42 U.S.C. 8301 et seq.); Omnibus Budget 
Reconciliation Act of 1981, Pub. L. 97-35; E.O. 12009, 42 FR 46267, 
Sept. 15, 1977)

[46 FR 59889, Dec. 7, 1981, as amended at 47 FR 50849, Nov. 10, 1982]



Sec. 501.63  Notice of the commencement of an administrative proceeding on an exemption petition.

    (a)(1) When a petition is accepted, OFE will publish in the Federal 
Register a Notice of Acceptance, or, in the case of a certification 
exemption, a Notice of Acceptance and Availability of Certification, 
signifying that an exemption proceeding has commenced. The notice will 
include a summary of the exemption petition, and publication will 
commence a public comment period of no less than forty-five (45) days 
during which interested parties may file written comments concerning the 
petition. In the case of a certification exemption, interested persons 
may request a public hearing during this period, pursuant to 
Sec. 501.33.
    (2) OFE will notify the appropriate State agency having apparent 
primary authority to permit or regulate the construction or operation of 
a powerplant that an exemption proceeding has commenced and will consult 
with this agency to the maximum extent practicable. Copies of all 
accepted petitions also will be forwarded to EPA, as provided in 
Sec. 501.14(a).
    (b) In processing an exemption petition, OFE shall comply with the 
requirements of the National Environmental Policy Act of 1969 (NEPA), 
the Council on Environmental Quality's implementing regulations, and the 
DOE guidelines implementing those regulations (45 FR 20694, Mar. 28, 
1980). Compliance with NEPA may involve the preparation of (1) an 
environmental impact statement (EIS) evaluating the grant or denial of 
an exemption petition, (2) an environmental assessment (EA), or (3) a 
memorandum to the file finding that the grant of the requested petition 
would not be considered a major federal action significantly affecting 
the quality of the human environment. If an EIS is required, OFE will 
publish in the Federal Register a Notice of Intent (NOI) to prepare an 
EIS as soon as practicable after commencement of the proceeding. A 
public meeting may be held pursuant to 40

[[Page 28]]

CFR 1501.7 to solicit comments or suggestions on the structure and 
content of the EIS.

[46 FR 59889, Dec. 7, 1981, as amended at 54 FR 52893, Dec. 22, 1989]



Sec. 501.64  Publication of notice of availability of tentative staff analysis.

    OFE will publish in the Federal Register a Notice of the 
Availability of Tentative Staff Analysis for the noncertification 
temporary public interest exemption, for noncertification environmental 
exemptions, and for a cogeneration exemption based on the public 
interest. OFE will provide a public comment period of at least fourteen 
(14) days from the date of publication during which interested persons 
may make written comments and request a public hearing.



Sec. 501.65  Publication of notice of availability of draft EIS.

    A Notice of Availability of any draft EIS will be published in the 
Federal Register and comments thereon will also be solicited. Interested 
persons may request a hearing on any draft EIS. Such hearing must be 
requested within thirty (30) days of publication of the Notice of 
Availability of the draft EIS.

[54 FR 52893, Dec. 22, 1989]



Sec. 501.66  OFE evaluation of the record, decision and order.

    (a) The administrative record in a proceeding under this part will 
consist of the proposed prohibition order and/or petition and related 
documents, all relevant evidence presented at the public hearing, all 
written comments, and any other information in the possession of OFE and 
made a part of the public record of the proceeding. OFE will base its 
determination to issue a rule or order on consideration of the whole 
record, or those parts thereof cited by a party and supported by 
reliable, probative, and substantial evidence.
    (b) OFE may investigate and corroborate any statement in any 
petition, document, or public comments submitted to it. OFE also may use 
any relevant facts it possesses in its evaluation and may request 
submissions from third persons relevant to the petition or other 
documents. OFE also may request additional information, data, or 
analyses following a public hearing, if any, if this information is 
necessary to resolve disputed issues in the record. Any relevant 
information received by OFE following the hearing that is not declared 
to be confidential under Sec. 501.7(a)(11) shall be made part of the 
public record with opportunity provided for rebuttal.
    (c) OFE will notify all participants if, after the close of any 
public hearing or comment period, it receives or obtains any relevant 
information or evidence. Participants may respond to such information or 
evidence in writing within fourteen (14) days of such notification. If 
OFE finds that the additional information or evidence relates to 
material issues of disputed fact and may significantly influence the 
outcome of the proceeding, OFE shall reopen the hearing on the issue or 
issues to which the additional information or evidence relates.



Sec. 501.67  Petition redesignations.

    OFE, with the petitioner's approval, will redesignate an exemption 
petition if the petitioner qualifies for an exemption other than the one 
originally requested, even though he may not qualify for the specific 
exemption originally requested, or be entitled to the full exemption 
period provided by requested exemption. OFE shall give public notice of 
any redesignation of an exemption petition, and where a public hearing 
has been requested notice shall be given at least thirty (30) days prior 
to such hearing.



Sec. 501.68  Decision and order.

    (a)(1) OFE shall issue an order either granting or denying the 
petition for an exemption or permit within six (6) months after the end 
of the period for public comment and hearing applicable to any petition.
    (2) OFE may extend the six (6) month period for decision to a date 
certain by publishing notice in the Federal Register, and stating the 
reasons for such extension.
    (3) OFE will publish a final EIS at least thirty (30) days prior to 
take

[[Page 29]]

issuance of the final order in all cases where an EIS is required.
    (b)(1) OFE shall serve a copy of the order granting or denying a 
petition for exemption to the petitioner and all persons on the service 
list in cases involving a public hearing.
    (2) OFE shall publish any order granting or denying a petition under 
this subpart in the Federal Register together with a statement of the 
reasons for the grant or denial.
    (c)(1) Any order granting or denying a petition for exemption shall 
be based upon consideration of the whole record or those parts thereof 
cited by a party and supported by, and in accordance with, reliable, 
probative and substantive evidence.
    (2) The denial of a petition for exemption shall be without 
prejudice to the petitioner's right to submit an amended petition. OFE 
may, however, reject the amended petition if it is not materially 
different from the denied petition.
    (d) OFE may design any terms and conditions included in any 
temporary exemption issued or extended under section 211 of FUA, to 
ensure, among other things, that upon expiration of the exemption the 
persons and powerplant covered by the exemption will comply with the 
applicable prohibitions under FUA. For purposes of the provision, the 
subsequent grant of a permanent exemption to the subject unit shall be 
deemed compliance with applicable prohibitions.

(Department of Energy Organization Act, Pub. L. 95-91, 91 Stat. 565 (42 
U.S.C. 7101 et seq.); Powerplant and Industrial Fuel Use Act of 1978, 
Pub. L. 95-620, 92 Stat. 3269 (42 U.S.C. 8301 et seq.); Omnibus Budget 
Reconciliation Act of 1981, Pub. L. 97-35; E.O. 12009, 42 FR 46267, 
Sept. 15, 1977)

[46 FR 59889, Dec. 7, 1981, as amended at 47 FR 50849, Nov. 10, 1982; 54 
FR 52893, Dec. 22, 1989]



Sec. 501.69  Judicial review.

    Any person aggrieved by any order issued by OFE under this subpart, 
must file, within sixty (60) days of publication of the final order in 
the Federal Register, a petition for judicial review in the United 
States Court of Appeals for the Circuit wherein he resides, or has his 
principal place of business. Exhaustion of administrative remedies for 
purposes of judicial review does not require filing a petition pursuant 
to subpart G for modification or rescission of the order to be reviewed.



  Subpart G--Requests for Modification or Rescission of a Rule or Order



Sec. 501.100  Purpose and scope.

    (a) Anyone may request that OFE commence a rulemaking proceeding 
pursuant to 5 U.S.C. 553(e); however, this subpart provides the 
procedures to be followed by--
    (1) An interested person seeking the modification or rescission of a 
prohibition by rule applicable to a new facility;
    (2) An owner or operator of a facility named in a prohibition by 
rule requesting the modification or rescission of that rule; or
    (3) An owner or operator subject to an exemption order or a specific 
prohibition imposed by order requesting the modification or a rescission 
of that order.
    (b) OFE also may commence a modification or rescission proceeding on 
its own initiative.



Sec. 501.101  Proceedings to modify or rescind a rule or order.

    (a) In response to a request duly filed by an interested person, OFE 
may commence a proceeding to modify or rescind a rule or order. If OFE 
determines that a request to modify or rescind a rule or order does not 
warrant commencement of a proceeding, it will deny the request and issue 
a brief statement of the reason(s) for the denial.
    (b) A request for modification or rescission of a rule or order must 
comply with the requirements of Sec. 501.7 and must be filed at the 
address set forth in Sec. 501.11.
    (c) Notice of the request for modification or rescission of an order 
must be given by the requester to each party to the original proceeding 
that resulted in the issuance of the original order for which 
modification or rescission is sought. If the number of parties to the 
original proceeding is too large to allow actual notice at a reasonable

[[Page 30]]

cost or within a reasonable time, a requester may ask that OFE give 
notice to the parties by publication in the Federal Register; however, 
this alternate notice does not bind OFE to commence a proceeding, if it 
subsequently determines that the request is not warranted.
    (d) If OFE determines to grant a request to commence a proceeding to 
rescind or modify a rule or order, or OFE on its own initiative, 
commences a proceeding for the modification or rescission of a rule or 
order, it will give notice, either by service of a written notice or by 
oral communication (which communication must be promptly confirmed in 
writing) to each person upon whom the order was served that OFE proposes 
to modify or rescind, or, alternatively, by publication of notice in the 
Federal Register. OFE will give a reasonable period of time for each 
person notified to file a written response.
    (e)(1) A copy of any written comments submitted to OFE under this 
subpart by a party to the original proceeding must also be sent to the 
requester. The party submitting such comments must certify to OFE that 
he has sent a copy of such comments to the requester.
    (2) OFE may notify other persons participating in the proceeding of 
the comments and provide an opportunity for those notified to respond.
    (f) A request for modification or rescission of a rule or order must 
contain a complete statement of all facts relevant to the action sought. 
The request must also include the names and addresses of all reasonably 
ascertainable persons who will be affected. Pertinent provisions 
contained in any documents believed to support a request may be briefly 
described, however, OFE reserves the right to obtain copies of any 
significant documents that will assist in making a determination on the 
merits of a request. The request must identify the specific order or 
rule for which modification or rescission is sought. A request should 
also indicate whether an informal conference will facilitate OFE's 
determination to commence, or not to commence a proceeding, or will 
assist OFE in making any determinations on material issues raised by the 
request.
    (g) A decision by OFE to commence a proceeding under this subpart 
does not entitle the requester to a public hearing on the request for 
modification or rescission. A public hearing may be held, however, if, 
in its discretion, OFE considers that a public hearing will advance its 
evaluation of the request.



Sec. 501.102  OFE evaluation of the record, decision and order for modification or rescission of a rule or order.

    (a) OFE will consider the entire administrative record in its 
evaluation of the decision and order for modification or rescission of a 
rule or order. OFE may investigate and corroborate any statement in the 
petition or related documents and may utilize in its evaluation any 
relevant facts obtained by its investigations. OFE may solicit or accept 
submissions from third persons relevant to any request under this 
subpart and all interested persons will be afforded an opportunity to 
respond to these submissions. OFE may, in its discretion and on its own 
initiative, convene a conference, if it considers that a conference will 
advance its evaluation of the request.
    (b) Criteria. Except where modification or rescission of a rule or 
order is initiated by OFE, OFE's decision to rescind or modify a rule or 
order will be based on a determination that there are significantly 
changed circumstances with respect to the applicability of a particular 
prohibition or exemption to the requester. OFE believes that there may 
be ``significantly changed circumstances'', if:
    (1) Significant material facts are subsequently discovered which 
were not known and could not have been known to the petitioner or to OFE 
at the time of the original proceeding;
    (2) A law, regulation, interpretation, ruling, order or decision on 
appeal that was in effect at the time of the proceeding upon which the 
rule or order is based and which, if it had been made known to OFE, 
would have been relevant to the proceeding and would have substantially 
altered the outcome is subsequently discovered; or
    (3) There has been a substantial change in the facts or 
circumstances upon which an outstanding and continuing order was based, 
which change

[[Page 31]]

occurred during the interval between issuance of the order and the date 
of filing of the request under this subpart, and was caused by force or 
circumstances beyond the requester's control.



Sec. 501.103  OFE decision.

    (a) OFE shall issue an appropriate rule or order after considering 
the request for modification or rescission of a rule or order and other 
relevant information received during the proceeding.
    (b) OFE will either grant or deny the request for modification or 
rescission and will briefly state the pertinent facts and legal basis 
for the decision.
    (c) OFE will serve the rule or order granting or denying the request 
for modification or rescission upon the requester, or, if the action was 
initiated by OFE, upon the owner or operator of the affected powerplant 
or installation. OFE will publish a notice of the issuance of a rule or 
order modifying or rescinding a rule or order in the Federal Register.



                      Subpart H--Requests for Stay



Sec. 501.120  Purpose and scope.

    (a) This subpart sets forth the procedures for the request and 
issuance of a stay of a rule or order or other requirement issued or 
imposed by OFE or these regulations but does not apply to the mandatory 
stays provided for in sections 202(b) and 301(a) of FUA. The application 
for a stay under this subpart will only be considered incidental to a 
proceeding on a request for modification or rescission of a final 
prohibition rule or order.
    (b) The petitioner must comply with all final and effective OFE 
orders, regulations, rulings, and generally applicable requirements 
unless a petition for a stay is granted or is applicable under FUA.



Sec. 501.121  Filing and notice of petitions for stays.

    (a)(1) The petition for a stay must be in writing and comply with 
the general filing requirements stated in Sec. 501.7, in addition to any 
other requirements set forth in this subpart, and must be filed at the 
address provided in Sec. 501.11.
    (2) A claim for confidential treatment of any information contained 
in the petition for stay and supporting documents must be in accordance 
with Sec. 501.7(a)(11), and filed at the address provided in 
Sec. 501.11.
    (b) OFE will publish notice of receipt of a petition for a stay 
under this subpart in the Federal Register.



Sec. 501.122  Contents.

    (a) A petition for a stay shall contain a full and complete 
statement of all facts believed to be pertinent to the act or 
transaction for which a stay is sought. The facts shall include, but not 
be limited to, the criteria listed below in Sec. 501.123(b).
    (b) The petitioner may request a conference regarding the 
application. If the request is not made at the time the application is 
filed, it must be made as soon thereafter as possible. The request and 
OFE's determination regarding it will be made in accordance with subpart 
C of this part.



Sec. 501.123  Evaluation of the record.

    (a) The record in a proceeding on a petition for stay shall consist 
of the petition and any related documents, evidence submitted at any 
public proceedings and any other information in the possession of OFE 
and made part of the record. OFE may investigate and corroborate any 
statement in the petition or any other document submitted to it and may 
utilize in its evaluation any relevant facts obtained by its 
investigations. OFE may solicit or accept submissions from third persons 
relevant to the petition for stay or other document and any interested 
person will be afforded an opportunity to respond to these submissions. 
OFE, on its initiative, may convene a conference, if, in its discretion, 
it considers that the conference will advance its evaluation of the 
petition.
    (b) Criteria. (1) OFE may grant a stay incident to a proceeding on a 
petition for modification of a rule or order if the petitioner shows:
    (i) Irreparable injury will result if the stay is denied;
    (ii) There is a strong likelihood of success on the merits;
    (iii) The denial of a stay will result in a more immediate hardship 
or inequity

[[Page 32]]

to the petitioner than to other persons affected by the proceeding; and
    (iv) It would be desirable for reasons of public policy to grant the 
stay.



Sec. 501.124  Decision and order.

    (a) OFE will issue an order granting or denying the petition for a 
stay upon consideration of the request and other relevant information 
received or obtained during the proceeding.
    (b) OFE will include in the order a brief written statement setting 
forth the relevant facts and the basis of the decision, including any 
appropriate terms and conditions of the stay.



                 Subpart I--Requests for Interpretation



Sec. 501.130  Purpose and scope.

    This subpart establishes procedures for filing a formal request for 
and the issuance of an interpretation of a rule, order or other action 
by DOE. Any response, whether oral or written, to a general inquiry, or 
to other than a formal written request for interpretation filed with 
DOE, is not an interpretation and merely provides general information 
that may not be relied upon in any proceeding to determine compliance 
with the applicable requirements of FUA.



Sec. 501.131  Filing a request for interpretation.

    A proceeding to request an interpretation is commenced by the filing 
of a ``Request for Interpretation (FUA).'' The request must be in 
writing and must also comply with the general filing requirements stated 
in Sec. 501.7. Any claims for confidential treatment for any information 
contained in the request or other related documents must be made 
pursuant to Sec. 501.7(a)(11). A request for interpretation should be 
filed with the Assistant General Counsel for Interpretations and Rulings 
at the address provided in Sec. 501.11.



Sec. 501.132  Contents of a request for interpretation.

    (a) A request for an interpretation must contain a complete 
statement of all the facts believed to be relevant to the circumstances, 
acts or transactions that are the subject of the request. The facts must 
include the names and addresses of all potentially affected persons (if 
reasonably ascertainable) and a full discussion of the pertinent 
provisions and relevant facts contained in any documents submitted with 
the request. Copies of relevant contracts, agreements, leases, 
instruments, and other documents relating to the request must be 
submitted if DOE believes they are necessary for determination of any 
issue pending in the proceeding under this subpart. When the request 
pertains to only one step in a larger integrated transaction, the 
requesting party must also submit the facts, circumstances, and other 
relevant information pertaining to the entire transaction.
    (b) The requesting party must include in the request a discussion of 
all relevant legal authorities, rulings, regulations, interpretations 
and decisions on appeal relied upon to support the particular 
interpretation sought.
    (c) DOE may refuse to issue an interpretation if it determines that 
there is insufficient information upon which to base an interpretation.



Sec. 501.133  DOE evaluaton.

    (a)(1) The record shall consist of the request for an interpretation 
and any supporting documents, all relevant evidence presented at any 
public proceedings, written comments and any information in the 
possession of DOE that has been made part of the record.
    (2) DOE may investigate and corroborate any statement in a request 
or related documents and may utilize in its evaluation any relevant 
facts obtained by the investigation. DOE may solicit or accept 
submissions from third persons relevant to the request for 
interpretation, or any other document submitted under this subpart, and 
the person requesting the interpretation will be afforded an opportunity 
to respond to these submissions.
    (3) The General Counsel or his delegate will issue an interpretation 
on the basis of the information provided in the request, unless that 
information is supplemented by other information brought to the 
attention of DOE during the proceeding. DOE's interpretation will, 
therefore, depend on the accuracy

[[Page 33]]

of the factual statements, and the requesting party may rely upon it 
only to the extent that the facts of the actual situation correspond to 
those upon which the interpretation is based.
    (b) Criteria. (1) DOE will base its FUA interpretations on the DEOA 
and FUA, as applicable, and the regulations and published rulings of DOE 
as applied to the specific factual situation presented.
    (2) DOE will take into consideration previously issued 
interpretations dealing with the same or a related issue.



Sec. 501.134  Issuance and effect of interpretations.

    (a) DOE may issue an interpretation after consideration of the 
request for interpretation and other relevant information received or 
obtained during the proceeding.
    (b) The interpretation will contain a written statement of the 
information upon which it is based and a legal analysis of and 
conclusions regarding the application of rulings, regulations and other 
precedent to the situation presented in the request.
    (c) Only those persons to whom an interpretation is specifically 
addressed, and other persons upon whom the DOE serves the interpretation 
and who are directly involved in the same transaction or act, are 
entitled to rely upon it. No person entitled to rely upon an 
interpretation shall be subject to civil or criminal penalties stated in 
title VII of FUA for any act taken in reliance upon the interpretation, 
notwithstanding that the interpretation shall thereafter be declared by 
judicial or other competent authority to be invalid.
    (d) DOE may at any time rescind or modify an interpretation on its 
own initiative. Rescission or modification shall be made by notifying 
persons entitled to rely on the interpretation that it is rescinded or 
modified. This notification will include a statement of the reasons for 
the rescission or modification and, in the case of a modification, a 
restatement of the interpretation as modified.
    (e) An interpretation is modified by a subsequent amendment to the 
regulations or ruling to the extent that it is inconsistent with the 
amended regulation or ruling.
    (f) Any person who believes he is directly affected by an 
interpretation issued by DOE, and who believes that he will be aggrieved 
by its implementation, may submit a petition for reconsideration of that 
interpretation to the General Counsel. DOE will acknowledge receipt of 
all requests for reconsideration; however, this acknowledgement in no 
way binds DOE to commence any proceeding on the request. If within sixty 
(60) days of DOE's acknowledgement of the receipt of a request for 
reconsideration, DOE has not issued either a notice of intent to 
commence a proceeding to reconsider the interpretation or a 
modification, revision or rescission of the original interpretation, the 
request for reconsideration will be deemed denied. DOE may, in its 
discretion, issue a formal denial of a request for reconsideration if:
    (1) The request has not been filed in a timely manner, and good 
cause therefor has not been shown;
    (2) The person requesting reconsideration is not aggrieved or 
otherwise injured substantially by the interpretation; or
    (3) The request is defective because it fails to state and to 
present facts and legal argument that the interpretation was erroneous 
in fact or in law, or that it was arbitrary or capricious.



                           Subpart J--Rulings



Sec. 501.140  Purpose and scope.

    DOE may issue rulings in accordance with the provisions of this 
subpart. DOE will publish each ruling in the Federal Register and in 10 
CFR part 518. A person is entitled to rely upon a ruling to the extent 
provided in this subpart.



Sec. 501.141  Criteria for issuance.

    (a) The General Counsel may issue a ruling whenever:
    (1) There has been a substantial number of inquiries with regard to 
similar factual situations or a particular section of the regulations; 
or
    (2) It is determined that a ruling will be of assistance to the 
public in applying the regulations to a specific situation.

[[Page 34]]



Sec. 501.142  Modification or rescission.

    (a) A ruling may be modified or rescinded by--
    (1) Publication of the modification or rescission by DOE in the 
Federal Register and in 10 CFR part 518; or
    (2) Adoption of a rule that supersedes or modifies a prior ruling.
    (b) A person shall not be subject to the sanctions or penalties 
stated in these regulations for actions taken in reliance upon a ruling, 
notwithstanding that the ruling is subsequently declared to be invalid 
or no longer applicable. A person affected by a ruling may not rely upon 
it for more than 30 days after it has been rendered invalid pursuant to 
issuance of a superseding rule by OFE, or after it has been rescinded or 
modified by DOE.



Sec. 501.143  Comments.

    Any interested person may file a written comment on or objection to 
a published ruling at any time with the Assistant General Counsel for 
Interpretations and Rulings at the address provided in Sec. 501.11.



                         Subpart K--Enforcement



Sec. 501.160  Purpose and scope.

    This subpart provides the procedures by which OFE may initiate 
enforcement proceedings on its own behalf and by which complaints 
concerning a violation of the Act or any rule or order thereunder may be 
filed.



Sec. 501.161  Filing a complaint.

    (a) A complaint under this subpart must be submitted in writing over 
the signature of the person making the complaint in accordance with the 
general filing requirements stated in Sec. 501.7. OFE will accept oral 
complaints that otherwise satisfy the requirements of this subpart, but 
OFE may request written verification.
    (b) A complaint shall be filed at the address provided in 
Sec. 501.11.



Sec. 501.162  Contents of a complaint.

    A complaint must contain a complete statement of all relevant facts 
pertaining to the act or transaction that is the subject of the 
complaint. It must also include the names and addresses of all persons 
involved (if reasonably ascertainable), a description of the events that 
led to the complaint, and a statement describing the statutory 
provision, regulation, ruling, order, rule, or interpretation that 
allegedly has been violated.



Sec. 501.163  OFE evaluation.

    (a) The record shall consist of the complaint and any supporting 
documents and all other relevant information developed in the course of 
any investigations or proceedings related to that complaint. OFE may 
investigate and corroborate any statement in the complaint or related 
documents submitted, and may utilize in its evaluation any relevant 
facts obtained by such investigation or from any other source of 
information. OFE may solicit or accept submissions from third persons 
relevant to the complaint or other related documents.
    (b) Confidentiality of information. OFE will treat as confidential 
information received in any investigation of a complaint, including the 
identity of the complainant and the identity of any other persons who 
provide information to the extent such information is exempt from public 
disclosure under the Freedom of Information Act, 5 U.S.C. 552. OFE 
reserves the right to make disclosures that would be in the public 
interest.



Sec. 501.164  Decision to initiate enforcement proceedings.

    After investigation of a specific complaint or based on any relevant 
information received or obtained during an investigation, OFE may issue 
a notice of violation, determine that no violation has occurred, or take 
such other actions as it deems appropriate. Prior to issuance of a 
notice of violation, and before commencement of an enforcement 
proceeding, OFE may transmit a draft of the notice of violation to the 
potentially affected person in order to promote an informal resolution 
of the violation.



Sec. 501.165  Commencement of enforcement proceedings.

    (a) Whenever, on the basis of any information available, OFE 
determines that a person is in violation or about

[[Page 35]]

to be in violation of any provision of these regulations, OFE may issue 
a notice of violation stating, in writing and with reasonable 
specificity, the nature of the violation. An enforcement proceeding 
commences with the issuance of a notice of violation.
    (b) Contents of the notice of violation. OFE will set forth in the 
notice of violation the nature of the violation, the relevant facts that 
OFE believes establish the violation and the legal basis for the 
conclusions reached therein. OFE may also include with the notice of 
violation a copy of a proposed order. The notice of violation will also 
state whether or not OFE proposes to assess civil penalties.
    (1) If OFE proposes to assess a civil penalty, a notice of violation 
will be issued to the violator with an opportunity for a hearing before 
an Administrative Law Judge, as set forth in Sec. 501.166(a)(1) of this 
part, before any final determination on the violation and penalty are 
made by OFE. The recipient of the notice will also be informed of his 
right to elect to have the procedures of Sec. 501.166(a)(2) apply, in 
lieu of the hearing, with respect to a final determination on the 
assessment of any civil penalty.
    (2) If OFE does not propose to assess a civil penalty, the violator 
will be provided the opportunity for a conference, as set forth in 
Sec. 501.166(b), before a final determination on the violation is made 
by OFE. OFE may, in its discretion, also provide the violator an 
opportunity for a hearing pursuant to Sec. 501.166(a)(1).
    (c) Service. OFE will serve the notice of violation in accordance 
with provisions set forth in Sec. 501.6.
    (d) Rescission. If, after issuance of a notice of violation and any 
related investigation, OFE finds no basis for the belief that a 
violation has occurred, is continuing to occur, or is about to occur, 
OFE may rescind the notice of violation by giving written notice to that 
effect to the recipient.



Sec. 501.166  Hearings and conferences.

    (a) When a civil penalty is proposed. (1) Hearing alternative in 
civil penalty assessment proceedings. Unless the recipient of a notice 
of violation elects in writing to have the provisions of paragraph 
(a)(2) of this section apply, OFE will commence a proceeding to assess a 
penalty and, prior to a final determination on the violation and 
assessment of a penalty, provide an opportunity for a hearing pursuant 
to 5 U.S.C. 554 before an Administrative Law Judge.
    (2) Election alternative in civil penalty assessment proceedings. 
The recipient of a notice of violation in which a civil penalty 
assessment has been proposed may elect, in writing, within thirty (30) 
days of receipt of the notice, to waive the administrative proceedings 
described in paragraph (a)(1) of this section. OFE will make a 
determination on the proposed civil penalty assessment and issue a final 
order to that effect within forty-five (45) days after receiving notice 
of the exercise of this election.
    (b) When a civil penalty is not proposed--opportunity to request a 
conference. If a person has received a notice of violation in which a 
civil penalty has not been proposed, he may, within thirty (30) days 
after receipt of the notice, request a conference with OFE to discuss 
the notice. In order to request a conference he must comply with the 
instructions set forth in the notice.



Sec. 501.167  Fuel use order.

    (a) General. OFE will issue a Fuel Use Order if, after considering 
all the information received during the proceeding, OFE determines that 
a person has committed, is committing, or is about to commit a violation 
of FUA or of an order or rule thereunder.
    (b) Contents. Any Fuel Use Order issued under this section shall set 
forth the relevant facts and legal basis for the order and where 
appropriate, the final penalty assessment and the basis therefor. When 
an administrative hearing is requested under Sec. 501.166(a) of this 
part, the Fuel Use Order will include the recommended findings and 
conclusions of the Administrative Law Judge (ALJ) and the basis for the 
penalty assessment. OFE will make a final determination as to any 
penalty assessment or other appropriate remedy based upon the 
recommended findings and conclusions of the ALJ and other information in 
the record of the enforcement proceeding. The order will

[[Page 36]]

be effective upon service, unless otherwise provided therein, or stayed 
pursuant to Sec. 501.120.
    (c) Service. OFE will serve a copy of the Fuel Use Order upon any 
person who was served a copy of the notice of violation and upon all 
parties to any public proceeding on the notice of violation. OFE will 
place a copy of each final order on file in the Public Information 
Office described in Sec. 501.12.
    (d) Judicial review. Any person against whom a penalty is assessed 
pursuant to Sec. 501.167(b) after a hearing before an ALJ may, within 
sixty (60) calendar days after the date of issuance of the order 
assessing such penalty, institute an action in the United States Court 
of Appeals for the appropriate judicial circuit for judicial review of 
such order in accordance with the provisions of section 723 of FUA.



  Subpart L--Investigations, Violations, Sanctions and Judicial Actions



Sec. 501.180  Investigations.

    (a) General. Pursuant to section 711 of FUA, the DEOA, and in 
accordance with the provisions of 10 CFR 205.201, OFE may initiate and 
conduct investigations relating to the scope, nature, and extent of 
compliance by any person with the rules, regulations, and orders issued 
by OFE under the authority of the Act, or any order or decree of court 
relating thereto, or any other agency action. When the circumstances 
warrant, OFE may issue subpoenas as provided in subpart D of this part. 
OFE may also conduct investigative conferences in conjunction with any 
investigation.
    (b) Any duly authorized representative of OFE has the authority to 
conduct an investigation and to take such action as he deems necessary 
and appropriate to the conduct of the investigation.
    (c) Notification. If any person is required to furnish information 
or documentary evidence pursuant to a subpoena or special report order, 
OFE will, upon written request, inform that person as to the general 
purposes of the investigation.
    (d) Confidentiality. OFE shall not disclose any information received 
during an investigation under this section, including the identities of 
the person investigated and any other person who provides information, 
to the extent it is exempt from public disclosure pursuant to 5 U.S.C. 
552 and 10 CFR part 1004.



Sec. 501.181  Sanctions.

    (a) General. (1) A violation of any provision of the Act (other than 
section 402 of FUA), or any rule or order thereunder shall be subject to 
the penalties and sanctions provided in subtitle C of title VII of FUA.
    (2) Each day that any provision of the Act (other than section 402), 
or any rule or order thereunder is violated constitutes a separate 
violation within the meaning of the provisions of this section relating 
to civil penalties.
    (b) Criminal penalties. Any person who willfully violates any 
provision of the Act (other than section 402), or any rule or order 
thereunder will be subject to a fine of not more than $50,000, or to 
imprisonment for not more than 1 year, or both, for each violation.
    (c) Civil penalties. (1) Any person who violates any provisions of 
the Act (other than section 402) or any rule or order thereunder will be 
subject to the following civil penalty, which may not exceed $27,500 for 
each violation: Any person who operates a powerplant or major fuel 
burning installation under an exemption, during any 12-calendar-month 
period, in excess of that authorized in such exemption will be assessed 
a civil penalty of up to $3.30 for each MCF of natural gas or up to $11 
for each barrel of oil used in excess of that authorized in the 
exemption.
    (2) OFE may compromise and settle, and collect civil penalties 
whenever it considers it to be appropriate or advisable.
    (d) Corporate personnel. (1) If a director, officer, or agent of a 
corporation willfully authorizes, orders, or performs any act or 
practice constituting in whole or in part a violation of the Act, or any 
rule or order thereunder, he will be subject to the penalties specified 
in paragraphs (b) and (c) of this section without regard to any 
penalties to which the corporation may be subject. He will not, however, 
be subject to imprisonment under paragraph (b) of

[[Page 37]]

this section unless he knew of noncompliance by the corporation, or had 
received from OFE notice of noncompliance by the corporation.
    (2) Purposes of this paragraph:
    (i) Agent includes any employee or other person acting on behalf of 
the corporation on either a temporary or permanent basis; and
    (ii) Notice of noncompliance is a final Fuel Use Order issued under 
Sec. 501.167 of this part.

[46 FR 59889, Dec. 7, 1981, as amended at 62 FR 46183, Sept. 2, 1997]



Sec. 501.182  Injunctions.

    Whenever it appears to OFE that any person has committed, is 
committing, or is about to commit a violation of any provision of the 
Act, or any rule or order thereunder, OFE may, in accordance with 
section 724 of FUA, bring a civil action in the appropriate United 
States District Court to enjoin such acts or practices. The relief 
sought may include a mandatory injunction commanding any person to 
comply with any provision of such provision, order or rule, the 
violation of which is prohibited by section 724 of FUA and may also 
include interim equitable relief.



Sec. 501.183  Citizen suits.

    (a) General. A person who believes he is aggrieved by the failure of 
OFE to perform any nondiscretionary act of duty under the Act may file a 
Petition for Action for OFE to take such action as he may feel to be 
proper. This petition must be filed at the address provided in 
Sec. 501.11. The petition must specify the action requested and set 
forth the facts and legal arguments that constitute the basis for the 
request. The filing of a Petition for Action will serve as notice to OFE 
under FUA section 725(b) for purposes of any citizens suit that may be 
subsequently filed.
    (b) OFE decision. Within sixty (60) days of receiving the Petition 
for Action, OFE will notify the person giving notice under this section 
that it has instituted the action requested or that other described 
action is being taken, or that other described action is being taken, or 
that no action is being taken and the reasons therefor.



      Subpart M--Use of Natural Gas or Petroleum for Emergency and 
                 Unanticipated Equipment Outage Purposes



Sec. 501.190  Purpose and scope.

    (a) If a person operates a powerplant covered by any of the 
prohibitions of titles II, III, or IV of FUA, Sec. 501.191 of this 
subpart establishes procedures to be followed for the use of minimum 
amounts of natural gas or petroleum under FUA section 103(a)(15)(B) in 
order to alleviate or prevent unanticipated equipment outages and 
emergencies directly affecting the public health, safety, or welfare 
that would result from electric power outages.
    (b) Explanatory note: If a person operates a rental boiler as a 
powerplant covered by any of the prohibitions of titles II, III, or IV 
of FUA, he may be able to use the provisions of this subpart for the 
emergency use of natural gas or petroleum.

[54 FR 52893, Dec. 22, 1989]



Sec. 501.191  Use of natural gas or petroleum for certain unanticipated equipment outages and emergencies defined in section 103(a)(15)(B) of the act.

    (a) In the event of the occurrence or imminent occurrence of an 
emergency, or of the occurrence or imminent occurrence of an 
unanticipated equipment outage in the unit, an owner or operator of a 
powerplant is automatically permitted to use minimum amounts of natural 
gas or petroleum in the unit or in a substitute unit to prevent or 
alleviate the outage or to prevent or alleviate the emergency if he 
complies with procedures contained in paragraph (b) of this section.
    (b) If the use of minimum amounts of petroleum or natural gas is 
required for purposes specified in this section, the owner or operator 
must notify OFE of such use by telegram or telephone within 24 hours 
after the commencement of such use. Immediately thereafter a written 
confirmation must be submitted to OFE, describing, to the best estimate 
of the owner or operator, (1) the nature of the emergency and (2) how 
long petroleum or natural gas use is likely to be required.

[[Page 38]]

    (c) For purposes of this section only:
    (1) An emergency is the occurrence or threat of imminent occurrence 
of a condition which results or would result from an electric power 
outage and directly effects or would directly effect the public health, 
safety or welfare;
    (2) Unanticipated equipment outage shall mean an unexpected outage 
due to equipment failure.
    (3) Minimum amounts required to alleviate or prevent shall mean:
    (i) For powerplants, the amounts of natural gas or petroleum 
required to prevent curtailment of electric supply where the operating 
utility has, to the maximum extent possible, utilized alternate fuel-
fired capacity to prevent such curtailment. Note--A utility operating 
hydroelectric facilities may take into account seasonal fluctuations in 
storage capacity and shall be permitted to prevent depletion of stored 
power-producing capacity as deemed necessary by the utility; and
    (ii) For installations, the amounts of natural gas or petroleum 
required to meet plant protection or human health and safety needs, 
including services to hospitals, public transportation facilities, 
sanitation, or water supply and pumping.

[46 FR 59889, Dec. 7, 1981, as amended at 54 FR 52893, Dec. 22, 1989]



Sec. 501.192  [Reserved]



PART 503--NEW FACILITIES--Table of Contents




                     Subpart A--General Prohibition

Sec.
503.1  Purpose and scope.
503.2  Prohibition.
503.3  [Reserved]

             Subpart B--General Requirements for Exemptions

503.4  Purpose and scope.
503.5  Contents of petition.
503.6  Cost calculations for new powerplants and installations.
503.7  State approval--general requirement for new powerplants.
503.8  No alternate power supply--general requirement for certain 
          exemptions for new powerplants.
503.9  Use of mixtures--general requirement for certain permanent 
          exemptions.
503.10  Use of fluidized bed combustion not feasible--general 
          requirement for permanent exemptions.
503.11  Alternative sites--general requirement for permanent exemptions 
          for new powerplants.
503.12  Terms and conditions; compliance plans.
503.13  Environmental impact analysis.
503.14  Fuels search.

           Subpart C--Temporary Exemptions for New Facilities

503.20  Purpose and scope.
503.21  Lack of alternate fuel supply.
503.22  Site limitations.
503.23  Inability to comply with applicable environmental requirements.
503.24  Future use of synthetic fuels.
503.25  Public interest.

           Subpart D--Permanent Exemptions for New Facilities

503.30  Purpose and scope.
503.31  Lack of alternate fuel supply for the first 10 years of useful 
          life.
503.32  Lack of alternate fuel supply at a cost which does not 
          substantially exceed the cost of using imported petroleum.
503.33  Site limitations.
503.34  Inability to comply with applicable environmental requirements.
503.35  Inability to obtain adequate capital.
503.36  State or local requirements.
503.37  Cogeneration.
503.38  Permanent exemption for certain fuel mixtures containing natural 
          gas or petroleum.
503.39-503.44  [Reserved]

    Authority: Department of Energy Organization Act, Pub. L. 95-91, 91 
Stat. 565 (42 U.S.C. Sec. 7101 et seq.); Powerplant and Industrial Fuel 
Use Act of 1978, Pub. L. 95-620, 92 Stat. 3289 (42 U.S.C. 8301 et seq.); 
Energy Security Act, Pub. L. 96-294, 94 Stat. 611 (42 U.S.C. 8701 et 
seq.); E.O. 1209, 42 FR 46267, September 15, 1977.

    Source: 46 FR 59903, Dec. 7, 1981, unless otherwise noted.

OMB Control No.: 1903-0075. See 46 FR 63209, Dec. 31, 1981.



                     Subpart A--General Prohibition



Sec. 503.1  Purpose and scope.

    This subpart sets forth the statutory prohibition imposed by the Act 
upon new powerplants. The prohibition in the subpart applies to all new 
baseload electric powerplants unless an exemption has been granted by 
OFE under

[[Page 39]]

subparts C and D of this part. Any person who owns, controls, rents, 
leases or operates a new powerplant that is subject to the prohibition 
may be subject to sanctions provided by the Act or these regulations.

[54 FR 52893, Dec. 22, 1989]



Sec. 503.2  Prohibition.

    Section 201 of the Act prohibits, unless an exemption has been 
granted under subpart C or D of this part, any new electric powerplant 
from being constructed or operated as a baseload powerplant without the 
capability to use coal or another alternate fuel as a primary energy 
source.

[54 FR 52893, Dec. 22, 1989]



Sec. 503.3  [Reserved]



             Subpart B--General Requirements for Exemptions



Sec. 503.4  Purpose and scope.

    This subpart establishes the general requirements necessary to 
qualify for either a temporary or permanent exemption under this part 
and sets out the methodology for calculating the cost of using an 
alternate fuel and the cost of using imported petroleum.



Sec. 503.5  Contents of petition.

    Before OFE will accept a petition for either a temporary or 
permanent exemption under this part, the petition must include all of 
the evidence and information required in this part and part 501 of this 
chapter.



Sec. 503.6  Cost calculations for new powerplants and installations.

    (a) General. (1) This calculation compares the cost of using 
alternate fuel to the cost of using imported petroleum. It must be 
performed for each alternate fuel and/or alternate site that the 
petitioner is required to examine.
    (2) The cost of using an alternate fuel as a primary energy source 
will be deemed to substantially exceed the cost of using imported 
petroleum if the difference between the cost of using alternate fuel and 
the cost of using imported oil is greater than zero.
    (3) There are two comparative cost calculations--a general cost test 
and a special cost test. Both take into consideration cash outlays for 
capital investments, annual expenses, and the effect of depreciation and 
taxes on cash flow. To demonstrate eligibility for a permanent 
exemption, a petitioner must use the procedures specified in the general 
cost test (paragraph (b) of this section). To demonstrate eligibility 
for a temporary exemption, the petitioner may apply the procedures 
specified in either the general cost test or the special cost test 
(paragraph (c) of this section).
    (b) Cost calculation--general cost test. (1) A petitioner may be 
eligible for a permanent exemption if he can demonstrate that the cost 
of using an alternate fuel from the first year of operation 
substantially exceeds the cost of using imported petroleum. Unless the 
best practicable cost estimates as prescribed below will not materially 
change during the first ten years of operation of the unit (given the 
best information available at the time the petition is filed), the 
petitioner must also demonstrate that the cost of using an alternate 
fuel beginning at any time within the first ten years of operation and 
using imported petroleum or natural gas until such time (i.e., delayed 
use of alternate fuel) would substantially exceed the cost of using only 
imported petroleum.
    (2) The petitioner would only be eligible for a temporary exemption 
if the computed costs of delayed alternate fuel use, commencing at the 
start of the second through eleventh years of operation, do not always 
substantially exceed the cost of using only imported petroleum. The 
length of the temporary exemption would be the minimum period from the 
start of operation in which the cost of using alternate fuel 
substantially exceeds the cost of using imported petroleum.
    (3) To conduct the general cost test, calculate the difference 
(DELTA) between the cost of using an alternate fuel (COST(ALTERNATE)) 
and the cost of using imported petroleum (COST(OIL)) using Equations 1 
through 3 below and the comparison procedures in paragraph (b)(5) of 
this section.

[[Page 40]]

[GRAPHIC] [TIFF OMITTED] TC01OC91.000

    (4) The terms in Equations 2 and 3 are defined as follows:

i=Year. i is a specified year either before year 0 or after year 0. Year 
          0 is the year before the unit becomes operational. For 
          example, in the third year before the unit becomes 
          operational, i would equal -2, and in the third year following 
          commencement of operations of the unit, i would equal +3. 
          Years are represented by 52 week periods prior to or following 
          the date on which the unit becomes operational. Outlays before 
          the unit becomes operational are future valued to the year 
          before the unit becomes operational (year 0), and outlays 
          after the unit becomes operational are present valued to the 
          year before the unit becomes operational. Year 0 must be the 
          same for the units being compared.
g=The number of years prior to the year before the unit becomes 
          operational (year 0) that (1) a cash outlay is first made for 
          capital investments, or (2) an investment tax credit is first 
          used--whichever occurs first.
N=The useful life of the unit (see paragraph (d)(5) of this section).
Ii=Yearly cash outlay (in dollars) from the year outlays 
          first occur to the last year of the unit's useful life for 
          capital investments. (See paragraph (d)(2) of this section for 
          the items that must be included.)
OMi=Annual cash outlay in year i (in dollars) for all 
          operations and maintenance expenses except fuel (i.e., all 
          non-capital and non-fuel cash outlays caused by putting the 
          capital investments (I) into service). This may include labor, 
          materials, insurance, taxes (except income taxes), etc. (See 
          paragraph (d)(3) of this section.)
Si=Salvage value of capital investment (in dollars) in year 
          i.
FLi=Annual cash outlay for delivered fuel expenses (in 
          dollars) in year i. (See paragraph (d)(3) of this section for 
          FLi calculation instructions and appendix II of 
          these regulations for the procedures to determine fuel price.)
k=The discount rate expressed as a fraction (see paragraph (d)(4) of 
          this section).
ITCi=Federal investment tax credit used in year i resulting 
          from capital investments (see paragraph (d)(6) of this 
          section).
DPRi=Depreciation in year i resulting from capital 
          investments (see paragraph (d)(6) of this section).
ti=Marginal income tax rate in year i (see paragraph (d)(6) 
          of this section).
IXi=Inflation index value for year i (see appendix II to part 
          504 for method of computation).
IXe=Inflation index value for the year e, the year before the 
          asset is placed in service.

    (5) The step-by-step procedure that follows shows the comparison 
that the petitioner must make.

[[Page 41]]

    (i) Compute the cost of using an alternate fuel (COST(ALTERNATE)) 
unit throughout the useful life of the unit using Equations 2 and 3.
    (ii) Compute the cost of using oil or natural gas (COST(OIL)) 
throughout the useful life of the unit using Equations 2 and 3.
    (iii) Using Equation 1, compute the difference (DELTA) between COST 
(ALTERNATE) and COST (OIL). If the difference (DELTA) is less than or 
equal to zero, a petitioner is not eligible for a permanent or temporary 
exemption using the general cost test and need not complete the 
remainder of the general cost test calculation. However, he still may be 
eligible for a temporary exemption using the special cost test 
(paragraph (c) of this section). If the difference (DELTA) is greater 
than zero and if the best practicable cost estimates will not materially 
change during the first ten years of operation (given the best 
information available at the time the petition is filed), the petitioner 
has completed the test and is eligible for a permanent exemption. 
However, if the best practicable cost estimate will materially change 
during the first ten years, the petitioner must complete the remainder 
of the general cost test--the delayed use calculations which follow.
    (iv) Recompute COST (ALTERNATE) with Equations 2 and 3, assuming 
that an alternate fuel is not used as the primary energy source until 
the start of the second year of operation and that imported petroleum or 
natural gas is used for the first year of operation. All cash outlays 
should reflect postponed use of alternate fuel.
    (v) Successively recompute COST (ALTERNATE) with Equations 2 and 3, 
assuming that the alternate fuel use is postponed until the start of the 
third year, fourth year, and so on, through the beginning of the 
eleventh year of operation (with imported petroleum or natural gas used 
in the years preceding alternate fuel use).
    (vi) Compute the difference (DELTA) between each of the ten 
COST(ALTERNATE)s calculated in paragraph (b)(5) (iv) and (v) of this 
section and the COST(OIL) calculated in paragraph (b)(5)(ii) of this 
section.
    (vii) If all the DELTAs computed in paragraph (b)(5) (iii) and (vi) 
of this section are greater than zero, the petitioner is eligible for a 
permanent exemption. If one or more of the DELTAs is less than or equal 
to zero, he is eligible for a temporary exemption for the period 
beginning at the start of the first year of operation and terminating at 
the beginning of the first year in which a DELTA is zero or less.
    (c) Cost calculations--special cost test. (1) A petitioner may be 
eligible for a temporary exemption if he demonstrates that the cost of 
using an alternate fuel will substantially exceed the cost of using 
imported petroleum or (natural gas) over the period of the proposed 
exemption. The period of the proposed temporary exemption may not exceed 
ten years.

The petitioner must demonstrate that the cost of using an alternate fuel 
substantially exceeds the cost of using imported petroleum for the first 
year of operation, the first two years of operation, and so forth, 
through the period of the proposed exemption. OFE will limit the 
duration of a temporary exemption to the shortest time possible.
    (2) To conduct the test, calculate the difference (DELTA) between 
the cost of using an alternate fuel (COST (ALTERNATE)) and the cost of 
using imported petroleum (COST (OIL)) using Equations 4 and 5 below, 
Equation 3 (paragraph (b)(3) of this section), and the comparison 
procedures in paragraph (c)(4) of this section.

[[Page 42]]

[GRAPHIC] [TIFF OMITTED] TC01OC91.001

    Capital investment (I) is calculated with Equation 3 (paragraph 
(b)(3) of this section).
    (3) The terms in Equation 5 are the same as those in Equation 2 with 
the addition of P, the length of the proposed temporary exemption in 
years. (See paragraph (b)(4) of this section for other terms.)
    (4) The step-by-step procedure that follows shows the comparisons 
which must be made.
    (i) Using Equation 5, compute the cost of using an alternate fuel 
(COST(ALTERNATE)) assuming the length of the proposed exemption is one 
year.
    (ii) Likewise, compute the cost of using imported petroleum or 
natural gas (COST(OIL)) assuming the length of the proposed exemption is 
one year.
    (iii) Compute the difference (DELTA) between COST (ALTERNATE) and 
COST (OIL) using Equation 4.
    (iv) Repeat the calculations made in (i), (ii), and (iii) above, 
assuming the length of the proposed exemption is two years, three years, 
four years, and so on, up through the period of the proposed exemption.
    (v) A petitioner is eligible for a temporary exemption for the 
period beginning at the start of the first year of operation and 
terminating at the beginning of the first year in which a DELTA is zero 
or less.
    (d) Information on parameters used in the calculations. (1) All 
estimated expenditures, except fuel, shall be expressed in real terms 
(unadjusted for inflation) by using the prices in effect at the time the 
petition is submitted. Instructions for fuel price calculations are 
contained in appendix II.
    (2) Capital investment yearly cash outlays (Ii) must 
include all items that are capital investments for Federal income tax 
purposes. All purchased equipment that has a useful life greater than 
one year, capitalized engineering costs, land, construction, 
environmental offsets, fuel inventory, transmission facilities, piping, 
etc., that are necessary for the operation of the unit must be included. 
However, an item must only be included if a cash outlay is required 
after the decision has been made to build the unit; sunk costs must not 
be included (e.g., if the firm owns the land, its purchase price may not 
be included).

    Note: The guidelines for the fuel inventory for powerplants not 
using natural gas shall be: (a) All powerplants with only steam driven 
turbines--78 days, (b) all powerplants with only combustion turbines--
142 days, (c) all powerplants with combined cycles--both steam driven 
turbines and combustion turbines--142 days. The guidelines for the fuel 
inventory for installations not using natural gas shall be the greater 
of: (1) 21 days fuel supply, or (2) sufficient fuel to fill sixty (60) 
percent of the storage volume. The guidelines for the fuel inventory for 
all facilities using natural gas shall be zero unless the gas supply is 
interruptible in which case an appropriate inventory of back-up fuel 
must be included. Other inventory levels may be used if they are more 
appropriate than these guidelines; however, the source or derivation of 
these levels must be discussed in the evidential summary.


[[Page 43]]


    (3)(i) The annual cash outlays for operations and maintenance 
expense (OMi) and fuel expense (FLi) for a 
powerplant may be computed by one of the following three methods; 
however, the one chosen must be consistently applied throughout the 
analysis.
    (A) Assume the energy produced by the powerplant equals seventy (70) 
percent of design capacity times 8760 hours for each year during the 
life of the powerplant, and compute cash outlays for operations, 
maintenance, and fuel expenses for the powerplant.
    (B) Economically dispatch the new powerplant. The cash outlays for 
operations, maintenance, and fuel expenses of all powerplants being 
dispatched (where oil and natural gas are priced according to the 
procedures of appendix II\1\) are the corresponding expenses for the 
purpose of the cost calculation. The dispatch analysis area must be that 
area with which the firm currently dispatches, anticipates dispatching, 
and will be interconnected. It must also include all anticipated 
exchanges of energy with other utilities or powerpools. The outlays for 
operations, maintenance, and fuel may also be estimated using a 
methodology that incorporates the benefits of economically dispatching 
units and provides consistent treatment in the alternate fuel and oil or 
natural gas cases being compared.
    (C) Use a dispatch analysis to project the energy produced by the 
powerplant for a representative (not atypical) year of operation when 
consuming an alternate fuel. Compute the cash outlays for operations, 
maintenance, and fuel expenses for the powerplant based upon the level 
of energy production estimated for the representative year. The dispatch 
analysis and fuel expenses for the cost calculation must include oil and 
natural gas priced according to the procedures of appendix II.\1\
    (ii) When computing the annual cash outlays for operations and 
maintenance expense (OMi) and fuel expense (FLi) 
for an installation, specify the firing rates and the length of time 
each firing rate will be maintained.
    (4) The discount rate (k) for analyses is 2.9 percent or that which 
is computed as specified in appendix I. The method of computing the 
inflation index (IX) is shown in appendix II to part 504. OFE will 
modify these specified rates from time to time as required by changed 
conditions after public notice and an opportunity to comment. However, 
the relevant set of specified rates for a specific petition for 
exemption will be the set in effect at the time the petition is 
submitted or the set in effect at the time a decision is rendered, 
whichever set is more favorable to the petitioner.
    (5)(i) The guidelines for the useful life (N) of all powerplants 
except nuclear will be thirty-five (35) years. The guidelines for the 
useful life of a nuclear powerplant will be forty (40) years. The 
guidelines for the useful life of major fuel burning installations will 
be forty (40) years. Other useful life projections may be used if they 
are more appropriate than these guidelines; however, the source or 
derivation of these projections must be contained in the evidential 
summary. The summary should include a discussion of engineering, 
economic historical or other evidence.
    (ii) If the units being compared have different useful lives, the 
petitioner will have to modify his calculation so that the two cash 
flows being compared have the length of the shorter useful life. To do 
this, (A) use the shorter of the two useful lives in Equations 2 and 5 
for both units, and (B) multiply capital investment (I) of the unit with 
the longer life (computed with Equation 3) by the following adjustment 
factor (A):
[GRAPHIC] [TIFF OMITTED] TC01OC91.002

where:
R=The useful life of the facility with the longer life.
Q=The useful life of the facility with the shorter life.
k=The discount rate (see paragraph (d)(4) above).

    (6) All Federal investment tax credits (ITCi) and 
depreciation (PRi) values are those used for Federal income 
tax purposes and must be applied consistently throughout the analysis 
and in a manner consistent with the Federal tax

[[Page 44]]

laws. All investment tax credits allowed under Federal tax law must be 
reflected in the computations. The petitioner must use the method of 
depreciation which results in the greatest present value of the cash 
flow due to the tax and depreciation effect. The marginal income tax 
rate (ti) is the firm's anticipated marginal Federal income 
tax rate in year i. The relevant investment tax credits, depreciation 
methodology, and marginal Federal income tax rates for a specific 
exemption petition will be those prescribed by Federal law in effect (or 
those tax parameters which are known with certainty will be in effect) 
at the time a decision is rendered. (However, if an investment tax 
credit expires in a certain year under the law which is in effect at the 
time the petition is submitted, the petitioner must assume that it will 
in fact expire in that year.)
    (7) If powerplants are being compared, the design capacities or the 
maximum sustained energy per unit of time that could be produced must be 
the same. If installations are being compared, the maximum sustained 
energy per unit of time that could be produced must be the same.
    (8) All estimated cash outlays must be computed in accordance with 
generally accepted accounting principles consistently applied.
    (9) The scope of the estimates of relevant costs (as discussed 
above) of units being compared must be the same.
    (10) All allowances for uncertainty and risk in the cost estimates 
must be explicit.
    (11) All cash outlays must be net of any government subsidies or 
grants.
    (e) Evidence in support of the cost calculation. Petitioners for an 
exemption which requires the use of the cost calculation shall certify 
that the cost of using alternate fuel substantially exceeds the cost of 
using oil as primary energy source as calculated in this section. A 
brief summary of the petitioner's supporting calculations and estimates 
shall be submitted with the certification. The summary should include 
the following:
    (1) Cash outlays, Investment tax credits, depreciation 
methodologies, and anticipated salvage for capital investments including 
a description of all major construction and equipment;
    (2) Annual cash outlays for operations and maintenance expenses 
including the formulas used to compute them; and
    (3) Annual cash outlays for delivered fuel expenses including the 
formulas used to compute them.

[46 FR 59903, Dec. 7, 1981; 46 FR 63033, Dec. 30, 1981; 47 FR 15314, 
Apr. 9, 1982; 54 FR 52893, Dec. 22, 1989]



Sec. 503.7  State approval--general requirement for new powerplants.

    (a) Where approvals by the appropriate State regulatory authority 
are required prior to the construction or use of a new powerplant, a 
petition for an exemption for consideration by OFE may be submitted to 
OFE prior to obtaining such approvals from the State regulatory 
authority.
    (b) An exemption granted for a powerplant shall not become effective 
until an adequate demonstration has been made to OFE that all applicable 
approvals required by the State regulatory authorities have been 
obtained.



Sec. 503.8  No alternate power supply--general requirement for certain exemptions for new powerplants.

    (a) Application. To qualify for an exemption, except in the case of 
an exemption for cogeneration units, section 213(c) of the Act requires 
a demonstration that, despite reasonable good faith efforts, there is no 
alternative supply of electric power available within a reasonable 
distance at a reasonable cost without impairing short-run or long-run 
reliability of service. If a petitioner is unable to demonstrate that 
there is no alternate supply during the first year of operation, OFE 
will conclude that the absence of the proposed powerplant will not 
impair short-term reliability of service, and as a result will not grant 
the exemption. Such action would not impair long-term reliability of 
service, since a petition may be submitted for a powerplant that would 
begin operation in a subsequent year.
    (b) Criteria. To meet the demonstration required under paragraph (a) 
of this section, a petitioner must certify that:

[[Page 45]]

    (1) A diligent effort has been made to purchase firm power for the 
first year of operation to cover all or part of the projected shortfall 
at a cost that is less than ten (10) percent above the annualized cost 
of generating power from the proposed plant (including the capital, 
operation and maintenance expenses, and fuel prices); and
    (2)(i) Despite these efforts, the reserve margin in the petitioner's 
electric region, normal dispatch area, or service area, in the absence 
of the proposed plant, would fall below twenty (20) percent during the 
first year of proposed operation; or
    (ii) Despite these efforts, the reserve margin will be greater than 
twenty (20) percent but reliability of service would be impaired. In 
such case, the certification must be related to factors not included in 
the calculation of reserve margin, such as transmission constraints.
    (c) Evidence. The petition must include the following evidence in 
order to make the demonstration required by this section:
    (1) Duly executed certification required under paragraph (b) of this 
section; and
    (2) Exhibits containing the basis for the certification submitted 
under this section (including those factual and analytical materials 
deemed by the petitioner to be sufficient to support its certification 
to this general requirement).
    (d) FERC consultation. OFE will forward a copy of any petition for 
which a showing is required under this section to FERC promptly after it 
is filed with OFE, and OFE will consult with FERC before making the no 
alternate supply of power finding.

[46 FR 59903, Dec. 7, 1981, as amended at 47 FR 15314, Apr. 9, 1982; 54 
FR 52894, Dec. 22, 1989]



Sec. 503.9  Use of mixtures--general requirement for certain permanent exemptions.

    (a) Criteria. To qualify for a permanent exemption, except in the 
case of an exemption for fuel mixtures, section 213(a)(1) of the Act 
requires a demonstration that the use of a mixture of natural gas and 
petroleum and an alternate fuel for which an exemption under 10 CFR 
503.38 (Fuel mixtures) would be available, would not be economically or 
technically feasible.
    (b) Evidence. The petition must include the following evidence in 
order to make the demonstration required by this section:
    (1) Duly executed certifications to the criteria set forth in 
paragraph (a) of this section; and
    (2) Exhibits containing the basis for the certifications submitted 
under this section (including those factual and analytical materials 
deemed by the petitioner to be sufficient to support its certifications 
to this general requirement.)

    Note: In meeting this general requirement, OFE will require a 
petitioner to examine only mixtures of oil and coal and natural gas and 
coal, or, where petitioner wishes to examine an additional or substitute 
mixture, such other alternate fuels as OFE and the petitioner agree are 
reasonable to petitioner's circumstances.

[46 FR 59903, Dec. 7, 1981, as amended at 54 FR 52894, Dec. 22, 1989]



Sec. 503.10  Use of fluidized bed combustion not feasible--general requirement for permanent exemptions.

    (a) OFE finding. Except in the case of an exemption for fuel 
mixtures, OFE may deny permanent exemptions authorized under section 212 
of the Act if OFE finds on a site-specific or generic basis that use of 
a method of fluidized bed combustion of an alternate fuel is 
economically and technically feasible.
    (b) Demonstration. If OFE has made such a finding, OFE will deny a 
petitioner's request for exemption unless the petitioner demonstrated 
that the use of a method of fluidized bed combustion is not economically 
or technically feasible. The petition or any supplement thereto required 
by OFE must include the following evidence:
    (1) If use of a method of fluidized bed combustion were to be 
required, evidence that the petitioner would be eligible for a permanent 
exemption for lack of alternate fuel supply, site limitations, 
environmental requirements, lack of adequate capital, or State or local 
requirements; or

[[Page 46]]

    (2) Use of a method of fluidized bed combustion is not technically 
or economically feasible due to design or special circumstances.

[46 FR 59903, Dec. 7, 1981, as amended at 54 FR 52894, Dec. 22, 1989]



Sec. 503.11  Alternative sites--general requirement for permanent exemptions for new powerplants.

    (a) Criteria. To qualify for permanent exemption due to lack of 
alternate fuel supply, site limitations, environmental requirements, or 
inadequate capital, section 212(a) of the Act requires a demonstration 
that one of these exemptions would be available for any reasonable 
alternative site for the facility.
    (b) Evidence. The petition must include the following evidence in 
order to make the demonstration required by this section:
    (1) Duly executed certifications to the criteria set forth in 
paragraph (a) of this section; and
    (2) Exhibits containing the basis for the certifications submitted 
under this section (including those factual and analytical materials 
deemed by the petitioner to be sufficient to support its certifications 
to this general requirement).

[46 FR 59903, Dec. 7, 1981, as amended at 54 FR 52894, Dec. 22, 1989]



Sec. 503.12  Terms and conditions; compliance plans.

    (a) Terms and conditions generally. A petitioner must comply with 
any terms and conditions imposed upon the grant of an exemption 
petition. OFE will limit any such terms and conditions to the unit(s) 
which is the subject of the petition.
    (b) Compliance plans for temporary exemptions. (1) Any compliance 
plan required to accompany a petition for a temporary exemption shall 
include the following:
    (i) A detailed schedule of progressive events and the dates upon 
which the events are to take place, indicating how compliance with the 
applicable prohibitions of the Act will occur;
    (ii) Evidence of binding contracts for fuel, or for facilities for 
the production of fuel, which are required for compliance with the 
applicable prohibitions of the Act;
    (iii) A schedule indicating how any necessary permits and approvals 
required to burn an alternate fuel will be obtained; and
    (iv) Any other documentary evidence which indicates an ability to 
comply with the applicable prohibitions of the Act.
    (2) Any exemption for which a compliance plan is required shall not 
be effective until the compliance plan is approved by DOE.
    (3) If the petition is granted, an updated, duly executed plan must 
be submitted to OFE within one (1) month of an alteration of any 
milestone in the compliance plan, together with the reasons for the 
alteration and its impact upon the scheduling of all other milestones in 
the plan.



Sec. 503.13  Environmental impact analysis.

    In order to enable OFE to comply with NEPA, a petitioner must 
include the information indicated in this section if a permanent 
exemption is requested. Material which has been prepared pursuant to any 
Federal, State or local requirement for environmental information for 
this unit or site may be incorporated by reference and appended to the 
petition. Guidelines issued by OFE for environmental reports should be 
used in preparing this analysis (44 FR 63740, November 5, 1979). These 
guidelines, which are also available in the OFE public document room, 
have been designed to insure that environmental reports follow the 
format prescribed by Council on Environmental Quality final regulations 
implementing NEPA. The guidelines are subject to discussion at a 
prepetition conference and to modification according to the facts of a 
particular case.
    (a) All petitions for permanent exemptions must contain the 
following information:
    (1) A description of the facility, including site location, and 
surroundings, alternative site(s), the facility's current proposed 
operations, its

[[Page 47]]

fuel capability, and its pollution abatement systems and equipment 
(including those systems and equipment necessary for all fuel scenarios 
considered);
    (2) A description of the existing environment, including air, water, 
and land resources;
    (3) Direct and indirect environmental impacts of the proposed action 
including impacts of alternative fuel scenarios, and no build 
alternatives.
    (4) Regulatory requirements governing the facility, including a 
description of Federal, State and local requirements for air, water, 
noise and solid waste disposal which must be met for each fuel 
considered.
    (b) For exemptions for cogeneration, the information enumerated 
below is to be submitted in lieu of the information required by 
paragraph (a) of this section. However, submission of the following 
information merely establishes a rebuttable presumption that the grant 
or denial of the exemption would have no significant environmental 
impact. OFE may, in individual cases, during the course of the 
administrative proceeding, determine that additional environmental 
information is required. In such cases, the petitioner will be required 
to submit the information described in paragraph (a) of this section.
    (1) A certification that the petitioner will, prior to operating the 
unit under the exemption, secure all applicable environmental permits 
and approvals pursuant to, but not limited to, the following: Clean Air 
Act, Rivers and Harbors Act, Coastal Zone Management Act, Safe Drinking 
Water Act, Resource Conservation and Recovery Act; and
    (2) Information required by the following environmental checklist 
must be provided and certified as accurate:

    Environmental Checklist for FUA Certification Exemptions 
Instructions
    All questions are to be answered by placing a check in the 
appropriate box. N/A represents (not applicable). Although it is not 
required, the petitioner may elaborate on any question in writing on a 
separate sheet of paper.

------------------------------------------------------------------------
                                                 Yes       No      N/A
------------------------------------------------------------------------
(1) Is your facility located in, or will it    .......  .......  .......
 affect a wetland (Protection of Wetlands
 Executive Order No. 11990)?.................
(2) Is your facility located in, or will it    .......  .......  .......
 affect, a 100-year floodplain (Floodplain
 Management Executive Order No. 11988)?......
(3) Will your facility affect a designated     .......  .......  .......
 wild, scenic, or recreation river (Wild and
 Scenic Rivers Act)?.........................
(4)(A) Is your facility located within a       .......  .......  .......
 county in which critical habitat for
 threatened or endangered species are known
 to exist (Endangered Species Act)?..........
(4)(B) Has a qualified biologist determined    .......  .......  .......
 that your facility will not affect any
 species on the Threatened and Endangered
 Species list?...............................
(5) Is your facility located on, or will it    .......  .......  .......
 affect land that has been classified as
 prime or unique farmland or rangeland by the
 U.S. Department of Agriculture?.............
(6) Is your facility located on, or will it    .......  .......  .......
 affect, historical archaeological, or
 cultural resources that have been designated
 pursuant to the National Historic
 Preservation Act?...........................
------------------------------------------------------------------------


[46 FR 59903, Dec. 7, 1981, as amended at 47 FR 15315, Apr. 9, 1982; 51 
FR 18866, May 22, 1986; 52 FR 658, Jan. 7, 1987; 54 FR 52894, Dec. 22, 
1989]



Sec. 503.14  Fuels search.

    Prior to submitting a petition for a permanent exemption for lack of 
alternate fuel supply, site limitations, inadequate capital, or state or 
local requirements, a petitioner must examine the use of conventional 
solid coal as a primary energy source at the site under consideration, 
and at reasonable alternative sites. Where a petitioner believes that 
its use of such coal would be infeasible, however, and where OFE and the 
petitioner can reach accord, it may evaluate use of a different 
alternate fuel in lieu of solid coal. A petitioner of these exemptions 
must demonstrate for any fuel examined that he would qualify for an 
exemption.

[54 FR 52894, Dec. 22, 1989]

[[Page 48]]



           Subpart C--Temporary Exemptions for New Facilities



Sec. 503.20  Purpose and scope.

    (a) This subpart implements the provisions contained in section 211 
of the Act with regard to temporary exemptions for new facilities.
    (b) This subpart establishes the criteria and standards which owners 
or operators of new powerplants who petition for a temporary exemption 
must meet to sustain their burden of proof under the Act.
    (c) All petitions for temporary exemptions shall be submitted in 
accordance with the procedures set out in part 501 of this chapter and 
the applicable requirements of part 503 of these regulations.
    (d) The duration of any temporary exemption granted under this 
subpart shall be measured from the date that the facility is placed in 
service using petroleum or natural gas.

[46 FR 59903, Dec. 7, 1981, as amended at 54 FR 52894, Dec. 22, 1989]



Sec. 503.21  Lack of alternate fuel supply.

    (a) Eligibility. Section 211(a)(1) of the Act provides for a 
temporary exemption due to the unavailability of an adequate and 
reliable supply of an alternate fuel at a cost which does not 
substantially exceed the cost of using imported petroleum. To qualify, a 
petitioner must certify that:
    (1) A good faith effort has been to obtain an adequate and reliable 
supply of an alternate fuel of the quality necessary to conform to the 
design and operational requirements of the unit;
    (2) For the period of the proposed exemption, the cost of using such 
alternate fuel would substantially exceed the cost of using imported 
petroleum as a primary energy source as defined in Sec. 503.6 (Cost 
calculation) of these regulations;
    (3) The petitioner will be able to comply with the applicable 
prohibitions of the Act at the end of the proposed exemption period; and
    (4) No alternate power supply exists, as required under Sec. 503.8 
of these regulations.
    (b) Evidence required in support of a petition. The petition must 
include the following evidence in order to make the demonstration 
required by this section:
    (1) Duly executed certifications required under paragraph (a) of 
this section;
    (2) Exhibits containing the basis for the certifications required 
under paragraph (a) of this section (including those factual and 
analytical materials deemed by the petitioner to be sufficient to 
support the granting of this exemption);
    (3) All data required by Sec. 503.6 (cost calculation) of these 
regulations necessary for computing the cost calculation formula; and
    (4) The anticipated duration of the lack of alternate fuel supply 
which constitutes the basis for the exemption.
    (c) Duration. This temporary exemption, taking into account any 
extensions or renewals, may not exceed 10 years.

[46 FR 59903, Dec. 7, 1981, as amended at 47 FR 15315, Apr. 9, 1982; 54 
FR 52894, Dec. 22, 1989]



Sec. 503.22  Site limitations.

    (a) Eligibility. Section 211(a)(2) of the Act provides for a 
temporary exemption due to a site limitation. To qualify for such an 
exemption, a petitioner must certify that:
    (1) One or more specific physical limitations relevant to the 
location or operation of the proposed facility exist which, despite 
diligent good faith efforts, cannot be overcome before the end of the 
proposed exemption period;
    (2) The petitioner will be able to comply with the applicable 
prohibitions of the Act at the end of the proposed exemption period; and
    (3) No alternate power supply exists, as required under Sec. 503.8 
of these regulations.

    Note: Examples of the types of site limitations to which a 
petitioner may certify in order to qualify for this exemption include:

    (i) Inaccessability of alternate fuels as a result of a specific 
physical limitation;
    (ii) Unavailability of transportation facilities for alternate 
fuels;

[[Page 49]]

    (iii) Unavailability of adequate land or facilities for handling, 
using, or storing an alternate fuel;
    (iv) Unavailability of adequate land or facilities for controlling 
and disposing of wastes, including pollution control equipment or 
devices necessary to assure compliance with applicable environmental 
requirements;
    (v) Unavailability of adequate and reliable supply of water, 
including water for use in compliance with applicable environmental 
requirements; or
    (vi) Other site limitations exist which will not permit the location 
or operation of the proposed unit using an alternate fuel.
    (b) Evidence required in support of a petition. The petition must 
include the following evidence in order to make the demonstration 
required by this section:
    (1) Duly executed certifications required under paragraph (a) of 
this section;
    (2) Exhibits containing the basis for the certifications required 
under paragraph (a) of this section (including those factual and 
analytical materials deemed by the petitioner to be sufficient to 
support the granting of this exemption); and
    (3) The anticipated duration of the site limitation which 
constitutes the basis for the exemption.
    (c) Duration. This temporary exemption, taking into account any 
extensions and renewals, may not exceed five years.

[46 FR 59903, Dec. 7, 1981, as amended at 54 FR 52894, Dec. 22, 1989]



Sec. 503.23  Inability to comply with applicable environmental requirements.

    (a) Eligibility. Section 211(a)(3) of the Act provides for a 
temporary exemption due to an inability to comply with applicable 
environmental requirements. To qualify a petitioner must demonstrate 
that despite diligent good faith efforts:
    (1) The petitioner will be unable, as of the projected date of 
commencement of operation, to comply with the applicable prohibitions of 
the Act without violating applicable Federal or State environmental 
requirements; and
    (2) The petitioner will be able to comply with the applicable 
prohibitions of the Act and with applicable environmental requirements 
by the end of the temporary exemption period.

    Note: (1) For purposes of considering an exemption under this 
section, OFE's decision will be based solely on an analysis of the 
petitioner's capacity to physically achieve applicable environmental 
requirements. The petition should be directed toward those conditions or 
circumstances which make it physically impossible to comply during the 
temporary exemption period. The cost of compliance is not relevant, but 
cost-related considerations may be presented as part of a demonstration 
submitted under Sec. 503.21.
    (2) Prior to submitting an exemption petition, it is recommended 
that a meeting be requested with OFE and EPA or the appropriate State or 
local regulatory agency to discuss options for operating an alternate 
fuel fired facility in compliance with applicable environmental 
requirements.

    (b) Evidence required in support of a petition. The petition must 
include the following evidence in order to make the demonstration 
required by this section:
    (1) Where the petitioner has applied for a construction permit from 
EPA or an appropriate State agency prior to petitioning for an exemption 
under this section, a copy of that application and synopsis of 
supporting documents filed with or subsequent to that application must 
be submitted to OFE with the petition or at the time filed with the 
permitting agency;
    (2) To the extent applicable, a copy of the EPA or State denial of 
the construction permit application;
    (3) To the extent applicable, a synopsis of the administrative 
record of the EPA or State or local permit proceedings;
    (4) To the extent applicable, a summary of the technology upon which 
the denial was based, including a performance comparison between the 
proposed technology and that technology which would provide the maximum 
possible reduction of pollution;
    (5) An examination of the environmental compliance of the facility, 
including an analysis of its ability to meet applicable standards and 
criteria when using both the proposed fuel and the alternate fuel(s) 
which would provide the basis for exemption. All such analysis must be 
based on accepted analytical techniques, such as air quality

[[Page 50]]

modeling, and reflect current conditions of the area which would be 
affected by the facility. The petitioner is responsible for obtaining 
the necessary data to accurately characterize these conditions. 
Environmental compliance must be examined in the context of available 
pollution control equipment which would provide the maximum possible 
reduction of pollution. The analysis must contain: (i) Requests for bids 
and other inquiries made and responses received by the petitioner 
concerning the availability and performance of pollution control 
equipment; (ii) contracts signed, if any, for an alternate fuel supply 
and for the purchase and installation of pollution control equipment; or 
(iii) other comparable evidence such as technical studies documenting 
the efficacy of equipment to meet applicable requirements;
    (6) An examination of any regulatory options available to the 
petitioner in seeking to achieve environmental compliance (such as 
offsets, variances, and State Implementation Plan revisions);
    (7) Any other documentation which demonstrates an inability to 
comply with applicable environmental requirements;
    (8) No alternate power supply exists, as required under Sec. 503.8 
of these regulations.
    (c) Duration. This temporary exemption, taking into account any 
extension and renewals, may not exceed 5 years.
    (d) Certification alternative. (1) To qualify for this exemption, in 
lieu of meeting the evidentiary requirements of paragraph (b) of this 
chapter, a petitioner may certify that, for the period of the exemption:
    (i) The site for the facility is or will be located in a Class I 
area or Class II area in which the allowable increment established by 
law has been consumed, as defined in part C of the Clean Air Act; the 
use of an alternate fuel will cause or contribute to concentrations of 
pollutants which would exceed the maximum allowable increases in a Class 
I or Class II area even with the application of best available control 
technology; the site for the facility is or will be located in a non-
attainment area as defined in part D of the Clean Air Act for any 
pollutant which would be emitted by the facility; or, even with the 
application of the lowest achievable emission rate, the use of an 
alternate fuel will cause or contribute to concentrations in an air 
quality control region, of a pollutant for which any national ambient 
air quality standard is or would be exceeded; and
    (ii) No alternate power supply exists, as required under Sec. 503.8 
of these regulations.
    (2) A petition by certification under this paragraph must include:
    (i) Duly executed certifications required under paragraph (d)(1) of 
this section;
    (ii) Exhibits containing the basis for the certifications required 
under paragraph (d)(1) of this section (including those factual and 
analytical materials deemed by the petitioner to be sufficient to 
support the granting of this exemption); and
    (iii) The anticipated duration of the circumstances which constitute 
the basis for the exemption.

[46 FR 59903, Dec. 7, 1981, as amended at 54 FR 52894, Dec. 22, 1989]



Sec. 503.24  Future use of synthetic fuels.

    (a) Eligibility. Section 211(b) of the Act provides for a temporary 
exemption based upon the future use of synthetic fuels. To qualify, a 
petitioner must certify that:
    (1) The petitioner will be able to comply with the applicable 
prohibitions imposed by the Act by the use of a synthetic fuel derived 
from coal or another alternate fuel as a primary energy source in the 
proposed facility by the end of the proposed exemption period;
    (2) The petitioner will not be able to comply with the applicable 
prohibitions imposed by the Act by use of a synthetic fuel until the end 
of the proposed exemption period; and
    (3) No alternate power supply exists, as required under Sec. 503.8 
of these regulations.
    (b) Evidence required in support of a petition. The petition must 
include the following evidence in order to make the demonstration 
required by this section:
    (1) Duly executed certifications required under paragraph (a) of 
this section;

[[Page 51]]

    (2) Exhibits containing the basis for the certifications required 
under paragraph (a) of this section (including those factual and 
analytical materials deemed by the petitioner to be sufficient to 
support the granting of this exemption); and
    (3) A preliminary compliance plan, including to the extent 
available, the information required under Sec. 503.12.
    (c) Final Compliance Plan. Before an exemption may become effective, 
the petitioner must submit and OFE must approve a final compliance plan 
as required by Sec. 503.12.
    (d) Duration. This temporary exemption may be granted for a period 
of up to ten (10) years. Unless the petitioner requests otherwise, any 
temporary exemption from the fuel use prohibitions of the Act for the 
future use of synthetic fuels will commence on the date of commercial 
operation of the facility.

    Note: Contracts based on the anticipated successful demonstration of 
a development program and/or the anticipated economic feasibility of a 
synthetic fuels facility, will generally be sufficient to meet the 
``binding contract'' requirements for this exemption.

[46 FR 59903, Dec. 7, 1981; 47 FR 15315, Apr. 9, 1982; 54 FR 52894, Dec. 
22, 1989]



Sec. 503.25  Public interest.

    (a) Eligibility. Section 211(c) of the Act provides for a temporary 
public interest exemption. To qualify, a petitioner must demonstrate 
that:
    (1) The unit will be capable of complying with the applicable 
prohibitions at the end of the proposed exemption period;
    (2) The granting of the exemption would be in accord with the 
purposes of the Act and would be in the public interest; and
    (3) No alternate power supply exists, as required under Sec. 503.8 
of these regulations.
    (b) Evidence required in support of a petition. The petition must 
include the following evidence in order to make the demonstration 
required by this section:
    (1) Substantial evidence to corroborate the eligibility requirements 
identified above; and
    (2) The anticipated duration of the circumstances which constitute 
the basis for the exemption.
    (c) Certification alternative. If the petitioner requires use of oil 
or natural gas in a unit, during the construction of an alternate-fuel 
fired unit, the petitioner may substitute, in lieu of the evidentiary 
requirements of paragraphs (b)(1) and (2) of this section:
    (1) A duly executed certification, including the requested duration 
of the exemption, that the unit will be operated on oil or natural gas 
only during the construction of an alternate fuel fired unit to be owned 
or operated by the petitioner; and
    (2) Exhibits containing the basis for the certifications required 
under paragraph (c)(1) of this section (including those factual and 
analytical materials deemed by the petitioner to be sufficient to 
support the granting of this exemption).
    (d) Duration. This temporary exemption, taking into account 
extension and renewals, may not exceed 5 years.

[46 FR 59903, Dec. 7, 1981, as amended at 54 FR 52894, Dec. 22, 1989]



           Subpart D--Permanent Exemptions for New Facilities



Sec. 503.30  Purpose and scope.

    (a) This subpart implements the provisions contained in section 212 
of the Act with regard to permanent exemptions for new facilities.
    (b) This subpart establishes the criteria and standards which owners 
or operators of new powerplants and installations who petition for a 
permanent exemption must meet to sustain their burden of proof under the 
Act.
    (c) All petitions for permanent exemptions for new facilities shall 
be submitted in accordance with the procedures set out in part 501 of 
this chapter and the applicable requirements of part 503 of these 
regulations.



Sec. 503.31  Lack of alternate fuel supply for the first 10 years of useful life.

    (a) Eligibility. Section 212(a)(1)(A)(i) of the Act provides for a 
permanent exemption due to lack of an adequate and reliable supply of 
alternate fuel within the first 10 years of useful life of the proposed 
unit. To qualify, a petitioner must certify that:

[[Page 52]]

    (1) A good faith effort has been made to obtain an adequate and 
reliable supply of an alternate fuel for use as a primary energy source 
of the quality and quantity necessary to conform with the design and 
operational requirements of the unit;
    (2) Such a supply is not likely to be available within the first 10 
years of useful life of the proposed unit;
    (3) No alternate power supply exists, as required under Sec. 503.8 
of these regulations;
    (4) Use of mixtures is not feasible, as required under Sec. 503.9 of 
these regulations; and
    (5) Alternative sites are not available, as required under 
Sec. 503.11 of these regulations.
    (b) Evidence required in support of a petition. A petition must 
include the following evidence in order to make the demonstration 
required by this section:
    (1) Duly executed certifications required under paragraph (a) of 
this section;
    (2) Exhibits containing the basis for the certifications required 
under paragraph (a) of this section (including those factual and 
analytical materials deemed by the petitioner to be sufficient to 
support the granting of this exemption);
    (3) Environmental impact analysis, as required under Sec. 503.13 of 
these regulations; and
    (4) Fuels search, as required under Sec. 503.14 of these 
regulations.

[46 FR 59903, Dec. 7, 1981, as amended at 54 FR 52895, Dec. 22, 1989]



Sec. 503.32  Lack of alternate fuel supply at a cost which does not substantially exceed the cost of using imported petroleum.

    (a) Eligibility. Section 212(a)(1) (A)(ii) of the Act provides for a 
permanent exemption due to lack of an alternate fuel supply at a cost 
which does not substantially exceed the cost of using imported 
petroleum. To qualify a petitioner must certify that:
    (1) A good faith effort has been made to obtain an adequate and 
reliable supply of an alternate fuel for use as a primary energy source 
of the quality and quantity necessary to conform with the design and 
operational requirements of the proposed unit;
    (2) The cost of using such a supply would substantially exceed the 
cost of using imported petroleum as a primary energy source during the 
useful life of the proposed unit as defined in Sec. 503.6 (cost 
calculation) of these regulations;
    (3) No alternate power supply exists, as required under Sec. 503.8 
of these regulations.
    (4) Use of mixtures is not feasible, as required under Sec. 503.9 of 
these regulations; and
    (5) Alternative sites are not available, as required under 
Sec. 503.11 of these regulations.
    (b) Evidence required in support of a petition. The petition must 
include the following evidence in order to make the demonstration 
required by this section:
    (1) Duly executed certifications required under paragraph (a) of 
this section;
    (2) Exhibits containing the basis for certifications required under 
paragraph (a) of this section (including those factual and analytical 
materials deemed by the petitioner to be sufficient to support the 
granting of this exemption);
    (3) Environmental impact analysis, as required under Sec. 503.13 of 
these regulations;
    (4) Fuels search, as required under Sec. 503.14 of these 
regulations; and
    (5) All data required by Sec. 503.6 (cost calculation) of these 
regulations necessary for computing the cost calculation formula.

[46 FR 59903, Dec. 7, 1981, as amended at 47 FR 15315, Apr. 9, 1982; 54 
FR 52895, Dec. 22, 1989]



Sec. 503.33  Site limitations.

    (a) Eligibility. Section 212(a)(1)(B) of the Act provides for a 
permanent exemption due to site limitations. To qualify for such an 
exemption, a petitioner must certify that:
    (1) One or more specific physical limitations relevant to the 
location or operation of the proposed facility exist which, despite good 
faith efforts, cannot reasonably be expected to be overcome within five 
years after commencement of operations;

[[Page 53]]

    (2) No alternate power supply exists, as required under Sec. 503.8 
of these regulations;
    (3) Use of mixtures is not feasible, as required under Sec. 503.9 of 
these regulations; and
    (4) Alternative sites are not available, as required under 
Sec. 503.11 of these regulations.

    Note: Examples of the types of site limitations to which a 
petitioner may certify in order to qualify for this exemption include:
    (i) Inaccessibility of alternate fuels as a result of a specific 
physical limitation;
    (ii) Unavailability of transportation facilities for alternate 
fuels;
    (iii) Unavailability of adequate land or facilities for handling, 
using or storing an alternate fuel;
    (iv) Unavailability of adequate land or facilities for controlling 
and disposing of wastes, including pollution control equipment or 
devices necessary to assure compliance with applicable environmental 
requirements;
    (v) Unavailability of adequate and reliable supply of water, 
including water for use in compliance with applicable environmental 
requirements; or
    (vi) Other site limitations exist which will not permit the location 
or operation of the proposed unit using an alternate fuel.

    (b) Evidence required in support of the petition. A petitioner must 
include in the petition the following evidence in order to make the 
demonstration required by this section:
    (1) Duly executed certifications required under paragraph (a) of 
this section;
    (2) Exhibits containing the basis for the certifications required 
under paragraph (a) of this section (including those factual and 
analytical materials deemed by the petitioner to be sufficient to 
support the granting of this exemption);
    (3) Environmental impact analysis, as required under Sec. 503.13 of 
these regulations; and
    (4) Fuels search, as required under Sec. 503.14 of these 
regulations.

[46 FR 59903, Dec. 7, 1981, as amended at 54 FR 52895, Dec. 22, 1989]



Sec. 503.34  Inability to comply with applicable environmental requirements.

    (a) Eligibility. Section 212(a)(1)(C) of the Act provides for a 
permanent exemption due to the inability to comply with applicable 
environmental requirements. To qualify, a petitioner must demonstrate 
that despite good faith efforts:
    (1) The petitioner will be unable within 5 years after beginning 
operation, to comply with the applicable prohibitions imposed by the Act 
without violating applicable Federal or state environmental 
requirements; and
    (2) Reasonable alternative sites, which would permit the use of 
alternate fuels in compliance with applicable Federal or state 
environmental requirements, are not available.

    Note: (1) For purposes of considering an exemption under this 
section, OFE's decision will be based solely on an analysis of the 
petitioner's capacity to physically achieve applicable environmental 
requirements. The cost of compliance is not relevant, but cost-related 
considerations may be presented as part of a demonstration submitted 
under Sec. 503.32 (Lack of alternate fuel supply).
    (2) Prior to deciding to submit an exemption petition, it is 
recommended that a petitioner request a meeting with OFE and EPA or the 
appropriate state or local regulatory agency to discuss options for 
operating an alternate fuel-fired facility in compliance with the 
applicable environmental requirements.

    (b) [Reserved]
    (c) Evidence required in support of a petition. The petitioner must 
include in the petition the following evidence in order to make the 
demonstration required by this section:
    (1) Where the petitioner has applied for a construction permit from 
EPA or an appropriate state agency prior to petitioning for an exemption 
from OFE under this section, a copy of such application and a synopsis 
of all supporting documents filed with or subsequent to the application 
must be submitted to OFE with the petition or at the time filed with the 
permitting agency;
    (2) To the extent applicable, a copy of the EPA or state denial of 
the construction permit application;
    (3) To the extent applicable, a synopsis of the administrative 
record of the EPA or state or local permit proceedings;
    (4) To the extent applicable, a summary of the technology upon which 
the denial was based, including a performance comparison between the 
proposed technology and that technology which

[[Page 54]]

provides the maximum possible reduction of pollution;
    (5) An examination of the environmental compliance of the facility, 
including an analysis of its ability to meet applicable standards and 
criteria when using both the proposed fuel and the alternate fuel(s) 
which would provide the basis for the exemption. All such analysis must 
be based on accepted analytical techniques, such as air quality 
modeling, and reflect current conditions of the area which would be 
affected by the facility. The petitioner is responsible for obtaining 
the necessary data to accurately characterize these conditions. 
Environmental compliance must be examined in the context of available 
pollution control equipment which would provide the maximum possible 
reduction of pollution. The analysis must contain: (i) Requests for bids 
and other inquiries made and responses received by the petitioner 
concerning the availability and performance of pollution control 
equipment; or (ii) other comparable evidence such as technical studies 
documenting the efficacy of equipment to meet applicable requirements;
    (6) An examination of any regulatory options available to the 
petitioner in seeking to achieve environmental compliance (such as 
offsets, variances and State Implementation Plan (SIP) revisions); and
    (7) Any other documentation which demonstrates an inability to 
comply with applicable environmental requirements;
    (8) No alternate power supply exists as required under Sec. 503.8 of 
these regulations;
    (9) Use of mixtures is not feasible, as required under Sec. 503.9 of 
these regulations;
    (10) Alternative sites are not available, as required under 
Sec. 503.11 of these regulations;
    (11) Environmental impact analysis, as required under Sec. 503.13 of 
these regulations; and
    (12) Fuels search, as required under Sec. 503.14 of these 
regulations.
    (d) Certification alternative. (1) To qualify for this exemption, in 
lieu of meeting the evidentiary requirements of paragraph (c) of this 
section, a petitioner may certify that:
    (i) The site for the facility is or will be located in a Class I 
area or Class II area in which the allowable increment established by 
law has been consumed, as defined in part C of the Clean Air Act; the 
use of an alternate fuel will cause or contribute to concentrations of 
pollutants which would exceed the maximum allowable increases in a Class 
I or Class II area even with the application of best available control 
technology; the site for the facility is or will be located in a non-
attainment area as defined in part D of the Clean Air Act for any 
pollutant which would be emitted by the facility; or, even with the 
application of the lowest achievable emission rate, the use of an 
alternate fuel will cause or contribute to concentrations in an air 
quality control region of a pollutant for which any national ambient air 
quality standard is or would be exceeded;
    (ii) No alternate power supply exists, as required under Sec. 503.8 
of these regulations;
    (iii) Alternative sites are not available, as required under 
Sec. 503.11 of these regulations; and
    (iv) Use of mixtures is not feasible, as required under Sec. 503.19 
of these regulations.
    (2) A petition by certification under this paragraph must include:
    (i) Duly executed certifications required under paragraph (d)(1) of 
this section;
    (ii) Exhibits containing the basis for the certifications required 
under paragraph (d)(1) of this section (including those factual and 
analytical materials deemed by the petitioner to be sufficient to 
support the granting of this exemption);
    (iii) Environmental impact analysis, as required under Sec. 503.13 
of these regulations; and
    (iv) Fuels search, as required under Sec. 503.14 of these 
regulations.

[46 FR 59903, Dec. 7, 1981, as amended at 54 FR 52895, Dec. 22, 1989]



Sec. 503.35  Inability to obtain adequate capital.

    (a) Eligibility. Section 212(a)(1)(D) of the Act provides for a 
permanent exemption due to inability to obtain adequate capital. To 
qualify, a petitioner must certify that:

[[Page 55]]

    (1) Despite good faith efforts the petitioner will be unable to 
comply with the applicable prohibitions imposed by the Act because the 
additional capital required for an alternate fuel-capable unit beyond 
that required for the proposed unit cannot be raised;
    (2) The additional capital cannot be raised:
    (i) Due to specific restrictions (e.g., convenants on existing 
bonds) which constrain management's ability to raise debt or equity 
captial;
    (ii) Without a substantial dilution of shareholder equity;
    (iii) Without an unreasonably adverse affect on the utility's credit 
rating; or
    (iv) In the case of non-investor-owned public utilities, without 
jeopardizing the utility's ability to recover its capital investment, 
through tariffs, without unreasonably adverse economic effect on its 
service area (such as adverse impacts on local industry or undue 
hardship to ratepayers).
    (3) No alternative power supply exists, as required under Sec. 503.8 
of these regulations;
    (4) Use of mixtures is not feasible, as required under Sec. 503.9 of 
these regulations; and
    (5) Alternative sites are not available, as required under 
Sec. 503.11 of these regulations.
    (b) Evidence required in support of a petition. A petition must 
include the following evidence in order to make the demonstration 
required by this section:
    (1) Duly executed certifications required under paragraph (a) of 
this section;
    (2) Exhibits containing the basis for the certifications required 
under paragraph (a) of this section (including those factual and 
analytical materials deemed by the petitioner to be sufficient to 
support the granting of this exemption);
    (3) Environmental impact analysis, as required under Sec. 503.13 of 
these regulations; and
    (4) Fuels search, as required under Sec. 503.14 of these 
regulations.

[46 FR 59903, Dec. 7, 1981, as amended at 47 FR 15315, Apr. 9, 1982; 54 
FR 52895, Dec. 22, 1989]



Sec. 503.36  State or local requirements.

    (a) Eligibility. Section 212(b) of the Act provides for an exemption 
due to certain State or local requirements. To qualify a petitioner must 
certify that:
    (1) With respect to the proposed site of the unit, the operation or 
construction of the new unit using an alternate fuel is infeasible 
because of a State of local requirement other than a building code, 
nuisance, or zoning law;
    (2) The petitioner has made a good faith effort to obtain a variance 
from the State or local requirement but has been unable to do so or has 
demonstrated why none is available;
    (3) The granting of the exemption would be in the public interest 
and would be consistent with the purposes of the Act;
    (4) The petitioner is not entitled to an exemption for lack of 
alternate fuel supply, site limitation, environmental requirements, or 
inability to obtain adequate capital at the site of the proposed 
powerplant or at any reasonable alternative site for the alternate 
fuel(s) considered;
    (5) At the proposed site and every reasonable alternative site where 
the petitioner is not entitled to an exemption for lack of alternate 
fuel supply, site limitation, environmental requirements, or inability 
to obtain adequate capital, the petitioner nevertheless would be barred 
at each such proposed or alternate site from burning an alternate fuel 
by reason of a State or local requirement;
    (6) No alternate power supply exists, as required under Sec. 503.8 
of these regulations; and
    (7) Use of mixtures is not feasible, as required under Sec. 503.9 of 
these regulations.
    (b) Evidence required in support of a petition. The petition must 
include the following evidence in order to make the demonstration 
required by this section:
    (1) Duly executed certifications required under paragraph (a) of 
this section;
    (2) Exhibits containing the basis for the certifications required 
under paragraph (a) of this section (including those factual and 
analytical materials

[[Page 56]]

deemed by the petitioner to be sufficient to support the granting of 
this exemption);
    (3) Environmental impact analysis, as required under Sec. 503.13 of 
these regulations; and
    (4) Fuels search, as required under Sec. 503.14 of these 
regulations.

[46 FR 59903, Dec. 7, 1981; 46 FR 63033, Dec. 30, 1981, as amended at 54 
FR 52895, Dec. 22, 1989]



Sec. 503.37  Cogeneration.

    The following table may be used to determine eligibility for a 
permanent exemption based on oil and natural gas savings.

    Average Annual Utilization of Oil and Natural Gas for Electricity
                           Generation by State
                          [BTU's per KWHR sold]
------------------------------------------------------------------------
                                                                 Oil/gas
                          State name                             savings
                                                                 Btu/kWh
------------------------------------------------------------------------
Alabama.......................................................        33
Arizona.......................................................       802
Arkansas......................................................     1,363
California....................................................     3,502
Colorado......................................................       289
Connecticut...................................................     3,924
Delaware......................................................     3,478
Washington, DC................................................       895
Florida.......................................................     3,177
Georgia.......................................................        45
Idaho.........................................................         0
Illinois......................................................       250
Indiana.......................................................        53
Iowa..........................................................       147
Kansas........................................................       686
Kentucky......................................................        34
Louisiana.....................................................     4,189
Maine.........................................................     2,560
Maryland......................................................       895
Massachusetts.................................................     5,250
Michigan......................................................       256
Minnesota.....................................................       151
Mississippi...................................................     1,519
Missouri......................................................        57
Montana.......................................................        60
Nebraska......................................................       139
Nevada........................................................       761
New Hampshire.................................................     2,695
New Jersey....................................................     1,894
New Mexico....................................................     1,528
New York......................................................     4,219
North Carolina................................................        49
North Dakota..................................................        47
Ohio..........................................................        36
Oklahoma......................................................     5,180
Oregon........................................................         0
Pennsylvania..................................................       771
Rhode Island..................................................     1,800
South Carolina................................................        24
South Dakota..................................................        36
Tennessee.....................................................        20
Texas.........................................................     4,899
Utah..........................................................       107
Vermont.......................................................       105
Virginia......................................................       460
Washington....................................................         3
West Virginia.................................................       126
Wisconsin.....................................................        72
Wyoming.......................................................        75
------------------------------------------------------------------------


Data are based upon 1987 oil, natural gas and electricity statistics 
published by DOE's Energy Information Administration.

    Example: The proposed cogeneration project is to be located in 
Massachusetts and is to use distillate oil. It will have a capacity of 
50 MW, an average annual heat rate of 7600 BTU/KWHR, and be operated at 
a capacity factor of 90%. The annual fuel consumption is therefore 
calculated to be 2,996 x 10\9\ Btu/yr. (50,000 KW x 7600 BTU/
KWHR x .9 x 8760 HR/YR) The oil and gas backed off the grid would be 
calculated to be .2070 x 10\9\ BTU/YR. (50,000 KW x 5250 BTU/
KWHR x .9 x 8760 HR/YR) since the proposed unit would consume more oil 
that would be ``backed off'' the grid, the unit would not be eligible 
for a permanent exemption based on savings of oil and natural gas.

[54 FR 52895, Dec. 22, 1989]



Sec. 503.38  Permanent exemption for certain fuel mixtures containing natural gas or petroleum.

    (a) Eligibility. Section 212(d) of the Act provides for a permanent 
exemption for certain fuel mixtures. To qualify a petitioner must 
certify that:
    (1) The petitioner proposes to use a mixture of natural gas or 
petroleum and an alternate fuel as a primary energy source;
    (2) The amount of petroleum or natural gas proposed to be used in 
the mixture will not exceed the minimum percentage of the total annual 
Btu heat input of the primary energy sources needed to maintain 
operational reliability of the unit consistent with maintaining a 
reasonable level of fuel efficiency; and
    (3) No alternate power supply exists, as required under Sec. 503.8 
of these regulations.
    (b) Evidence required in support of a petition. The petition must 
include the following evidence in order to make

[[Page 57]]

the demonstration required by this section:
    (1) Duly executed certifications required under paragraph (a) of 
this section;
    (2) Exhibits containing the basis for the certifications required 
under paragraph (a) of this section (including those factual and 
analytical materials deemed by the petitioner to be sufficient to 
support the granting of this exemption);
    (3) A description of the fuel mixture, including component fuels and 
the percentage of each such fuel to be used; and
    (4) Environmental impact analysis as required under Sec. 503.13 of 
these regulations.
    (c) Solar mixtures. OFE will grant a permanent mixtures exemption 
for the use of a mixture of solar energy (including wind, tide, and 
other intermittent sources) and petroleum or natural gas, where:
    (1) Solar energy will account for at least 20 percent of the total 
annual Btu heat input, of the primary energy sources of the unit; and
    (2) Petitioner meets the eligibility and evidentiary requirements of 
paragraphs (a) and (c) of this section.

[46 FR 59903, Dec. 7, 1981, as amended at 54 FR 52896, Dec. 22, 1989]



Secs. 503.39-503.44  [Reserved]



PART 504--EXISTING POWERPLANTS--Table of Contents




504.2  Purpose and scope.
504.3-504.4  [Reserved]
504.5  Prohibitions by order (certifying powerplants under section 301 
          of FUA, as amended).
504.6  Prohibitions by order (case-by-case).
504.7  Prohibition against excessive use of petroleum or natural gas in 
          mixtures--electing powerplants.
504.8  Prohibitions against excessive use of petroleum or natural gas in 
          mixtures--certifying powerplants.
504.9  Environmental requirements for certifying powerplants.

Appendix I to Part 504--Procedures for the Computation of the Real Cost 
          of Capital
Appendix II to Part 504--Fuel Price Computation

    Authority: Department of Energy Organization Act, Pub. L. 95-91, 91 
Stat. 565 (42 U.S.C. Sec. 7101 et seq.); Powerplant and Industrial Fuel 
Use Act of 1978, Pub. L. 95-620, 92 Stat. 3289 (42 U.S.C. 8301 et seq.); 
Energy Security Act, Pub. L. 96-294, 94 Stat. 611 (42 U.S.C. 8701 et 
seq.); E.O. 1209, 42 FR 46267, Sept. 15, 1977.

    Source: 45 FR 53692, Aug. 12, 1980, unless otherwise noted.

(Approved by the Office of Management and Budget under control number 
1903-0075. See 46 FR 63209, Dec. 31, 1981.)



Sec. 504.2  Purpose and scope.

    (a) Sections 504.5, 504.6, and 504.8, set forth the prohibitions 
that OFP, pursuant to section 301 of the Act, as amended, may impose 
upon existing powerplants after a review of the certification and 
prohibition order compliance schedule submitted by the owner or operator 
of a powerplant. Sections 504.5 and 504.8 are explanatory sections, and 
Sec. 504.6 provides the informational requirements necessary to support 
the certification.
    (b) Sections 504.6 and 504.7, set forth the prohibitions that OFP 
may impose upon certain electing powerplants, pursuant to former section 
301 (b) and (c) of FUA, where OFP can make the findings as to the unit's 
technical capability and financial feasibility to use coal or another 
alternate fuel as a primary energy source. The prohibitions may be made 
to apply to electing powerplants unless an exemption is granted by OFP 
under the provisions of the Final Rule for Existing Facilities (10 CFR 
parts 500, 501 and 504) published at 45 FR 53682, Aug. 12, 1980 and 46 
FR 59872, Dec. 7, 1981. Any person who owns, controls, rents or leases 
an existing electing powerplant may be subject to the prohibitions 
imposed by and the sanctions provided for in the Act or these 
regulations, if OFP can make the findings required by former section 301 
(b) and (c) of FUA.

(Department of Energy Organization Act, Pub. L. 95-91, 91 Stat. 565 (42 
U.S.C. 7101 et seq.); Powerplant and Industrial Fuel Use Act of 1978, 
Pub. L. 95-620, 92 Stat. 3269 (42 U.S.C. 8301 et seq.); Omnibus Budget 
Reconciliation Act of 1981, Pub. L. 97-35; E.O. 12009, 42 FR 46267, 
Sept. 15, 1977)

[47 FR 50849, Nov. 10, 1982]

[[Page 58]]



Secs. 504.3-504.4  [Reserved]



Sec. 504.5  Prohibitions by order (certifying powerplants under section 301 of FUA, as amended).

    (a) In the case of existing powerplants, OFP may prohibit, in 
accordance with section 301 of the Act, as amended, the use of petroleum 
or natural gas as a primary energy source where the owner or operator of 
the powerplant presents a complete certification concurred in by OFP. 
The certification, which may be presented at any time, pertains to the 
unit's technical capability and financial feasibility to use coal or 
another alternate fuel as a primary energy source in the unit. The 
informational requirements necessary to support a certification are 
contained in Sec. 504.6 of these regulations. A prohibition compliance 
schedule which meets the requirements of Sec. 504.5(d) shall also be 
submitted.
    (b) If OFP concurs with the certification, a prohibition order on 
the powerplant's use of petroleum or natural gas will be issued 
following the procedure outlined in Sec. 501.52 of these regulations.
    (c) The petitioner may amend its certification at any time prior to 
the effective date of the prohibitions contained in the final 
prohibition order in order to take into account changes in relevant 
facts and circumstances by following the procedure contained in 
Sec. 501.52(d).
    (d) Prohibition order compliance schedule. The certification 
described above, which forms the basis for the issuance of a prohibition 
order to a powerplant, shall include a prohibition order compliance 
schedule. The compliance schedule should contain the following:
    (1) A schedule of progressive events involved in the conversion 
project, including construction of any facilities for the production of 
fuel or fuel handling equipment, and contracts for the purchase of 
alternate fuels, and estimated date of compliance with the applicable 
prohibitions of the Act; and
    (2) A schedule indicating estimated dates for obtaining necessary 
federal, state, and local permits and approvals. Any prohibition order 
issued under the certification provisions of Secs. 504.5, 504.6, and 
504.8 will be subject to appropriate conditions subsequent so as to 
delay the effectiveness of the prohibitions contained in the final 
prohibition order until the above events or permits have occurred or 
been obtained.

(Approved by the Office of Management and Budget under control number 
1903-0077)

(Department of Energy Organization Act, Pub. L. 95-91 (42 U.S.C. 7101 et 
seq.); Energy Supply and Environmental Coordination Act of 1974, Pub. L. 
93-319, as amended by Pub. L. 94-163, Pub. L. 95-70, and Pub. L. 95-620 
(15 U.S.C. 719 et seq.); Powerplant and Industrial Fuel Use Act of 1978, 
Pub. L. 95-620, as amended by Pub. L. 97-35 (42 U.S.C. 8301 et seq.); 
Omnibus Budget Reconciliation Act of 1981, Pub. L. 97-35)

[47 FR 17044, Apr. 21, 1982]



Sec. 504.6  Prohibitions by order (case-by-case).

    (a) OFP may prohibit, by order, the use of natural gas or petroleum 
as a primary energy source in existing powerplants under certain 
circumstances. In the case of certifying powerplants under section 301 
of the Act, as amended, the petitioner must present evidence to support 
the certification, required by Sec. 504.6 (c), (d), (e), and (f). In the 
case of electing powerplants, OFP must make the following findings 
required by Sec. 504.6 (c), (d), (e), and (f), in order to issue a 
prohibition order to the unit, pursuant to former section 301 (b) or 
(c):
    (1) The unit currently has, or previously had, the technical 
capability to use an alternate fuel as a primary energy source;
    (2) The unit has this technical capability now, or it could have the 
technical capability without:
    (i) A substantial physical modification of the unit; or
    (ii) A substantial reduction in the rated capacity of the unit; and
    (3) It is financially feasible for the unit to use an alternate fuel 
as its primary energy source.
    (b) In the case of electing powerplants, OFP must make a proposed 
finding regarding the technical capability of a unit to use alternate 
fuel as identified in paragraph (a) (1) of this section prior to the 
date of publication of the notice of the proposed prohibition. OFP will 
publish this finding in

[[Page 59]]

The Federal Register along with the notice of the proposed prohibition.
    (c) Technical capability. (1) In the case of electing and certifying 
powerplants, OFP will consider ``technical capability'' on a case-by-
case basis in order to make the required finding. In the case of a 
certifying powerplant, the powerplant should present information to 
support the certification relevant to the considerations set forth 
below. OFP will consider the ability of the unit, from the point of fuel 
intake to physically sustain combustion of a given fuel and to maintain 
heat transfer.\2\
---------------------------------------------------------------------------

    \2\ OFP will not ordinarily consider the nature or absence of 
appurtenances outside the unit. For example, OFP will examine the 
furnace configuration and ash removal capability but will not normally 
consider the need to install pollution control equipment as a measure of 
technical capability. Furthermore, OFP will not normally conclude that 
the absence of fuel handling equipment, such as conveyor belts, 
pulverizers, or unloading facilities, bears on the issue of a unit's 
``technical capability'' to burn an alternate fuel.
---------------------------------------------------------------------------

    (2) OFP considers that a unit ``had'' the technical capability to 
use an alternate fuel if the unit was once able to burn that fuel 
(regardless of whether the unit was expressly designed to burn that fuel 
or whether it ever actually did burn it), but is no longer able to do so 
at the present due to temporary or permanent alterations to the unit 
itself.3
---------------------------------------------------------------------------

    3 For example, a unit which at one time burned solid coal but 
which could no longer do so because its coal firing ports and sluicing 
channels had been cemented over, would be classified as having ``had'' 
the technical capability to use coal. (The question of whether it again 
``could have'' such capability without ``substantial physical 
modification'' is a separate and additional question.)
---------------------------------------------------------------------------

    (3) A unit ``has'' the technical capability to use an alternate fuel 
if it can burn an alternate fuel, notwithstanding the fact that 
adjustments must be made to the unit beforehand or that pollution 
control equipment may be required to meet air quality 
requirements.4
---------------------------------------------------------------------------

    4  A unit designed to burn natural gas shall be presumed to 
have the technical capability to burn a synthetic fuel such as medium 
Btu gas from coal (assuming such gas is available unless convincing 
evidence to the contrary is submitted in rebuttal). Also a unit designed 
to burn oil may, depending upon the chemical characteristics, be a unit 
that ``has'' the technical capability to burn liquefied coal. The fact 
that certain adjustments may be necessary does not render this a 
``hypothetical'' as opposed to a ``real'' capability. Even an oil fired 
unit converting from the use of 2 distillate to 6 residual oil may be 
required to adjust or replace burner nozzles and add soot blowers.
---------------------------------------------------------------------------

    (d) Substantial physical modification. In the case of electing and 
certifying powerplants, OFP will make its determination on whether a 
physical modification to a unit is ``substantial'' on a case-by-case 
basis. In the case of certifying powerplants, OFP will consider the 
factors set forth below for the purpose of concurrence in the 
certification. OFP will consider physical modifications made to the unit 
as ``substantial'' where warranted by the magnitude and complexity of 
the engineering task or where the modification would impact severely 
upon operations at the site.\5\ OFP will not, however, assess physical 
modification on the basis of cost.
---------------------------------------------------------------------------

    \5\ Generally, modification of a unit to burn coal or an alternate 
fuel will be considered insubstantial if significant alterations to the 
boiler, such as a change to the furnace configuration or a complete 
respacing of the tubes, are not required. Minor alterations such as 
replacement of burners or additions of soot blowers, and additions or 
alterations outside the boiler, shall not cause the modification to be 
substantial.
---------------------------------------------------------------------------

    (e) Substantial reduction in rated capacity. In the case of electing 
and certifying powerplants, OFP will make this determination on the 
basis of the following factors. A certifying powerplant should present 
information to support its certification regarding these factors in 
order for OFP to make its review for concurrence.
    (1) OFP regards a unit's derating of 25 percent or more, as a result 
of converting a unit from oil or gas to an alternate fuel, as 
substantial.
    (2) OFP will presume that a derating of less than 10 percent, as a 
result of converting a unit from oil or gas to an alternate fuel, is not 
substantial unless

[[Page 60]]

convincing evidence to the contrary is submitted in rebuttal.6
---------------------------------------------------------------------------

    6 For example, units that are the subject of a prohibition 
order will not have installed any operating air pollution control 
equipment sufficient to burn coal in compliance with applicable 
environmental equipments. The installation and use of air pollution 
control equipment alone can, in many cases, produce a derating. 
Moreover, the shift to coal itself will, because of differences in 
energy density and fuel flow characteristics, typically involve some 
derating.
---------------------------------------------------------------------------

    (3) OFP will assess units for which a derating is claimed of 10 
percent or more, but less than 25 percent, on a case-by-case.
    (4) In assessing whether a unit's derating is not substantial, OFP 
will consider the impact of a reduction in rated capacity of the unit 
taking into consideration all necessary appurtenances such as air 
pollution control equipment required to burn an alternate fuel in 
compliance with environmental requirements expected to be applicable at 
the date the prohibitions contained in the final prohibition order 
become effective. However, the potential order recipient may raise in 
rebuttal the impact of derating on the site at which the unit is located 
and on the system as well as on the unit itself, if under paragraph 
(e)(2), or case-by-case, if under paragraph (e)(3) of this section.
    (f) Financial feasibility. In the case of certifying and electing 
powerplants, OFP will make this finding based on the following 
considerations. A certifying powerplant should present information to 
support its certification relevant to these considerations in order for 
OFP to make its review for concurrence. Conversion of a unit to burn 
coal or an alternate fuel shall be deemed financially feasible if the 
firm has the actual ability to obtain sufficient capital to finance the 
conversion, including all necessary land, coal and ash handling 
equipment, pollution control equipment, and all other necessary 
expenditures, without violating legal restrictions on its ability to 
raise debt or equity capital, unreasonably diluting shareholder equity, 
or unreasonably adversely affecting its credit rating. OFP will consider 
any economic or financial factors presented by the proposed order 
recipient in determining the firm's ability or inability to finance the 
conversion including, but not limited to, the following:
    (1) The required coverage ratios on the firm's debt and preferred 
stock;
    (2) The firm's investment program; and
    (3) The financial impact of the conversion, including other 
conversions which are or may be undertaken voluntarily by the proposed 
order recipient or imposed upon the recipient's system by the Act, and 
including pending or planned construction or reconstruction of 
alternate-fuel-fired plants and plants exempt from FUA prohibitions.\7\ 
Where helpful in clarifying the long-term financial feasibility of a 
conversion, DOE may analyze the economic benefits anticipated from 
operation of the converted unit or units using coal or other alternate 
fuel relative to those from continued operation using petroleum or 
natural gas.
---------------------------------------------------------------------------

    \7\ OFP will not require the proposed order recipient to cancel or 
defer construction or reconstruction of any alternate-fuel-fired 
facility, or any facility exempt from the prohibitions of the Act, for 
which a decision to finance such facility has been made by the 
appropriate company official before the publication of the prohibition 
order. The proposed order recipient may choose to cancel or defer any 
such facility.

(Approved by the Office of Management and Budget under control number 
---------------------------------------------------------------------------
1903-0077)

(Energy Supply and Environmental Coordination Act of 1974, Pub. L. 93-
319, as amended by Pub. L. 94-163, Pub. L. 95-70, and 15 U.S.C. 719 et 
seq.; Department of Energy Organization Act, Pub. L. 95-91, 91 Stat. 565 
(42 U.S.C. 7101 et seq.); Powerplant and Industrial Fuel Use Act of 
1978, Pub. L. 95-620, 92 Stat. 3269 (42 U.S.C. 8301 et seq.); Omnibus 
Budget Reconciliation Act of 1981 (Pub. L. 97-35); E.O. 12009, 42 FR 
46267, Sept. 15, 1977)

[45 FR 53692, Aug. 12, 1980, as amended at 47 FR 17044, Apr. 21, 1982; 
47 FR 50849, Nov. 10, 1982]



Sec. 504.7  Prohibition against excessive use of petroleum or natural gas in mixtures--electing powerplants.

    (a) In the case of electing powerplants, if OFP finds that it is 
technically and financially feasible for a unit to use a mixture of 
petroleum or natural gas and an alternate fuel as its primary energy 
source, OFP may prohibit, by order, the use in that unit of

[[Page 61]]

petroleum or natural gas, or both, in amounts exceeding the minimum 
amount necessary to maintain reliability of operation consistent with 
maintaining reasonable fuel efficiency of the mixture.
    (b) In making the technical feasibility finding required by former 
section 301 (b) and (c) of the Act and paragraph (a) of this section, 
OFP may weigh ``physical modification'' or ``derating of the unit,'' but 
these considerations, by themselves, will not control the technical 
feasibility finding. A technical feasibility finding might be made 
notwithstanding the need for substantial physical modification. The 
economic consequences of a substantial physical modification are taken 
into account in determining financial feasibility.

(Energy Supply and Environmental Coordination Act of 1974, Pub. L. 93-
319, as amended by Pub. L. 94-163, Pub. L. 95-70, and 15 U.S.C. 719 et 
seq.; Department of Energy Organization Act, Pub. L. 95-91, 91 Stat. 565 
(42 U.S.C. 7101 et seq.); Powerplant and Industrial Fuel Use Act of 
1978, Pub. L. 95-620, 92 Stat. 3269 (42 U.S.C. 8301 et seq.); Omnibus 
Budget Reconciliation Act of 1981 (Pub. L. 97-35); E.O. 12009, 42 FR 
46267, Sept. 15, 1977)

[47 FR 17045, Apr. 21, 1982, and 47 FR 50850, Nov. 10, 1982]



Sec. 504.8  Prohibitions against excessive use of petroleum or natural gas in mixtures--certifying powerplants.

    (a) In the case of certifying powerplants, OFP may prohibit the use 
of petroleum or natural gas in such powerplant in amounts exceeding the 
minimum amount necessary to maintain reliability of operation consistent 
with maintaining the reasonable fuel efficiency of the mixture. This 
authority is contained in section 301(c) of the Act, as amended. The 
owner or operator of the powerplant may certify at any time to OFP that 
it is technically capable and financially feasible for the unit to use a 
mixture of petroleum or natural gas and coal or another alternate fuel 
as a primary energy source. In assessing whether the unit is technically 
capable of using a mixture of petroleum or natural gas and coal or 
another alternate fuel as a primary energy source, for purposes of this 
section, the extent of any physical modification necessary to convert 
the unit and any concomitant reduction in rated capacity are not 
relevant factors. So long as a unit as proposed to be modified would be 
technically capable of using the mixture as a primary energy source 
under Sec. 504.6(c), this certification requirement shall be deemed met. 
The criteria for certification of financial feasibility are found at 
Sec. 504.6(f). In addition, the powerplant's owner or operator must 
submit a prohibition compliance schedule, which meets the requirements 
of Sec. 504.5(d).
    (b) If OFP concurs with the certification, a prohibition order 
against the unit's excessive use of petroleum or natural gas in the 
mixture will be issued following the procedure outlined in Sec. 501.52 
of these regulations.
    (c) The petitioner may seek to amend its certification in order to 
take into account changes in relevant facts and circumstances by 
following the procedure contained in Sec. 501.52(d).

    Note: The authority of OFP implemented under this section should not 
be confused with the other two fuel mixture provisions of these 
regulations. One is the general requirement that petitioners for 
permanent exemptions demonstrate that the use of a mixture of natural 
gas or petroleum and an alternate fuel is not economically or 
technically feasible (See Sec. 504.15). The second is the permanent fuel 
mixtures exemption itself (See Sec. 504.56).

(Approved by the Office of Management and Budget under control number 
1903-0077)

(Department of Energy Organization Act, Pub. L. 95-91 (42 U.S.C. 7101 et 
seq.); Energy Supply and Environmental Coordination Act of 1974, Pub. L. 
93-319, as amended by Pub. L. 94-163, Pub. L. 95-70, and Pub. L. 95-620 
(15 U.S.C. 719 et seq.); Powerplant and Industrial Fuel Use Act of 1978, 
Pub. L. 95-620, as amended by Pub. L. 97-35 (42 U.S.C. 8301 et seq.); 
Omnibus Budget Reconciliation Act of 1981, Pub. L. 97-35)

[47 FR 17045, Apr. 21, 1982]



Sec. 504.9  Environmental requirements for certifying powerplants.

    Under Secs. 501.52, 504.5 and 504.6 of these regulations, OFP may 
prohibit, in accordance with section 301 and section 303 (a) or (b) of 
FUA, as amended, the use of natural gas or petroleum, or both, as a 
primary energy source in any certifying powerplant. Under sections 
301(c) and 303(a) of FUA, as amended, and Secs. 501.52, 504.6, and 504.8 
of

[[Page 62]]

these regulations, OFP may prohibit the excessive use of natural gas or 
petroleum in a mixture with an alternate fuel as a primary energy source 
in a certifying powerplant.
    (a) NEPA compliance. Except as provided in paragraph (c) of this 
section, where the owner or operator of a powerplant seeks to obtain an 
OFP prohibition order through the certification procedure, and did not 
hold either a proposed prohibition order under former section 301 of FUA 
or pending order under section 2 of ESECA, it will be responsible for 
the costs of preparing any necessary Environmental Assessment (EA) or 
Environmental Impact Statement (EIS) arising from OFP's obligation to 
comply with NEPA. The powerplant owner or operator shall enter into a 
contract with an independent party selected by OFP, who is qualified to 
conduct an environmental review and prepare an EA or EIS, as 
appropriate, and who does not have a financial or other interest in the 
outcome of the proceedings, under the supervision of OFP. The NEPA 
process must be completed and approved before OFP will issue a final 
prohibition order based on the certification.
    (b) Environmental review procedure. Except as provided in paragraph 
(c) of this section, environmental documents, including the EA and EIS, 
where necessary, will be prepared utilizing the process set forth above. 
OFP, the powerplant owner or operator and the independent third party 
shall enter into an agreement for the owner or operator to engage and 
pay directly for the services of the qualified third party to prepare 
the necessary documents. The third party will execute an OFP prepared 
disclosure document stating that he does not have any conflict of 
interest, financial or otherwise, in the outcome of either the 
environmental process or the prohibition order proceeding. The agreement 
shall outline the responsibilities of each party and his relationship to 
the other two parties regarding the work to be done or supervised. OFP 
shall approve the information to be developed and supervise the 
gathering, analysis and presentation of the information. In addition, 
OFP will have the authority to approve and modify any statement, 
analysis, and conclusion contained in the third party prepared 
environmental documents.
    (c) Financial hardship. Whenever the bona fide estimate of the costs 
associated with NEPA compliance, if borne by the powerplant owner or 
operator, would make the conversion financially infeasible, OFP may 
waive the requirement set forth in paragraphs (a) and (b) of this 
section and perform the necessary environmental review.

(Approved by the Office of Management and Budget under control number 
1903-0077)

(Department of Energy Organization Act, Pub. L. 95-91 (42 U.S.C. 7101 et 
seq.); Energy Supply and Environmental Coordination Act of 1974, Pub. L. 
93-319, as amended by Pub. L. 94-163, Pub. L. 95-70, and Pub. L. 95-620 
(15 U.S.C. 719 et seq.); Powerplant and Industrial Fuel Use Act of 1978, 
Pub. L. 95-620, as amended by Pub. L. 97-35 (42 U.S.C. 8301 et seq.); 
Omnibus Budget Reconciliation Act of 1981, Pub. L. 97-35)

[47 FR 17046, Apr. 21, 1982]

Appendix I to Part 504--Procedures for the Computation of the Real Cost 
                               of Capital

    (a) The firm's real after-tax weighted average marginal cost of 
capital (K) is computed with equation 1.
[GRAPHIC] [TIFF OMITTED] TC01OC91.003


[[Page 63]]


The terms in equation 1 are defined as follows:

Wd=Fraction of existing capital structure which is debt.
Wp=Fraction of existing capital structure which is preferred 
          equity.
We=Fraction of existing capital structure which is common 
          equity and retained earnings.
Rd=Predicted nominal cost of long term debt expressed as a 
          fraction.
Rp=Predicted nominal cost of preferred stock expressed as a 
          fraction.
Re=Predicted nominal cost of common stock expressed as a 
          fraction.
INF=Percentage change in the GNP implicit price deflator over the past 
          12 months expressed as a fraction.
fd=Flotation cost of debt expressed as a fraction.
fp=Flotation cost of preferred stock expressed as a fraction.
fe=Flotation cost of common stock expressed as a fraction.
t=Marginal federal income tax rate for the current year.

    (b) Information on parameters used in Equation 1. (1) The parameters 
used in equation 1 will be the best practicable estimates. They will be 
obtained from the firm, accepted rating services (e.g., Standard & 
Poors, Moody's), government publications, accepted financial 
publications, annual financial reports and statements of firms, and 
investment bankers.
    (2) The predicted nominal cost of debt (Rd) may be 
estimated by determining the current average yield on newly issued 
bonds--industrial or utility as appropriate--which have the same rating 
as the firm's most recent debt issue.
    (3) The predicted nominal cost of preferred stock (Rp) 
may be estimated by determining the current average yield on newly 
issued preferred stock--industrial or utility as appropriate--which has 
the same rating as the firm's most recent preferred stock issue.
    (4)(A) The predicted nominal cost of common stock (Re) is 
computed with equation 2.

Eq 2    Re=Rf+B x Rm

where:

    Rf=The risk free interest rate--the average of the most 
recent auction rates of U.S. Government 13-week Treasury Bills,
    B=The ``beta'' coefficient--the relationship between the excess 
return on common stock and the excess return on the S&P 500 composite 
index, and
    Rm=The mean excess return on the S&P 500 composite 
index--the mean of the difference between the return on the S&P 500 
composite index and the risk free interest rate for the years 1926-1976 
as computed by Ibbotson and Sinquefield(1)--9.2%

    (B) The ``beta'' coefficient is computed with regression analysis 
techniques. The regression equation is Equation 3.

        (Ret-Rft) = 
    A+B(Rmt-Rft)+et

                                                             Eq. 3

where
[GRAPHIC] [TIFF OMITTED] TC01OC91.004

Rf t=The risk free interest rate in month t--the average of 
          the yields on 13-week treasury bills auctioned in month t.(2)
A=A constant which should not be significantly different than zero.
[GRAPHIC] [TIFF OMITTED] TC01OC91.005

et=The error in month t.
PRCCt=Closing market prices of the firm's common stock at the 
          end of month t fully adjusted for splits and stock dividends.
DIVRATEt=The sum of the dividends paid in the fiscal year 
          which contain month t.
Vsp,t=The market value of ``one share'' of the S&P 500 
          composite index at the end of month t.
Dsp,t=The estimated monthly income received from holding 
          ``one share'' of the S&P 500 in month t.

    The regression analysis is done with sixty months of data. The first 
month (t=1) is sixty months before the month in which the firm's current 
fiscal year started. The last month (t=60) is the last month of the past 
fiscal year.
    (5) Where the parameters specified above are not obtainable, 
alternate parameters that closely correspond to those above may be used. 
This may include substituting a bond yield for nominal cost of preferred 
stock where the former is not available. Where the capital structure 
does not consist of any debt, preferred equity, or common equity, an 
alternate methodology to predict the firm's real after-tax marginal cost 
of capital may be used.
    Example of using alternate parameters that closely correspond to 
those above are:
    (A) In the case of industrials, who do not typically issue preferred 
stock, the predicted nominal cost of preferred stock (RP) can 
be estimated by determining the current average yield on newly issued 
industrial bonds which have the same rating as the firm's most recent 
debt issue.
    (B) If necessary, the following assumptions can be made to determine 
the nominal cost of debt or preferred stock and their flotation costs.
    (i) Where a company issued privately placed debt that was not rated, 
the rating,

[[Page 64]]

applied to preferred stock could be used to determine the cost of debt 
and its flotation cost.
    (ii) Where a company issued privately placed preferred stock that 
was not rated, the rating applied to debt could be used to determine the 
cost of preferred stock and its flotation costs.
    (iii) In the case where all issues were privately placed, the 
current average yield on all newly issued debt or preferred could be 
used to determine the cost of debt or preferred respectively, and an 
average flotation cost, for debt or preferred, could be used.
    (C) Evidence Requirements. Copies of this calculation with notations 
as to the source of the data must be submitted.

                                Footnotes

    (1) Ibbotson, R.E. and R.A. Sinquefield, Stocks, Bonds, Bills, and 
Inflation, Charlottesville, Va.: The Financial Analysts Research 
Foundation, 1977, cited by Ernst & Whinney, Costs of Capital and Rates 
of Return for Industrial Firms and Class A&B Electric Utility Firms, 
June 1979, p. 3-8.
    (2) As an option, Rf tcan be developed with the following 
equation:
[GRAPHIC] [TIFF OMITTED] TC01OC91.006

where:

    Dt=The average annual yield on three month U.S. Treasury 
bills reported in the Survey of Current Business auctioned in month t--
which is reported using the bank discount method.
    N=Number of days to maturity.

[46 FR 59920, Dec. 7, 1981]

             Appendix II to Part 504--Fuel Price Computation

    (a) Introduction. This appendix provides the equations and 
parameters needed to specify the price of the delivered fuels to be used 
in the cost calculations associated with parts 503 and 504 of these 
regulations. The delivered price of the fuel to be used to calculate 
delivered fuel expenses must reflect (1) the price of each fuel at the 
time of the petition, and (2) the effects of future real price increases 
for each fuel. The delivered price of an alternate fuel used to 
calculate delivered fuel expenses must reflect the petitioner's 
delivered price of the alternate fuel and the effects of real increases 
in the price of that alternate fuel. Paragraphs (b), (c) and (d) below 
provide the procedure to: (1) Calculate fuel price and inflation 
indices; (2) account for projected real increases in fuel prices when 
planning to burn one or more than one fuel; and (3) account for 
projected real increases in the price of the alternate fuel. Table II-1 
of this appendix (See paragraph (b)) contains example fuel price and 
inflation indices based on the latest data appearing in the Energy 
Information Administration's (EIA) Annual Energy Outlook (AEO).
    The fuel price and inflation indices will change yearly with the 
publication of the AEO. Revisions shall become effective after final 
publication. However, the relevant set of parameters for a specific 
petition for exemption will be the set in effect at the time the 
petition is submitted or the set in effect at the time a decision is 
rendered, whichever is more favorable to the petitioner.
    (b) Computation of Fuel Price and Inflation Indices.
    (1) the Petitioner is responsible for computing the annual fuel 
price and inflation indices by using Equation II-1 and Equation II-2, 
respectively. The petitioner may compute the fuel price index specified 
in Equation II-1 or use his own price index. However, if he uses his own 
price index, the source or the derivation of the index must be fully 
documented and be contained in the evidential summary.

    EQ II-2 is:
    [GRAPHIC] [TIFF OMITTED] TC01OC91.007
    
where:
    PXi=The fuel price index for each fuel in year i. 
Pi=Price of fuel in year i.
    Po=Price of fuel in base year.

    EQ II-2 is:
    [GRAPHIC] [TIFF OMITTED] TC01OC91.008
    
where:
    IXi=The inflation index in year i.
    GXi=The NIPA GNP price deflator for year i.
    GXo=The NIPA GNP price deflator for the base year.

    (2) The parameters to be used in EQ II-1 are the Base Case fuel 
price projections found in EIA's current AEO.
    (3) When computing annual inflation indices, the petitioner is to 
use the Base Case National Macroeconomic Indicators (NIPA GNP Price 
Deflator) contained in EIA's current AEO. If necessary, the petitioner 
must rebase the projection to the same year used for the fuel price 
projections. For example, in 1989 AEO projects the price deflator in 
1982 dollars; this must be rebased to the year in which the petition is 
filed. The methodology used to rebase the inflation indices must follow 
standard statistical procedures and must be fully documented within the 
petition. This index will remain frozen at the last year of the AEO's 
projection for the remainder of the unit'(s) useful life.

[[Page 65]]

    (4) Table II-1 is provided as an example of the application of 
equations II-1 and II-2. This table contains annual fuel price indices 
for distillate oil, residual oil, natural gas, and coal. It also 
contains annual inflation indices. These values were computed from 
information contained in Table A3 and Table A11 of EIA's AEO, 1989.

                                        Table II-1: Price and Inflation Indices for use in the Cost Calculations
--------------------------------------------------------------------------------------------------------------------------------------------------------
          Year                Distillate (DPX)           Residual (RPX)           Natural gas (GPX)            Coal (CPX)             Inflation (IX)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                1986                    1.0000                    1.0000                    1.0000                    1.0000                   1.0000
                1987                    0.9810                    1.2134                    0.9508                    0.9231                   1.0334
                1988                    0.9429                    0.9407                    0.8934                    0.8876                   1.0658
                1989                    0.8929                    0.9328                    0.9057                    0.8639                   1.1054
                1990                    0.9905                    1.0119                    0.9221                    0.9112                   1.1607
                1991                    1.0381                    1.0751                    0.9344                    0.9172                   1.2204
                1992                    1.0929                    1.1344                    1.0205                    0.9231                   1.2836
                1993                    1.1595                    1.2292                    1.1148                    0.9349                   1.3512
                1994                    1.2286                    1.3241                    1.1844                    0.9467                   1.4214
                1995                    1.3000                    1.4150                    1.2705                    0.9527                   1.4960
                1996                    1.4000                    1.5415                    1.4016                    0.9586                   1.5768
                1997                    1.4762                    1.6403                    1.4918                    0.9704                   1.6585
                1998                    1.5452                    1.7273                    1.5615                    0.9763                   1.7410
                1999                    1.6143                    1.7905                    1.6475                    0.9882                   1.8235
                2000                    1.6690                    1.8340                    1.7049                    0.9941                   1.9025
                2001                    1.6690                    I.8340                    1.7049                    0.9941                   1.9025
                2002                    1.6690                    1.8340                    1.7049                    0.9941                   1.9025
                2003                    1.6690                    1.8340                    1.7049                    0.9941                   1.9025
                2004                    1.6690                    1.8340                    1.7049                    0.9941                   1.9025
                2005                    1.6690                    1.8340                    1.7049                    0.9941                   1.9025
                2006                    1.6690                    1.8340                    1.7049                    0.9941                   1.9025
                2007                    1.6690                    1.8340                    1.7049                    0.9941                   1.9025
                2008                    1.6690                    1.8430                    1.7049                    0.9941                   1.9025
                2009                    1.6690                    1.8340                    1.7049                    0.9941                   1.9025
                2010                    1.6690                    1.8340                    1.7049                    0.9941                   1.9025
--------------------------------------------------------------------------------------------------------------------------------------------------------

    (C) Fuel Price Computation.
    (1) The delivered price of the proposed fuel to be burned 
(FPBi) must reflect the real escalation rate of the proposed 
fuel, and must be computed with Equation EQ II-3.
EQ-II-3 is: FPBi=MPB [PXi]

where:

    FPBi=Price of the proposed fuel (distillate oil, residual 
oil, or natural gas) in year i.
    MPB=The current delivered market price of the proposed fuel.
    PXi=The fuel price index value in year i, computed with 
Equation II-1.

or:

    (2) When planning to use more than one fuel in the proposed unit(s), 
the petitioner must use Equation II-1 and Equation II-3 to calculate the 
annual fuel price of each fuel to be used. The petitioner then must 
estimate the proportion of each fuel to be burned annually over the 
useful life of the unit(s). With these proportions and the respective 
annual fuel prices for each fuel, the petitioner must compute an annual 
weighted average fuel price. The methodology used to calculate the 
weighted average fuel price must follow standard statistical procedures 
and be fully documented within the petition.
    (d) Fuel Price Computation--Alternate Fuel. The delivered price of 
alternate fuel (PFAi) must reflect the real escalation rate 
of alternate fuel and must be computed with Equation II-4.
Equation II-4 is:

    PFAi=APF x apxi
where:
    PFA=The price of the alternate fuel in year i.
    APF-i=The current market price of the alternate fuel 
f.o.b. the facility).
    APXi=The alternate fuel price index value for year i, 
computed with Equation II-1.

    In most cases the alternate fuel will be coal. The petitioner must 
use Equation II-1 (paragraph (b)) to compute the escalation rate 
(APXi). If an alternate fuel other than coal is proposed the 
source or the derivation of the index must be fully documented and be 
contained in the evidential summary.

[54 FR 52896, Dec. 22, 1989]

                          PART 508  [RESERVED]

                          PART 516  [RESERVED]

[[Page 66]]





     SUBCHAPTER G--NATURAL GAS (ECONOMIC REGULATORY ADMINISTRATION)


PART 580--CURTAILMENT PRIORITIES FOR ESSENTIAL AGRICULTURAL USES--Table of Contents




Sec.
580.01  Purpose.
580.02  Definitions.
580.03  Curtailment priorities.
580.04  Administrative procedures. [Reserved]

    Authority: Secs. 401, 403, Pub. L. 95-621, 92 Stat. 3394-3395, 3396; 
secs. 301(b), 402(a), Pub. L. 95-91, 91 Stat. 578, 594, (42 U.S.C. 
7115(b), 7117(a)); E.O. 12009, 42 FR 46267.

    Source: 44 FR 15646, Mar. 15, 1979, unless otherwise noted.



Sec. 580.01  Purpose.

    The purpose of this part is to implement the authority granted to 
the Secretary of Energy in section 401 of the Natural Gas Policy Act of 
1978, Public Law 95-621, 92 Stat. 3394-3395 (1978).



Sec. 580.02  Definitions.

    (a) Terms defined in section 2 of the Natural Gas Policy Act of 1978 
shall have the same meaning, as applicable, for purposes of this part, 
unless further defined in paragraph (b) of this section.
    (b) The following definitions are applicable to this part:
    (1) Commercial establishment means any establishment, (including 
institutions and local, state and federal government agencies) engaged 
primarily in the sale of goods or services, where natural gas is used 
for purposes other than those involving manufacturing or electric power 
generation.
    (2) Essential agricultural use means any use of natural gas:
    (i) For agricultural production, natural fiber production, natural 
fiber processing, food processing, food quality maintenance, irrigation 
pumping, crop drying; or
    (ii) As a process fuel or feedstock in the production of fertilizer, 
agricultural chemicals, animal feed, or food which the Secretary of 
Agriculture determines is necessary for full food and fiber production.
    (3) Essential agricultural user means any person who uses natural 
gas for an essential agricultural use as defined in paragraph (b)(2) of 
this section.
    (4) Hospital means a facility whose primary function is delivering 
medical care to patients who remain at the facility, including nursing 
and convalescent homes. Outpatient clinics or doctors' offices are not 
included in this definition.
    (5) High-priority use means any use of natural gas by a high-
priority user as defined in paragraph (a)(6) of this section.
    (6) High-priority user means, in no specific order, any person who 
uses natural gas:
    (i) In a residence, or
    (ii) In a commercial establishment in amounts of less than 50 Mcf on 
a peak day; or
    (iii) In any school or hospital; or
    (iv) For minimum plant protection when operations are shut down, for 
police protection, for fire protection, in a sanitation facility, in a 
correctional facility, or for emergency situations pursuant to 18 CFR 
2.78(a)(4).
    (7) Interstate pipeline means any person engaged in natural gas 
transportation subject to the jurisdiction of the Federal Energy 
Regulatory Commission under the Natural Gas Act.
    (8) Residence means a dwelling using natural gas predominately for 
residential purposes such as space heating, air conditioning, hot water 
heating, cooking, clothes drying, and other residential uses, and 
includes apartment buildings and other multi-unit residential buildings.
    (9) School means a facility, the primary function of which is to 
deliver instruction to regularly enrolled students in attendance at such 
facility. Facilities used for both educational and non-educational 
activities are not included under this definition unless the latter are 
merely incidental to the delivery of instruction.

[[Page 67]]



Sec. 580.03  Curtailment priorities.

    (a) Notwithstanding any provision of law other than section 401(b) 
of the Natural Gas Policy Act of 1978, or any other rule, regulation, or 
order of the Department of Energy, the Federal Energy Regulatory 
Commission or their predecessor agencies, and to the maximum extent 
practicable, no curtailment plan of an interstate pipeline may provide 
for curtailment of deliveries of natural gas for any essential 
agricultural use, unless:
    (1) Such curtailment does not reduce the quantity of natural gas 
delivered for such use below the use requirement certified by the 
Secretary of Agriculture under section 401(c) of the Natural Gas Policy 
Act of 1978 in order to meet the requirements of full food and fiber 
production; or
    (2) Such curtailment is necessary in order to meet the requirements 
of high-priority users; or
    (3) The Federal Energy Regulatory Commission, in consultation with 
the Secretary of Agriculture, determines, by rule or order issued 
pursuant to section 401(b) of the Natural Gas Policy Act of 1978, that 
use of a fuel (other than natural gas) is economically practicable and 
that the fuel is reasonably available as an alternative for such 
essential agricultural use.
    (b) Any essential agricultural user who also qualifies as a high-
priority user shall be a high-priority user for purposes of paragraph 
(a) of this section.
    (c) The specific relative order of priority for all uses and users 
of natural gas, including high-priority and essential agricultural uses 
and users, shall remain as reflected in effective curtailment plans of 
interstate pipelines filed with the Federal Energy Regulatory Commission 
to the extent that the relative order of priorities does not conflict 
with paragraph (a) of this section.
    (d) Nothing in this rule shall prohibit the injection of natural gas 
into storage by interstate pipelines or deliveries to its customers for 
their injection into storage unless it is demonstrated to the Federal 
Energy Regulatory Commission that these injections or deliveries are not 
reasonably necessary to meet the requirements of high-priority users or 
essential agricultural uses.



Sec. 580.04  Administrative procedures. [Reserved]



PART 590--ADMINISTRATIVE PROCEDURES WITH RESPECT TO THE IMPORT AND EXPORT OF NATURAL GAS--Table of Contents




                      Subpart A--General Provisions

Sec.
590.100  OMB Control Numbers.
590.101  Purpose and scope.
590.102  Definitions.
590.103  General requirements for filing documents with FE.
590.104  Address for filing documents.
590.105  Computation of time.
590.106  Dockets.
590.107  Service.
590.108  Off-the-record communications.
590.109  FE investigations.

 Subpart B--Applications for Authorization to Import or Export Natural 
                                   Gas

590.201  General.
590.202  Contents of applications.
590.203  Deficient applications.
590.204  Amendment or withdrawal of applications.
590.205  Notice of applications.
590.206  Notice of procedures.
590.207  Filing fees.
590.208  Small volume exports.
590.209  Exchanges by displacement.

                          Subpart C--Procedures

590.301  General
590.302  Motions and answers.
590.303  Interventions and answers.
590.304  Protests and answers.
590.305  Informal discovery.
590.306  Subpoenas.
590.307  Depositions.
590.308  Admissions of facts.
590.309  Settlements.
590.310  Opportunity for additional procedures.
590.311  Conferences.
590.312  Oral presentations.
590.313  Trial-type hearings.
590.314  Presiding officials.
590.315  Witnesses.
590.316  Shortened proceedings.
590.317  Complaints.

                     Subpart D--Opinions and Orders

590.401  Orders to show cause.
590.402  Conditional orders.
590.403  Emergency interim orders.
590.404  Final opinions and orders.
590.405  Transferability.
590.406  Compliance with orders.

[[Page 68]]

590.407  Reports of changes.

                  Subpart E--Applications for Rehearing

590.501  Filing.
590.502  Application is not a stay.
590.503  Opinion and order on rehearing.
590.504  Denial by operation of law.
590.505  Answers to applications for rehearing.

    Authority: Secs. 301(b), 402(f), and 644, Pub. L. 95-91, 91 Stat. 
578, 585, and 599 (42 U.S.C. 7151(b), 7172(f), and 7254), Sec. 3, Act of 
June 21, 1938, c. 556, 52 Stat. 822 (15 U.S.C. 717b); E.O. 12009 (42 FR 
46267, September 15, 1977); DOE Delegation Order Nos. 0204-111 and 0204-
127 (49 FR 6684, February 22, 1984; 54 FR 11437, March 20, 1989).

    Source: 54 FR 53531, Dec. 29, 1989, unless otherwise noted.



                      Subpart A--General Provisions



Sec. 590.100  OMB Control Numbers.

    The information collection requirements contained in this part have 
been approved by the Office of Management and Budget under Control No. 
1903-0081.



Sec. 590.101  Purpose and scope.

    The purpose of this part is to establish the rules and procedures 
required to be followed by persons to obtain authorizations from DOE to 
import or export natural gas under the Natural Gas Act and by all other 
persons interested in participating in a natural gas import or export 
proceeding before the agency. This part establishes the procedural rules 
necessary to implement the authorities vested in the Secretary of Energy 
by sections 301(b) and 402(f) of the DOE Act, which have been delegated 
to the Assistant Secretary.



Sec. 590.102  Definitions.

    As used in this part:
    (a) Assistant Secretary means the Assistant Secretary for Fossil 
Energy or any employee of the DOE who has been delegated final 
decisional authority.
    (b) Contested proceeding means a proceeding:
    (1) Where a protest or a motion to intervene, or a notice of 
intervention, in opposition to an application or other requested action 
has been filed, or
    (2) Where a party otherwise notifies the Assistant Secretary and the 
other parties to a proceeding in writing that it opposes an application 
or other requested action.
    (c) Decisional employee means the Assistant Secretary, presiding 
officials at conferences, oral presentations or trial-type hearings, and 
any other employee of the DOE, including consultants and contractors, 
who are, or may reasonably be expected to be, involved in the decision-
making process, including advising the Assistant Secretary on the 
resolution of issues involved in a proceeding. The term includes those 
employees of the DOE assisting in the conduct of trial-type hearings by 
performing functions on behalf of the Assistant Secretary or presiding 
official.
    (d) DOE means the Department of Energy, of which FE is a part.
    (e) DOE Act means the Department of Energy Organization Act, Public 
Law 95-91, 91 Stat. 565 (42 U.S.C. 7101 et seq.).
    (f) FE means the Office of The Assistant Secretary for Fossil 
Energy.
    (g) FERC means the Federal Energy Regulatory Commission.
    (h) Interested person means a person, other than a decisional 
employee, whose interest in a proceeding goes beyond the general 
interest of the public as a whole and includes applicants, intervenors, 
competitors of applicants, and other individuals and organizations, 
including non-profit and public interest organizations, and state, 
local, and other public officials, with a proprietary, financial or 
other special interest in the outcome of a proceeding. The term does not 
include other federal agencies or foreign governments and their 
representatives, unless the agency, foreign government, or 
representative of a foreign government is a party to the proceeding.
    (i) Natural gas means natural gas and mixtures of natural gas and 
synthetic natural gas, regardless of physical form or phase, including 
liquefied natural gas and gels primarily composed of natural gas.
    (j) NGA means the Natural Gas Act of June 21, 1938, c. 556, 52 Stat. 
821 (15 U.S.C. 717 et seq.).
    (k) Off-the-record communication means a written or oral 
communication not on the record which is relevant to the merits of a 
proceeding, and about which the parties have not been given reasonable 
prior notice of

[[Page 69]]

the nature and purpose of the communication and an opportunity to be 
present during such communication or, in the case of a written 
communication, an opportunity to respond to the communication. It does 
not include communications concerned solely with procedures which are 
not relevant to the merits of a proceeding. It also does not include 
general background discussions about an entire industry or natural gas 
markets or communications of a general nature made in the course of 
developing agency policy for future general application, even though 
these discussions may relate to the merits of a particular proceeding.
    (l) Party means an applicant, any person who has filed a motion for 
and been granted intervenor status or whose motion to intervene is 
pending, and any state commission which has intervened by notice 
pursuant to Sec. 590.303(a).
    (m) Person means any individual, firm, estate, trust, partnership, 
association, company, joint-venture, corporation, United States local, 
state and federal governmental unit or instrumentality thereof, 
charitable, educational or other institution, and others, including any 
officer, director, owner, employee, or duly authorized representative of 
any of the foregoing.
    (n) Presiding official means any employee of the DOE who has been 
designated by the Assistant Secretary to conduct any stage of a 
proceeding, which may include presiding at a conference, oral 
presentation, or trial-type hearing, and who has been delegated the 
authority of the Assistant Secretary to make rulings and issue orders in 
the conduct of such proceeding, other than final opinions and orders, 
orders to show cause, emergency interim orders, or conditional decisions 
under subpart D and orders on rehearing under subpart E.
    (o) Proceeding means the process and activity, and any part thereof, 
instituted by FE either in response to an application, petition, motion 
or other filing under this part, or on its own initiative, by which FE 
develops and considers the relevant facts, policy and applicable law 
concerning the importation or exportation of natural gas and which may 
lead to the issuance of an order by the Assistant Secretary under 
subparts D and E.
    (p) State commission means the regulatory body of a state or 
municipality having jurisdiction to regulate rates and charges for the 
sale of natural gas to consumers within the state or municipality, or 
having any regulatory jurisdiction over parties involved in the import 
or export arrangement.



Sec. 590.103  General requirements for filing documents with FE.

    (a) Any document, including but not limited to an application, 
amendment of an application, request, petition, motion, answer, comment, 
protest, complaint, and any exhibit submitted in connection with such 
documents, shall be filed with FE under this part. Such document shall 
be considered officially filed with FE when it has been received and 
stamped with the time and date of receipt by the Office of Fuels 
Programs, FE. Documents transmitted to FE must be addressed as provided 
in Sec. 590.104. All documents and exhibits become part of the record in 
the official FE docket file and will not be returned. An original and 
fifteen (15) copies of all applications, filings and submittals shall be 
provided to FE. No specific format is required. Applicants required to 
file quarterly reports as a condition to an authorization need only file 
an original and four (4) copies.
    (b) Upon receipt by FE, each application or other initial request 
for action shall be assigned a docket number. Any petition, motion, 
answer, request, comment, protest, complaint or other document filed 
subsequently in a docketed proceeding with FE shall refer to the 
assigned docket number. All documents shall be signed either by the 
person upon whose behalf the document is filed or by an authorized 
representative. Documents signed by an authorized representative shall 
contain a certified statement that the representative is a duly 
authorized representative unless the representative has a certified 
statement already on file in the FE docket of the proceeding. All 
documents shall also be verified under oath or affirmation by the person 
filing, or by an officer or authorized representative of the firm having 
knowledge of the facts alleged. Each document filed

[[Page 70]]

with FE shall contain a certification that a copy has been served as 
required by Sec. 590.107 and indicate the date of service. Service of 
each document must be made not later than the date of the filing of the 
document.
    (c) A person who files an application shall state whether, to the 
best knowledge of that person, the same or a related matter is being 
considered by any other part of the DOE, including the FERC, or any 
other Federal agency or department and, if so, shall identify the matter 
and the agency or department.



Sec. 590.104  Address for filing documents.

    All documents filed under this part shall be addressed to: Office of 
Fuels Programs, Fossil Energy, U.S. Department of Energy, Docket Room 
3F-056, FE-50, Forrestal Building, 1000 Independence Avenue SW., 
Washington, DC 20585. All hand delivered documents shall be filed with 
the Office of Fuels Programs at the above address between the hours of 8 
a.m. and 4:30 p.m., Monday through Friday, except Federal holidays.



Sec. 590.105  Computation of time.

    (a) In computing any period of time prescribed or allowed by these 
regulations, the day of the act or event from which the designated 
period of time begins to run is not included. The period of time begins 
to run the next day after the day of the act or event. The last day of 
the period so computed is included unless it is a Saturday, Sunday, or 
legal Federal holiday, in which event the period runs until the end of 
the next day that is neither a Saturday, Sunday, nor a legal Federal 
holiday, unless otherwise provided by this part or by the terms of an FE 
order. Documents received after the regular business hours of 8 a.m. to 
4:30 p.m. are deemed filed on the next regular business day.
    (b) When a document is required to be filed with FE within a 
prescribed time, an extension of time to file may be granted for good 
cause shown.
    (c) An order is issued and effective when date stamped by the Office 
of Fuels Programs, FE, after the order has been signed unless another 
effective date is specified in the order.



Sec. 590.106  Dockets.

    The FE shall maintain a docket file of each proceeding under this 
part, which shall contain the official record upon which all orders 
provided for in subparts D and E shall be based. The official record in 
a particular proceeding shall include the official service list, all 
documents filed under Sec. 590.103, the official transcripts of any 
procedures held under subpart C, and opinions and orders issued by FE 
under subparts D and E, and reports of contract amendments under 
Sec. 590.407. All dockets shall be available for inspection and copying 
by the public during regular business hours between 8 a.m. and 4:30 p.m. 
Dockets are located in the Office of Fuels Programs, FE, Docket Room 3F-
056, Forrestal Building, 1000 Independence Avenue SW., Washington, DC 
20585.



Sec. 590.107  Service.

    (a) An applicant, any other party to a proceeding, or a person 
filing a protest shall serve a copy of all documents filed with FE upon 
all parties unless otherwise provided in this part. The copy of a 
document served upon parties shall be a true copy of the document filed 
with FE, but does not have to be a copy stamped with the time and date 
of receipt by FE. The FE shall maintain an official service list for 
each proceeding which shall be provided upon request.
    (b) When the parties are not known, such as during the initial 
comment period following publication of the notice of application, 
service requirements under paragraph (a) of this section may be met by 
serving a copy of all documents on the applicant and on FE for inclusion 
in the FE docket in the proceeding.
    (c) All documents required to be served under this part may be 
served by hand, certified mail, registered mail, or regular mail. It 
shall be the responsibility of the serving party to ensure that service 
is effected in a timely manner. Service is deemed complete upon delivery 
or upon mailing, whichever occurs first.
    (d) Service upon a person's duly authorized representatives on the 
official service list shall constitute service upon that person.

[[Page 71]]

    (e) All FE orders, notices, or other FE documents shall be served on 
the parties by FE either by hand, registered mail, certified mail, or 
regular mail, except as otherwise provided in this part.



Sec. 590.108  Off-the-record communications.

    (a) In any contested proceeding under this part:
    (1) No interested person shall make an off-the-record communication 
or knowingly cause an off-the-record communication to be made to any 
decisional employee.
    (2) No decisional employee shall make an off-the-record 
communication or knowingly cause an off-the-record communication to be 
made to any interested person.
    (3) A decisional employee who receives, makes, or knowingly causes 
to be made an oral off-the-record communication prohibited by this 
section shall prepare a memorandum stating the substance of the 
communication and any responses made to it.
    (4) Within forty-eight (48) hours of the off-the-record 
communication, a copy of all written off-the-record communications or 
memoranda prepared in compliance with paragraph (a)(3) of this section 
shall be delivered by the decisional employee to the Assistant Secretary 
and to the Deputy Assistant Secretary for Fuels Programs. The materials 
will then be made available for public inspection by placing them in the 
docket associated with the proceeding.
    (5) Requests by a party for an opportunity to rebut, on the record, 
any facts or contentions in an off-the-record communication may be filed 
in writing with the Assistant Secretary. The Assistant Secretary shall 
grant such requests only for good cause.
    (6) Upon being notified of an off-the-record communication made by a 
party in violation of this section, the Assistant Secretary may, to the 
extent consistent with the interests of justice and the policies of the 
NGA and the DOE Act, require the party to show cause why the party's 
claim or interest in the proceeding should not be dismissed, denied, 
disregarded, or otherwise adversely affected on account of the 
violation.
    (b) The prohibitions of paragraph (a) of the section shall apply 
only to contested proceedings and begin at the time either a protest or 
a motion to intervene or notice of intervention in opposition to the 
application or other requested action is filed with FE, or a party 
otherwise specifically notifies the Assistant Secretary and the other 
parties in writing of its opposition to the application or other 
requested action, whichever occurs first.



Sec. 590.109  FE investigations.

    The Assistant Secretary or the Assistant Secretary's delegate may 
investigate any facts, conditions, practices, or other matters within 
the scope of this part in order to determine whether any person has 
violated or is about to violate any provision of the NGA or other 
statute or any rule, regulation, or order within the Assistant 
Secretary's jurisdiction. In conducting such investigations, the 
Assistant Secretary or the Assistant Secretary's delegate may, among 
other things, subpoena witnesses to testify, subpoena or otherwise 
require the submission of documents, and order testimony to be taken by 
deposition.



 Subpart B--Applications for Authorization to Import or Export Natural 
                                   Gas



Sec. 590.201  General.

    (a) Any person seeking authorization to import or export natural gas 
into or from the United States, to amend an existing import or export 
authorization, or seeking any other requested action, shall file an 
application with the FE under the provisions of this part.
    (b) Applications shall be filed at least ninety (90) days in advance 
of the proposed import or export or other requested action, unless a 
later date is permitted for good cause shown.

[54 FR 53531, Dec. 29, 1989; 55 FR 14916, Apr. 19, 1990]



Sec. 590.202  Contents of applications.

    (a) Each application filed under Sec. 590.201 shall contain the 
exact legal

[[Page 72]]

name of the applicant, the names, titles, and mailing addresses of a 
maximum of two persons for the official service list, a statement 
describing the action sought from FE, the justification for such action, 
including why the proposed action is not inconsistent with the public 
interest, and the FE docket number, if applicable.
    (b) Each application shall include the matters listed below to the 
extent applicable. All factual matters shall be supported to the extent 
practicable by the necessary data or documents. Copies of relevant 
documents filed or intended to be filed with FERC may be submitted to 
satisfy the requirements of this section. Topics to be addressed or 
described shall include:
    (1) The scope of the project, including the volumes of natural gas 
involved, expressed in either Mcf or Bcf and their Btu equivalents, the 
dates of commencement and completion of the proposed import or export, 
and the facilities to be utilized or constructed;
    (2) The source and security of the natural gas supply to be imported 
or exported, including contract volumes and a description of the gas 
reserves supporting the project during the term of the requested 
authorization;
    (3) Identification of all the participants in the transaction, 
including the parent company, if any, and identification of any 
corporate or other affiliations among the participants;
    (4) The terms of the transaction, such as take-or-pay obligations, 
make-up provisions, and other terms that affect the marketability of the 
gas;
    (5) The provisions of the import arrangement which establish the 
base price, volume requirements, transportation and other costs, and 
allow adjustments during the life of the project, and a demonstration as 
to why the import arrangement is and will remain competitive over the 
life of the project and is otherwise not inconsistent with the public 
interest;
    (6) For proposed imports, the need for the natural gas by the 
applicant or applicant's prospective customers, including a description 
of the persons who are expected to purchase the natural gas; and for 
proposed exports, the lack of a national or regional need for the gas; 
and
    (7) The potential environmental impact of the project. To the extent 
possible, the application shall include a listing and description of any 
environmental assessments or studies being performed on the proposed gas 
project. The application shall be updated as the status of any 
environmental assessments changes.
    (c) The application shall also have attached a statement, including 
a signed opinion of legal counsel, showing that a proposed import or 
export of natural gas is within the corporate powers of the applicant 
and a copy of all relevant contracts and purchase agreements.
    (d) The Assistant Secretary or the Assistant Secretary's delegate 
may at any time require the applicant and other parties to make 
supplemental filings of additional information necessary to resolve 
issues raised by the application.
    (e) All information and data filed in support of or against an 
application will be placed in the official FE docket file of the 
proceeding and will not be afforded confidential treatment, unless the 
party shows why the information or data should be exempted from public 
disclosure and the Assistant Secretary or Assistant Secretary's delegate 
determines that such information or data shall be afforded confidential 
treatment. Such determination shall be made in accordance with 10 CFR 
1004.11.

[54 FR 53531, Dec. 29, 1989; 55 FR 18227, May 1, 1990]



Sec. 590.203  Deficient applications.

    If an application is incomplete or otherwise deemed deficient, the 
Assistant Secretary or the Assistant Secretary's delegate may require 
the applicant to submit additional information or exhibits to remedy the 
deficiency. If the applicant does not remedy the deficiency within the 
time specified by the Assistant Secretary or the Assistant Secretary's 
delegate, the application may be dismissed without prejudice to refiling 
at another time.



Sec. 590.204  Amendment or withdrawal of applications.

    (a) The applicant may amend or supplement the application at any 
time

[[Page 73]]

prior to issuance of the Assistant Secretary's final opinion and order 
resolving the application, and shall amend or supplement the application 
whenever there are changes in material facts or conditions upon which 
the proposal is based.
    (b) The Assistant Secretary may for good cause shown by motion of a 
party or upon the Assistant Secretary's own initiative decline to act 
on, in whole or in part, an amendment or supplement requested by an 
applicant under paragraph (a) of this section.
    (c) After written notice to FE and service upon the parties of that 
notice an applicant may withdraw an application. Such withdrawal shall 
be effective thirty (30) days after notice to FE if the Assistant 
Secretary does not issue an order to the contrary within that time 
period.



Sec. 590.205  Notice of applications.

    (a) Upon receipt of an application, the FE shall publish a notice of 
application in the Federal Register. The notice shall summarize the 
proposal. Except in emergency circumstances, generally the notice shall 
provide a time limit of not less than thirty (30) days from the notice's 
date of publication in the Federal Register for persons to file 
protests, comments, or a motion to intervene or notice of intervention, 
as applicable. The notice may also request comments on specific issues 
or matters of fact, law, or policy raised by the application.
    (b) The notice of application shall advise the parties of their 
right to request additional procedures, including the opportunity to 
file written comments and to request that a conference, oral 
presentation, or trial-type hearing be convened. Failure to request 
additional procedures at this time shall be deemed a waiver of any right 
to additional procedures should the Assistant Secretary decide to grant 
the application and authorize the import or export by issuing a final 
opinion and order in accordance with Sec. 590.316.
    (c) Where negotiations between the DOE, including FE, and a foreign 
government have resulted in a formal policy agreement or statement 
affecting a particular import or export proceeding, FE shall include in 
the notice of application a description of the terms or policy positions 
of that agreement or statement to the extent they apply to the 
proceeding, and invite comment. A formal policy agreement or statement 
affecting a particular import or export proceeding that is arrived at 
after publication of the notice of application shall be placed on the 
record in that proceeding and the parties given an opportunity to 
comment thereon.



Sec. 590.206  Notice of procedures.

    In all proceedings where, following a notice of application and the 
time specified in the notice for the filing of responses thereto, the 
Assistant Secretary determines to have additional procedures, which may 
consist of the filing of supplemental written comments, written 
interrogatories or other discovery procedures, a conference, oral 
presentation, or trial-type hearing, the Assistant Secretary shall 
provide the parties with notice of the procedures the Assistant 
Secretary has determined to follow in the proceeding and advise the 
parties of their right to request any additional procedures in 
accordance with the provisions of Sec. 590.310. The notice of procedures 
may identify and request comments on specific issues of fact, law, or 
policy relevant to the proceeding and may establish a time limit for 
requesting additional procedures.



Sec. 590.207  Filing fees.

    A non-refundable filing fee of fifty dollars ($50) shall accompany 
each application filed under Sec. 590.201. Checks shall be made payable 
to ``Treasury of the United States.''



Sec. 590.208  Small volume exports.

    Any person may export up to 100,000 cubic feet of natural gas (14.73 
pounds per square inch at 60 degrees Fahrenheit) or the liquefied or 
compressed equivalent thereof, in a single shipment for scientific, 
experimental, or other non-utility gas use without prior authorization 
of the Assistant Secretary.

[[Page 74]]



Sec. 590.209  Exchanges by displacement.

    Any importer of natural gas may enter into an exchange by 
displacement agreement without the prior authorization of the Assistant 
Secretary when the net effect of the exchange is no different than under 
the importer's existing authorization. An exchange by displacement is an 
arrangement whereby authorized imported volumes are displaced by other 
gas for purposes of storage or flexibility. The term of the exchange 
agreement may not exceed five (5) years, the volumes imported may not 
exceed the importer's existing import authorization, and no actual 
natural gas may flow across the United States border under the terms of 
the exchange agreement. Any importer who enters into an exchange 
agreement pursuant to this section shall file with FE within fifteen 
(15) days after the start up of the exchange, a written description of 
the transaction, the exact volume of natural gas to be displaced, the 
name of the purchaser, and the import authorization under which the 
exchange is being carried out.



                          Subpart C--Procedures



Sec. 590.301  General.

    The procedures of this subpart are applicable to proceedings 
conducted on all applications or other requested actions filed under 
this part. The Assistant Secretary may conduct all aspects of the 
procedures of this subpart or may designate a presiding official 
pursuant to Sec. 590.314.



Sec. 590.302  Motions and answers.

    (a) Motions for any procedural or interlocutory ruling shall set 
forth the ruling or relief requested and state the grounds and the 
statutory or other authority relied upon. All written motions shall 
comply with the filing requirements of Sec. 590.103. Motions made during 
conferences, oral presentations or trial-type hearings may be stated 
orally upon the record, unless the Assistant Secretary or the presiding 
official determines otherwise.
    (b) Any party may file an answer to any written motion within 
fifteen (15) days after the motion is filed, unless another period of 
time is established by the Assistant Secretary or the presiding 
official. Answers shall be in writing and shall detail each material 
allegation of the motion being answered. Answers shall state clearly and 
concisely the facts and legal authorities relied upon.
    (c) Any motion, except for motions seeking intervention or 
requesting that a conference, oral presentation or trial-type hearing be 
held, shall be deemed to have been denied, unless the Assistant 
Secretary or presiding official acts within thirty (30) days after the 
motion is filed.



Sec. 590.303  Interventions and answers.

    (a) A state commission may intervene in a proceeding under this part 
as a matter of right and become a party to the proceeding by filing a 
notice of intervention no later than the date fixed for filing motions 
to intervene in the applicable FE notice or order. If the period for 
filing the notice has expired, a state commission may be permitted to 
intervene by complying with the filing and other requirements applicable 
to any other person seeking to become a party to the proceeding as 
provided in this section.
    (b) Any other person who seeks to become a party to a proceeding 
shall file a motion to intervene, which sets out clearly and concisely 
the facts upon which the petitioner's claim of interest is based.
    (c) A motion to intervene shall state, to the extent known, the 
position taken by the movant and the factual and legal basis for such 
positions in order to advise the parties and the Assistant Secretary as 
to the specific issues of policy, fact, or law to be raised or 
controverted.
    (d) Motions to intervene may be filed at any time following the 
filing of an application, but no later than the date fixed for filing 
such motions or notices in the applicable FE notice or order, unless a 
later date is permitted by the Assistant Secretary for good cause shown 
and after considering the impact of granting the late motion of the 
proceeding. Each motion or notice shall list the names, titles, and 
mailing addresses of a maximum of two persons for the official service 
list.

[[Page 75]]

    (e) Any party may file an answer to a motion to intervene, but such 
answer shall be made within fifteen (15) days after the motion to 
intervene was filed, unless a later date is permitted by the Assistant 
Secretary for good cause shown. Answers shall be in writing. Answers 
shall detail each material allegation of the motion to intervene being 
answered and state clearly and concisely the facts and legal authorities 
relied upon. Failure to answer is deemed a waiver of any objection to 
the intervention. This paragraph does not prevent the Assistant 
Secretary from ruling on a motion to intervene and issuing a final 
opinion and order in accordance with Sec. 590.316 prior to the 
expiration of the fifteen (15) days in which a party has to answer a 
motion to intervene.
    (f) If an answer in opposition to a motion to intervene is timely 
filed or if the motion to intervene is not timely filed, then the movant 
becomes a party only after the motion to intervene is expressly granted.
    (g) If no answer in opposition to a motion to intervene is filed 
within the period of time prescribed in paragraph (e) of this section, 
the motion to intervene shall be deemed to be granted, unless the 
Assistant Secretary denies the motion in whole or in part or otherwise 
limits the intervention prior to the expiration of the time allowed in 
paragraph (e) for filing an answer to the motion to intervene. Where the 
motion to intervene is deemed granted, the participation of the 
intervenor shall be limited to matters affecting asserted rights and 
interests specifically set forth in the motion to intervene, and the 
admission of such intervenor to party status shall not be construed as 
recognition by FE that the intervenor might be aggrieved because of any 
order issued.
    (h) In the event that a motion for late intervention is granted, an 
intervenor shall accept the record of the proceeding as it was developed 
prior to the intervention.



Sec. 590.304  Protests and answers.

    (a) Any person objecting to an application filed under Sec. 590.201 
of this part or to any action taken by FE under this part may file a 
protest. No particular form is required. The protest shall identify the 
person filing the protest, the application or action being objected to, 
and provide a concise statement of the reasons for the protest.
    (b) The filing of a protest, without also filing a motion to 
intervene or a notice of intervention, shall not make the person filing 
the protest a party to the proceeding.
    (c) A protest shall be made part of the official FE docket file in 
the proceeding and shall be considered as a statement of position of the 
person filing the protest, but not as establishing the validity of any 
assertion upon which the decision would be based.
    (d) Protests shall be served on the applicant and all parties by the 
person filing the protest. If the person filing the protest is unable to 
provide service on any person identified as a party to the proceeding 
after a good faith effort, then FE shall effect service. However, when 
the parties are not known, service requirements may be met by serving a 
copy on the applicant and on FE as provided in Sec. 590.107(b).
    (e) Protests may be filed at any time following the filing of an 
application, but no later than the date fixed for filing protests in the 
applicable FE notice or order, unless a later date is permitted by the 
Assistant Secretary for good cause shown.
    (f) Any party may file an answer to a protest but such answer must 
be filed within fifteen (15) days after the protest was filed, unless a 
later date is permitted by the Assistant Secretary for good cause shown.

[54 FR 53531, Dec. 29, 1989; 55 FR 14916, Apr. 19, 1990]



Sec. 590.305  Informal discovery.

    The parties to a proceeding may conduct discovery through use of 
procedures such as written interrogatories or production of documents. 
In response to a motion by a party, the Assistant Secretary or presiding 
official may determine the procedures to be utilized for discovery if 
the parties cannot agree on such procedures.



Sec. 590.306  Subpoenas.

    (a) Subpoenas for the attendance of witnesses at a trial-type 
hearing or for

[[Page 76]]

the production of documentary evidence may be issued upon the initiative 
of the Assistant Secretary or presiding official, or upon written motion 
of a party or oral motion of a party during a conference, oral 
presentation, or trial-type hearing, if the Assistant Secretary or 
presiding official determines that the evidence sought is relevant and 
material.
    (b) Motions for the issuance of a subpoena shall specify the 
relevance, materiality, and scope of the testimony or documentary 
evidence sought, including, as to documentary evidence, specification to 
the extent possible of the documents sought and the facts to be proven 
by them, the issues to which they relate, and why the information or 
evidence was not obtainable through discovery procedures agreed upon by 
the parties.
    (c) If service of a subpoena is' made by a United States Marshal or 
a Deputy United States Marshal, service shall be evidenced by their 
return. If made by another person, that person shall affirm that service 
has occurred and file an affidavit to that effect with the original 
subpoena. A witness who is subpoenaed shall be entitled to witness fees 
as provided in Sec. 590.315(c).



Sec. 590.307  Depositions.

    (a) Upon motion filed by a party, the Assistant Secretary or 
presiding official may authorize the taking of testimony of any witness 
by deposition. Unless otherwise directed in the authorization issued, a 
witness being deposed may be examined regarding any matter which is 
relevant to the issues involved in the pending proceeding.
    (b) Parties authorized to take a deposition shall provide written 
notice to the witness and all other parties at least ten (10) days in 
advance of the deposition unless such advance notice is waived by mutual 
agreement of the parties.
    (c) The requesting motion and notice shall state the name and 
mailing address of the witness, delineate the subject matters on which 
the witness is expected to testify, state the reason why the deposition 
should be taken, indicate the time and place of the deposition, and 
provide the name and mailing address of the person taking the 
deposition.
    (d) A witness whose testimony is taken by deposition shall be sworn 
in or shall affirm concerning the matter about which the witness has 
been called to testify before any questions are asked or testimony 
given. A witness deposed shall be entitled to witness fees as provided 
in Sec. 590.315(c).
    (e) The moving party shall file the entire deposition with FE after 
it has been subscribed and certified. No portion of the deposition shall 
constitute a part of the record in the proceedings unless received in 
evidence, in whole or in part, by the Assistant Secretary or presiding 
official.



Sec. 590.308  Admissions of facts.

    (a) At any time prior to the end of a trial-type hearing, or, if 
there is no trial-type hearing, prior to the issuance of a final opinion 
and order under Sec. 590.404, any party, the Assistant Secretary, or the 
presiding official may serve on any party a written request for 
admission of the truth of any matters at issue in the proceeding that 
relate to statements or opinions of fact or of the application of law to 
fact.
    (b) A matter shall be considered admitted and conclusively 
established for the purposes of any proceeding in which a request for 
admission is served unless, within fifteen (15) days of such time limit 
established by the Assistant Secretary or presiding official, the party 
to whom the request is directed answers or objects to the request. Any 
answer shall specifically admit or deny the matter, or set forth in 
detail the reasons why the answering party cannot truthfully admit or 
deny the matter. An answering party may not give lack of information or 
knowledge as a reason for failure to admit or deny, unless the answering 
party states that, after reasonable inquiry, the answering party has 
been unable to obtain sufficient information to admit or deny. If an 
objection is made, the answering party shall state the reasons for the 
objection.
    (c) If the Assistant Secretary or presiding official determines that 
an answer to a request for admission does not comply with the 
requirements of this section, the Assistant Secretary or

[[Page 77]]

presiding official may order either that the matter is admitted or that 
an amended answer be served.
    (d) A copy of all requests for admission and answers thereto shall 
be filed with FE in accordance with Sec. 590.103. Copies of any 
documents referenced in the request shall be served with the request 
unless they are known to be in the possession of the other parties.
    (e) The Assistant Secretary or presiding official may limit the 
number of requests for admission of facts in order to expedite a 
proceeding through elimination of duplicative requests.



Sec. 590.309  Settlements.

    The parties may conduct settlement negotiations. If settlement 
negotiations are conducted during a conference, at the request of one of 
the parties, the Assistant Secretary or presiding official may order 
that the discussions be off-the-record with no transcript of such 
settlement negotiations being prepared for inclusion in the official 
record of the proceeding. No offer of settlement, comment or discussion 
by the parties with respect to an offer of settlement shall be subject 
to discovery or admissible into evidence against any parties who object 
to its admission.



Sec. 590.310  Opportunity for additional procedures.

    Any party may file a motion requesting additional procedures, 
including the opportunity to file written comments, request written 
interrogatories or other discovery procedures, or request that a 
conference, oral presentation or trial-type hearing be held. The motion 
shall describe what type of procedure is requested and include the 
information required by Secs. 590.311, 590.312 and 590.313, as 
appropriate. Failure to request additional procedures within the time 
specified in the notice of application or in the notice of procedure, if 
applicable, shall constitute a waiver of that right unless the Assistant 
Secretary for good cause shown grants additional time for requesting 
additional procedures. If no time limit is specified in the notice or 
order, additional procedures may be requested at any time prior to the 
issuance of a final opinion and order. At any time during a proceeding, 
the Assistant Secretary or presiding official may on his or her own 
initiative determine to provide additional procedures.

[54 FR 53531, Dec. 29, 1989; 55 FR 14916, Apr. 19, 1990]



Sec. 590.311  Conferences.

    (a) Upon motion by a party, a conference of the parties may be 
convened to adjust or settle the proceedings, set schedules, delineate 
issues, stipulate certain issues of fact or law, set procedures, and 
consider other relevant matters where it appears that a conference will 
materially advance the proceeding. The Assistant Secretary or presiding 
official may delineate the issues which are to be considered and may 
place appropriate limitations on the number of intervenors who may 
participate, if two or more intervenors have substantially like 
interests.
    (b) A motion by a party for a conference shall include a specific 
showing why a conference will materially advance the proceeding.
    (c) Conferences shall be recorded, unless otherwise ordered by the 
Assistant Secretary or presiding official, and the transcript shall be 
made a part of the official record of the proceeding and available to 
the public.



Sec. 590.312  Oral presentations.

    (a) Any party may file a motion requesting an opportunity to make an 
oral presentation of views, arguments, including arguments of counsel, 
and data on any aspect of the proceeding. The motion shall identify the 
substantial question of fact, law or policy at issue and demonstrate 
that it is material and relevant to the merits of the proceeding. The 
party may submit material supporting the existence of substantial 
issues. The Assistant Secretary or presiding official ordinarily will 
grant a party's motion for an oral presentation, if the Assistant 
Secretary or presiding official determines that a substantial question 
of fact, law, or policy is at issue in the proceeding and illumination 
of that question will be aided materially by such an oral presentation.
    (b) The Assistant Secretary or presiding official may require 
parties making oral presentations to file briefs

[[Page 78]]

or other documents prior to the oral presentation. The Assistant 
Secretary or presiding official also may delineate the issues that are 
to be considered at the oral presentation and place appropriate 
limitations on the number of intervenors who may participate if two or 
more intervenors have substantially like interests.
    (c) Oral presentations shall be conducted in an informal manner with 
the Assistant Secretary or the presiding official and other decisional 
employees presiding as a panel. The panel may question those parties 
making an oral presentation. Cross-examination by the parties and other 
more formal procedures used in trial-type hearings will not be available 
in oral presentations. The oral presentation may be, but need not be, 
made by legal counsel.
    (d) Oral presentations shall be recorded, and the transcript shall 
be made part of the official record of the proceeding and available to 
the public.



Sec. 590.313  Trial-type hearings.

    (a) Any party may file a motion for a trial-type hearing for the 
purpose of taking evidence on relevant and material issues of fact 
genuinely in dispute in the proceeding. The motion shall identify the 
factual issues in dispute and the evidence that will be presented. The 
party must demonstrate that the issues are genuinely in dispute, 
relevant and material to the decision and that a trial-type hearing is 
necessary for a full and true disclosure of the facts. The Assistant 
Secretary or presiding official shall grant a party's motion for a 
trial-type hearing, if the Assistant Secretary or presiding official 
determines that there is a relevant and material factual issue genuinely 
in dispute and that a trial-type hearing is necessary for a full and 
true disclosure of the facts.
    (b) In trial-type hearings, the parties shall have the right to be 
represented by counsel, to request discovery, to present the direct and 
rebuttal testimony of witnesses, to cross-examine witnesses under oath, 
and to present documentary evidence.
    (c) The Assistant Secretary or presiding official upon his or her 
own initiative or upon the motion of any party may consolidate any 
proceedings involving common questions of fact in whole or in part for a 
trial-type hearing. The Assistant Secretary or presiding official may 
also place appropriate limitations on the number of intervenors who may 
participate if two or more intervenors have substantially like 
interests.
    (d) The Assistant Secretary or presiding official may make such 
rulings for trial-type hearings, including delineation of the issues and 
limitation of cross-examination of a witness, as are necessary to obtain 
a full and true disclosure of the facts and to limit irrelevant, 
immaterial, or unduly repetitious evidence.
    (e) At trial-type hearings, the Assistant Secretary or presiding 
official, or any other decisional employee directed by the Assistant 
Secretary or presiding official, may call witnesses for testimony or 
presenting exhibits that directly relate to a particular issue of fact 
to be considered at the hearing. The Assistant Secretary or presiding 
official, or any other decisional employee directed by the Assistant 
Secretary or presiding official, may also question witnesses offered by 
the parties concerning their testimony.
    (f) Trial-type hearings shall be recorded, and the transcript shall 
be made part of the official record of the proceeding and available to 
the public.



Sec. 590.314  Presiding officials.

    (a) The Assistant Secretary may designate a presiding official to 
conduct any stage of the proceeding, including officiating at a 
conference, oral presentation, or trial-type hearing. The presiding 
official shall have the full authority of the Assistant Secretary during 
such proceedings.
    (b) A presiding official at a conference, oral presentation, or 
trial-type hearing shall have the authority to regulate the conduct of 
the proceeding including, but not limited to, determination of the 
issues to be raised during the course of the conference, oral 
presentation, or trial-type hearing, administering oaths or 
affirmations, directing discovery, ruling on objections to the 
presentation of testimony or exhibits, receiving relevant and material

[[Page 79]]

evidence, requiring the advance submission of written testimony and 
exhibits, ruling on motions, determining the format, directing that 
briefs be filed with respect to issues raised or to be raised during the 
course of the conference, oral presentation or trial-type hearing, 
questioning witnesses, taking reasonable measures to exclude duplicative 
material, and placing limitations on the number of witnesses to be 
called by a party.



Sec. 590.315  Witnesses.

    (a) The Assistant Secretary or presiding official may require that 
the direct testimony of witnesses in trial-type hearings be submitted in 
advance of the hearing and be under oath, and in written form.
    (b) Witnesses who testify in trial-type hearings shall be under oath 
or affirmation before being allowed to testify.
    (c) Witnesses subpoenaed pursuant to Sec. 590.306 shall be paid the 
same fees and mileage as paid for like services in the District Courts 
of the United States.
    (d) Witnesses subpoenaed pursuant to Sec. 590.307 shall be paid the 
same fees and mileage as paid for like services in the District Court of 
the United States.

[54 FR 53531, Dec. 29, 1989; 55 FR 14916, Apr. 19, 1990]



Sec. 590.316  Shortened proceedings.

    In any proceeding where, in response to a notice of application or 
notice of procedures, if applicable, no party files a motion requesting 
additional procedures, including the right to file written comments, or 
the holding of a conference, oral presentation, or trial-type hearing, 
or where the Assistant Secretary determines that such requested 
additional procedures are not required pursuant to Secs. 590.310, 
590.311, 590.312 and 590.313, the Assistant Secretary may issue a final 
opinion and order on the basis of the official record, including the 
application and all other filings. In any proceeding in which the 
Assistant Secretary intends to deny the application or grant the 
application with the attachment of material conditions unknown to, or 
likely to be opposed by, the applicant, solely on the basis of the 
application and responses to the notice of application or notice of 
procedures, if applicable, without additional procedures, the Assistant 
Secretary shall advise the parties in writing generally of the issues of 
concern to the Assistant Secretary upon which the denial or material 
conditions would be based and provide them with an opportunity to 
request additional procedures pursuant to Secs. 590.310, 590.311, 
590.312 and 590.313.



Sec. 590.317  Complaints.

    (a) Any person may file a complaint objecting to the actions by any 
other person under any statute, rule, order or authorization applicable 
to an existing import or export authorization over which FE has 
jurisdiction. No particular form is required. The complaint must be 
filed with FE in writing and must contain the name and address of the 
complainant and the respondent and state the facts forming the basis of 
the complaint.
    (b) A complaint concerning an existing import or export 
authorization shall be served on all parties to the original import or 
export authorization proceeding either by the complainant or by FE if 
the complainant has made a good faith effort but has been unable to 
effect service.
    (c) The Assistant Secretary may issue an order to show cause under 
Sec. 590.401, or may provide opportunity for additional procedures 
pursuant to Secs. 590.310, 590.311, 590.312, or Sec. 590.313, in order 
to determine what action should be taken in response to the complaint.



                     Subpart D--Opinions and Orders



Sec. 590.401  Orders to show cause.

    A proceeding under this part may commence upon the initiative of the 
Assistant Secretary or in response to an application by any person 
requesting FE action against any other person alleged to be in 
contravention or violation of any authorization, statute, rule, order, 
or law administered by FE applicable to the import or export of natural 
gas, or for any other alleged wrong involving importation or exportation 
of natural gas over which FE has jurisdiction. Any show cause order 
issued shall identify the matters of interest or the matters complained 
of

[[Page 80]]

that the Assistant Secretary is inquiring about, and shall be deemed to 
be tentative and for the purpose of framing issues for consideration and 
decision. The respondent named in the order shall respond orally or in 
writing, or both, as required by the order. A show cause order is not a 
final opinion and order.



Sec. 590.402  Conditional orders.

    The Assistant Secretary may issue a conditional order at any time 
during a proceeding prior to issuance of a final opinion and order. The 
conditional order shall include the basis for not issuing a final 
opinion and order at that time and a statement of findings and 
conclusions. The findings and conclusions shall be based solely on the 
official record of the proceeding.



Sec. 590.403  Emergency interim orders.

    Where consistent with the public interest, the Assistant Secretary 
may waive further procedures and issue an emergency interim order 
authorizing the import or export of natural gas. After issuance of the 
emergency interim order, the proceeding shall be continued until the 
record is complete, at which time a final opinion and order shall be 
issued. The Assistant Secretary may attach necessary or appropriate 
terms and conditions to the emergency interim order to ensure that the 
authorized action will be consistent with the public interest.



Sec. 590.404  Final opinions and orders.

    The Assistant Secretary shall issue a final opinion and order and 
attach such conditions thereto as may be required by the public interest 
after completion and review of the record. The final opinion and order 
shall be based solely on the official record of the proceeding and 
include a statement of findings and conclusions, as well as the reasons 
or basis for them, and the appropriate order, condition, sanction, 
relief or denial.



Sec. 590.405  Transferability.

    Authorizations by the Assistant Secretary to import or export 
natural gas shall not be transferable or assignable, unless specifically 
authorized by the Assistant Secretary.



Sec. 590.406  Compliance with orders.

    Any person required or authorized to take any action by a final 
opinion and order of the Assistant Secretary shall file with FE, within 
thirty (30) days after the requirement or authorization becomes 
effective, a notice, under oath, that such requirement has been complied 
with or such authorization accepted or otherwise acted upon, unless 
otherwise specified in the order.



Sec. 590.407  Reports of changes.

    Any person authorized to import or export natural gas has a 
continuing obligation to give the Assistant Secretary written 
notification, as soon as practicable, of any prospective or actual 
changes to the information submitted during the application process upon 
which the authorization was based, including, but not limited to, 
changes to: The parties involved in the import or export arrangement, 
the terms and conditions of any applicable contracts, the place of entry 
or exit, the transporters, the volumes accepted or offered, or the 
import or export price. Any notification filed under this section shall 
contain the FE docket number(s) to which it relates. Compliance with 
this section does not relieve an importer or exporter from 
responsibility to file the appropriate application to amend a previous 
import or export authorization under this part whenever such changes are 
contrary to or otherwise not permitted by the existing authorization.



                  Subpart E--Applications for Rehearing



Sec. 590.501  Filing.

    (a) An application for rehearing of a final opinion and order, 
conditional order, or emergency interim order may be filed by any party 
aggrieved by the issuance of such opinion and order within thirty (30) 
days after issuance. The application shall be served on all parties.
    (b) The application shall state concisely the alleged errors in the 
final opinion and order, conditional order, or emergency interim order 
and must set forth specifically the ground or grounds upon which the 
application is

[[Page 81]]

based. If an order is sought to be vacated, reversed, or modified by 
reason of matters that have arisen since the issuance of the final 
opinion and order, conditional order, or emergency interim order, the 
matters relied upon shall be set forth with specificity in the 
application. The application shall also comply with the filing 
requirements of Sec. 590.103.



Sec. 590.502  Application is not a stay.

    The filing of an application for rehearing does not operate as a 
stay of the Assistant Secretary's order, unless specifically ordered by 
the Assistant Secretary.



Sec. 590.503  Opinion and order on rehearing.

    Upon application for rehearing, the Assistant Secretary may grant or 
deny rehearing or may abrogate or modify the final opinion and order, 
conditional order, or emergency interim order with or without further 
proceedings.



Sec. 590.504  Denial by operation of law.

    Unless the Assistant Secretary acts upon the application for 
rehearing within thirty (30) days after it is filed, it is deemed to be 
denied. Such denial shall constitute final agency action for the purpose 
of judicial review.



Sec. 590.505  Answers to applications for rehearing.

    No answers to applications for rehearing shall be entertained. Prior 
to the issuance of any final opinion and order on rehearing, however, 
the Assistant Secretary may afford the parties an opportunity to file 
briefs or answers and may order that a conference, oral presentation, or 
trial-type hearing be held on some or all of the issues presented by an 
application for rehearing.

[[Page 82]]





                  SUBCHAPTER H--ASSISTANCE REGULATIONS


PART 600--FINANCIAL ASSISTANCE RULES--Table of Contents




                           Subpart A--General

Sec.
600.1   Purpose.
600.2   Applicability.
600.3   Definitions.
600.4   Deviations.
600.5   Selection of award instrument.
600.6   Eligibility.
600.7   Small and disadvantaged and women-owned business participation.
600.8   Solicitation.
600.9   Notice of program interest.
600.10  Form and content of applications.
600.11  Intergovernmental review.
600.12  Generally applicable requirements.
600.13  Merit review.
600.15  Authorized uses of information.
600.16  Legal authority and effect of an award.
600.17  Contents of award.
600.18  Recipient acknowledgement of award.
600.19  Notification to unsuccessful applicants.
600.20  Maximum DOE obligation.
600.21  Access to records.
600.22  Disputes and appeals.
600.23  Debarment and suspension.
600.24  Noncompliance.
600.25  Suspension and termination.
600.26  Funding.
600.27  Patent and data provisions.
600.28  Restrictions on lobbying.
600.29  Fixed obligation awards.
600.30  Cost sharing.

     Subpart B--Uniform Administrative Requirements for Grants and 
Cooperative Agreements With Institutions of Higher Education, Hospitals, 
       Other Non-Profit Organizations and Commercial Organizations

                                 General

600.100  Purpose.
600.101  Definitions.
600.102  Effect on other issuances.
600.103  Deviations.
600.104  Subawards.

                         Pre-Award Requirements

600.110  Purpose.
600.111  Pre-award policies.
600.112  Forms for applying for Federal assistance.
600.113  Debarment and suspension.
600.114  Special award conditions.
600.115  Metric system of measurement.
600.116  Resource Conservation and Recovery Act.
600.117  Certifications and representations.

                         Post-Award Requirements

                    Financial and Program Management

600.120  Purpose of financial and program management.
600.121  Standards for financial management systems.
600.122  Payment.
600.123  Cost sharing or matching.
600.124  Program income.
600.125  Revision of budget and program plans.
600.126  Non-Federal audits.
600.127  Allowable costs.
600.128  Period of availability of funds.

                           Property Standards

600.130  Purpose of property standards.
600.131  Insurance coverage.
600.132  Real property.
600.133  Federally-owned and exempt property.
600.134  Equipment.
600.135  Supplies and other expendable property.
600.136  Intangible property.
600.137  Property trust relationship.

                          Procurement Standards

600.140  Purpose of procurement standards.
600.141  Recipient responsibilities.
600.142  Codes of conduct.
600.143  Competition.
600.144  Procurement procedures.
600.145  Cost and price analysis.
600.146  Procurement records.
600.147  Contract administration.
600.148  Contract provisions.
600.149  Resource Conservation and Recovery Act (RCRA).

                           Reports and Records

600.150  Purpose of reports and records.
600.151  Monitoring and reporting program performance.
600.152  Financial reporting.
600.153  Retention and access requirements for records.

                       Termination and Enforcement

600.160  Purpose of termination and enforcement.
600.161  Termination.
600.162  Enforcement.

                      After-the-Award Requirements

600.170  Purpose.
600.171  Closeout procedures.

[[Page 83]]

600.172  Subsequent adjustments and continuing responsibilities.
600.173  Collection of amounts due.

                          Additional Provisions

600.180  Purpose.
600.181  Special provisions for Small Business Innovation Research 
          Grants.

Appendix A to Subpart B to Part 600--Contract Provisions

     Subpart C--Uniform Administrative Requirements for Grants and 
          Cooperative Agreements to State and Local Governments

                                 General

600.200  Purpose and scope of this subpart.
600.201  Scope of Secs. 600.200 through 600.205.
600.202  Definitions.
600.203  Applicability.
600.204  Effect on other issuances.
600.205  Additions and exceptions.

                         Pre-Award Requirements

600.210  Forms for applying for grants.
600.211  State plans.
600.212  Special grant or subgrant conditions for ``high- risk'' 
          recipients.

                         Post-Award Requirements

                        Financial Administration

600.220  Standards for financial management systems.
600.221  Payment.
600.222  Allowable costs.
600.223  Period of availability of funds.
600.224  Matching or cost sharing.
600.225  Program income.
600.226  Non-Federal audit.

                    Changes, Property, and Subawards

600.230  Changes.
600.231  Real property.
600.232  Equipment.
600.233  Supplies.
600.234  Copyrights.
600.235  Subawards to debarred and suspended parties.
600.236  Procurement.
600.237  Subgrants.

               Reports, Records Retention, and Enforcement

600.240  Monitoring and reporting program performance.
600.241  Financial reporting.
600.242  Retention and access requirements for records.
600.243  Enforcement.
600.244  Termination for convenience.

                      After-the-Grant Requirements

600.250  Closeout.
600.251  Later disallowances and adjustments.
600.252  Collection of amounts due.

                        Entitlements  [Reserved]

                         Subpart D-E  [Reserved]

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

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.

Appendix A to Part 600--Generally Applicable Requirements
Appendix B to Part 600--Audit Report Distributees

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



                           Subpart A--General

    Source: 61 FR 7166, Feb. 26, 1996, unless otherwise noted.



Sec. 600.1  Purpose.

    This part implements the Federal Grant and Cooperative Agreement 
Act, Pub. L. 95-224, as amended by Pub. L. 97-258 (31 U.S.C. 6301-6308), 
and establishes uniform policies and procedures for the award and 
administration of DOE grants and cooperative agreements. This subpart 
(Subpart A) sets forth the policies and procedures applicable to the 
award and administration of grants and cooperative agreements.



Sec. 600.2  Applicability.

    (a) Except as otherwise provided by Federal statute or program rule, 
this part applies to applications, solicitations, and new, continuation, 
and renewal awards (and any subsequent subawards).
    (b) Any new, continuation, or renewal award (and any subsequent 
subaward) shall comply with any applicable Federal statute, Federal 
rule, Office of Management and Budget (OMB) Circular and Governmentwide 
guidance in effect as of the date of such award.

[[Page 84]]

    (c) Financial assistance to foreign entities is governed, to the 
extent appropriate, by this part and by the administrative requirements 
and cost principles applicable to their respective recipient type, e.g, 
governmental, non-profit, commercial.



Sec. 600.3  Definitions.

    Amendment means the written document executed by a DOE contracting 
officer that changes one or more terms or conditions of an existing 
financial assistance award.
    Award means the written document executed by a DOE Contracting 
Officer, after an application is approved, which contains the terms and 
conditions for providing financial assistance to the recipient.
    Budget period means the interval of time, specified in the award, 
into which a project is divided for budgeting and funding purposes.
    Continuation award means an award for a succeeding or subsequent 
budget period after the initial budget period of either an approved 
project period or renewal thereof.
    Contract means a written procurement contract executed by a 
recipient or subrecipient for the acquisition of property or services 
under a financial assistance award.
    Contracting Officer means the DOE official authorized to execute 
awards on behalf of DOE and who is responsible for the business 
management and non-program aspects of the financial assistance process.
    DOE Patent Counsel means the Department of Energy Patent Counsel 
assisting the Contracting Officer in the review and coordination of 
patents and data related items.
    Financial assistance means the transfer of money or property to a 
recipient or subrecipient to accomplish a public purpose of support or 
stimulation authorized by Federal statute. For purposes of this part, 
financial assistance instruments are grants and cooperative agreements 
and subawards.
    Head of Contracting Activity or HCA means a DOE official with senior 
management authority for the award and administration of financial 
assistance instruments within one or more DOE organizational elements.
    Merit review means a thorough, consistent, and objective examination 
of applications based on pre-established criteria by persons who are 
independent of those submitting the applications and who are 
knowledgeable in the field of endeavor for which support is requested.
    Nonprofit organization means any corporation, trust, foundation, or 
institution which is entitled to exemption under section 501(c)(3) of 
the Internal Revenue Code, or which is not organized for profit and no 
part of the net earnings of which inure to the benefit of any private 
shareholder or individual (except that the definition of ``nonprofit 
organization'' at 48 CFR 27.301 shall apply to the use of the patent 
clause at Section 600.27).
    Program rule means a rule issued by a DOE program office for the 
award and administration of financial assistance which may describe the 
program's purpose or objectives, eligibility requirements for 
applicants, types of program activities or areas to be supported, 
evaluation and selection process, cost sharing requirements, etc. These 
rules usually supplement the generic policies and procedures for 
financial assistance contained in this part.
    Project means the set of activities described in an application, 
State plan, or other document that is approved by DOE for financial 
assistance (whether such financial assistance represents all or only a 
portion of the support necessary to carry out those activities.)
    Project period means the total period of time indicated in an award 
during which DOE expects to provide financial assistance. A project 
period may consist of one or more budget periods and may be extended by 
DOE.
    Recipient means the organization, individual, or other entity that 
receives an award from DOE and is financially accountable for the use of 
any DOE funds or property provided for the performance of the project, 
and is legally responsible for carrying out the terms and conditions of 
the award.
    Renewal award means an award which adds one or more additional 
budget periods to an existing project period.
    Research and development means all research activities, both basic 
and applied, and all development activities

[[Page 85]]

that are supported at universities, colleges, and other non-profit 
institutions and commercial organizations. ``Research'' is defined as a 
systematic study directed toward fuller scientific knowledge or 
understanding of the subject studied. The term research also includes 
activities involving the training of individuals in research techniques 
where such activities utilize the same facilities as other research and 
development activities and where such activities are not included in the 
instruction function. ``Development'' is the systematic use of knowledge 
and understanding gained from research directed toward the production of 
useful materials, devices, systems, or methods, including design and 
development of prototypes and processes.

[61 FR 7166, Feb. 26, 1996, as amended at 64 FR 56420, Oct. 20, 1999]



Sec. 600.4  Deviations.

    (a) General. (1) A deviation is the use of any policy, procedure, 
form, standard, term, or condition which varies from a requirement of 
this part, or the waiver of any such requirement, unless such use or 
waiver is authorized or precluded by Federal statute. The use of 
optional or discretionary provisions of this part, including special 
restrictive conditions used in accordance with Secs. 600.114 and 
600.212, are not deviations. Awards to foreign entities and the waiver 
of the cost sharing requirements in Sec. 600.30 or the patent 
requirements of Sec. 600.27 are not subject to this section.
    (2) A single-case deviation is a deviation which applies to one 
financial assistance transaction and one applicant, recipient, or 
subrecipient only.
    (3) A class deviation is a deviation which applies to more than one 
financial assistance transaction, applicant, recipient, or subrecipient.
    (b) The DOE officials specified in paragraph (c) of this section may 
authorize a deviation only upon a written determination that the 
deviation is--
    (1) Necessary to achieve program objectives;
    (2) Necessary to conserve public funds;
    (3) Otherwise essential to the public interest; or
    (4) Necessary to achieve equity.
    (c) Approval procedures. (1) A deviation request must be in writing 
and must be submitted to the responsible DOE Contracting Officer. An 
applicant for a subaward or a subrecipient shall submit any such request 
through the recipient.
    (2) Except as provided in paragraph (c)(3) of this section--
    (i) A single-case deviation may be authorized by the responsible 
HCA. Any proposed single-case deviation from the requirements of 
Sec. 600.27 concerning patents or data shall be referred to the DOE 
Patent Counsel for review and concurrence prior to submission to the 
HCA.
    (ii) A class deviation may be authorized by the Director, 
Procurement and Assistance Management or designee. Any proposed class 
deviation from the requirements of Sec. 600.27 concerning patents or 
data shall be forwarded through the Assistant General Counsel for 
Technology Transfer and Intellectual Property or designee.
    (3) Whenever the approval of OMB, other Federal agency, or other DOE 
office is required to authorize a deviation, the proposed deviation must 
be submitted to the Director, Procurement and Assistance Management or 
designee for concurrence prior to submission to the authorizing 
official.
    (d) Notice. Whenever a request for a class deviation is approved, 
DOE shall publish a notice in the Federal Register at least 15 days 
before the class deviation becomes effective. Whenever a class deviation 
is contained in a proposed program rule, the preamble to the proposed 
rule shall describe the purpose and scope of the deviation.
    (e) Subawards. A recipient may use a deviation in a subaward only 
with the prior written approval of a DOE Contracting Officer.

[61 FR 7166, Feb. 26, 1996, as amended at 64 FR 56420, Oct. 20, 1999]



Sec. 600.5  Selection of award instrument.

    (a) If DOE has administrative discretion in the selection of the 
award instrument, the DOE decision as to whether the relationship is 
principally one of procurement or financial assistance shall be made 
pursuant to the Federal Grant and Cooperative Agreement Act as codified 
at 31 U.S.C. 6301-

[[Page 86]]

6306. A grant or cooperative agreement shall be the appropriate 
instrument, in accordance with this part, when the principal purpose of 
the relationship is the transfer of money or property to accomplish a 
public purpose of support or stimulation authorized by Federal statute. 
In selecting the type of financial assistance instrument, DOE shall 
limit involvement between itself and the recipient in the performance of 
a project to the minimum necessary to achieve DOE program objectives.
    (b) When it is anticipated that substantial involvement will be 
necessary between DOE and the recipient during performance of the 
contemplated activity, the award instrument shall be a cooperative 
agreement rather than a grant. Every cooperative agreement shall 
explicitly state the substantial involvement anticipated between DOE and 
the recipient during the performance of the project. Substantial 
involvement exists if:
    (1) Responsibility for the management, control, or direction of the 
project is shared by DOE and the recipient; or
    (2) Responsibility for the performance of the project is shared by 
DOE and the recipient.
    (c) Providing technical assistance or guidance of a programmatic 
nature to a recipient does not constitute substantial involvement if:
    (1) the recipient is not required to follow such guidance;
    (2) the technical assistance or guidance is not expected to result 
in continuing DOE involvement in the performance of the project; or
    (3) The technical assistance or guidance pertains solely to the 
administrative requirements of the award.
    (d) In cooperative agreements, DOE has the right to intervene in the 
conduct or performance of project activities for programmatic reasons. 
Intervention includes the interruption or modification of the conduct or 
performance of project activities. Suspension or termination of the 
cooperative agreement under Secs. 600.162 and 600.243 does not 
constitute intervention in the conduct or performance of project 
activities.



Sec. 600.6  Eligibility.

    (a) General. DOE shall solicit applications for financial assistance 
in a manner which provides for the maximum amount of competition 
feasible.
    (b) Restricted eligibility. If DOE restricts eligibility, an 
explanation of why the restriction of eligibility is considered 
necessary shall be included in the solicitation, program rule, or 
published notice. Except when authorized by statute or program rule, if 
the aggregate amount of DOE funds available for award under a 
solicitation or published notice is $1,000,000 or more, such restriction 
of eligibility shall be supported by a written determination initiated 
by the program office and approved by an official no less than two 
levels above the initiating program official and concurred in by the 
Contracting Officer and legal counsel. Where the amount of DOE funds is 
less than $1,000,000, the cognizant HCA and the Contracting Officer may 
approve the determination.
    (c) Noncompetitive financial assistance. DOE may award a grant or 
cooperative agreement on a noncompetitive basis only if the application 
satisfies one or more of the following selection criteria:
    (1) The activity to be funded is necessary to the satisfactory 
completion of, or is a continuation or renewal of, an activity presently 
being funded by DOE or another Federal agency, and for which competition 
for support would have a significant adverse effect on continuity or 
completion of the activity.
    (2) The activity is being or would be conducted by the applicant 
using its own resources or those donated or provided by third parties; 
however, DOE support of that activity would enhance the public benefits 
to be derived and DOE knows of no other entity which is conducting or is 
planning to conduct such an activity.
    (3) The applicant is a unit of government and the activity to be 
supported is related to performance of a governmental function within 
the subject jurisdiction, thereby precluding DOE provision of support to 
another entity.
    (4) The applicant has exclusive domestic capability to perform the 
activity successfully, based upon unique

[[Page 87]]

equipment, proprietary data, technical expertise, or other such unique 
qualifications.
    (5) The award implements an agreement between the United States 
Government and a foreign government to fund a foreign applicant.
    (6) Time constraints associated with a public health, safety, 
welfare or national security requirement preclude competition.
    (7) The proposed project was submitted as an unsolicited proposal 
and represents a unique or innovative idea, method, or approach which 
would not be eligible for financial assistance under a recent, current, 
or planned solicitation, and if, as determined by DOE, a competitive 
solicitation would not be appropriate.
    (8) The responsible program Assistant Secretary (or official of 
equivalent authority), with the approval of the Secretary of Energy, 
determines that a noncompetitive award is in the public interest. This 
authority may not be delegated.
    (d) Approval requirements. Determinations of noncompetitive awards 
shall be approved, prior to award, by the initiating program official, 
by the responsible program Assistant Secretary (or official of 
equivalent authority) or designee, who shall be not less than two 
organizational levels above that of the project officer, by the 
Contracting Officer and shall be concurred in by local legal counsel. 
Where the amount of DOE funds is less than $1,000,000 for a 
noncompetitive financial assistance award, the determination shall be 
approved by the cognizant HCA and the Contracting Officer. Concurrence 
for a particular award or class of awards of $1,000,000 or less may be 
waived by local legal counsel.
    (e) Documentation requirements. A determination of noncompetitive 
financial assistance (normally prepared by the responsible program 
official) explaining the basis for the proposed noncompetitive award 
shall be placed in the award file.

[61 FR 7166, Feb. 26, 1996, as amended at 64 FR 56420, Oct. 20, 1999]



Sec. 600.7  Small and disadvantaged and women-owned business participation.

    (a) DOE encourages the participation in financial assistance awards 
of small businesses, including those owned by socially and economically 
disadvantaged individuals and women, of historically black colleges, and 
of colleges and universities with substantial minority enrollments.
    (b) For definitions of the terms in paragraph (a) of this section, 
see the Higher Education Act of 1965, and 15 U.S.C. 644, as amended by 
the Federal Acquisition Streamlining Act (FASA), and implementing 
regulations under FASA issued by the Office of Federal Procurement 
Policy.
    (c) When entering into contracts under financial assistance awards, 
recipients and subrecipients shall comply with the requirements of 
Section 600.144 or Section 600.236, as applicable.



Sec. 600.8  Solicitation.

    (a) General. A solicitation for financial assistance applications 
shall be in the form of a program rule or other publicly available 
document which invites the submission of applications by a common due 
date or within a prescribed period of time.
    (1) A Program Assistant Secretary (or official of equivalent 
authority) may annually issue a program notice describing research areas 
in which financial assistance is being made available. Such notice shall 
also state whether the research areas covered by the notice are to be 
added to those listed in a previously issued program rule. If they are 
to be included, then applications received as a result of the notice may 
be treated as having been in response to that previously published 
program rule. If they are not to be included, then applications received 
in response to the notice are to be treated as unsolicited applications. 
Solicitations may be issued by a DOE Contracting Officer or program 
office with prior concurrence of the contracting office.
    (2) DOE shall publish either a copy or a notice of the availability 
of a financial assistance solicitation in the Federal Register. DOE 
shall publish solicitations or notices in the Commerce

[[Page 88]]

Business Daily when potential applicants include for-profit 
organizations or when there is the potential for significant contracting 
opportunities under the resulting financial assistance awards.
    (b) Subawards. In accordance with the provisions of the applicable 
statute and program rules, if a DOE financial assistance program 
involves the award of financial assistance by a recipient to a 
subrecipient, the recipient shall provide sufficient advance notice so 
that potential subrecipients may prepare timely applications and secure 
prerequisite reviews and approvals.
    (c) Contents of solicitation. Each solicitation shall provide 
information as may be necessary to allow potential applicants to decide 
whether to submit an application, to understand how applications will be 
evaluated, and to know what the obligations of a recipient would be. At 
a minimum, each solicitation must include:
    (1) A control number assigned by the issuing DOE office;
    (2) The amount of money available for award and, if appropriate, the 
expected size of individual awards broken down by areas of priority or 
emphasis, and the expected number of awards;
    (3) The type of award instrument or instruments to be used;
    (4) The Catalog of Federal Domestic Assistance number for the 
program;
    (5) Who is eligible to apply;
    (6) The expected duration of DOE support or the period of 
performance;
    (7) An application form or the format to be used, location for 
application submission, and number of copies required;
    (8) The name of the responsible DOE Contracting Officer (or, for 
program notices or solicitations issued by the program office, the 
program office contact) to contact for additional information, and, as 
appropriate, an address where application forms may be obtained;
    (9) Whether loans are available under the DOE Minority Economic 
Impact (MEI) loan program, 10 CFR part 800, to finance the cost of 
preparing a financial assistance application, and, if MEI loans are 
available, a general description of the eligibility requirements for 
such a loan, a reference to Catalog of Federal Domestic Assistance 
Number 81.063, and the name and address of the DOE office from which 
additional information and loan application forms can be obtained;
    (10) Appropriate periods or due dates for submission of applications 
and a statement describing the consequences of late submission. If 
programs have established a series of due dates to allow for the 
comparison of applications against each other, these dates shall be 
indicated in the solicitation;
    (11) The types of projects or activities eligible for support;
    (12) Evaluation criteria and the weight or relative importance of 
each, which may include one or more of the following or other criteria, 
as appropriate:
    (i) Qualifications of the applicant's personnel who will be working 
on the project;
    (ii) Adequacy of the applicant's facilities and resources;
    (iii) Cost-effectiveness of the project;
    (iv) Adequacy of the project plan or methodology;
    (v) Management capability of the applicant;
    (vi) Sources of financing available to the project. Any requirement 
concerning cost sharing shall be clearly stated (See also Sec. 600.30, 
Cost Sharing). Cost sharing is generally encouraged. However, unless 
cost sharing is required by the solicitation, it shall not be considered 
in the evaluation process and shall be considered only at the time the 
award is negotiated.
    (vii) Relationship of the proposed project to the objectives of the 
solicitation;
    (13) A listing of program policy factors, if any, indicating the 
relative importance of each, if appropriate. Examples of program policy 
factors are:
    (i) Geographic distribution;
    (ii) Diverse types and sizes of applicant entities;
    (iii) A diversity of methods, approaches, or kinds of work; and
    (iv) Projects which are complementary to other DOE programs or 
projects;
    (14) References to or copies of:
    (i) Statutory authority for the program;
    (ii) Applicable rules, including the appropriate subparts of this 
part;

[[Page 89]]

    (iii) Other terms and conditions applicable to awards to be made 
under the solicitation, including allowable and unallowable costs and 
reporting requirements;
    (iv) Policies and procedures for patents, data, copyrights, 
audiovisual productions and exhibits;
    (v) Any required assurances not included in the application form;
    (15) The deadline for submission of required or optional 
preapplications;
    (16) Date, time, and location of any briefing for applicants;
    (17) Required presubmission reviews and clearances, including a 
statement as to whether review under E.O. 12372, ``Intergovernmental 
Review of Federal Programs'', is required.
    (18) Dates by which selections and awards are expected to be made 
and whether unsuccessful applications will be returned to the applicant 
or be retained by DOE and for what period of time;
    (19) A statement that DOE is under no obligation to pay for any 
costs associated with preparation or submission of applications if an 
award is not made. If an award is made, such costs may be allowable as 
provided in the applicable cost principles (See Secs. 600.127 and 
600.222);
    (20) A statement that DOE reserves the right to fund, in whole or in 
part, any, all, or none of the applications submitted in response to the 
solicitation; and
    (21) Any other relevant information, including explanatory 
information or factual basis for justifications required by this part.



Sec. 600.9  Notice of program interest.

    (a) General. (1) DOE may publish periodic Notices of Program 
Interest in the Federal Register and other media, as appropriate, which 
describes broad, general, technical problems and areas of investigation 
for which DOE may award grants or cooperative agreements.
    (2) DOE shall evaluate any application submitted under a Notice of 
Program Interest as an unsolicited application.
    (b) Contents. The notice shall include:
    (1) A brief description of the areas of interest for which DOE may 
provide financial assistance;
    (2) A statement about how resulting applications will be evaluated 
and the criteria for selection and funding;
    (3) An expiration date with an explanation that such a date does not 
represent a common deadline for applications but rather that 
applications may be submitted at any time before the notice expires; and
    (4) The location for application submission.



Sec. 600.10  Form and content of applications.

    (a) General. Applications shall be required for all financial 
assistance projects or programs.
    (b) Forms. Applications shall be on the form and in the number of 
copies specified in a program rule, the solicitation, or these 
regulations. (See also Secs. 600.112 and 600.210.) For unsolicited 
applications, a guide for preparation and submission is available from 
U.S. Department of Energy, Federal Energy Technology Center, Attn: 
Unsolicited Proposal Manager, Post Office Box 10940, Pittsburgh, PA, 
15236-0940.
    (c) Contents of an application. In general, a financial assistance 
application shall include:
    (1) A facesheet containing basic identifying information. The 
facesheet shall be the Standard Form (SF)424 or other approved DOE 
application form;
    (2) A detailed narrative description of the proposed project, 
including the objectives of the project and the applicant's plan for 
carrying it out;
    (3) A budget with supporting justification; and
    (4) Any required preaward assurances.
    (d) Incomplete applications. DOE may return an application that:
    (1) Is not signed, either in writing or electronically, by an 
official authorized to bind the applicant; or
    (2) Omits any information or documentation required by statute, 
program rule, or the solicitation, if the nature of the omission 
precludes review of the application.
    (e) Supplemental information. During the review of a complete 
application,

[[Page 90]]

DOE may request the submission of additional information only if the 
information is essential to evaluate the application.

[61 FR 7166, Feb. 26, 1996, as amended at 64 FR 56420, Oct. 20, 1999]



Sec. 600.11  Intergovernmental review.

    Intergovernmental review of DOE financial assistance shall be 
conducted in accordance with 10 CFR part 1005.



Sec. 600.12  Generally applicable requirements.

    (a) Except as expressly exempted by Federal statute or program rule, 
recipients and subrecipients of DOE financial assistance shall comply 
with all generally applicable requirements to which they are subject. 
Generally applicable requirements include, but are not limited to, the 
requirements of this part, Federal statutes, the OMB Circulars and other 
Governmentwide guidance implemented by this part, Executive Orders, and 
the requirements identified in appendix A of this part.
    (b) Provisions shall be made to design and construct all buildings, 
in which DOE funds are used, to meet appropriate seismic design and 
construction standards. Seismic codes and standards meeting or exceeding 
the provisions of each of the model codes listed in this paragraph are 
considered to be appropriate for purposes of this part. These codes 
provide a level of seismic safety that is substantially equivalent to 
the National Earthquake Hazards Reduction Program (NEHRP) Recommended 
Provisions for the Development of Seismic Regulations for New Buildings, 
1988 Edition (Federal Emergency Management Administration 222 and 223). 
Revisions of these model codes that are substantially equivalent to or 
exceed the then current or immediately preceding edition of the NEHRP 
Recommended Provisions (which are updated triennially) shall be 
considered to be appropriate standards. The model codes are as follows:
    (1) 1991 Uniform Building Code, of the International Council of 
Building Officials,
    (2) 1992 Supplement to the National Building Code, of the Building 
Official and Code Administrators International.
    (3) 1992 Amendments to the Standard Building Code, of the Southern 
Building Code Congress International.



Sec. 600.13  Merit review.

    (a) It is the policy of DOE that discretionary financial assistance 
be awarded through a merit-based selection process. A merit review means 
a thorough, consistent, and objective examination of applications based 
on pre-established criteria by persons who are independent of those 
submitting the applications and who are knowledgeable in the field of 
endeavor for which support is requested.
    (b) Each program office must establish a merit review system 
covering the financial assistance programs it administers. Merit review 
of financial assistance applications is intended to be advisory and is 
not intended to replace the authority of the project/program official 
with responsibility for deciding whether an award will be made.

[64 FR 56420, Oct. 20, 1999]



Sec. 600.15  Authorized uses of information.

    (a) General. Information contained in applications shall be used 
only for evaluation purposes unless such information is generally 
available to the public or is already the property of the Government. 
The Trade Secrets Act, 18 U.S.C. 1905, prohibits the unauthorized 
disclosure by Federal employees of trade secret and confidential 
business information.
    (b) Treatment of application information. (1) An application may 
include technical data and other data, including trade secrets and/or 
privileged or confidential commercial or financial information, which 
the applicant does not want disclosed to the public or used by the 
Government for any purpose other than application evaluation. To protect 
such data, the applicant should specifically identify each page 
including each line or paragraph thereof containing the data to be 
protected and mark the cover sheet of the application with the following 
Notice as well as referring to the Notice on each page to which the 
Notice applies:

[[Page 91]]

           Notice of Restriction on Disclosure and Use of Data

    The data contained in pages ______ of this application have been 
submitted in confidence and contain trade secrets or proprietary 
information, and such data shall be used or disclosed only for 
evaluation purposes, provided that if this applicant receives an award 
as a result of or in connection with the submission of this application, 
DOE shall have the right to use or disclose the data herein to the 
extent provided in the award. This restriction does not limit the 
Government's right to use or disclose data obtained without restriction 
from any source, including the applicant.

    (2) Unless a solicitation specifies otherwise, DOE shall not refuse 
to consider an application solely on the basis that the application is 
restrictively marked.
    (3) Data (or abstracts of data) marked with the Notice under 
paragraph (b)(1) of this section shall be retained in confidence and 
used by DOE or its designated representatives as specified in 
Sec. 600.13 solely for the purpose of evaluating the proposal. The data 
so marked shall not be disclosed or used for any other purpose except to 
the extent provided in any resulting award, or to the extent required by 
law, including the Freedom of Information Act (5 U.S.C. 552) (10 CFR 
part 1004). The Government shall not be liable for disclosure or use of 
unmarked data and may use or disclose such data for any purpose.
    (4) The Government shall obtain unlimited rights in the technical 
data contained in any application which results in an award except those 
portions of the technical data which the applicant asserts and properly 
marks as proprietary data, or which are not directly related to or will 
not be utilized in the project and are deleted from the application with 
the concurrence of DOE.
    (5) The clause at 48 CFR 52.227-23, which applies only to technical 
data and not to other data such as privileged or confidential commercial 
or financial information shall apply to every award.



Sec. 600.16  Legal authority and effect of an award.

    (a) A DOE financial assistance award is valid only if it is in 
writing and is signed, either in writing or electronically, by a DOE 
Contracting Officer.
    (b) DOE funds awarded under a grant or cooperative agreement shall 
be obligated as of the date the DOE Contracting Officer signs the award; 
however, the recipient is not authorized to incur costs under an award 
prior to the beginning date of the budget period shown in the award 
except as may be authorized in accordance with Secs. 600.125(e) or 
600.230 of this part. The duration of the DOE financial obligation shall 
not extend beyond the expiration date of the budget period shown in the 
award unless authorized by a DOE Contracting Officer by means of a 
continuation or renewal award or other extension of the budget period.



Sec. 600.17  Contents of award.

    Each financial assistance award shall be made on a Notice of 
Financial Assistance Award (DOE F 4600.1) which contains basic 
identifying and funding information together with attachments including 
a budget, any special terms and conditions, and any other provisions 
necessary to establish the respective right, duties, obligation, and 
responsibilities of DOE and the recipient, consistent with the 
requirements of this part.



Sec. 600.18  Recipient acknowledgement of award.

    (a) After signature by the DOE Contracting Officer, the award shall 
be sent to the recipient. The recipient shall acknowledge acceptance by 
returning a copy signed either in writing or electronically. No DOE 
funds shall be disbursed until the award document signed by the 
recipient is received by DOE.
    (b) In the event a recipient declines an award, DOE shall deobligate 
the funds obligated by the award after providing the applicant with at 
least two weeks written notice of DOE's intention to deobligate.
    (c) After the recipient acknowledges the award, the terms and 
conditions of the award may be amended only upon the written request or 
with the written concurrence of the recipient unless the amendment is 
one which DOE may make unilaterally in accordance with a program rule or 
this part.

[[Page 92]]



Sec. 600.19  Notification to unsuccessful applicants.

    DOE shall promptly notify in writing each applicant whose 
application has not been selected for award or whose application cannot 
be funded because of the unavailability of appropriated funds. If the 
application was not selected, the written notice shall briefly explain 
why the application was not selected and, if for grounds other than 
unavailability of funds, shall offer the unsuccessful applicant the 
opportunity for a more detailed explanation upon request.



Sec. 600.20  Maximum DOE obligation.

    (a) The maximum DOE obligation to the recipient is--
    (1) For monetary awards, the amount shown in the award as the amount 
of DOE funds obligated, and
    (2) Any designated property.
    (b) DOE shall not be obligated to make any additional, supplemental, 
continuation, renewal, or other award for the same or any other purpose.



Sec. 600.21  Access to records.

    (a) In addition to recipient and subrecipient responsibilities 
relative to access to records specified in Secs. 600.153 and 600.242, 
for any negotiated contract or subcontract in excess of $10,000 under a 
grant or cooperative agreement, DOE, the Comptroller General of the 
United States, the recipient and the subrecipient (if the contract was 
awarded under a financial assistance subaward), or any of their 
authorized representatives shall have the right of access to any books, 
documents, papers, or other records of the contractor or subcontractor 
which are pertinent to that contract or subcontract, in order to make 
audit, examination, excerpts, and copies.
    (b) The right of access may be exercised for as long as the 
applicable records are retained by the recipient, subrecipient, 
contractor, or subcontractor.



Sec. 600.22  Disputes and appeals.

    (a) Informal dispute resolution. Whenever practicable, DOE shall 
attempt to resolve informally any dispute over the award or 
administration of financial assistance. Informal resolution, including 
resolution through an alternative dispute resolution mechanism, shall be 
preferred over formal procedures available in 10 CFR Part 1024, to the 
extent practicable.
    (b) Alternative dispute resolution (ADR). Before issuing a final 
determination in any dispute in which informal resolution has not been 
achieved, the Contracting Officer shall suggest that the other party 
consider the use of voluntary consensual methods of dispute resolution, 
such as mediation. The DOE dispute resolution specialist is available to 
provide assistance for such disputes, as are trained mediators of other 
federal agencies. ADR may be used at any stage of a dispute.
    (c) Final determination. Whenever a dispute is not resolved 
informally or through an alternative dispute resolution process, DOE 
shall mail (by certified mail) a brief written determination signed by a 
Contracting Officer, setting forth DOE's final disposition of such 
dispute. Such determination shall contain the following information:
    (1) A summary of the dispute, including a statement of the issues 
and of the positions taken by the Department and the party or parties to 
the dispute; and
    (2) The factual, legal and, if appropriate, policy reasons for DOE's 
disposition of the dispute.
    (d) Right of appeal. (1) Except as provided in paragraph (f)(1) of 
this section, the final determination under paragraph (c) of this 
section may be appealed to the Financial Assistance Appeals Board (the 
Board) in accordance with the procedures set forth in 10 CFR part 1024.
    (2) If the final determination under paragraph (c) of this section 
involves a dispute over which the Board has jurisdiction as provided in 
paragraph (f)(2) of this section, the Contracting Officer's 
determination shall state that, with respect to such dispute, the 
determination shall be the final decision of the Department unless, 
within 60 days, a written notice of appeal is filed.
    (3) If the final determination under paragraph (c) of this section 
involves a dispute over which the Board has no jurisdiction as provided 
in paragraph (f)(1) of this section, the Contracting Officer's 
determination shall state that, effective immediately or on a

[[Page 93]]

later date specified therein, the determination shall, with respect to 
such dispute, be the final decision of the Department.
    (e) Effect of appeal. The filing of an appeal with the Board shall 
not stay any determination or action taken by DOE which is the subject 
of the appeal. Consistent with its obligation to protect the interests 
of the Federal Government, DOE may take such authorized actions as may 
be necessary to preserve the status quo pending decision by the Board, 
or to preserve its ability to provide relief in the event the Board 
decides in favor of the appellant.
    (f) Review on appeal. (1) The Board shall have no jurisdiction to 
review:
    (i) Any preaward dispute (except as provided in paragraph (f)(2)(ii) 
of this section), including use of any special restrictive condition 
pursuant to Secs. 600.114 or 600.212;
    (ii) DOE denial of a request for a deviation under Secs. 600.4, 
600.103, or 600.205 of this part;
    (iii) DOE denial of a request for a budget revision or other change 
in the approved project under Secs. 600.125, 600.127, 600.222, or 
600.230 of this part or under another term or condition of the award;
    (iv) Any DOE action authorized under Secs. 600.162(a) (1), (2), (3) 
or (5); or Secs. 600.243 (a)(1), (a)(3) for suspensions only; or 
Sec. 600.162(a)(4) or Sec. 600.243(a)(4) for actions disapproving 
renewal applications or other requests for extension of time or 
additional funding for the same project when related to recipient 
noncompliance, or such actions authorized by program rule;
    (v) Any DOE decision about an action requiring prior DOE approval 
under Sec. 600.144, or Sec. 600.236 of this part or under another term 
or condition of the award;
    (vi) A DOE decision not to make a continuation award, which decision 
is based on the insufficiency of available appropriations;
    (vii) Any matter which is under the jurisdiction of the Patent 
Compensation Board (10 CFR 780.3);
    (viii) Any matter which may be heard by the Invention Licensing 
Appeals Board (10 CFR 781.65 and 781.66); and
    (ix) Any other dispute not described in paragraph (f)(2) of this 
section.
    (2) In addition to any right of appeal established by program rule, 
or by the terms and conditions (not inconsistent with paragraph (f)(1) 
of this section) of an award, the Board shall have jurisdiction to 
review:
    (i) A DOE determination that the recipient has failed to comply with 
the applicable requirements of this part, the program statute or rules, 
or other terms and conditions of the award;
    (ii) A DOE decision not to make a continuation award based on any of 
the determinations described in paragraph (f)(2)(i) of this section;
    (iii) Termination of an award for cause, in whole or in part, by 
DOE;
    (iv) A DOE determination that an award is void or invalid;
    (v) The application by DOE of an indirect cost rate; and
    (vi) DOE disallowance of costs.
    (3) In reviewing disputes authorized under paragraph (f)(2) of this 
section, the Board shall be bound by the applicable law, statutes, and 
rules, including the requirements of this part, and by the terms and 
conditions of the award.
    (4) The decision of the Board shall be the final decision of the 
Department.



Sec. 600.23  Debarment and suspension.

    Applicants, recipients, subrecipients, and contractors under 
financial assistance awards may be debarred and suspended for the causes 
and in accordance with the procedures set forth in 10 CFR part 1036.



Sec. 600.24  Noncompliance.

    (a) Except for noncompliance with nondiscrimination requirements 
under 10 CFR part 1040, whenever DOE determines that a recipient has not 
complied with the applicable requirements of this part, with the 
requirements of any applicable program statute or rule, or with any 
other term or condition of the award, a DOE Contracting Officer shall 
provide to the recipient (by certified mail, return receipt requested) a 
written notice setting forth:
    (1) The factual and legal bases for the determination of 
noncompliance;
    (2) The corrective actions and the date (not less than 30 days after 
the

[[Page 94]]

date of the notice) by which they must be taken.
    (3) Which of the actions authorized under Secs. 600.122(n), 
600.162(a) or Sec. 600.243(a) of this part DOE may take if the recipient 
does not achieve compliance within the time specified in the notice, or 
does not provide satisfactory assurances that actions have been 
initiated which will achieve compliance in a timely manner.
    (b) DOE may take any of the actions set forth in Sec. 600.122(n), 
Sec. 600.162(a), or Sec. 600.243(a) of this part concurrent with the 
written notice required under paragraph (a) of this section or with less 
than 30 days written notice to the recipient whenever:
    (1) There is evidence the award was obtained by fraud;
    (2) The recipient ceases to exist or becomes legally incapable of 
performing its responsibilities under the financial assistance award; or
    (3) There is a serious mismanagement or misuse of financial 
assistance award funds necessitating immediate action.

[61 FR 7166, Feb. 26, 1996, as amended at 64 FR 56420, Oct. 20, 1999]



Sec. 600.25  Suspension and termination.

    (a) Suspension and termination for cause. DOE may suspend or 
terminate an award for cause on the basis of:
    (1) A noncompliance determination under Secs. 600.24, 600.122(n), 
600.162(a), or Sec. 600.243(a); or
    (2) An suspension or debarment of the awardee under Sec. 600.23.
    (b) Notification requirements. Except as provided in Sec. 600.24, 
600.162(a), or Sec. 600.243(a) before suspending or terminating a award 
for cause, DOE shall mail to the awardee (by certified mail, return 
receipt requested) a separate written notice in addition to that 
required by Secs. 600.24(a), 600.162(a), or Sec. 600.243(a) at least ten 
days prior to the effective date of the suspension or termination. Such 
notice shall include, as appropriate:
    (1) The factual and legal bases for the suspension or termination;
    (2) The effective date or dates of the DOE action;
    (3) If the action does not apply to the entire award, a description 
of the activities affected by the action;
    (4) Instructions concerning which costs shall be allowable during 
the period of suspension, or instructions concerning allowable 
termination costs, including in either case, instructions concerning any 
subgrants or contracts;
    (5) Instructions concerning required final reports and other 
closeout actions for terminated awards (see Secs. 600.170 through 
600.173 and Secs. 600.250 through 600.252);
    (6) A statement of the awardee's right to appeal a termination for 
cause pursuant to Sec. 600.22; and
    (7) The dated signature of a DOE Contracting Officer.
    (c) Suspension. (1) Unless DOE and the awardee agree otherwise, no 
period of suspension shall exceed 90 days.
    (2) DOE may cancel the suspension at any time, up to and including 
the date of expiration of the period of suspension, if the awardee takes 
satisfactory corrective action before the expiration date of the 
suspension or gives DOE satisfactory evidence that such corrective 
action will be taken.
    (3) If the suspension has not been cancelled by the expiration date 
of the period of suspension, the awardee shall resume the suspended 
activities or project unless, prior to the expiration date, DOE notifies 
the awardee in writing that the period of suspension shall be extended 
consistent with paragraph (c)(1) of this section or that the award shall 
be terminated.
    (4) As of the effective date of the suspension, DOE shall withhold 
further payments and shall allow new obligations incurred by the awardee 
during the period of suspension only if such costs were authorized in 
the notice of suspension or in a subsequent letter.
    (5) If the suspension is cancelled or expires and the award is not 
terminated, DOE shall reimburse the awardee for any authorized allowable 
costs incurred during the suspension and, if necessary, may amend the 
award to extend the period of performance.
    (d) Termination by mutual agreement. In addition to any situation 
where a termination for cause pursuant to Secs. 600.24, 600.160 through 
600.162 or Secs. 600.243 through 600.244 is appropriate, either DOE or 
the awardee may initiate a termination of an award (or portion thereof) 
as described in this

[[Page 95]]

paragraph. If the awardee initiates a termination, the awardee must 
notify DOE in writing and specify the awardee's reasons for requesting 
the termination, the proposed effective date of the termination, and, in 
the case of a partial termination, a description of the activities to be 
terminated, and an appropriate budget revision. DOE shall terminate an 
award or portion thereof under this paragraph only if both parties agree 
to the termination and the conditions under which it shall occur. If DOE 
determines that the remaining activities under a partially terminated 
award would not accomplish the purpose for which the award was 
originally awarded, DOE may terminate the entire award.
    (e) Effect of termination. The awardee shall incur no new 
obligations after the effective date of the termination of an award (or 
portion thereof), and shall cancel as many outstanding obligations as 
possible. DOE shall allow full credit to the awardee for the DOE share 
of noncancellable obligations properly incurred by the awardee prior to 
the effective date of the termination.
    (f) Subgrants. Awardees shall follow the policies and procedures in 
this section and in Secs. 600.24, 600.160 through 600.162 or 
Secs. 600.243 through 600.244 for suspending and terminating subgrants.



Sec. 600.26  Funding.

    (a) General. The project period during which DOE expects to provide 
award support for an approved project shall be specified on the Notice 
of Financial Assistance Award (DOE Form 4600.1).
    (b) Budget period and continuation awards. If the project period is 
12 months or less, the budget period and the project period shall be 
coextensive. Multiyear awards, including formula awards, shall generally 
be funded annually within the approved project period. Funding for each 
budget period within the project period shall be contingent on DOE 
approval of a continuation application submitted in accordance with a 
schedule specified by DOE. A continuation application shall include:
    (1) A statement of technical progress or status of the project to 
date;
    (2) A detailed description of the awardee's plans for the conduct of 
the project during the coming year; and
    (3) A detailed budget for the upcoming budget period, including an 
estimate of unobligated balances. A detailed budget need not be 
submitted if the new or renewal application contained future-year 
budgets sufficiently detailed to allow DOE to review and approve the 
categories and elements of cost. Should the award have a change in scope 
or significant change in the budget, DOE may request a detailed budget.
    (4) DOE shall review a continuation application for the adequacy of 
the awardee's progress and planned conduct of the project in the 
subsequent budget period. DOE shall not require a continuation 
application to compete against any other application. The amount and 
award of continuation funding is subject to the availability of 
appropriations.
    (c) Renewal awards. Discretionary renewal awards may be made either 
on the basis of a solicitation or on a noncompetitive basis. If DOE 
proposes to restrict eligibility for a discretionary renewal award to 
the incumbent grantee, the noncompetitive award must be justified in 
accordance with Sec. 600.6(b)(2). Renewal applications must be submitted 
no later than 6 months prior to the scheduled expiration of the project 
period unless a program rule or other published instruction establishes 
a different application deadline.
    (d) Extensions. Unless otherwise specified in the award terms and 
conditions, recipients of financial assistance awards, except recipients 
of SBIR awards (See Sec. 600.181), may extend the expiration date of the 
final budget period of the project (thereby extending the project 
period) if additional time beyond the established expiration date is 
needed to assure adequate completion of the original scope of work 
within the funds already made available. A single extension, which shall 
not exceed twelve (12) months, may be made for this purpose, and must be 
made prior to the originally established expiration date. The recipient 
must notify the cognizant DOE Contracting Officer in the awarding office 
in writing within ten (10) days of making the extension.

[[Page 96]]



Sec. 600.27  Patent and data provisions.

    (a) General. Financial assistance shall be awarded and administered 
by DOE in compliance with the patent and data provisions of this section 
(See also Secs. 600.136 and 600.234.) To the extent not otherwise 
provided in this part, the policies, procedures and clauses referenced 
for contracts in 48 CFR part 927 and 41 CFR part 9-9 shall normally be 
applicable to the award and administration of Departmental grants and 
cooperative agreements. Copies of 41 CFR part 9-9 are available by 
contacting the DOE Patent Counsel.
    (b) Required clauses. In all solicitations and awards both for the 
support of research, development, and demonstration and for other 
efforts, the DOE Contracting Officer shall consult the DOE Patent 
Counsel for applicable patent and data clauses from those listed below 
and/or for modifications thereto. In reading each 48 CFR part 27 and 48 
CFR part 952 patent and data clause selected for inclusion in a 
solicitation or award, the term ``contract'' when referring to a prime 
contract shall be read as ``award.'' The term ``contractor'' shall be 
read as referring to the ``awardee.'' The term ``subcontract'' shall be 
read as ``subaward or a procurement contract under an award or subaward 
and/or a procurement subcontract under an awardee's or subawardee's 
contract.'' The term ``Acquisition'' with respect to the Long Form 
Patent Rights Clause shall be read as ``Retention.'' The terms 
``offerors'' and ``quoters'' shall be read as ``applicants,'' and 
``proposal'' and ``quotation'' shall be read as ``application.''
    (1) Patent clauses--(i) (Short Form Patent Clause). Incorporate the 
clause at 48 CFR 952.227-11 for awards to a domestic small business firm 
or nonprofit organization as defined at 48 CFR 27.301. In accordance 
with 35 U.S.C. 202(a)(ii), the DOE may issue an exceptional 
circumstances determination. To implement any exceptional circumstances 
determination, DOE will modify 48 CFR 952.227-11 to retain greater 
rights in subject inventions. Such modifications will be only to the 
extent necessary to implement the exceptional circumstances 
determination.
    (ii) (Long Form Patent Clause). For awards to a large business firm 
or other organization, other than a domestic small business firm or 
nonprofit organization as set forth in 48 CFR 27.301, incorporate the 
clause at 48 CFR 952.227-13.
    (iii) The notice of Right to Request Patent Waiver at 48 CFR 
952.227-84 shall also be inserted in all solicitations to advise 
applicants of their rights to request in advance of, or within 30 days 
after the award is signed, a waiver of all or any part of the rights of 
the United States with respect to subject inventions. For unsolicited 
applications, DOE shall provide this notice to the applicant prior to 
award.
    (2) Data clauses (includes copyright provisions)--(i) Rights in 
data--General. (A) Incorporate 48 CFR 52.227-14 with its Alternate V and 
with the definitional paragraph (a) and paragraph (d)(3) of 48 CFR 
927.409(a)(1). Solicitations shall also include the Representation of 
Limited Rights Data and Restricted Computer Software provision at 48 CFR 
52.227-15. Contracting officers shall treat rights in data matters in 
accordance with 48 CFR 927.4.
    (B) In awards for grants and cooperative agreements with 
institutions of higher education, hospitals, and other non-profit 
organizations, the clause referred to in paragraph (b)(2)(i)(A) of this 
section shall be revised by deleting paragraph (d)(3) and inserting the 
following paragraph (c) in lieu of paragraph (c) of that clause:

    (c) Copyright. (1) Data first produced in the performance of the 
award. Except as otherwise specifically provided in this award, the 
recipient may establish claim to copyright subsisting in any data first 
produced in the performance of this award. When claim to copyright is 
made, the Recipient shall affix the applicable copyright notice of 17 
U.S.C. 401 or 402 and acknowledgement of Government sponsorship 
(including award number) to the data when such data are delivered to the 
Government, as well as when the data are published or deposited for 
registration as a published work in the U.S. Copyright Office. The 
recipient grants to the Government a royalty-free, nonexclusive and 
irrevocable right to reproduce, publish, or otherwise use the work for 
Federal purposes, and to authorize others to do so. The right to publish 
includes the right to publicly distribute. The right to use the work for 
Federal purposes

[[Page 97]]

includes the right to prepare derivative works.

    (C) If programmatic needs on a particular award require the delivery 
to the Government of limited rights data or restricted computer 
software, Alternates II or III of 48 CFR 52.227-14 shall also be added.
    (ii) Restriction on disclosure and use of data. Insert the Notice at 
Sec. 600.15(b)(1) in all solicitations.
    (iii) Rights to application data. As discussed at Sec. 600.15(b)(5), 
incorporate 48 CFR 52.227-23.
    (iv) Additional data requirements. Incorporate 48 CFR 52.227-16. In 
the event all technical data requirements are known in advance of and 
are set forth in the agreement or, the award is for the performance of 
basic or applied research and is to be performed solely by a university 
or college as discussed in 48 CFR 27.406(b), 48 CFR 52.227-16 does not 
need to be incorporated.
    (3) Authorization and consent. Incorporate 48 CFR 52.227-1 or 
Alternates I or II, as appropriate, in accordance with the guidance in 
48 CFR 927.201-1 and 48 CFR 27.201.
    (4) Patent indemnity. Incorporate the clause set forth in 48 CFR 
52.227-3, as appropriate, in accordance with the guidance in 48 CFR 
27.203-1 and 48 CFR 27.203-3.
    (5) Filing of patent applications--Classified subject matter. 
Incorporate the following paragraphs in any solicitation or award which 
covers, or is likely to cover, classified subject matter:

                          Classified Inventions

    (a) The recipient shall not file or cause to be filed on any 
invention or discovery conceived or first actually reduced to practice 
in the course of or under this award in any country other than the 
United States, an application or registration for a patent without first 
obtaining written approval of the Contracting Officer.
    (b) When filing a patent application in the United States on any 
invention or discovery conceived of or first actually reduced to 
practice in the course of or under this award, the subject matter of 
which is classified for reasons of security, the awardee shall observe 
all applicable security regulations covering the transmission of 
classified subject matter. When transmitting the patent application to 
the United States Patent and Trademark Office, the awardee shall, by 
separate letter, identify by agency and agreement number the award(s) 
which require security classification markings to be placed on the 
application.

    (6) Notice and assistance regarding patent and copyright 
infringement. Incorporate the clause at 48 CFR 52.227-2, in accordance 
with the guidance in 48 CFR 27.202, in all awards in excess of $100,000 
for construction, research, development, and demonstration work which is 
to be performed within the United States, its possessions, or Puerto 
Rico.
    (7) Royalty information. Incorporate 48 CFR 52.227-6.
    (8) Refund of royalties. As discussed in 48 CFR 927.206, incorporate 
the clause at 48 CFR 952.227-9 in solicitations and awards where the 
Contracting Officer believes royalties will have to be paid by the 
awardees or subawardee or contractor at any tier.
    (9) Subawards and contracts under award. The recipient shall include 
the applicable clauses of this section in any subaward or contract 
awarded under the award and assure that the applicable clauses are also 
included by subrecipients in contracts.

[61 FR 7166, Feb. 26, 1996, as amended at 63 FR 10503, Mar. 4, 1998; 64 
FR 4029, Jan. 27, 1999]



Sec. 600.28  Restrictions on lobbying.

    Procedures regarding restrictions on lobbying activities of 
applicants and recipients are contained in 10 CFR 601.110.



Sec. 600.29  Fixed obligation awards.

    (a) General. This section contains provisions applicable to the 
award of financial assistance instruments on a fixed amount basis. Under 
a fixed obligation award, funds are issued in support of a project 
without a requirement for Federal monitoring of actual costs 
subsequently incurred.
    (b) Provisions applicable to fixed obligation awards. Financial 
assistance awards may be made on a fixed obligation basis subject to the 
following requirements:
    (1) Each fixed obligation award may neither exceed $100,000 nor 
exceed one year in length.
    (2) Programs which require mandatory cost sharing are not eligible.

[[Page 98]]

    (3) Proposed costs must be analyzed in detail to ensure consistency 
with applicable cost principles.
    (4) Budget categories are not stipulated in making an award. 
However, budgets are submitted by an applicant and reviewed for purposes 
of establishing the amount to be awarded.
    (5) Payments must be made in the same manner as other financial 
assistance awards, except that when determined appropriate by the 
cognizant program official and contracting officer a lump sum payment 
may be made.
    (6) Recipients must certify in writing to the contracting officer at 
the end of the project that the activity was completed or the level of 
effort was expended, however should the activity or effort not be 
carried out, the recipient would be expected to make appropriate 
reimbursements.
    (7) Periodic reports may be established for each award so long as 
they are not more frequently than quarterly.
    (8) Changes in principal investigator or project leader, scope of 
effort, or institution, must receive the prior approval of the 
Department.



Sec. 600.30  Cost sharing.

    In addition to the requirements of Sec. 600.123 or Sec. 600.224, the 
following requirements apply to research, development, and demonstration 
projects:
    (a) When DOE awards financial assistance for research, development, 
and demonstration projects where the primary purpose of the project is 
the ultimate commercialization and utilization of technology by the 
private sector and when there are reasonable expectations that the 
recipient will receive significant present or future economic benefits 
beyond the instant award as a result of the performance of the project, 
cost sharing shall be required. Unless the cost sharing is required by 
statute, a waiver of the requirement on a single-case or class basis may 
be approved by the cognizant Program Assistant Secretary or designee.
    (b) Except as provided in section 3002 of the Energy Policy Act of 
1992, 42 U.S.C. 13542, or program rule, DOE will decide, on a case-by-
case basis, the amount of cost sharing required for a particular 
project.
    (c) Factors in addition to those specified in Sec. 600.123 or 
Sec. 600.224, which may be considered when negotiating cost sharing for 
research, development, and demonstration projects include the potential 
benefits to a recipient resulting from the project and the length of 
time before a project is likely to be commercially successful.



     Subpart B--Uniform Administrative Requirements for Grants and 
Cooperative Agreements With Institutions of Higher Education, Hospitals, 
       Other Non-Profit Organizations and Commercial Organizations

    Source: 59 FR 53266, Oct. 21, 1994, unless otherwise noted.

                                 General



Sec. 600.100  Purpose.

    This subpart implements OMB Circular A-110 and establishes uniform 
administrative requirements for grants and agreements awarded to 
institutions of higher education, hospitals, and other non-profit and 
commercial organizations. It also establishes rules governing subawards 
to institutions of higher education, hospitals, and non-profit and 
commercial organizations (including grants and cooperative agreements 
administered by State, local and Indian Tribal governments).



Sec. 600.101  Definitions.

    Accrued expenditures means the charges incurred by the recipient 
during a given period requiring the provision of funds for:
    (1) Goods and other tangible property received;
    (2) Services performed by employees, contractors, subrecipients, and 
other payees; and,
    (3) Other amounts becoming owed under programs for which no current 
services or performance is required.
    Accrued income means the sum of:
    (1) Earnings during a given period from services performed by the 
recipient, and goods and other tangible property delivered to 
purchasers, and

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    (2) Amounts becoming owed to the recipient for which no current 
services or performance is required by the recipient.
    Acquisition cost of equipment means the net invoice price of the 
equipment, including the cost of modifications, attachments, 
accessories, or auxiliary apparatus necessary to make the property 
usable for the purpose for which it was acquired. Other charges, such as 
the cost of installation, transportation, taxes, duty or protective in-
transit insurance, shall be included or excluded from the unit 
acquisition cost in accordance with the recipient's regular accounting 
practices.
    Advance means a payment made by Treasury check or other appropriate 
payment mechanism to a recipient upon its request either before outlays 
are made by the recipient or through the use of predetermined payment 
schedules.
    Award means financial assistance that provides support or 
stimulation to accomplish a public purpose. Awards include grants and 
other agreements in the form of money or property in lieu of money, by 
DOE to an eligible recipient. The term does not include: technical 
assistance, which provides services instead of money; other assistance 
in the form of loans, loan guarantees, interest subsidies, or insurance; 
direct payments of any kind to individuals; and, contracts which are 
required to be entered into and administered under procurement laws and 
regulations.
    Cash contributions means the recipient's cash outlay, including the 
outlay of money contributed to the recipient by third parties.
    Closeout means the process by which DOE determines that all 
applicable administrative actions and all required work of the award 
have been completed by the recipient and DOE.
    Contract means a procurement contract under an award or subaward, 
and a procurement subcontract under a recipient's or subrecipient's 
contract.
    Cost sharing or matching means that portion of project or program 
costs not borne by DOE.
    Date of completion means the date on which all work under an award 
is completed or the date on the award document, or any supplement or 
amendment thereto, on which DOE sponsorship ends.
    Disallowed costs means those charges to an award that the DOE 
determines to be unallowable, in accordance with the applicable Federal 
cost principles or other terms and conditions contained in the award.
    Equipment means tangible nonexpendable personal property including 
exempt property charged directly to the award having a useful life of 
more than one year and an acquisition cost of $5000 or more per unit. 
However, consistent with recipient policy, lower limits may be 
established.
    Excess property means property under the control of any Federal 
awarding agency that, as determined by the head thereof, is no longer 
required for its needs or the discharge of its responsibilities.
    Exempt property means tangible personal property acquired in whole 
or in part with Federal funds, where the Federal awarding agency has 
statutory authority to vest title in the recipient without further 
obligation to the Federal Government. An example of exempt property 
authority is contained in the Federal Grant and Cooperative Agreement 
Act (31 U.S.C. 6306), for property acquired under an award to conduct 
basic or applied research by a non-profit institution of higher 
education or non-profit organization whose principal purpose is 
conducting scientific research.
    Federal awarding agency means the Federal agency that provides an 
award to the recipient.
    Federal funds authorized means the total amount of Federal funds 
obligated by the Federal Government for use by the recipient. This 
amount may include any authorized carryover of unobligated funds from 
prior funding periods when permitted by agency regulations or agency 
implementing instructions.
    Federal share of real property, equipment, or supplies means that 
percentage of the property's acquisition costs and any improvement 
expenditures paid with Federal funds.
    Funding period or budget period means the period of time when DOE 
funding is available for obligation by the recipient.

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    Intangible property and debt instruments means, but is not limited 
to, trademarks, copyrights, patents and patent applications and such 
property as loans, notes and other debt instruments, lease agreements, 
stock and other instruments of property ownership, whether considered 
tangible or intangible.
    Obligations means the amounts of orders placed, contracts and grants 
awarded, services received and similar transactions during a given 
period that require payment by the recipient during the same or a future 
period.
    Outlays or expenditures means charges made to the project or 
program. They may be reported on a cash or accrual basis. For reports 
prepared on a cash basis, outlays are the sum of cash disbursements for 
direct charges for goods and services, the amount of indirect expense 
charged, the value of third party in-kind contributions applied and the 
amount of cash advances and payments made to subrecipients. For reports 
prepared on an accrual basis, outlays are the sum of cash disbursements 
for direct charges for goods and services, the amount of indirect 
expense incurred, the value of in-kind contributions applied, and the 
net increase (or decrease) in the amounts owed by the recipient for 
goods and other property received, for services performed by employees, 
contractors, subrecipients and other payees and other amounts becoming 
owed under programs for which no current services or performance are 
required.
    Personal property means property of any kind except real property. 
It may be tangible, having physical existence, or intangible, having no 
physical existence, such as copyrights, patents, or securities.
    Prior approval means written approval by a contracting officer 
evidencing prior consent.
    Program income means gross income earned by the recipient that is 
directly generated by a supported activity or earned as a result of the 
award (see exclusions in Secs. 600.124 (e) and (h)). Program income 
includes, but is not limited to, income from fees for services 
performed, the use or rental of real or personal property acquired under 
federally-funded projects, the sale of commodities or items fabricated 
under an award, license fees and royalties on patents and copyrights, 
and interest on loans made with award funds. Interest earned on advances 
of DOE funds is not program income. Except as otherwise provided in this 
subpart, program regulations, or the terms and conditions of the award, 
program income does not include the receipt of principal on loans, 
rebates, credits, discounts, etc., or interest earned on any of them.
    Project costs means all allowable costs, as set forth in the 
applicable Federal cost principles, incurred by a recipient and the 
value of the contributions made by third parties in accomplishing the 
objectives of the award during the project period.
    Project period means the period established in the award document 
during which DOE sponsorship begins and ends.
    Property means, unless otherwise stated, real property, equipment, 
intangible property and debt instruments.
    Real property means land, including land improvements, structures 
and appurtenances thereto, but excludes movable machinery and equipment.
    Recipient means an organization receiving financial assistance 
directly from DOE to carry out a project or program. The term includes 
public and private institutions of higher education, public and private 
hospitals, and other quasi-public and private non-profit organizations 
such as, but not limited to, community action agencies, research 
institutes, educational associations, and health centers. The term shall 
include commercial organizations which are recipients, subrecipients, or 
contractors or subcontractors of recipients or subrecipients. The term 
does not include government-owned contractor-operated facilities or 
research centers providing continued support for mission-oriented, 
large-scale programs that are government-owned or controlled, or are 
designated as federally-funded research and development centers.
    Research and development means all research activities, both basic 
and applied, and all development activities

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that are supported at universities, colleges, and other non-profit 
institutions. ``Research'' is defined as a systematic study directed 
toward fuller scientific knowledge or understanding of the subject 
studied. ``Development'' is the systematic use of knowledge and 
understanding gained from research directed toward the production of 
useful materials, devices, systems, or methods, including design and 
development of prototypes and processes. The term research also includes 
activities involving the training of individuals in research techniques 
where such activities utilize the same facilities as other research and 
development activities and where such activities are not included in the 
instruction function.
    Small award means a grant or cooperative agreement not exceeding the 
small purchase threshold fixed at 41 U.S.C. 403(11) (currently $25,000).
    Subaward means an award of financial assistance in the form of 
money, or property in lieu of money, made under an award by a recipient 
to an eligible subrecipient or by a subrecipient to a lower tier 
subrecipient. The term includes financial assistance when provided by 
any legal agreement, even if the agreement is called a contract, but 
does not include procurement of goods and services nor does it include 
any form of assistance which is excluded from the definition of 
``award'' above.
    Subrecipient means the legal entity to which a subaward is made and 
which is accountable to the recipient for the use of the funds provided. 
The term may include foreign or international organizations (such as 
agencies of the United Nations).
    Supplies means all personal property excluding equipment, intangible 
property, and debt instruments as defined in this section, and 
inventions of a contractor conceived or first actually reduced to 
practice in the performance of work under a funding agreement (``subject 
inventions''), as defined in 37 CFR part 401, ``Rights to Inventions 
Made by Nonprofit Organizations and Small Business Firms Under 
Government Grants, Contracts, and Cooperative Agreements.''
    Suspension means an action by DOE that temporarily withdraws DOE 
sponsorship under an award, pending corrective action by the recipient 
or pending a decision to terminate the award by the DOE. Suspension of 
an award is a separate action from suspension under DOE regulations 
implementing E.O.'s 12549 and 12689, ``Debarment and Suspension'' (see 
10 CFR part 1036).
    Termination means the cancellation of DOE sponsorship, in whole or 
in part, under an agreement at any time prior to the date of completion.
    Third party in-kind contributions means the value of non-cash 
contributions provided by non-Federal third parties. Third party in-kind 
contributions may be in the form of real property, equipment, supplies 
and other expendable property, and the value of goods and services 
directly benefiting and specifically identifiable to the project or 
program.
    Unliquidated obligations, for financial reports prepared on a cash 
basis, means the amount of obligations incurred by the recipient that 
have not been paid. For reports prepared on an accrued expenditure 
basis, they represent the amount of obligations incurred by the 
recipient for which an outlay has not been recorded.
    Unobligated balance means the portion of the funds authorized by DOE 
that has not been obligated by the recipient and is determined by 
deducting the cumulative obligations from the cumulative funds 
authorized.
    Unrecovered indirect cost means the difference between the amount 
awarded and the amount which could have been awarded under the 
recipient's approved negotiated indirect cost rate.
    Working capital advance means a procedure whereby funds are advanced 
to the recipient to cover its estimated disbursement needs for a given 
initial period.



Sec. 600.102  Effect on other issuances.

    For awards subject to this subpart, all administrative requirements 
of codified program regulations, program manuals, handbooks and other 
nonregulatory materials which are inconsistent with the requirements of 
this subpart shall be superseded, except to the extent they are required 
by statute, or authorized in accordance with the deviations provision in 
Sec. 600.4.

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Sec. 600.103  Deviations.

    The deviation provisions of Sec. 600.4 apply to this subpart.



Sec. 600.104  Subawards.

    Unless sections of this subpart specifically exclude subrecipients 
from coverage, all DOE recipients, including State, local and Indian 
tribal governments, shall apply the provisions of this subpart to 
subrecipients performing work under awards if such subrecipients are 
institutions of higher education, hospitals, other non-profit 
organizations or commercial organizations. Thus, this subpart is 
applicable to those types of organizations regardless of the type of 
recipient receiving the primary award. State and local government 
subrecipients are subject to the provisions of 10 CFR part 600, subpart 
C, ``Uniform Administrative Requirements for Grants and Cooperative 
Agreements to State and Local Governments.''

                         Pre-Award Requirements



Sec. 600.110  Purpose.

    Sections 600.111 through 600.117 prescribe forms and instructions 
and other pre-award matters to be used in applying for DOE awards.



Sec. 600.111  Pre-award policies.

    (a) Use of Grants and Cooperative Agreements, and Contracts. In each 
instance, the DOE shall decide on the appropriate award instrument 
(i.e., grant, cooperative agreement, or contract). The Federal Grant and 
Cooperative Agreement Act (31 U.S.C. 6301-08) governs the use of grants, 
cooperative agreements and contracts. A grant or cooperative agreement 
shall be used only when the principal purpose of a transaction is to 
accomplish a public purpose of support or stimulation authorized by 
Federal statute. The statutory criterion for choosing between grants and 
cooperative agreements is that for the latter, ``substantial involvement 
is expected between the executive agency and the State, local 
government, or other recipient when carrying out the activity 
contemplated in the agreement.'' Contracts shall be used when the 
principal purpose is acquisition of property or services for the direct 
benefit or use of the Federal Government.
    (b) Public Notice and Priority Setting. DOE will, whenever 
practical, notify the public of its intended funding priorities for 
discretionary grant programs, unless funding priorities are established 
by Federal statute.



Sec. 600.112  Forms for applying for Federal assistance.

    (a) General. An application for an award shall be on the form or in 
the format specified in a program rule, in the solicitation, or in these 
regulations (see Sec. 600.10). When the SF-424 form is not used, DOE 
shall indicate whether the application is subject to review by the State 
under E.O. 12372. DOE may also require applicants to complete--
    (1) The Notice of Energy RD&D Project (DOE Form 538) if the 
application is for a research, development, or demonstration project; or
    (2) The Federal Assistance Management Summary Report (DOE F 4600.5) 
or the Federal Assistance Milestone Plan (DOE F 4600.3) as a baseline 
plan in accordance with the terms and conditions of award if required by 
program rule or the solicitation. If a solicitation other than a program 
rule requires the use of one or both of these forms, the solicitation 
shall contain an explanation of how the information to be provided 
relates to the objectives of the program.
    (b) Budgetary information. DOE may request and the applicant shall 
submit the minimum budgetary information necessary to evaluate the costs 
of the proposed project.
    (1) Applicants for research awards, other than State, local, or 
Indian tribal governments, will use DOE budget forms ERF 4620.1 and ERF 
4620.1A. All other applicants shall use the budget formats established 
in the solicitation or program regulations.
    (2) DOE may, subsequent to receipt of an application, request 
additional information from an applicant when necessary for 
clarification or to make informed preaward determinations.
    (c) Continuation and renewal applications. DOE may require that an 
application for a continuation or renewal award (see Sec. 600.26 (b) and 
(c)) be made

[[Page 103]]

in the format or on the forms authorized by paragraphs (a) and (b) of 
this section.

[59 FR 53266, Oct. 21, 1994, as amended at 61 FR 7165, Feb. 26, 1996]



Sec. 600.113  Debarment and suspension.

    Recipients shall comply with the nonprocurement debarment and 
suspension common rule implementing E.O.'s 12549 and 12689, ``Debarment 
and Suspension,'' 10 CFR part 1036. This common rule restricts subawards 
and contracts with certain parties that are debarred, suspended or 
otherwise excluded from or ineligible for participation in Federal 
assistance programs or activities.



Sec. 600.114  Special award conditions.

    (a) If an applicant or recipient has a history of poor performance, 
is not financially stable, has a management system that does not meet 
the standards prescribed in this subpart, has not conformed to the terms 
and conditions of a previous award, or is not otherwise responsible, DOE 
may impose additional requirements as needed, without regard to the 
deviation provisions of Sec. 600.4. Such applicant or recipient will be 
notified in writing as to the nature of the additional requirements, the 
reason why the additional requirements are being imposed, the nature of 
the corrective action needed, and the time allowed for completing the 
corrective actions. Reconsideration of the additional requirements may 
be requested at any time. Any special conditions shall be promptly 
removed once the conditions that prompted them have been corrected.
    (b) A recipient may place a special restrictive condition, as 
specified in paragraph (a) of this section, in a subaward. In any such 
case, the recipient must notify DOE in writing within 15 days of the 
subaward. DOE shall decide whether to notify OMB and other interested 
parties.



Sec. 600.115  Metric system of measurement.

    The Metric Conversion Act, as amended by the Omnibus Trade and 
Competitiveness Act (15 U.S.C. 205) declares that the metric system is 
the preferred measurement system for U.S. trade and commerce. The Act 
requires each Federal agency to establish a date or dates in 
consultation with the Secretary of Commerce, when the metric system of 
measurement will be used in the agency's procurements, grants, and other 
business-related activities. Metric implementation may take longer where 
the use of the system is initially impractical or likely to cause 
significant inefficiencies in the accomplishment of federally-funded 
activities. DOE will follow the provisions of E.O. 12770, ``Metric Usage 
in Federal Government Programs.''



Sec. 600.116  Resource Conservation and Recovery Act.

    Under the Act (Pub. L. 94-580 codified at 42 U.S.C. 6962), any State 
agency or agency of a political subdivision of a State which is using 
appropriated Federal funds must comply with section 6002. Section 6002 
requires that preference be given in procurement programs to the 
purchase of specific products containing recycled materials identified 
in guidelines developed by the Environmental Protection Agency (EPA) (40 
CFR parts 247-254). Accordingly, State and local institutions of higher 
education, hospitals, and non-profit organizations that receive direct 
Federal awards or other Federal funds shall give preference in their 
procurement programs funded with Federal funds to the purchase of 
recycled products pursuant to the EPA guidelines.



Sec. 600.117  Certifications and representations.

    Unless prohibited by statute or codified regulation, each Federal 
awarding agency is authorized and encouraged to allow recipients to 
submit certifications and representations required by statute, executive 
order, or regulation on an annual basis, if the recipients have ongoing 
and continuing relationships with the agency. Annual certifications and 
representations shall be signed by responsible officials with the 
authority to ensure recipients' compliance with the pertinent 
requirements.

[[Page 104]]

                         Post-Award Requirements

                    Financial and Program Management



Sec. 600.120  Purpose of financial and program management.

    Sections 600.121 through 600.128 prescribe standards for financial 
management systems, methods for making payments and rules for satisfying 
cost sharing and matching requirements, accounting for program income, 
budget revision approvals, making audits, determining allowability of 
cost, and establishing fund availability.



Sec. 600.121  Standards for financial management systems.

    (a) Recipients shall relate financial data to performance data and 
develop unit cost information whenever practical. For awards that 
support research, it should be noted that it is generally not 
appropriate to develop unit cost information.
    (b) Except for the provisions of 600.121(f) and 600.181, recipients' 
financial management systems shall provide for the following:
    (1) Accurate, current and complete disclosure of the financial 
results of each federally-sponsored project or program in accordance 
with the reporting requirements set forth in Sec. 600.152. If a DOE 
award requires reporting on an accrual basis from a recipient that 
maintains its records on other than an accrual basis, the recipient 
shall not be required to establish an accrual accounting system. These 
recipients may develop such accrual data for their reports on the basis 
of an analysis of the documentation on hand.
    (2) Records that identify adequately the source and application of 
funds for federally-sponsored activities. These records shall contain 
information pertaining to Federal awards, authorizations, obligations, 
unobligated balances, assets, outlays, income and interest.
    (3) Effective control over and accountability for all funds, 
property and other assets. Recipients shall adequately safeguard all 
such assets and assure they are used solely for authorized purposes.
    (4) Comparison of outlays with budget amounts for each award. 
Whenever appropriate, financial information should be related to 
performance and unit cost data. As discussed in paragraph (a) of this 
section, unit cost data is generally not appropriate for awards that 
support research.
    (5) Written procedures to minimize the time elapsing between the 
transfer of funds to the recipient from the U.S. Treasury and the 
issuance or redemption of checks, warrants or payments by other means 
for program purposes by the recipient. To the extent that the provisions 
of the Cash Management Improvement Act (CMIA) (Pub. L. 101-453) govern, 
payment methods of State agencies, instrumentalities, and fiscal agents 
shall be consistent with CMIA Treasury-State Agreements or the CMIA 
default procedures codified at 31 CFR part 205, ``Withdrawal of Cash 
from the Treasury for Advances under Federal Grant and Other Programs.''
    (6) Written procedures for determining the reasonableness, 
allocability and allowability of costs in accordance with the provisions 
of the applicable Federal cost principles and the terms and conditions 
of the award.
    (7) Accounting records including cost accounting records that are 
supported by source documentation.
    (c) Where the Federal Government guarantees or insures the repayment 
of money borrowed by the recipient, the Contracting Officer, at his or 
her discretion, may require adequate bonding and insurance if the 
bonding and insurance requirements of the recipient are not deemed 
adequate to protect the interest of the Federal Government.
    (d) The Contracting Officer may require adequate fidelity bond 
coverage where the recipient lacks sufficient coverage to protect the 
Federal Government's interest.
    (e) Where bonds are required in the situations described in 
Secs. 600.121 (c) and (d), the bonds shall be obtained from companies 
holding certificates of authority as acceptable sureties, as prescribed 
in 31 CFR part 223, ``Surety Companies Doing Business with the United 
States.''
    (f) Individuals whose financial management systems do not meet the 
minimum standards of Sec. 600.121 (b) shall maintain a separate bank 
account for deposit of award or subaward funds.

[[Page 105]]

Disbursements by the recipient or subrecipient from this account shall 
be supported by source documentation such as canceled checks, paid 
bills, receipts, payrolls, etc.



Sec. 600.122  Payment.

    (a) Payment methods shall minimize the time elapsing between the 
transfer of funds from the United States Treasury and the issuance or 
redemption of checks, warrants, or payment by other means by the 
recipients. Payment methods of State agencies or instrumentalities shall 
be consistent with Treasury-State CMIA agreements or default procedures 
codified at 31 CFR part 205.
    (b) Recipients will be paid in advance, provided they maintain or 
demonstrate the willingness to maintain:
    (1) Written procedures that minimize the time elapsing between the 
transfer of funds and disbursement by the recipient, and
    (2) Financial management systems that meet the standards for fund 
control and accountability as established in Sec. 600.121. Cash advances 
to a recipient organization shall be limited to the minimum amounts 
needed and be timed to be in accordance with the actual, immediate cash 
requirements of the recipient organization in carrying out the purpose 
of the approved program or project. The timing and amount of cash 
advances shall be as close as is administratively feasible to the actual 
disbursements by the recipient organization for direct program or 
project costs and the proportionate share of any allowable indirect 
costs.
    (c) Whenever possible, advances shall be consolidated to cover 
anticipated cash needs for all awards made by the DOE to the recipient.
    (1) Advance payment mechanisms include, but are not limited to, 
Treasury check and electronic funds transfer.
    (2) Advance payment mechanisms are subject to 31 CFR part 205.
    (3) Recipients may submit requests for advances and reimbursements 
at least monthly when electronic fund transfers are not used.
    (d) Requests for Treasury check advance payment shall be submitted 
on SF-270, ``Request for Advance or Reimbursement,'' or other forms as 
may be authorized by OMB. This form is not to be used when Treasury 
check advance payments are made to the recipient automatically through 
the use of a predetermined payment schedule or if precluded by special 
DOE instructions for electronic funds transfer.
    (e) Reimbursement is the preferred method when the requirements in 
paragraph (b) of this section cannot be met. DOE may also use this 
method on any construction agreement, or if the major portion of the 
construction project is accomplished through private market financing or 
Federal loans, and the Federal assistance constitutes a minor portion of 
the project.
    (1) When the reimbursement method is used, DOE shall make payment 
within 30 days after receipt of the billing, unless the billing is 
improper.
    (2) Recipients are authorized to submit requests for reimbursement 
at least monthly when electronic funds transfers are not used.
    (f) If a recipient cannot meet the criteria for advance payments and 
DOE has determined that reimbursement is not feasible because the 
recipient lacks sufficient working capital, DOE may provide cash on a 
working capital advance basis. Under this procedure, DOE advances cash 
to the recipient to cover its estimated disbursement needs for an 
initial period generally geared to the recipient's disbursing cycle. 
Thereafter, DOE reimburses the recipient for its actual cash 
disbursements. The working capital advance method of payment will not be 
used for recipients unwilling or unable to provide timely advances to 
their subrecipient to meet the subrecipient's actual cash disbursements.
    (g) To the extent available, recipients shall disburse funds 
available from repayments to and interest earned on a revolving fund, 
program income, rebates, refunds, contract settlements, audit recoveries 
and interest earned on such funds before requesting additional cash 
payments.
    (h) Unless otherwise required by statute, DOE will not withhold 
payments for proper charges made by recipients at any time during the 
project period unless paragraph (h)(1) or (h)(2) of this section apply.

[[Page 106]]

    (1) A recipient has failed to comply with the project objectives, 
the terms and conditions of the award, or DOE reporting requirements.
    (2) The recipient or subrecipient is delinquent in a debt to the 
United States. Under such conditions, the Federal awarding agency may, 
upon reasonable notice, inform the recipient that payments shall not be 
made for obligations incurred after a specified date until the 
conditions are corrected or the indebtedness to the Federal Government 
is liquidated. Before withholding any payment, DOE shall notify the 
recipient that payments shall not be made for obligations incurred after 
a specified date, which shall ordinarily be no sooner than 30 days from 
the date of the notice, until the recipient corrects the noncompliance 
or pays the indebtedness to the Federal government.
    (i) Standards governing the use of banks and other institutions as 
depositories of funds advanced under awards are as follows.
    (1) Except for situations described in paragraph (i)(2) of this 
section, DOE shall not require separate depository accounts for funds 
provided to a recipient or establish any eligibility requirements for 
depositories for funds provided to a recipient. However, recipients must 
be able to account for the receipt, obligation and expenditure of funds.
    (2) Advances of Federal funds shall be deposited and maintained in 
insured accounts whenever possible.
    (j) Consistent with the national goal of expanding the opportunities 
for women-owned and minority-owned business enterprises, recipients are 
encouraged to use women-owned and minority-owned banks (a bank which is 
owned at least 50 percent by women or minority group members).
    (k) Recipients shall maintain advances of Federal funds in interest 
bearing accounts, unless paragraph (k) (1), (2) or (3) of this section 
apply.
    (1) The recipient receives less than $120,000 in Federal awards per 
year.
    (2) The best reasonably available interest bearing account would not 
be expected to earn interest in excess of $250 per year on Federal cash 
balances.
    (3) The depository would require an average or minimum balance so 
high that it would not be feasible within the expected Federal and non-
Federal cash resources.
    (l) For those entities where CMIA and its implementing regulations 
do not apply, interest earned on Federal advances deposited in interest 
bearing accounts shall be remitted annually to the HHS Payment 
Management System through an electronic medium such as the FEDWIRE 
Deposit system. Recipients which do not have this capability should use 
a check. The address is the Department of Health and Human Services, 
Payment Management System, P.O. Box 6021, Rockville, MD 20852. Interest 
amounts up to $250 per year may be retained by the recipient for 
administrative expense. State universities and hospitals shall comply 
with CMIA, as it pertains to interest. If an entity subject to CMIA uses 
its own funds to pay pre-award costs for discretionary awards without 
prior written approval from the Federal awarding agency, it waives its 
right to recover the interest under CMIA.
    (m) Except as noted elsewhere in this subpart, only the following 
forms shall be authorized for the recipients in requesting advances and 
reimbursements. Federal agencies shall not require more than an original 
and two copies of these forms.
    (1) SF-270, Request for Advance or Reimbursement. Each Federal 
awarding agency shall adopt the SF-270 as a standard form for all 
nonconstruction programs when electronic funds transfer or predetermined 
advance methods are not used. Federal awarding agencies, however, have 
the option of using this form for construction programs in lieu of the 
SF-271, ``Outlay Report and Request for Reimbursement for Construction 
Programs.''
    (2) SF-271, Outlay Report and Request for Reimbursement for 
Construction Programs. Each Federal awarding agency shall adopt the SF-
271 as the standard form to be used for requesting reimbursement for 
construction programs. However, a Federal awarding agency may substitute 
the SF-270 when the Federal awarding agency determines that it provides 
adequate information to meet Federal needs.

[[Page 107]]

    (n) The DOE may convert a recipient from advance payment to 
reimbursement whenever the recipient no longer meets the criteria for 
advance payment specified in paragraph (b) of this section. Any such 
conversion may be accomplished only after the DOE has advised the 
recipient in writing of the reasons for the proposed action and has 
provided a period of at least 30 days within which the recipient may 
take corrective action or provide satisfactory assurances of its 
intention to take such action.
    (o) With prior DOE approval and in accordance with written DOE 
instructions, a recipient may assign to a bank, trust company or other 
financing institution, including any Federal lending agency, 
reimbursement by Treasury check due from DOE under the following 
conditions:
    (1) The award provides for reimbursement totaling $1,000 or more;
    (2) The assignment covers all amounts payable under the award that 
have not already been paid;
    (3) Reassignment is prohibited; and
    (4) The assignee files a written notice of award payment assignment 
and a true copy of the instrument of assignment with DOE. Any interest 
costs resulting from a loan obtained on the basis of an assignment are 
unallowable charges to DOE award funds or any required cost sharing.
    (p) Recipients shall observe the requirements of this section in 
making or withholding payments to subrecipients except that the forms 
used by recipients are not required to be used by subrecipients when 
requesting advances or reimbursement.



Sec. 600.123  Cost sharing or matching.

    (a) All cost sharing or matching contributions, including cash and 
third party in-kind, shall meet all of the following criteria.
    (1) Are verifiable from the recipient's records.
    (2) Are not included as contributions for any other federally-
assisted project or program.
    (3) Are necessary and reasonable for proper and efficient 
accomplishment of project or program objectives.
    (4) Are allowable under the applicable cost principles.
    (5) Are not paid by the Federal Government under another award, 
except where authorized by Federal statute to be used for cost sharing 
or matching.
    (6) Are provided for in the approved budget.
    (7) Conform to other provisions of this subpart, as applicable.
    (b) Unrecovered indirect costs may be included as part of cost 
sharing or matching.
    (c) Values for recipient contributions of services and property 
shall be established in accordance with the applicable cost principles. 
If DOE authorizes recipients to donate buildings or land for 
construction/facilities acquisition projects or long-term use, the value 
of the donated property for cost sharing or matching shall be the lesser 
of either paragraph (c)(1) or (2) of this section.
    (1) The certified value of the remaining life of the property 
recorded in the recipient's accounting records at the time of donation.
    (2) The current fair market value. However, when there is sufficient 
justification, DOE may approve the use of the current fair market value 
of the donated property, even if it exceeds the certified value at the 
time of donation to the project.
    (d) Volunteer services furnished by professional and technical 
personnel, consultants, and other skilled and unskilled labor may be 
counted as cost sharing or matching if the service is an integral and 
necessary part of an approved project or program. Rates for volunteer 
services shall be consistent with those paid for similar work in the 
recipient's organization. In those instances in which the required 
skills are not found in the recipient organization, rates shall be 
consistent with those paid for similar work in the labor market in which 
the recipient competes for the kind of services involved. In either 
case, paid fringe benefits that are reasonable, allowable, and allocable 
may be included in the valuation.
    (e) When an employer other than the recipient furnishes the services 
of an employee, these services shall be valued at the employee's regular 
rate of pay (plus an amount of fringe benefits that are reasonable, 
allowable, and allocable, but exclusive of overhead

[[Page 108]]

costs), provided these services are in the same skill for which the 
employee is normally paid.
    (f) Donated supplies may include such items as office supplies, 
laboratory supplies or workshop and classroom supplies. Value assessed 
to donated supplies included in the cost sharing or matching share shall 
be reasonable and shall not exceed the fair market value of the property 
at the time of the donation.
    (g) The method used for determining cost sharing or matching for 
donated equipment, buildings and land for which title passes to the 
recipient may differ according to the purpose of the award, if either 
paragraph (g)(1) or (2) of this section apply.
    (1) If the purpose of the award is to assist the recipient in the 
acquisition of equipment, buildings or land, the total value of the 
donated property may be claimed as cost sharing or matching.
    (2) If the purpose of the award is to support activities that 
require the use of equipment, buildings or land, normally only 
depreciation or use charges for equipment and buildings may be made. 
However, the full value of equipment or other capital assets and fair 
rental charges for land may be allowed, provided that DOE has approved 
the charges.
    (h) The value of donated property shall be determined in accordance 
with the usual accounting policies of the recipient, with the following 
qualifications.
    (1) The value of donated land and buildings shall not exceed its 
fair market value at the time of donation to the recipient as 
established by an independent appraiser (e.g., certified real property 
appraiser or General Services Administration representative) and 
certified by a responsible official of the recipient.
    (2) The value of donated equipment shall not exceed the fair market 
value of equipment of the same age and condition at the time of 
donation.
    (3) The value of donated space shall not exceed the fair rental 
value of comparable space as established by an independent appraisal of 
comparable space and facilities in a privately-owned building in the 
same locality.
    (4) The value of loaned equipment shall not exceed its fair rental 
value.
    (i) The following requirements pertain to the recipient's supporting 
records for in-kind contributions from third parties.
    (1) Volunteer services shall be documented and, to the extent 
feasible, supported by the same methods used by the recipient for its 
own employees.
    (2) The basis for determining the valuation for personal service, 
material, equipment, buildings and land shall be documented.
    (j) DOE shall specify in the solicitation or in the program rule, if 
any, any cost sharing requirement. The award document shall be specific 
as to whether the cost sharing is based on a minimum amount for the 
recipient or on a percentage of total costs.
    (k) If DOE requires that a recipient provide cost sharing which is 
not required by statute or which exceeds a statutory minimum, DOE shall 
state in the program rule or solicitation the reasons for requiring such 
cost sharing, recommended or required levels of cost sharing, and the 
circumstances under which the requirement for cost sharing may be waived 
or adjusted during any negotiation.
    (l) Whenever DOE negotiates the amount of cost sharing, DOE may take 
into account such factors as the use of program income (see 
Sec. 600.124), patent rights, and rights in data. Foregone fee or profit 
shall not be considered in establishing the extent of cost sharing.



Sec. 600.124  Program income.

    (a) The standards set forth in this section shall be used to account 
for program income related to projects financed in whole or in part with 
DOE funds.
    (b) Except as provided in paragraph (h) of this section, program 
income earned during the project period shall be retained by the 
recipient and, in accordance with program regulations or the terms and 
conditions of the award, shall be used in one or more of the following 
ways.
    (1) Added to funds committed to the project and used to further 
eligible project objectives.
    (2) Used to finance the non-DOE share of the project.

[[Page 109]]

    (3) Deducted from the total project allowable cost in determining 
the net allowable costs on which the share of costs is based.
    (c) When DOE authorizes the disposition of program income as 
described in paragraphs (b)(1) or (b)(2) of this section, program income 
in excess of any limits stipulated shall be used in accordance with 
paragraph (b)(3) of this section.
    (d) In the event that the program regulations or the terms and 
conditions of the award do not specify how program income is to be used, 
paragraph (b)(3) of this section shall apply automatically to all 
projects or programs except research. For awards that support research, 
paragraph (b)(1) of this section shall apply automatically unless the 
award indicates another alternative in the terms and conditions, the 
recipient is subject to special award conditions, as indicated in 
Sec. 600.114, or the recipient is a commercial organization.
    (e) Unless program regulations or the terms and conditions of the 
award provide otherwise, recipients shall have no obligation to the 
Federal Government regarding program income earned after the end of the 
project period.
    (f) Unless program regulations or the terms and conditions of the 
award provide otherwise, costs incident to the generation of program 
income may be deducted from gross income to determine program income, 
provided these costs have not been charged to the award.
    (g) Proceeds from the sale of property shall be handled in 
accordance with the requirements of the Property Standards (See 
Secs. 600.130 through 600.137).
    (h) Unless program regulations or the terms and condition of the 
award provide otherwise, recipients shall have no obligation to the 
Federal Government with respect to program income earned from license 
fees and royalties for copyrighted material, patents, patent 
applications, trademarks, and inventions produced under an award. 
However, Patent and Trademark Amendments (35 U.S.C. Chapter 18) apply to 
inventions made under an experimental, developmental, or research award.



Sec. 600.125  Revision of budget and program plans.

    (a) The budget plan is the financial expression of the project or 
program as approved during the award process. It includes the sum of the 
Federal and non-Federal share when there are cost sharing requirements. 
It shall be related to performance for program evaluation purposes 
whenever appropriate.
    (b) Recipients are required to report deviations from budget and 
program plans, and request prior approvals for budget and program plan 
revisions, in accordance with this section.
    (c) For nonconstruction awards, recipients shall request prior 
approvals from the DOE for one or more of the following program or 
budget related reasons.
    (1) Change in the scope or the objective of the project or program 
(even if there is no associated budget revision requiring prior written 
approval).
    (2) Change in a key person specified in the application or award 
document.
    (3) The absence for more than three months, or a 25 percent 
reduction in time devoted to the project, by the approved project 
director or principal investigator.
    (4) The need for additional Federal funding.
    (5) If required by program regulations, the transfer of amounts 
budgeted for indirect costs to absorb increases in direct costs, or vice 
versa.
    (6) The inclusion, unless waived by program regulations or the terms 
and conditions of award, of costs that require prior approval in 
accordance with OMB Circular A-21, ``Cost Principles for Institutions of 
Higher Education,'' OMB Circular A-122, ``Cost Principles for Non-Profit 
Organizations,'' or 45 CFR part 74 Appendix E, ``Principles for 
Determining Costs Applicable to Research and Development under Grants 
and Contracts with Hospitals,'' or 48 CFR part 31, ``Contract Cost 
Principles and Procedures,'' as applicable.
    (7) The transfer of funds allotted for training allowances (direct 
payment to trainees) to other categories of expense.
    (8) Unless described in the application and funded in the approved 
awards, the subaward, transfer or contracting out of any work under an

[[Page 110]]

award. This provision does not apply to the purchase of supplies, 
material, equipment or general support services.
    (d) No other prior approval requirements for specific items may be 
imposed unless a deviation has been approved in accordance with 
Sec. 600.4.
    (e) Except for requirements listed in paragraphs (c)(1) and (c)(4) 
of this section, program regulations may waive cost-related and 
administrative prior written approvals required by this subpart and its 
Appendices. Such waivers may include authorizing recipients to do any 
one or more of the following.
    (1) Incur pre-award costs 90 calendar days prior to award without 
prior approval or more than 90 calendar days with the prior approval of 
DOE. All pre-award costs are incurred at the recipient's risk (i.e., DOE 
is under no obligation to reimburse such costs if for any reason the 
recipient does not receive an award or if the award is less than 
anticipated and inadequate to cover such costs).
    (2) Initiate a one-time extension of the expiration date of the 
final budget period of the project of up to 12 months unless one or more 
of the following conditions apply.
    (i) The terms and conditions of award prohibit the extension.
    (ii) The extension requires additional Federal funds.
    (iii) The extension involves any change in the approved objectives 
or scope of the project.
    (iv) The extension is being exercised merely for the purpose of 
using unobligated balances. For one-time extensions, the recipient must 
notify the DOE in writing with the supporting reasons and revised 
expiration date at least 10 days before the expiration date specified in 
the award.
    (3) Carry forward unobligated balances to subsequent funding 
periods.
    (4) For awards that support research, unless the terms and 
conditions of award provide otherwise, the prior approval requirements 
described in paragraph (e) of this section are automatically waived 
(i.e., recipients need not obtain such prior approvals) unless one of 
the conditions included in Sec. 600.125(e)(2) applies.
    (5) For continuation awards within a multiple year project in 
support of research, prior to receipt of continuation funding, preaward 
expenditures by recipients are not subject to the limitation or approval 
requirements of Sec. 600.125(e)(1). Nevertheless, incurrence by the 
recipient does not impose any obligation on DOE if a continuation award 
is not subsequently made, or if an award is made for a lesser amount 
than the recipient expected.
    (f) Program regulations may restrict the transfer of funds among 
direct cost categories or programs, functions and activities for awards 
in which DOE's share of the project exceeds $100,000 and the cumulative 
amount of such transfers exceeds or is expected to exceed 10 percent of 
the total budget as last approved by DOE. However, no program regulation 
shall permit a transfer that would cause any Federal appropriation or 
part thereof to be used for purposes other than those consistent with 
the original intent of the appropriation.
    (g) All other changes to nonconstruction budgets, except for the 
changes described in paragraph (j) of this section, do not require prior 
approval.
    (h) For construction awards, recipients shall request prior written 
approval promptly from the Contracting Officer for budget revisions 
whenever paragraph (h) (1), (2) or (3) of this section apply.
    (1) The revision results from changes in the scope or the objective 
of the project or program.
    (2) The need arises for additional Federal funds to complete the 
project.
    (3) A revision is desired which involves specific costs for which 
prior written approval requirements may be imposed consistent with 
applicable OMB cost principles listed in Sec. 600.127.
    (i) Except in accordance with the deviation procedures in 600.4 or 
as may be provided for in program regulations, no other prior approval 
requirements for specific items will be imposed by DOE.
    (j) When DOE makes an award that provides support for both 
construction and nonconstruction work, DOE may require the recipient to 
request prior approval from DOE before making any fund or budget 
transfers between the two types of work supported.
    (k) For both construction and nonconstruction awards, recipients 
shall

[[Page 111]]

notify DOE in writing promptly whenever the amount of Federal authorized 
funds is expected to exceed the needs of the recipient for the project 
period by more than $5000 or five percent of the Federal award, 
whichever is greater. This notification shall not be required if an 
application for additional funding is submitted for a continuation 
award.
    (l) Requests for budget revisions may be made by letter.
    (m) Within 30 calendar days from the date of receipt of the request 
for budget revisions, DOE shall review the request and notify the 
recipient whether the budget revisions have been approved. If the 
revision is still under consideration at the end of 30 calendar days, 
DOE shall inform the recipient in writing of the date when the recipient 
may expect the decision.
    (n) DOE approval or disapproval of a request for a budget or project 
revision shall be in writing and signed by a DOE Contracting Officer.
    (o) A request by a subrecipient for prior approval shall be 
addressed in writing to the recipient. The recipient shall promptly 
review such request and shall approve or disapprove the request in 
writing within 30 days from the date of the recipient's request for the 
revision. A recipient shall not approve any budget or project revision 
which is inconsistent with the purpose or terms and conditions of the 
DOE award. If the revision requested by the subrecipient would result in 
a change to the recipient's approved budget or approved project which 
requires DOE prior approval, the recipient shall obtain DOE approval 
before approving such revision.



Sec. 600.126  Non-Federal audits.

    (a) Recipients and subrecipients that are institutions of higher 
education or other non-profit organizations (including hospitals) shall 
be subject to the audit requirements contained in the Single Audit Act 
Amendments of 1996 (31 U.S.C. 7501-7507) and revised OMB Circular A-133, 
``Audits of States, Local Governments, and Non-Profit Organizations.''
    (b) State and local governments shall be subject to the audit 
requirements contained in the Single Audit Act Amendments of 1996 (31 
U.S.C. 7501-7507) and revised OMB Circular A-133, ``Audits of States, 
Local Governments, and Non-Profit Organizations.''
    (c) For-profit hospitals not covered by the audit provisions of 
revised OMB Circular A-133 shall be subject to the audit requirements of 
the Federal awarding agencies.
    (d) The Contracting Officer may audit, or cause to be audited, 
awards to commercial organizations whenever and in the degree of detail 
he/she deems necessary. The Contracting Officer shall rely on available 
audit reports in determining the need for and scope of such audits. The 
commercial organization has similar authority in auditing subrecipients.
    (e) The Contracting Officer may audit, or cause to be audited, 
awards to individuals whenever and in the degree of detail he/she deems 
necessary. The Contracting Officer shall rely on available audit reports 
in determining the need for and scope of such audits.

[59 FR 53266, Oct. 21, 1994, as amended at 62 FR 45939, 45940, Aug. 29, 
1997]



Sec. 600.127  Allowable costs.

    (a) General. For each kind of recipient, there is a set of Federal 
principles for determining allowable costs. Allowability of costs shall 
be determined in accordance with the cost principles applicable to the 
entity incurring the costs. Thus, allowability of costs incurred by 
State, local or federally-recognized Indian tribal governments is 
determined in accordance with the provisions of OMB Circular A-87, 
``Cost Principles for State and Local Governments.'' The allowability of 
costs incurred by non-profit organizations is determined in accordance 
with the provisions of OMB Circular A-122, ``Cost Principles for Non-
Profit Organizations.'' The allowability of costs incurred by 
institutions of higher education is determined in accordance with the 
provisions of OMB Circular A-21, ``Cost Principles for Educational 
Institutions.'' The allowability of costs incurred by hospitals is 
determined in accordance with the provisions of Appendix E of 45 CFR 
part 74, ``Principles for Determining Costs Applicable to Research and 
Development Under Grants and Contracts with Hospitals.'' The 
allowability of costs incurred by

[[Page 112]]

commercial organizations and those non-profit organizations listed in 
Attachment C to Circular A-122 is determined in accordance with the 
provisions of the Federal Acquisition Regulation (FAR) at 48 CFR part 
31.
    (b) Indirect costs. Unless restricted by Federal statute or program 
rule, DOE shall provide for the reimbursement of appropriate indirect 
costs.
    (1) DOE shall include an amount for indirect costs in an award only 
if the applicant requests reimbursement of such costs and--
    (i) Submits evidence that a cognizant Federal agency has been 
assigned to establish indirect cost rates for the applicant and 
indicates or provides evidence that--
    (A) A current agreement containing an applicable approved indirect 
cost rate(s) covering all or part of the budget period for which DOE may 
provide funding has been established; or
    (B) An indirect cost proposal has been submitted to the cognizant 
agency in order to establish an applicable approved indirect cost 
rate(s) covering all or part of the budget period for which DOE may 
provide funding; or
    (C) An indirect cost proposal covering all or part of the budget 
period and applicable to the activities for which DOE may provide 
funding will be submitted to the cognizant agency for approval no later 
than three months after the beginning date of the initial budget period 
of the DOE award or, for subsequent budget periods, in accordance with 
any schedule established by the cognizant agency; or
    (ii) If not assigned to a cognizant agency, the applicant includes, 
in the application, data that is current, complete, accurate, and 
sufficient to allow the Contracting Officer to determine a rate(s) for 
indirect costs. If the total approved budget will not exceed $100,000 or 
if the amount requested for indirect costs does not exceed $5,000, DOE 
may waive the requirement for negotiation of a rate and, in lieu 
thereof, provide a reasonable allowance for such costs.
    (2) Indirect cost proposals shall be prepared and submitted in 
accordance with the applicable Federal cost principles and instructions 
from the cognizant agency or from DOE, as appropriate.
    (3) If a subaward under an award or subaward provides for the 
payment of indirect costs, the recipient or subrecipient shall be 
responsible for negotiating appropriate indirect costs, using the cost 
principles applicable to the subrecipient or contractor, unless the 
subrecipient or contractor has negotiated an applicable rate directly 
with DOE or another Federal department or agency. DOE may review and 
audit the procedures a recipient or subrecipient uses in conducting 
indirect cost negotiations.
    (c) Fee or profit. No increment above cost may be paid to a 
recipient or subrecipient under a DOE award or subaward, except for SBIR 
recipients as provided in Sec. 600.181(d)(3). A fee or profit may be 
paid to a contractor providing goods or services under a contract with a 
recipient or subrecipient.



Sec. 600.128  Period of availability of funds.

    Where a funding period is specified, a recipient may charge to the 
award only allowable costs resulting from obligations incurred during 
the funding period and any pre-award costs authorized by DOE.

                           Property Standards



Sec. 600.130  Purpose of property standards.

    Sections 600.131 through 600.137 set forth uniform standards 
governing management and disposition of property furnished by the 
Federal Government or whose cost was charged to a project supported by a 
Federal award. Recipients shall observe these standards under awards and 
shall not impose additional requirements, unless specifically required 
by Federal statute or program regulations. The recipient may use its own 
property management standards and procedures provided it observes the 
provisions of Secs. 600.131 through 600.137.



Sec. 600.131  Insurance coverage.

    Recipients shall, at a minimum, provide the equivalent insurance 
coverage for real property and equipment acquired with DOE funds as 
provided to

[[Page 113]]

property owned by the recipient. Federally-owned property need not be 
insured unless required by the terms and conditions of the award.



Sec. 600.132  Real property.

    Unless otherwise provided by statute or program regulations, the 
requirements concerning the use and disposition of real property 
acquired in whole or in part under awards are as follows.
    (a) Title to real property shall vest in the recipient subject to 
the condition that the recipient shall use the real property for the 
authorized purpose of the project as long as it is needed and shall not 
encumber the property without approval of DOE.
    (b) The recipient shall obtain written approval by DOE for the use 
of real property in other federally-sponsored projects when the 
recipient determines that the property is no longer needed for the 
purpose of the original project. Use in other projects shall be limited 
to those under federally-sponsored projects (i.e., awards) or programs 
that have purposes consistent with those authorized for support by DOE.
    (c) When the real property is no longer needed as provided in 
paragraphs (a) and (b) of this section, the recipient shall request 
disposition instructions from DOE or its successor Federal awarding 
agency. DOE will give one or more of the following disposition 
instructions.
    (1) The recipient may be permitted to retain title without further 
obligation to the Federal Government after it compensates the Federal 
Government for that percentage of the current fair market value of the 
property attributable to the Federal participation in the project.
    (2) The recipient may be directed to sell the property under 
guidelines provided by DOE and pay the Federal Government for that 
percentage of the current fair market value of the property attributable 
to the Federal participation in the project (after deducting actual and 
reasonable selling and fix-up expenses, if any, from the sales 
proceeds). When the recipient is authorized or required to sell the 
property, proper sales procedures shall be established that provide for 
competition to the extent practicable and result in the highest possible 
return.
    (3) The recipient may be directed to transfer title to the property 
to the Federal Government or to an eligible third party provided that, 
in such cases, the recipient shall be entitled to compensation for its 
attributable percentage of the current fair market value of the 
property.



Sec. 600.133  Federally-owned and exempt property.

    (a) Federally-owned property.
    (1) Title to federally-owned property remains vested in the Federal 
Government. Recipients shall submit annually an inventory listing of 
federally-owned property in their custody to DOE. Upon completion of the 
award or when the property is no longer needed, the recipient shall 
report the property to DOE for further Federal agency utilization.
    (2) If DOE has no further need for the property, it shall be 
declared excess and reported to the General Services Administration, 
unless DOE has statutory authority to dispose of the property by 
alternative methods (e.g., the authority provided by the Federal 
Technology Transfer Act (15 U.S.C. 3710 (i)) to donate research 
equipment to educational and non-profit organizations in accordance with 
E.O. 12821, ``Improving Mathematics and Science Education in Support of 
the National Education Goals.'') Appropriate instructions shall be 
issued to the recipient by DOE.
    (b) Exempt property. When statutory authority exists, DOE may vest 
title to property acquired with Federal funds in the recipient without 
further obligation to the Federal Government and under conditions DOE 
considers appropriate. For example, under 31 U.S.C. 6306, DOE may so 
vest title to tangible personal property under a grant or cooperative 
agreement for basic or applied research in a nonprofit institution of 
higher education or in a nonprofit organization whose primary purpose is 
conducting scientific research. Such property is ``exempt property.'' 
Program regulations or the terms and conditions of award may establish 
provisions for vesting title to exempt property. Should such conditions 
not

[[Page 114]]

be established and the recipient has no need for the equipment, the 
recipient shall request disposition instructions from DOE. If DOE does 
not issue disposition instructions within 120 calendar days of receipt 
of the request, title to the property shall vest in the recipient 
without further obligation to the Federal Government. If, at the end of 
the project, DOE fails to issue disposition instructions within 120 
calendar days of the receipt of a final inventory, title to the property 
shall vest in the recipient without further obligation to the Federal 
Government.



Sec. 600.134  Equipment.

    (a) Title to equipment acquired by a recipient with Federal funds 
shall vest in the recipient, subject to conditions of this section.
    (b) The recipient shall not use equipment acquired with Federal 
funds to provide services to non-Federal outside organizations for a fee 
that is less than private companies charge for equivalent services, 
unless specifically authorized by Federal statute, for as long as the 
Federal Government retains an interest in the equipment.
    (c) The recipient shall use the equipment in the project or program 
for which it was acquired as long as needed, whether or not the project 
or program continues to be supported by Federal funds and shall not 
encumber the property without approval of DOE. When no longer needed for 
the original project or program, the recipient shall use the equipment 
in connection with its other federally-sponsored activities, in the 
following order of priority:
    (1) Activities sponsored by DOE, then
    (2) Activities sponsored by other Federal agencies.
    (d) During the time that equipment is used on the project or program 
for which it was acquired, the recipient shall make it available for use 
on other projects or programs if such other use will not interfere with 
the work on the project or program for which the equipment was 
originally acquired. First preference for such other use shall be given 
to other projects or programs sponsored by DOE that financed the 
equipment; second preference shall be given to projects or programs 
sponsored by other Federal awarding agencies. If the equipment is owned 
by the Federal Government, use on other activities not sponsored by the 
Federal Government shall be permissible if authorized by DOE. User 
charges shall be treated as program income.
    (e) When acquiring replacement equipment, the recipient may use the 
equipment to be replaced as trade-in or sell the equipment and use the 
proceeds to offset the costs of the replacement equipment subject to the 
approval of DOE.
    (f) The recipient's property management standards for equipment 
acquired with Federal funds and federally-owned equipment shall include 
all of the following.
    (1) Equipment records shall be maintained accurately and shall 
include the following information.
    (i) A description of the equipment.
    (ii) Manufacturer's serial number, model number, Federal stock 
number, national stock number, or other identification number.
    (iii) Source of the equipment, including the award number.
    (iv) Whether title vests in the recipient or the Federal Government.
    (v) Acquisition date (or date received, if the equipment was 
furnished by the Federal Government) and cost.
    (vi) Information from which one can calculate the percentage of 
Federal participation in the cost of the equipment (not applicable to 
equipment furnished by the Federal Government).
    (vii) Location and condition of the equipment and the date the 
information was reported.
    (viii) Unit acquisition cost.
    (ix) Ultimate disposition data, including date of disposal and sales 
price or the method used to determine current fair market value where a 
recipient compensates DOE for its share.
    (2) Equipment owned by the Federal Government shall be identified to 
indicate Federal ownership.
    (3) A physical inventory of equipment shall be taken and the results 
reconciled with the equipment records at least once every two years. Any 
differences between quantities determined by the physical inspection and 
those shown in the accounting records shall be investigated to determine 
the causes of the difference. The recipient

[[Page 115]]

shall, in connection with the inventory, verify the existence, current 
utilization, and continued need for the equipment.
    (4) A control system shall be in effect to insure adequate 
safeguards to prevent loss, damage, or theft of the equipment. Any loss, 
damage, or theft of equipment shall be investigated and fully 
documented; if the equipment was owned by the Federal Government, the 
recipient shall promptly notify DOE.
    (5) Adequate maintenance procedures shall be implemented to keep the 
equipment in good condition.
    (6) Where the recipient is authorized or required to sell the 
equipment, proper sales procedures shall be established which provide 
for competition to the extent practicable and result in the highest 
possible return.
    (g) When the recipient no longer needs the equipment, the equipment 
may be used for other activities in accordance with the following 
standards. Equipment with a current per-unit fair market value of less 
than $5000 may be retained, sold or otherwise disposed of with no 
further obligation to the awarding agency. For equipment with a current 
per unit fair market value of $5000 or more, the recipient may retain 
the equipment for other uses provided that compensation is made to the 
original Federal awarding agency or its successor. The amount of 
compensation shall be computed by applying the percentage of Federal 
participation in the cost of the original project or program to the 
current fair market value of the equipment. If the recipient has no need 
for the equipment, the recipient shall request disposition instructions 
from DOE. DOE shall determine whether the equipment can be used to meet 
DOE's requirements. If no requirement exists within DOE, the 
availability of the equipment shall be reported to the General Services 
Administration by DOE to determine whether a requirement for the 
equipment exists in other Federal agencies. DOE will issue instructions 
to the recipient no later than 120 calendar days after the recipient's 
request and the following procedures shall govern.
    (1) If so instructed or if disposition instructions are not issued 
within 120 calendar days after the recipient's request, the recipient 
shall sell the equipment and reimburse DOE an amount computed by 
applying to the sales proceeds the percentage of Federal participation 
in the cost of the original project or program. However, the recipient 
shall be permitted to deduct and retain from the Federal share $500 or 
ten percent of the proceeds, whichever is less, for the recipient's 
selling and handling expenses.
    (2) If the recipient is instructed to ship the equipment elsewhere, 
the recipient shall be reimbursed by the Federal Government by an amount 
which is computed by applying the percentage of the recipient's 
participation in the cost of the original project or program to the 
current fair market value of the equipment, plus any reasonable shipping 
or interim storage costs incurred.
    (3) If the recipient is instructed to otherwise dispose of the 
equipment, the recipient shall be reimbursed by DOE for such costs 
incurred in its disposition.
    (h) DOE reserves the right, at the end of a project, to transfer the 
title to the Federal Government or to a third party named by DOE when 
such third party is otherwise eligible under existing statutes. Such 
transfer shall be subject to the following standards.
    (1) The equipment shall be appropriately identified in the award or 
otherwise made known to the recipient in writing.
    (2) DOE shall issue disposition instructions within 120 calendar 
days after receipt of a final inventory. The final inventory shall list 
all equipment acquired with award funds and federally-owned equipment. 
If DOE fails to issue disposition instructions within the 120 calendar 
day period, the provisions of Sec. 600.134(g)(1) apply.
    (3) When DOE exercises its right to take title, the equipment shall 
be subject to the provisions for federally-owned equipment.



Sec. 600.135  Supplies and other expendable property.

    (a) Title to supplies and other expendable property shall vest in 
the recipient upon acquisition. If there is a residual inventory of 
unused supplies exceeding $5000 in total aggregate

[[Page 116]]

value upon termination or completion of the project or program and the 
supplies are not needed for any other federally-sponsored project or 
program, the recipient shall retain the supplies for use on non-Federal 
sponsored activities or sell them, but shall, in either case, compensate 
the Federal Government for its share. The amount of compensation shall 
be computed in the same manner as for equipment.
    (b) The recipient shall not use supplies acquired with Federal funds 
to provide services to non-Federal outside organizations for a fee that 
is less than private companies charge for equivalent services, unless 
specifically authorized by Federal statute as long as the Federal 
Government retains an interest in the supplies.



Sec. 600.136  Intangible property.

    (a) Recipients that are institutions of higher education, hospitals, 
and other non-profit organizations are subject to the following:
    (1) The recipient may copyright any work that is subject to 
copyright and was developed, or for which ownership was purchased, under 
an award. DOE reserves a royalty-free, nonexclusive and irrevocable 
right to reproduce, publish or otherwise use the work for Federal 
purposes, and to authorize others to do so.
    (2) Recipients are subject to applicable regulations governing 
patents and inventions. (See 10 CFR 600.27)
    (3) DOE has the right to:
    (i) Obtain, reproduce, publish or otherwise use the data first 
produced under an award.
    (ii) Authorize others to receive, reproduce, publish, or otherwise 
use such data for Federal purposes.
    (4) Title to intangible property and debt instruments acquired under 
an award or subaward vests upon acquisition in the recipient. The 
recipient shall use that property for the originally-authorized purpose, 
and the recipient shall not encumber the property without approval of 
DOE. When no longer needed for the originally authorized purpose, 
disposition of the intangible property shall occur in accordance with 
the provisions of Sec. 600.134(g).
    (b) Recipients that are commercial entities shall follow the 
provisions set forth at 10 CFR 600.27.

[61 FR 7165, Feb. 26, 1996]



Sec. 600.137  Property trust relationship.

    Real property, equipment, intangible property and debt instruments 
that are acquired or improved with Federal funds shall be held in trust 
by the recipient as trustee for the beneficiaries of the project or 
program under which the property was acquired or improved. Recipients 
shall record liens or other appropriate notices of record to indicate 
that personal or real property has been acquired or improved with 
Federal funds and that use and disposition conditions apply to the 
property.

                          Procurement Standards



Sec. 600.140  Purpose of procurement standards.

    Sections 600.141 through 600.148 set forth standards for use by 
recipients in establishing procedures for the procurement of supplies 
and other expendable property, equipment, real property and other 
services with Federal funds. These standards are furnished to ensure 
that such materials and services are obtained in an effective manner and 
in compliance with the provisions of applicable Federal statutes and 
executive orders. No additional procurement standards or requirements 
shall be imposed by DOE upon recipients, unless specifically required by 
Federal statute or executive order or in accordance with the deviation 
procedures of Sec. 600.4.



Sec. 600.141  Recipient responsibilities.

    The standards contained in this section do not relieve the recipient 
of the contractual responsibilities arising under its contract(s). The 
recipient is the responsible authority, without recourse to DOE 
regarding the settlement and satisfaction of all contractual and 
administrative issues arising out of procurements entered into in 
support of an award or other agreement. This includes disputes, claims, 
protests of award, source evaluation or other matters of a contractual 
nature. Matters concerning violation of statute are to be referred to 
such Federal,

[[Page 117]]

State or local authority as may have proper jurisdiction.



Sec. 600.142  Codes of conduct.

    The recipient shall maintain written standards of conduct governing 
the performance of its employees engaged in the award and administration 
of contracts. No employee, officer, or agent shall participate in the 
selection, award, or administration of a contract supported by Federal 
funds if a real or apparent conflict of interest would be involved. Such 
a conflict would arise when the employee, officer, or agent, any member 
of his or her immediate family, his or her partner, or an organization 
which employs or is about to employ any of the parties indicated herein, 
has a financial or other interest in the firm selected for an award. The 
officers, employees, and agents of the recipient shall neither solicit 
nor accept gratuities, favors, or anything of monetary value from 
contractors, or parties to subagreements. However, recipients may set 
standards for situations in which the financial interest is not 
substantial or the gift is an unsolicited item of nominal value. The 
standards of conduct shall provide for disciplinary actions to be 
applied for violations of such standards by officers, employees, or 
agents of the recipient.



Sec. 600.143  Competition.

    All procurement transactions shall be conducted in a manner to 
provide, to the maximum extent practical, open and free competition. The 
recipient shall be alert to organizational conflicts of interest as well 
as noncompetitive practices among contractors that may restrict or 
eliminate competition or otherwise restrain trade. In order to ensure 
objective contractor performance and eliminate unfair competitive 
advantage, contractors that develop or draft specifications, 
requirements, statements of work, invitations for bids and/or requests 
for proposals shall be excluded from competing for such procurements. 
Awards shall be made to the bidder or offeror whose bid or offer is 
responsive to the solicitation and is most advantageous to the 
recipient, price, quality and other factors considered. Solicitations 
shall clearly set forth all requirements that the bidder or offeror 
shall fulfill in order for the bid or offer to be evaluated by the 
recipient. Any and all bids or offers may be rejected when it is in the 
recipient's interest to do so.



Sec. 600.144  Procurement procedures.

    (a) All recipients shall establish written procurement procedures. 
These procedures shall provide for, at a minimum, that paragraphs 
(a)(1), (2) and (3) of this section apply.
    (1) Recipients avoid purchasing unnecessary items.
    (2) Where appropriate, an analysis is made of lease and purchase 
alternatives to determine which would be the most economical and 
practical procurement.
    (3) Solicitations for goods and services provide for all of the 
following.
    (i) A clear and accurate description of the technical requirements 
for the material, product or service to be procured. In competitive 
procurements, such a description shall not contain features which unduly 
restrict competition.
    (ii) Requirements which the bidder/offeror must fulfill and all 
other factors to be used in evaluating bids or proposals.
    (iii) A description, whenever practicable, of technical requirements 
in terms of functions to be performed or performance required, including 
the range of acceptable characteristics or minimum acceptable standards.
    (iv) The specific features of ``brand name or equal'' descriptions 
that bidders are required to meet when such items are included in the 
solicitation.
    (v) The acceptance, to the extent practicable and economically 
feasible, of products and services dimensioned in the metric system of 
measurement.
    (vi) Preference, to the extent practicable and economically 
feasible, for products and services that conserve natural resources and 
protect the environment and are energy efficient.
    (b) Positive efforts shall be made by recipients to utilize small 
businesses, minority-owned firms, and women's business enterprises, 
whenever possible. Recipients of DOE awards shall take all of the 
following steps to further this goal.

[[Page 118]]

    (1) Ensure that small businesses, minority-owned firms, and women's 
business enterprises are used to the fullest extent practicable.
    (2) Make information on forthcoming opportunities available and 
arrange time frames for purchases and contracts to encourage and 
facilitate participation by small businesses, minority-owned firms, and 
women's business enterprises.
    (3) Consider in the contract process whether firms competing for 
larger contracts intend to subcontract with small businesses, minority-
owned firms, and women's business enterprises.
    (4) Encourage contracting with consortiums of small businesses, 
minority- owned firms and women's business enterprises when a contract 
is too large for one of these firms to handle individually.
    (5) Use the services and assistance, as appropriate, of such 
organizations as the Small Business Administration and the Department of 
Commerce's Minority Business Development Agency in the solicitation and 
utilization of small businesses, minority-owned firms and women's 
business enterprises.
    (c) The type of procuring instruments used (e.g., fixed price 
contracts, cost reimbursable contracts, purchase orders, and incentive 
contracts) shall be determined by the recipient but shall be appropriate 
for the particular procurement and for promoting the best interest of 
the program or project involved. The ``cost-plus-a-percentage-of-cost'' 
or ``percentage of construction cost'' methods of contracting shall not 
be used.
    (d) Contracts shall be made only with responsible contractors who 
possess the potential ability to perform successfully under the terms 
and conditions of the proposed procurement. Consideration shall be given 
to such matters as contractor integrity, record of past performance, 
financial and technical resources or accessibility to other necessary 
resources. In certain circumstances, contracts with certain parties are 
restricted by DOE's implementation, in 10 CFR part 1036, of E.O.'s 12549 
and 12689, ``Debarment and Suspension.''
    (e) Recipients shall, on request, make available for DOE, pre-award 
review and procurement documents, such as request for proposals or 
invitations for bids, independent cost estimates, etc., when any of the 
following conditions apply.
    (1) A recipient's procurement procedures or operation fails to 
comply with the procurement standards in this subpart.
    (2) The procurement is expected to exceed the small purchase 
threshold fixed at 41 U.S.C. 403 (11) (currently $25,000) and is to be 
awarded without competition or only one bid or offer is received in 
response to a solicitation.
    (3) The procurement, which is expected to exceed the small purchase 
threshold, specifies a ``brand name'' product.
    (4) The proposed award over the small purchase threshold is to be 
awarded to other than the apparent low bidder under a sealed bid 
procurement.
    (5) A proposed contract modification changes the scope of a contract 
or increases the contract amount by more than the amount of the small 
purchase threshold.
    (f) By agreement of the recipient or subrecipient and the 
contractor, if consistent with the recipient's or subrecipient's usual 
business practices and applicable state and local law, any contract to 
which this section applies may provide for the payment of interest 
penalties on amounts overdue under such contract except that--
    (1) In no case shall any obligation to pay such interest penalties 
be construed to be an obligation of the Federal government, and
    (2) Any payment of such interest penalties may not be made from DOE 
funds nor be counted toward meeting a cost sharing requirement of a DOE 
award.



Sec. 600.145  Cost and price analysis.

    Some form of cost or price analysis shall be made and documented in 
the procurement files in connection with every procurement action. Price 
analysis may be accomplished in various ways, including the comparison 
of price quotations submitted, market prices and similar indicia, 
together

[[Page 119]]

with discounts. Cost analysis is the review and evaluation of each 
element of cost to determine reasonableness, allocability and 
allowability.



Sec. 600.146  Procurement records.

    Procurement records and files for purchases in excess of the small 
purchase threshold shall include the following at a minimum:
    (a) Basis for contractor selection,
    (b) Justification for lack of competition when competitive bids or 
offers are not obtained, and
    (c) Basis for award cost or price.



Sec. 600.147  Contract administration.

    A system for contract administration shall be maintained to ensure 
contractor conformance with the terms, conditions and specifications of 
the contract and to ensure adequate and timely follow up of all 
purchases. Recipients shall evaluate contractor performance and 
document, as appropriate, whether contractors have met the terms, 
conditions and specifications of the contract.



Sec. 600.148  Contract provisions.

    The recipient shall include, in addition to provisions to define a 
sound and complete agreement, the following provisions in all contracts. 
The following provisions shall also be applied to subcontracts.
    (a) Contracts in excess of the small purchase threshold shall 
contain contractual provisions or conditions that allow for 
administrative, contractual, or legal remedies in instances in which a 
contractor violates or breaches the contract terms, and provide for such 
remedial actions as may be appropriate.
    (b) All contracts in excess of the small purchase threshold shall 
contain suitable provisions for termination by the recipient, including 
the manner by which termination shall be effected and the basis for 
settlement. In addition, such contracts shall describe conditions under 
which the contract may be terminated for default as well as conditions 
where the contract may be terminated because of circumstances beyond the 
control of the contractor.
    (c) Except as otherwise required by statute, an award that requires 
the contracting (or subcontracting) for construction or facility 
improvements shall provide for the recipient to follow its own 
requirements relating to bid guarantees, performance bonds, and payment 
bonds unless the construction contract or subcontract exceeds $100,000. 
For those contracts or subcontracts exceeding $100,000, DOE may accept 
the bonding policy and requirements of the recipient, provided the DOE 
has made a determination that the Federal Government's interest is 
adequately protected. If such a determination has not been made, the 
minimum requirements shall be as follows.
    (1) A bid guarantee from each bidder equivalent to five percent of 
the bid price. The ``bid guarantee'' shall consist of a firm commitment 
such as a bid bond, certified check, or other negotiable instrument 
accompanying a bid as assurance that the bidder shall, upon acceptance 
of his bid, execute such contractual documents as may be required within 
the time specified.
    (2) A performance bond on the part of the contractor for 100 percent 
of the contract price. A ``performance bond'' is one executed in 
connection with a contract to secure fulfillment of all the contractor's 
obligations under such contract.
    (3) A payment bond on the part of the contractor for 100 percent of 
the contract price. A ``payment bond'' is one executed in connection 
with a contract to assure payment as required by statute of all persons 
supplying labor and material in the execution of the work provided for 
in the contract.
    (4) Where bonds are required in the situations described herein, the 
bonds shall be obtained from companies holding certificates of authority 
as acceptable sureties pursuant to 31 CFR part 223, ``Surety Companies 
Doing Business with the United States.''
    (d) All negotiated contracts (except those for less than the small 
purchase threshold) awarded by recipients shall include a provision to 
the effect that the recipient, DOE, the Comptroller General of the 
United States, or any of their duly authorized representatives, shall 
have access to any books, documents, papers and records of the 
contractor which are directly pertinent to a specific program for the 
purpose of

[[Page 120]]

making audits, examinations, excerpts and transcriptions.
    (e) All contracts, including small purchases, awarded by recipients 
and their contractors shall contain the procurement provisions of 
Appendix A to this subpart, as applicable.



Sec. 600.149  Resource Conservation and Recovery Act (RCRA).

    Recipients' procurements shall comply with applicable requirements 
of RCRA, as described at Sec. 600.116 of this subpart.

                           Reports and Records



Sec. 600.150  Purpose of reports and records.

    Sections 600.151 through 600.153 set forth the procedures for 
monitoring and reporting on the recipient's financial and program 
performance and the necessary standard reporting forms. They also set 
forth record retention requirements.



Sec. 600.151  Monitoring and reporting program performance.

    (a) Recipients are responsible for managing and monitoring each 
project, program, subaward, function or activity supported by the award. 
Recipients shall monitor subawards to ensure subrecipients have met the 
audit requirements as delineated in Sec. 600.126.
    (b) The terms and conditions of the award will prescribe the 
frequency with which the performance reports shall be submitted. Except 
as provided in paragraph (f) of this section, performance reports shall 
not be required more frequently than quarterly or less frequently than 
annually. Annual reports shall be due 90 calendar days after the award 
year; quarterly or semi-annual reports shall be due 30 days after the 
reporting period. DOE may require annual reports before the anniversary 
dates of multiple year awards in lieu of these requirements. The final 
performance reports are due 90 calendar days after the expiration or 
termination of the award.
    (c) If inappropriate, a final technical or performance report shall 
not be required after completion of the project.
    (d) When required, performance reports shall generally contain, for 
each award, brief information on each of the following.
    (1) A comparison of actual accomplishments with the goals and 
objectives established for the period, the findings of the investigator, 
or both. Whenever appropriate and the output of programs or projects can 
be readily quantified, such quantitative data should be related to cost 
data for computation of unit costs.
    (2) Reasons why established goals were not met, if appropriate.
    (3) Other pertinent information including, when appropriate, 
analysis and explanation of cost overruns or high unit costs.

DOE may specify in the award that the recipient provide this information 
on the Federal Assistance Program/Project Status Report (DOE F 4600.6), 
the technical reporting formats, or the Federal Assistance Management 
Summary Report. DOE may require that the Federal Assistance Management 
Summary Report be used as a performance report only when such use is 
authorized by program rule or the need for this form is explained in the 
solicitation. The requirements of this section concerning reporting 
frequency and deadlines shall apply to the Federal Assistance Management 
Summary Report. (See also Sec. 600.112 with regard to use of this form 
as part of the award application.)
    (e) Recipients shall not be required to submit more than the 
original and two copies of performance reports.
    (f) Recipients shall immediately notify DOE of developments that 
have a significant impact on the award-supported activities. Also, 
notification shall be given in the case of problems, delays, or adverse 
conditions which materially impair the ability to meet the objectives of 
the award. This notification shall include a statement of the action 
taken or contemplated, and any assistance needed to resolve the 
situation.
    (g) DOE may make site visits, as needed.
    (h) DOE shall comply with applicable clearance requirements of 5 CFR 
part 1320 when requesting performance data from recipients.
    (i) Recipients may place performance reporting requirements on 
subawards

[[Page 121]]

consistent with the provisions of this section and shall require interim 
reporting in accordance with Sec. 600.151(f).



Sec. 600.152  Financial reporting.

    (a) The following forms or such other forms as may be approved by 
OMB are authorized for obtaining financial information from recipients.
    (1) SF-269 or SF-269A, Financial Status Report.
    (i) Recipients shall use the SF-269 or SF-269A to report the status 
of funds for all nonconstruction projects or programs, except that DOE 
has the option of not requiring the SF-269 or SF-269A when the SF-270, 
Request for Advance or Reimbursement, or SF-272, Report of Federal Cash 
Transactions, is determined to provide adequate information to meet DOE 
needs. However, a final SF-269 or SF-269A shall be required at the 
completion of the project when the SF-270 is used only for advances.
    (ii) The terms and conditions of award shall prescribe whether the 
report shall be on a cash or accrual basis. DOE may require accrual 
reporting only if such reporting is required by program statute or rule. 
If the award requires accrual information and the recipient's accounting 
records are not normally kept on the accrual basis, the recipient shall 
not be required to convert its accounting system, but shall develop such 
accrual information through best estimates based on an analysis of the 
documentation on hand.
    (iii) DOE shall determine the frequency of the Financial Status 
Report for each project or program, considering the size and complexity 
of the particular project or program. However, the report shall not be 
required more frequently than quarterly or less frequently than 
annually. A final report shall be required at the completion of the 
agreement.
    (iv) DOE shall require recipients to submit the SF-269 or SF-269A 
(an original and no more than two copies) no later than 30 days after 
the end of each specified reporting period for quarterly and semi-annual 
reports, and 90 calendar days for annual and final reports. Extensions 
of reporting due dates may be approved by the DOE upon request of the 
recipient.
    (2) SF-272, Report of Federal Cash Transactions.
    (i) When funds are advanced, each recipient shall submit the SF-272 
and, when necessary, its continuation sheet, SF-272a. DOE will use this 
report to monitor cash advanced to recipients and to obtain disbursement 
information for each agreement with the recipients.
    (ii) Recipients shall forecast Federal cash requirements in the 
``Remarks'' section of the report.
    (iii) When practical and deemed necessary, DOE may require 
recipients to report in the ``Remarks'' section the amount of cash 
advances received in excess of three days. Recipients shall provide 
short narrative explanations of actions taken to reduce the excess 
balances.
    (iv) Recipients shall be required to submit not more than the 
original and two copies of the SF-272 15 calendar days following the end 
of each quarter. DOE may require a monthly report from those recipients 
receiving advances totaling $1 million or more per year.
    (v) DOE may waive the requirement for submission of the SF-272 for 
any one of the following reasons:
    (A) When monthly advances do not exceed $25,000 per recipient, 
provided that such advances are monitored through other forms contained 
in this section;
    (B) If, in the contracting officer's opinion, the recipient's 
accounting controls are adequate to minimize excessive Federal advances; 
or,
    (C) When electronic payment mechanisms provide adequate data.
    (b) When DOE needs additional information or more frequent reports, 
the following shall be observed:
    (1) When additional information is needed to comply with legislative 
requirements, DOE shall issue instructions to require recipients to 
submit such information under the ``Remarks'' section of the reports.
    (2) When DOE determines that a recipient's accounting system does 
not meet the standards in Sec. 600.121, additional pertinent information 
to further monitor awards may be obtained upon written notice to the 
recipient until such time as the system is brought up

[[Page 122]]

to standard. DOE, in obtaining this information, shall comply with 
report clearance requirements of 5 CFR part 1320.
    (3) Contracting officers are encouraged to shade out any line item 
on any report if not necessary.
    (4) DOE may accept the identical information from the recipients in 
machine readable format or computer printouts or electronic outputs in 
lieu of prescribed formats.
    (5) Computer or electronic outputs may be provided to recipients 
when that expedites or contributes to the accuracy of reporting.



Sec. 600.153  Retention and access requirements for records.

    (a) This section sets forth requirements for record retention and 
access to records for awards to recipients. DOE shall not impose any 
other record retention or access requirements upon recipients, unless 
such requirements are established in program regulations.
    (b) Financial records, supporting documents, statistical records, 
and all other records pertinent to an award shall be retained for a 
period of three years from the date of submission of the final 
expenditure report or, for awards that are renewed quarterly or 
annually, from the date of the submission of the quarterly or annual 
financial report, as authorized by DOE. The only exceptions are the 
following:
    (1) If any litigation, claim, or audit is started before the 
expiration of the 3-year period, the records shall be retained until all 
litigation, claims or audit findings involving the records have been 
resolved and final action taken.
    (2) Records for real property and equipment acquired with Federal 
funds shall be retained for 3 years after final disposition.
    (3) When records are transferred to or maintained by DOE, the 3-year 
retention requirement is not applicable to the recipient.
    (4) Indirect cost rate proposals, cost allocations plans, and 
related records, for which retention requirements are specified in 
Sec. 600.153(g).
    (c) Copies of original records may be substituted for the original 
records if authorized by DOE.
    (d) DOE shall request transfer of certain records to its custody 
from recipients when it determines that the records possess long term 
retention value. However, in order to avoid duplicate recordkeeping, DOE 
may make arrangements for recipients to retain any records that are 
continuously needed for joint use.
    (e) DOE, the Inspector General, Comptroller General of the United 
States, or any of their duly authorized representatives, have the right 
of timely and unrestricted access to any books, documents, papers, or 
other records of recipients that are pertinent to the awards, in order 
to make audits, examinations, excerpts, transcripts and copies of such 
documents. This right also includes timely and reasonable access to a 
recipient's personnel for the purpose of interview and discussion 
related to such documents. The rights of access in this paragraph are 
not limited to the required retention period, but shall last as long as 
records are retained.
    (f) Unless required by statute, DOE shall place no restrictions on 
recipients that limit public access to the records of recipients that 
are pertinent to an award, except when DOE can demonstrate that such 
records shall be kept confidential and would have been exempted from 
disclosure pursuant to the Freedom of Information Act (5 U.S.C. 552) if 
the records had belonged to DOE.
    (g) Paragraphs (g)(1) and (g)(2) of this section apply to the 
following types of documents, and their supporting records: indirect 
cost rate computations or proposals, cost allocation plans, and any 
similar accounting computations of the rate at which a particular group 
of costs is chargeable (such as computer usage chargeback rates or 
composite fringe benefit rates).
    (1) If submitted for negotiation. If the recipient submits to the 
Federal agency responsible for negotiating the recipient's indirect cost 
rate or the subrecipient submits to the recipient the proposal, plan, or 
other computation to form the basis for negotiation of the rate, then 
the 3-year retention period for its supporting records starts on the 
date of such submission.

[[Page 123]]

    (2) If not submitted for negotiation. If the recipient is not 
required to submit to the cognizant Federal agency or the subrecipient 
is not required to submit to the recipient the proposal, plan, or other 
computation for negotiation purposes, then the 3-year retention period 
for the proposal, plan, or other computation and its supporting records 
starts at the end of the fiscal year (or other accounting period) 
covered by the proposal, plan, or other computation.
    (h) If, by the terms and conditions of the award, the recipient or 
subrecipient--
    (1) Is accountable for program income earned or received after the 
end of the project period or after the termination of an award or 
subaward, or
    (2) If program income earned during the project period is required 
to be applied to costs incurred after the end of the project period or 
after termination of an award or subaward, the record retention period 
shall start on the last day of the recipient's or subrecipient's fiscal 
year in which such income was earned or received or such costs were 
incurred. All other program income records shall be retained in 
accordance with Sec. 600.153(b).

                       Termination and Enforcement



Sec. 600.160  Purpose of termination and enforcement.

    Sections 600.161 and 600.162 set forth uniform suspension, 
termination and enforcement procedures.



Sec. 600.161  Termination.

    (a) Awards may be terminated in whole or in part only if paragraph 
(a) (1), (2) or (3) of this section apply.
    (1) By DOE, if a recipient materially fails to comply with the terms 
and conditions of an award.
    (2) By DOE with the consent of the recipient, in which case the two 
parties shall agree upon the termination conditions, including the 
effective date and, in the case of partial termination, the portion to 
be terminated.
    (3) By the recipient upon sending to DOE written notification 
setting forth the reasons for such termination, the effective date, and, 
in the case of partial termination, the portion to be terminated. 
However, if DOE determines in the case of partial termination that the 
reduced or modified portion of the award will not accomplish the 
purposes for which the award was made, it may terminate the award in its 
entirety under either paragraph (a) (1) or (2) of this section.
    (b) If costs are allowed under an award, the responsibilities of the 
recipient referred to in Sec. 600.171(a), including those for property 
management as applicable, shall be considered in the termination of the 
award, and provision shall be made for continuing responsibilities of 
the recipient after termination, as appropriate.



Sec. 600.162  Enforcement.

    (a) Remedies for noncompliance. If a recipient materially fails to 
comply with the terms and conditions of an award, whether stated in a 
Federal statute, regulation, assurance, application, or notice of award, 
DOE may, in addition to imposing any of the special conditions outlined 
in Sec. 600.114, take one or more of the following actions, as 
appropriate in the circumstances.
    (1) Temporarily withhold cash payments pending correction of the 
deficiency by the recipient or more severe enforcement action by DOE.
    (2) Disallow (that is, deny both use of funds and any applicable 
matching credit for) all or part of the cost of the activity or action 
not in compliance.
    (3) Wholly or partly suspend or terminate the current award.
    (4) Withhold further awards for the project or program.
    (5) Take other remedies that may be legally available.
    (b) Hearings and appeals. In taking an enforcement action, DOE shall 
provide the recipient an opportunity for hearing, appeal, or other 
administrative proceeding to which the recipient is entitled under any 
statute or regulation applicable to the action involved.
    (c) Effects of suspension and termination. Costs of a recipient 
resulting from obligations incurred by the recipient during a suspension 
or after termination of an award are not allowable unless the awarding 
agency expressly authorizes them in the notice of suspension or 
termination or subsequently. Other recipient costs during

[[Page 124]]

suspension or after termination which are necessary and not reasonably 
avoidable are allowable if paragraph (c) (1) and (2) of this section 
apply.
    (1) The costs result from obligations which were properly incurred 
by the recipient before the effective date of suspension or termination, 
are not in anticipation of it, and in the case of a termination, are 
noncancellable.
    (2) The costs would be allowable if the award were not suspended or 
expired normally at the end of the funding period in which the 
termination takes effect.
    (d) Relationship to debarment and suspension. The enforcement 
remedies identified in this section, including suspension and 
termination, do not preclude a recipient from being subject to debarment 
and suspension under 10 CFR part 1036.

                      After-the-Award Requirements



Sec. 600.170  Purpose.

    Sections 600.171 through 600.173 contain closeout procedures and 
other procedures for subsequent disallowances and adjustments.



Sec. 600.171  Closeout procedures.

    (a) Recipients shall submit, within 90 calendar days after the date 
of completion of the award, all financial, performance, and other 
reports as required by the terms and conditions of the award. DOE may 
approve extensions when requested by the recipient.
    (b) Unless DOE authorizes an extension, a recipient shall liquidate 
all obligations incurred under the award not later than 90 calendar days 
after the funding period or the date of completion as specified in the 
terms and conditions of the award or in agency implementing 
instructions.
    (c) DOE shall make prompt payments to a recipient for allowable 
reimbursable costs under the award being closed out.
    (d) The recipient shall promptly refund any balances of unobligated 
cash that DOE has advanced or paid and that is not authorized to be 
retained by the recipient for use in other projects. OMB Circular A-129 
governs unreturned amounts that become delinquent debts.
    (e) When authorized by the terms and conditions of the award, DOE 
shall make a settlement for any upward or downward adjustments to the 
Federal share of costs after closeout reports are received.
    (f) The recipient shall account for any real and personal property 
acquired with Federal funds or received from the Federal Government in 
accordance with Secs. 600.131 through 600.137.
    (g) In the event a final audit has not been performed prior to the 
closeout of an award, DOE shall retain the right to recover an 
appropriate amount after fully considering the recommendations on 
disallowed costs resulting from the final audit.



Sec. 600.172  Subsequent adjustments and continuing responsibilities.

    (a) The closeout of an award does not affect any of the following.
    (1) The right of DOE to disallow costs and recover funds on the 
basis of a later audit or other review.
    (2) The obligation of the recipient to return any funds due as a 
result of later refunds, corrections, or other transactions.
    (3) Audit requirements in Sec. 600.126.
    (4) Property management requirements in Secs. 600.131 through 
600.137.
    (5) Records retention as required in Sec. 600.153.
    (b) After closeout of an award, a relationship created under an 
award may be modified or ended in whole or in part with the consent of 
DOE and the recipient, provided the responsibilities of the recipient 
referred to in paragraph 600.173(a), including those for property 
management as applicable, are considered and provisions made for 
continuing responsibilities of the recipient, as appropriate.



Sec. 600.173  Collection of amounts due.

    (a) Any funds paid to a recipient in excess of the amount to which 
the recipient is finally determined to be entitled under the terms and 
conditions of the award constitute a debt to the Federal Government. If 
not paid within a reasonable period after the demand for payment, DOE 
may reduce the debt by paragraph (a) (1), (2) or (3) of this section.

[[Page 125]]

    (1) Making an administrative offset against other requests for 
reimbursements.
    (2) Withholding advance payments otherwise due to the recipient.
    (3) Taking other action permitted by statute.
    (b) Except as otherwise provided by law, DOE shall charge interest 
on an overdue debt in accordance with 4 CFR Chapter II, ``Federal Claims 
Collection Standards.''

                          Additional Provisions



Sec. 600.180  Purpose.

    The purpose of ``Additional Provisions'' is to provide additional 
rules for certain types of recipients which are otherwise covered by 10 
CFR part 600, subpart B when they are performing under Small Business 
Innovation Research grants.



Sec. 600.181  Special provisions for Small Business Innovation Research Grants.

    (a) General. This section contains provisions applicable to the 
Small Business Innovation Research (SBIR) Program. This codifies six 
class deviations pertaining to the SBIR program.
    (b) Provisions Applicable to Phase I SBIR Awards. Phase I SBIR 
awards may be made on a fixed obligation basis, subject to the following 
requirements:
    (1) While proposed costs must be analyzed in detail to ensure 
consistency with applicable cost principles, incurred costs are not 
subject to regulation by the standards of cost allowability;
    (2) Although detailed budgets are submitted by a recipient and 
reviewed by DOE for purposes of establishing the amount to be awarded, 
budget categories are not stipulated in making an award;
    (3) Prior approval from the DOE for rebudgeting among categories by 
the recipient is not required. Prior approval from DOE is required for 
situations involving sole source or single bid procurements as provided 
in Sec. 600.181(d)(2). Prior approval from DOE is also required for any 
variation from the requirement under the SBIR program that no more than 
one-third of Phase I work can be done by sub-contractors or consortium 
partners;
    (4) Pre-award expenditure approval is not required;
    (5) Payments are to be made in the same manner as other financial 
assistance (see Sec. 600.122), except that, when determined appropriate 
by the cognizant program official and contracting officer, a lump sum 
payment may be made. If a lump sum payment is made, the award must be 
conditioned to require the recipient to return to DOE amounts remaining 
unexpended at the end of the project if those amounts exceed $500;
    (6) Recipients will certify in writing to the Contracting Officer at 
the end of the project that the activity was completed or the level of 
effort was expended. Should the activity or effort not be carried out, 
the recipient would be expected to make appropriate reimbursements;
    (7) Requirements for periodic reports may be established for each 
award so long as they are consistent with Sec. 600.151;
    (8) Changes in principal investigator or project leader, scope of 
effort, or institution, require the prior approval of DOE.
    (c) Provision Applicable to Phase II SBIR Awards. Phase II SBIR 
awards may be made for a single budget period of 24 months.
    (d) Provisions Applicable to Phase I and Phase II SBIR Awards.
    (1) The prior approval of the cognizant DOE Contracting Officer is 
required before the final budget period of the project period may be 
extended without additional funds.
    (2) A recipient or subrecipient must receive the prior written 
approval of the awarding party before entering into any sole source 
contract or a contract where only one bid or proposal is received when 
the value of the contract is expected to exceed $25,000 in the 
aggregate.
    (3) A fee or profit may be paid to SBIR recipients.

        Appendix A to Subpart B to Part 600--Contract Provisions

    All contracts, awarded by a recipient including small purchases, 
shall contain the following provisions as applicable:

[[Page 126]]

    1. Equal Employment Opportunity--All contracts shall contain a 
provision requiring compliance with E.O. 11246, ``Equal Employment 
Opportunity,'' as amended by E.O. 11375, ``Amending Executive Order 
11246 Relating to Equal Employment Opportunity,'' and as supplemented by 
regulations at 41 CFR part 60, ``Office of Federal Contract Compliance 
Programs, Equal Employment Opportunity, Department of Labor.''
    2. Copeland ``Anti-Kickback'' Act (18 U.S.C. 874 and 40 U.S.C. 
276c)--All contracts and subgrants in excess of $2000 for construction 
or repair awarded by recipients and subrecipients shall include a 
provision for compliance with the Copeland ``Anti-Kickback'' Act (18 
U.S.C. 874), as supplemented by Department of Labor regulations (29 CFR 
part 3, ``Contractors and Subcontractors on Public Building or Public 
Work Financed in Whole or in part by Loans or Grants from the United 
States''). The Act provides that each contractor or subrecipient shall 
be prohibited from inducing, by any means, any person employed in the 
construction, completion, or repair of public work, to give up any part 
of the compensation to which he is otherwise entitled. The recipient 
shall report all suspected or reported violations to the Federal 
awarding agency.
    3. Davis-Bacon Act, as amended (40 U.S.C. 276a to a-7)--When 
required by Federal program legislation, all construction contracts 
awarded by the recipients and subrecipients of more than $2000 shall 
include a provision for compliance with the Davis-Bacon Act (40 U.S.C. 
276a to a-7) and as supplemented by Department of Labor regulations (29 
CFR part 5, ``Labor Standards Provisions Applicable to Contracts 
Governing Federally Financed and Assisted Construction''). Under this 
Act, contractors shall be required to pay wages to laborers and 
mechanics at a rate not less than the minimum wages specified in a wage 
determination made by the Secretary of Labor. In addition, contractors 
shall be required to pay wages not less than once a week. The recipient 
shall place a copy of the current prevailing wage determination issued 
by the Department of Labor in each solicitation and the award of a 
contract shall be conditioned upon the acceptance of the wage 
determination. The recipient shall report all suspected or reported 
violations to the Federal awarding agency.
    4. Contract Work Hours and Safety Standards Act (40 U.S.C. 327-
333)--Where applicable, all contracts awarded by recipients in excess of 
$2000 for construction contracts and in excess of $2500 for other 
contracts that involve the employment of mechanics or laborers shall 
include a provision for compliance with sections 102 and 107 of the 
Contract Work Hours and Safety Standards Act (40 U.S.C. 327-333), as 
supplemented by Department of Labor regulations (29 CFR part 5). Under 
section 102 of the Act, each contractor shall be required to compute the 
wages of every mechanic and laborer on the basis of a standard work week 
of 40 hours. Work in excess of the standard work week is permissible 
provided that the worker is compensated at a rate of not less than 1\1/
2\ times the basic rate of pay for all hours worked in excess of 40 
hours in the work week. Section 107 of the Act is applicable to 
construction work and provides that no laborer or mechanic shall be 
required to work in surroundings or under working conditions which are 
unsanitary, hazardous or dangerous. These requirements do not apply to 
the purchases of supplies or materials or articles ordinarily available 
on the open market, or contracts for transportation or transmission of 
intelligence.
    5. Rights to Inventions Made Under a Contract or Agreement--
Contracts or agreements for the performance of experimental, 
developmental, or research work shall provide for the rights of the 
Federal Government and the recipient in any resulting invention in 
accordance with 37 CFR part 401, ``Rights to Inventions Made by 
Nonprofit Organizations and Small Business Firms Under Government 
Grants, Contracts and Cooperative Agreements,'' and any implementing 
regulations issued by the awarding agency.
    6. Clean Air Act (42 U.S.C. 7401 et seq.) and the Federal Water 
Pollution Control Act (33 U.S.C. 1251 et seq.), as amended--Contracts 
and subgrants of amounts in excess of $100,000 shall contain a provision 
that requires the recipient to agree to comply with all applicable 
standards, orders or regulations issued pursuant to the Clean Air Act 
(42 U.S.C. 7401 et seq.) and the Federal Water Pollution Control Act as 
amended (33 U.S.C. 1251 et seq.). Violations shall be reported to the 
Federal awarding agency and the Regional Office of the Environmental 
Protection Agency (EPA).
    7. Byrd Anti-Lobbying Amendment (31 U.S.C. 1352)-- Contractors who 
apply or bid for an award of $100,000 or more shall file the required 
certification. Each tier certifies to the tier above that it will not 
and has not used Federal appropriated funds to pay any person or 
organization for influencing or attempting to influence an officer or 
employee of any agency, a member of Congress, officer or employee of 
Congress, or an employee of a member of Congress in connection with 
obtaining any Federal contract, grant or any other award covered by 31 
U.S.C. 1352. Each tier shall also disclose any lobbying with non-Federal 
funds that takes place in connection with obtaining any Federal award. 
Such disclosures are forwarded from tier to tier up to the recipient.
    8. Debarment and Suspension (E.O.s 12549 and 12689)-- Contract 
awards that exceed the small purchase threshold and certain other 
contract awards shall not be made to parties listed on the 
nonprocurement portion of the General Services Administration's List of

[[Page 127]]

parties Excluded from Federal Procurement or Nonprocurement Programs in 
accordance with E.O.s 12549 and 12689, ``Debarment and Suspension.'' 
This list contains the names of parties debarred, suspended, or 
otherwise excluded by agencies, and contractors declared ineligible 
under statutory or regulatory authority other than E.O. 12549. 
Contractors with awards that exceed the small purchase threshold shall 
provide the required certification regarding its exclusion status and 
that of its principals.



     Subpart C--Uniform Administrative Requirements for Grants and 
          Cooperative Agreements to State and Local Governments

    Source: 53 FR 8045, 8087, Mar. 11, 1988, unless otherwise noted. 
Redesignated at 59 FR 53264, Oct. 21, 1994.

    Editorial Note: For additional information, see related documents 
published at 49 FR 24958, June 18, 1984, 52 FR 20178, May 29, 1987, and 
53 FR 8028, Mar. 11, 1988.

                                 General



Sec. 600.200  Purpose and scope of this subpart.

    This subpart establishes uniform administrative rules for Federal 
grants and cooperative agreements and subawards to State, local and 
Indian tribal governments.



Sec. 600.201  Scope of Secs. 600.200 through 600.205.

    This section contains general rules pertaining to this part and 
procedures for control of exceptions from this subpart.



Sec. 600.202  Definitions.

    As used in this part:
    Accrued expenditures mean the charges incurred by the grantee during 
a given period requiring the provision of funds for: (1) Goods and other 
tangible property received; (2) services performed by employees, 
contractors, subgrantees, subcontractors, and other payees; and (3) 
other amounts becoming owed under programs for which no current services 
or performance is required, such as annuities, insurance claims, and 
other benefit payments.
    Accrued income means the sum of: (1) Earnings during a given period 
from services performed by the grantee and goods and other tangible 
property delivered to purchasers, and (2) amounts becoming owed to the 
grantee for which no current services or performance is required by the 
grantee.
    Acquisition cost of an item of purchased equipment means the net 
invoice unit price of the property including the cost of modifications, 
attachments, accessories, or auxiliary apparatus necessary to make the 
property usable for the purpose for which it was acquired. Other charges 
such as the cost of installation, transportation, taxes, duty or 
protective in-transit insurance, shall be included or excluded from the 
unit acquisition cost in accordance with the grantee's regular 
accounting practices.
    Administrative requirements mean those matters common to grants in 
general, such as financial management, kinds and frequency of reports, 
and retention of records. These are distinguished from programmatic 
requirements, which concern matters that can be treated only on a 
program-by-program or grant-by-grant basis, such as kinds of activities 
that can be supported by grants under a particular program.
    Awarding agency means (1) with respect to a grant, the Federal 
agency, and (2) with respect to a subgrant, the party that awarded the 
subgrant.
    Cash contributions means the grantee's cash outlay, including the 
outlay of money contributed to the grantee or subgrantee by other public 
agencies and institutions, and private organizations and individuals. 
When authorized by Federal legislation, Federal funds received from 
other assistance agreements may be considered as grantee or subgrantee 
cash contributions.
    Contract means (except as used in the definitions for grant and 
subgrant in this section and except where qualified by Federal) a 
procurement contract under a grant or subgrant, and means a procurement 
subcontract under a contract.
    Cost sharing or matching means the value of the third party in-kind 
contributions and the portion of the costs of a federally assisted 
project or program not borne by the Federal Government.

[[Page 128]]

    Cost-type contract means a contract or subcontract under a grant in 
which the contractor or subcontractor is paid on the basis of the costs 
it incurs, with or without a fee.
    Equipment means tangible, nonexpendable, personal property having a 
useful life of more than one year and an acquisition cost of $5,000 or 
more per unit. A grantee may use its own definition of equipment 
provided that such definition would at least include all equipment 
defined above.
    Expenditure report means: (1) For nonconstruction grants, the SF-269 
``Financial Status Report'' (or other equivalent report); (2) for 
construction grants, the SF-271 ``Outlay Report and Request for 
Reimbursement'' (or other equivalent report).
    Federally recognized Indian tribal government means the governing 
body or a governmental agency of any Indian tribe, band, nation, or 
other organized group or community (including any Native village as 
defined in section 3 of the Alaska Native Claims Settlement Act, 85 Stat 
688) certified by the Secretary of the Interior as eligible for the 
special programs and services provided by him through the Bureau of 
Indian Affairs.
    Government means a State or local government or a federally 
recognized Indian tribal government.
    Grant means an award of financial assistance, including cooperative 
agreements, in the form of money, or property in lieu of money, by the 
Federal Government to an eligible grantee. The term does not include 
technical assistance which provides services instead of money, or other 
assistance in the form of revenue sharing, loans, loan guarantees, 
interest subsidies, insurance, or direct appropriations. Also, the term 
does not include assistance, such as a fellowship or other lump sum 
award, which the grantee is not required to account for.
    Grantee means the government to which a grant is awarded and which 
is accountable for the use of the funds provided. The grantee is the 
entire legal entity even if only a particular component of the entity is 
designated in the grant award document.
    Local government means a county, municipality, city, town, township, 
local public authority (including any public and Indian housing agency 
under the United States Housing Act of 1937) school district, special 
district, intrastate district, council of governments (whether or not 
incorporated as a nonprofit corporation under state law), any other 
regional or interstate government entity, or any agency or 
instrumentality of a local government.
    Obligations means the amounts of orders placed, contracts and 
subgrants awarded, goods and services received, and similar transactions 
during a given period that will require payment by the grantee during 
the same or a future period.
    OMB means the United States Office of Management and Budget.
    Outlays (expenditures) mean charges made to the project or program. 
They may be reported on a cash or accrual basis. For reports prepared on 
a cash basis, outlays are the sum of actual cash disbursement for direct 
charges for goods and services, the amount of indirect expense incurred, 
the value of in-kind contributions applied, and the amount of cash 
advances and payments made to contractors and subgrantees. For reports 
prepared on an accrued expenditure basis, outlays are the sum of actual 
cash disbursements, the amount of indirect expense incurred, the value 
of inkind contributions applied, and the new increase (or decrease) in 
the amounts owed by the grantee for goods and other property received, 
for services performed by employees, contractors, subgrantees, 
subcontractors, and other payees, and other amounts becoming owed under 
programs for which no current services or performance are required, such 
as annuities, insurance claims, and other benefit payments.
    Percentage of completion method refers to a system under which 
payments are made for construction work according to the percentage of 
completion of the work, rather than to the grantee's cost incurred.
    Prior approval means documentation evidencing consent prior to 
incurring specific cost. For the Department of Energy, this must be 
signed by a Contracting Officer.

[[Page 129]]

    Real property means land, including land improvements, structures 
and appurtenances thereto, excluding movable machinery and equipment.
    Share, when referring to the awarding agency's portion of real 
property, equipment or supplies, means the same percentage as the 
awarding agency's portion of the acquiring party's total costs under the 
grant to which the acquisition costs under the grant to which the 
acquisition cost of the property was charged. Only costs are to be 
counted--not the value of third-party in-kind contributions.
    State means any of the several States of the United States, the 
District of Columbia, the Commonwealth of Puerto Rico, any territory or 
possession of the United States, or any agency or instrumentality of a 
State exclusive of local governments. The term does not include any 
public and Indian housing agency under United States Housing Act of 
1937.
    Subgrant means an award of financial assistance in the form of 
money, or property in lieu of money, made under a grant by a grantee to 
an eligible subgrantee. The term includes financial assistance when 
provided by contractual legal agreement, but does not include 
procurement purchases, nor does it include any form of assistance which 
is excluded from the definition of grant in this subpart.
    Subgrantee means the government or other legal entity to which a 
subgrant is awarded and which is accountable to the grantee for the use 
of the funds provided.
    Supplies means all tangible personal property other than 
``equipment'' as defined in this subpart.
    Suspension means depending on the context, either (1) temporary 
withdrawal of the authority to obligate grant funds pending corrective 
action by the grantee or subgrantee or a decision to terminate the 
grant, or (2) an action taken by a suspending official in accordance 
with agency regulations implementing E.O. 12549 to immediately exclude a 
person from participating in grant transactions for a period, pending 
completion of an investigation and such legal or debarment proceedings 
as may ensue.
    Termination means permanent withdrawal of the authority to obligate 
previously-awarded grant funds before that authority would otherwise 
expire. It also means the voluntary relinquishment of that authority by 
the grantee or subgrantee. Termination does not include: (1) Withdrawal 
of funds awarded on the basis of the grantee's underestimate of the 
unobligated balance in a prior period; (2) withdrawal of the unobligated 
balance as of the expiration of a grant; (3) refusal to extend a grant 
or award additional funds, to make a competing or noncompeting 
continuation, renewal, extension, or supplemental award; or (4) voiding 
of a grant upon determination that the award was obtained fraudulently, 
or was otherwise illegal or invalid from inception.
    Terms of a grant or subgrant mean all requirements of the grant or 
subgrant, whether in statute, regulations, or the award document.
    Third party in-kind contributions mean property or services which 
benefit a federally assisted project or program and which are 
contributed by non-Federal third parties without charge to the grantee, 
or a cost-type contractor under the grant agreement.
    Unliquidated obligations for reports prepared on a cash basis mean 
the amount of obligations incurred by the grantee that has not been 
paid. For reports prepared on an accrued expenditure basis, they 
represent the amount of obligations incurred by the grantee for which an 
outlay has not been recorded.
    Unobligated balance means the portion of the funds authorized by the 
Federal agency that has not been obligated by the grantee and is 
determined by deducting the cumulative obligations from the cumulative 
funds authorized.

[53 FR 8087, Mar. 11, 1988, as amended at 53 FR 8047, Mar. 11, 1988; 54 
FR 23960, June 5, 1989]



Sec. 600.203  Applicability.

    (a) General. Sections 600.400 through 600.452 of this subpart apply 
to all grants and subgrants to governments, except where inconsistent 
with Federal statutes or with regulations authorized in accordance with 
the exception provision of Sec. 600.405, or:

[[Page 130]]

    (1) Grants and subgrants to State and local institutions of higher 
education or State and local hospitals.
    (2) The block grants authorized by the Omnibus Budget Reconciliation 
Act of 1981 (Community Services; Preventive Health and Health Services; 
Alcohol, Drug Abuse, and Mental Health Services; Maternal and Child 
Health Services; Social Services; Low-Income Home Energy Assistance; 
States' Program of Community Development Block Grants for Small Cities; 
and Elementary and Secondary Education other than programs administered 
by the Secretary of Education under Title V, Subtitle D, Chapter 2, 
Section 583--the Secretary's discretionary grant program) and Titles I-
III of the Job Training Partnership Act of 1982 and under the Public 
Health Services Act (Section 1921), Alcohol and Drug Abuse Treatment and 
Rehabilitation Block Grant and part C of Title V, Mental Health Service 
for the Homeless Block Grant).
    (3) Entitlement grants to carry out the following programs of the 
Social Security Act:
    (i) Aid to Needy Families with Dependent Children (Title IV-A of the 
Act, not including the Work Incentive Program (WIN) authorized by 
section 402(a)19(G); HHS grants for WIN are subject to this subpart);
    (ii) Child Support Enforcement and Establishment of Paternity (Title 
IV-D of the Act);
    (iii) Foster Care and Adoption Assistance (Title IV-E of the Act);
    (iv) Aid to the Aged, Blind, and Disabled (Titles I, X, XIV, and 
XVI-AABD of the Act); and
    (v) Medical Assistance (Medicaid) (Title XIX of the Act) not 
including the State Medicaid Fraud Control program authorized by section 
1903(a)(6)(B).
    (4) Entitlement grants under the following programs of The National 
School Lunch Act:
    (i) School Lunch (section 4 of the Act),
    (ii) Commodity Assistance (section 6 of the Act),
    (iii) Special Meal Assistance (section 11 of the Act),
    (iv) Summer Food Service for Children (section 13 of the Act), and
    (v) Child Care Food Program (section 17 of the Act).
    (5) Entitlement grants under the following programs of The Child 
Nutrition Act of 1966:
    (i) Special Milk (section 3 of the Act), and
    (ii) School Breakfast (section 4 of the Act).
    (6) Entitlement grants for State Administrative expenses under The 
Food Stamp Act of 1977 (section 16 of the Act).
    (7) A grant for an experimental, pilot, or demonstration project 
that is also supported by a grant listed in paragraph (a)(3) of this 
section;
    (8) Grant funds awarded under subsection 412(e) of the Immigration 
and Nationality Act (8 U.S.C. 1522(e)) and subsection 501(a) of the 
Refugee Education Assistance Act of 1980 (Pub. L. 96-422, 94 Stat. 
1809), for cash assistance, medical assistance, and supplemental 
security income benefits to refugees and entrants and the administrative 
costs of providing the assistance and benefits;
    (9) Grants to local education agencies under 20 U.S.C. 236 through 
241-1(a), and 242 through 244 (portions of the Impact Aid program), 
except for 20 U.S.C. 238(d)(2)(c) and 240(f) (Entitlement Increase for 
Handicapped Children); and
    (10) Payments under the Veterans Administration's State Home Per 
Diem Program (38 U.S.C. 641(a)).
    (b) Entitlement programs. Entitlement programs enumerated above in 
Sec. 600.403(a) (3) through (8) are subject to subpart E.

[53 FR 8045, 8087, Mar. 11, 1988, as amended at 54 FR 23960, June 5, 
1989]



Sec. 600.204  Effect on other issuances.

    All other grants administration provisions of codified program 
regulations, program manuals, handbooks and other nonregulatory 
materials which are inconsistent with this subpart are superseded, 
except to the extent they are required by statute, or authorized in 
accordance with the exception provision in Sec. 600.205.

[53 FR 8045, 8087, Mar. 11, 1988. Redesignated at 59 FR 53264, Oct. 21, 
1994, as amended at 61 FR 7165, Feb. 26, 1996]

[[Page 131]]



Sec. 600.205  Additions and exceptions.

    (a) For classes of grants and grantees subject to this subpart, 
Federal agencies may not impose additional administrative requirements 
except in codified regulations published in the Federal Register.
    (b) Exceptions for classes of grants or grantees may be authorized 
only by OMB.
    (c) Exceptions on a case-by-case basis and for subgrantees may be 
authorized by the affected Federal agencies.
    (d) The DOE procedural requirements for requesting additions and 
exceptions are specified in Sec. 600.4.

[53 FR 8087, Mar. 11, 1988, as amended at 53 FR 8047, Mar. 11, 1988]

                         Pre-Award Requirements



Sec. 600.210  Forms for applying for grants.

    (a) Scope. (1) This section prescribes forms and instructions to be 
used by governmental organizations (except hospitals and institutions of 
higher education operated by a government) in applying for grants. This 
section is not applicable, however, to formula grant programs which do 
not require applicants to apply for funds on a project basis.
    (2) This section applies only to applications to Federal agencies 
for grants, and is not required to be applied by grantees in dealing 
with applicants for subgrants. However, grantees are encouraged to avoid 
more detailed or burdensome application requirements for subgrants.
    (b) Authorized forms and instructions for governmental 
organizations. (1) In applying for grants, applicants shall only use 
standard application forms or those prescribed by the granting agency 
with the approval of OMB under the Paperwork Reduction Act of 1980.
    (2) Applicants are not required to submit more than the original and 
two copies of preapplications or applications.
    (3) Applicants must follow all applicable instructions that bear OMB 
clearance numbers. Federal agencies may specify and describe the 
programs, functions, or activities that will be used to plan, budget, 
and evaluate the work under a grant. Other supplementary instructions 
may be issued only with the approval of OMB to the extent required under 
the Paperwork Reduction Act of 1980. For any standard form, except the 
SF-424 facesheet, Federal agencies may shade out or instruct the 
applicant to disregard any line item that is not needed.
    (4) When a grantee applies for additional funding (such as a 
continuation or supplemental award) or amends a previously submitted 
application, only the affected pages need be submitted. Previously 
submitted pages with information that is still current need not be 
resubmitted.



Sec. 600.211  State plans.

    (a) Scope. The statutes for some programs require States to submit 
plans before receiving grants. Under regulations implementing Executive 
Order 12372, ``Intergovernmental Review of Federal Programs,'' States 
are allowed to simplify, consolidate and substitute plans. This section 
contains additional provisions for plans that are subject to regulations 
implementing the Executive order.
    (b) Requirements. A State need meet only Federal administrative or 
programmatic requirements for a plan that are in statutes or codified 
regulations.
    (c) Assurances. In each plan the State will include an assurance 
that the State shall comply with all applicable Federal statutes and 
regulations in effect with respect to the periods for which it receives 
grant funding. For this assurance and other assurances required in the 
plan, the State may:
    (1) Cite by number the statutory or regulatory provisions requiring 
the assurances and affirm that it gives the assurances required by those 
provisions,
    (2) Repeat the assurance language in the statutes or regulations, or
    (3) Develop its own language to the extent permitted by law.
    (d) Amendments. A State will amend a plan whenever necessary to 
reflect: (1) New or revised Federal statutes or regulations or (2) a 
material change in any State law, organization, policy, or State agency 
operation. The State will obtain approval for the amendment and its 
effective date but need submit for

[[Page 132]]

approval only the amended portions of the plan.



Sec. 600.212  Special grant or subgrant conditions for ``high-risk'' recipients.

    (a) A grantee or subgrantee may be considered ``high risk'' if an 
awarding agency determines that a grantee or subgrantee:
    (1) Has a history of unsatisfactory performance, or
    (2) Is not financially stable, or
    (3) Has a management system which does not meet the management 
standards set forth in this subpart, or
    (4) Has not conformed to terms and conditions of previous awards, or
    (5) Is otherwise not responsible; and if the awarding agency 
determines that an award will be made, special conditions and/or 
restrictions shall correspond to the high risk condition and shall be 
included in the award.
    (b) Special conditions or restrictions may include:
    (1) Payment on a reimbursement basis;
    (2) Withholding authority to proceed to the next phase until receipt 
of evidence of acceptable performance within a given funding period;
    (3) Requiring additional, more detailed financial reports;
    (4) Additional project monitoring;
    (5) Requiring the grantee or subgrantee to obtain technical or 
management assistance; or
    (6) Establishing additional prior approvals.
    (c) If an awarding agency decides to impose such conditions, the 
awarding official will notify the grantee or subgrantee as early as 
possible, in writing, of:
    (1) The nature of the special conditions/restrictions;
    (2) The reason(s) for imposing them;
    (3) The corrective actions which must be taken before they will be 
removed and the time allowed for completing the corrective actions and
    (4) The method of requesting reconsideration of the conditions/
restrictions imposed.

[53 FR 8045, 8087, Mar. 11, 1988, as amended at 59 FR 53265, Oct. 21, 
1994]

                         Post-Award Requirements

                        Financial Administration



Sec. 600.220  Standards for financial management systems.

    (a) A State must expend and account for grant funds in accordance 
with State laws and procedures for expending and accounting for its own 
funds. Fiscal control and accounting procedures of the State, as well as 
its subgrantees and cost-type contractors, must be sufficient to--
    (1) Permit preparation of reports required by this part and the 
statutes authorizing the grant, and
    (2) Permit the tracing of funds to a level of expenditures adequate 
to establish that such funds have not been used in violation of the 
restrictions and prohibitions of applicable statutes.
    (b) The financial management systems of other grantees and 
subgrantees must meet the following standards:
    (1) Financial reporting. Accurate, current, and complete disclosure 
of the financial results of financially assisted activities must be made 
in accordance with the financial reporting requirements of the grant or 
subgrant.
    (2) Accounting records. Grantees and subgrantees must maintain 
records which adequately identify the source and application of funds 
provided for financially-assisted activities. These records must contain 
information pertaining to grant or subgrant awards and authorizations, 
obligations, unobligated balances, assets, liabilities, outlays or 
expenditures, and income.
    (3) Internal control. Effective control and accountability must be 
maintained for all grant and subgrant cash, real and personal property, 
and other assets. Grantees and subgrantees must adequately safeguard all 
such property and must assure that it is used solely for authorized 
purposes.

[[Page 133]]

    (4) Budget control. Actual expenditures or outlays must be compared 
with budgeted amounts for each grant or subgrant. Financial information 
must be related to performance or productivity data, including the 
development of unit cost information whenever appropriate or 
specifically required in the grant or subgrant agreement. If unit cost 
data are required, estimates based on available documentation will be 
accepted whenever possible.
    (5) Allowable cost. Applicable OMB cost principles, agency program 
regulations, and the terms of grant and subgrant agreements will be 
followed in determining the reasonableness, allowability, and 
allocability of costs.
    (6) Source documentation. Accounting records must be supported by 
such source documentation as cancelled checks, paid bills, payrolls, 
time and attendance records, contract and subgrant award documents, etc.
    (7) Cash management. Procedures for minimizing the time elapsing 
between the transfer of funds from the U.S. Treasury and disbursement by 
grantees and subgrantees must be followed whenever advance payment 
procedures are used. Grantees must establish reasonable procedures to 
ensure the receipt of reports on subgrantees' cash balances and cash 
disbursements in sufficient time to enable them to prepare complete and 
accurate cash transactions reports to the awarding agency. When advances 
are made by letter-of-credit or electronic transfer of funds methods, 
the grantee must make drawdowns as close as possible to the time of 
making disbursements. Grantees must monitor cash drawdowns by their 
subgrantees to assure that they conform substantially to the same 
standards of timing and amount as apply to advances to the grantees.
    (c) An awarding agency may review the adequacy of the financial 
management system of any applicant for financial assistance as part of a 
preaward review or at any time subsequent to award.

[53 FR 8045, 8087, Mar. 11, 1988, as amended at 57 FR 5, Jan. 2, 1992]



Sec. 600.221  Payment.

    (a) Scope. This section prescribes the basic standard and the 
methods under which a Federal agency will make payments to grantees, and 
grantees will make payments to subgrantees and contractors.
    (b) Basic standard. Methods and procedures for payment shall 
minimize the time elapsing between the transfer of funds and 
disbursement by the grantee or subgrantee, in accordance with Treasury 
regulations at 31 CFR part 205.
    (c) Advances. Grantees and subgrantees shall be paid in advance, 
provided they maintain or demonstrate the willingness and ability to 
maintain procedures to minimize the time elapsing between the transfer 
of the funds and their disbursement by the grantee or subgrantee.
    (d) Reimbursement. Reimbursement shall be the preferred method when 
the requirements in paragraph (c) of this section are not met. Grantees 
and subgrantees may also be paid by reimbursement for any construction 
grant. Except as otherwise specified in regulation, Federal agencies 
shall not use the percentage of completion method to pay construction 
grants. The grantee or subgrantee may use that method to pay its 
construction contractor, and if it does, the awarding agency's payments 
to the grantee or subgrantee will be based on the grantee's or 
subgrantee's actual rate of disbursement.
    (e) Working capital advances. If a grantee cannot meet the criteria 
for advance payments described in paragraph (c) of this section, and the 
Federal agency has determined that reimbursement is not feasible because 
the grantee lacks sufficient working capital, the awarding agency may 
provide cash or a working capital advance basis. Under this procedure 
the awarding agency shall advance cash to the grantee to cover its 
estimated disbursement needs for an initial period generally geared to 
the grantee's disbursing cycle. Thereafter, the awarding agency shall 
reimburse the grantee for its actual cash disbursements. The working 
capital advance method of payment shall not be used by grantees or 
subgrantees if the reason for using

[[Page 134]]

such method is the unwillingness or inability of the grantee to provide 
timely advances to the subgrantee to meet the subgrantee's actual cash 
disbursements.
    (f) Effect of program income, refunds, and audit recoveries on 
payment. (1) Grantees and subgrantees shall disburse repayments to and 
interest earned on a revolving fund before requesting additional cash 
payments for the same activity.
    (2) Except as provided in paragraph (f)(1) of this section, grantees 
and subgrantees shall disburse program income, rebates, refunds, 
contract settlements, audit recoveries and interest earned on such funds 
before requesting additional cash payments.
    (g) Withholding payments. (1) Unless otherwise required by Federal 
statute, awarding agencies shall not withhold payments for proper 
charges incurred by grantees or subgrantees unless--
    (i) The grantee or subgrantee has failed to comply with grant award 
conditions or
    (ii) The grantee or subgrantee is indebted to the United States.
    (2) Cash withheld for failure to comply with grant award condition, 
but without suspension of the grant, shall be released to the grantee 
upon subsequent compliance. When a grant is suspended, payment 
adjustments will be made in accordance with Sec. 600.243(c).
    (3) A Federal agency shall not make payment to grantees for amounts 
that are withheld by grantees or subgrantees from payment to contractors 
to assure satisfactory completion of work. Payments shall be made by the 
Federal agency when the grantees or subgrantees actually disburse the 
withheld funds to the contractors or to escrow accounts established to 
assure satisfactory completion of work.
    (h) Cash depositories. (1) Consistent with the national goal of 
expanding the opportunities for minority business enterprises, grantees 
and subgrantees are encouraged to use minority banks (a bank which is 
owned at least 50 percent by minority group members). A list of minority 
owned banks can be obtained from the Minority Business Development 
Agency, Department of Commerce, Washington, DC 20230.
    (2) A grantee or subgrantee shall maintain a separate bank account 
only when required by Federal-State agreement.
    (i) Interest earned on advances. Unless there are statutory 
provisions to the contrary, grantees and subgrantees shall promptly, but 
at least quarterly, remit to the Federal agency interest earned on 
advances. The grantee or subgrantee may keep interest amounts up to $100 
per year for administrative expenses.

[53 FR 8045, 8087, Mar. 11, 1988, as amended at 57 FR 5, Jan. 2, 1992; 
61 FR 7165, Feb. 26, 1996]



Sec. 600.222  Allowable costs.

    (a) Limitation on use of funds. Grant funds may be used only for:
    (1) The allowable costs of the grantees, subgrantees and cost-type 
contractors, including allowable costs in the form of payments to fixed-
price contractors; and
    (2) Reasonable fees or profit to cost-type contractors but not any 
fee or profit (or other increment above allowable costs) to the grantee 
or subgrantee.
    (b) Applicable cost principles. For each kind of organization, there 
is a set of Federal principles for determining allowable costs. 
Allowable costs will be determined in accordance with the cost 
principles applicable to the organization incurring the costs. The 
following chart lists the kinds of organizations and the applicable cost 
principles.

------------------------------------------------------------------------
           For the costs of a--                Use the principles in--
------------------------------------------------------------------------
State, local or Indian tribal government..  OMB Circular A-87.
Private nonprofit organization other than   OMB Circular A-122.
 an (1) institution of higher education,
 (2) hospital, or (3) organization named
 in OMB Circular A-122 as not subject to
 that circular.
Educational institutions..................  OMB Circular A-21.
For-profit organization other than a        48 CFR part 31. Contract
 hospital and an organization named in OBM   Cost Principles and
 Circular A-122 as not subject to that       Procedures, or uniform cost
 circular.                                   accounting standards that
                                             comply with cost principles
                                             acceptable to the Federal
                                             agency.
For-profit organization other than a        48 CFR 931.2
 hospital and an organization named in OMB
 Circular A-122 as not subject to that
 circular..
Hospitals.................................  45 CFR part 74, Appendix E
------------------------------------------------------------------------


[[Page 135]]


[53 FR 8087, Mar. 11, 1988 as amended at 53 FR 8047, Mar. 11, 1988]



Sec. 600.223  Period of availability of funds.

    (a) General. Where a funding period is specified, a grantee may 
charge to the award only costs resulting from obligations of the funding 
period unless carryover of unobligated balances is permitted, in which 
case the carryover balances may be charged for costs resulting from 
obligations of the subsequent funding period.
    (b) Liquidation of obligations. A grantee must liquidate all 
obligations incurred under the award not later than 90 days after the 
end of the funding period (or as specified in a program regulation) to 
coincide with the submission of the annual Financial Status Report (SF-
269). The Federal agency may extend this deadline at the request of the 
grantee.



Sec. 600.224  Matching or cost sharing.

    (a) Basic rule: Costs and contributions acceptable. With the 
qualifications and exceptions listed in paragraph (b) of this section, a 
matching or cost sharing requirement may be satisfied by either or both 
of the following:
    (1) Allowable costs incurred by the grantee, subgrantee or a cost-
type contractor under the assistance agreement. This includes allowable 
costs borne by non-Federal grants or by others cash donations from non-
Federal third parties.
    (2) The value of third party in-kind contributions applicable to the 
period to which the cost sharing or matching requirements applies.
    (b) Qualifications and exceptions--(1) Costs borne by other Federal 
grant agreements. Except as provided by Federal statute, a cost sharing 
or matching requirement may not be met by costs borne by another Federal 
grant. This prohibition does not apply to income earned by a grantee or 
subgrantee from a contract awarded under another Federal grant.
    (2) General revenue sharing. For the purpose of this section, 
general revenue sharing funds distributed under 31 U.S.C. 6702 are not 
considered Federal grant funds.
    (3) Cost or contributions counted towards other Federal costs-
sharing requirements. Neither costs nor the values of third party in-
kind contributions may count towards satisfying a cost sharing or 
matching requirement of a grant agreement if they have been or will be 
counted towards satisfying a cost sharing or matching requirement of 
another Federal grant agreement, a Federal procurement contract, or any 
other award of Federal funds.
    (4) Costs financed by program income. Costs financed by program 
income, as defined in Sec. 600.425, shall not count towards satisfying a 
cost sharing or matching requirement unless they are expressly permitted 
in the terms of the assistance agreement. (This use of general program 
income is described in Sec. 600.225(g).)
    (5) Services or property financed by income earned by contractors. 
Contractors under a grant may earn income from the activities carried 
out under the contract in addition to the amounts earned from the party 
awarding the contract. No costs of services or property supported by 
this income may count toward satisfying a cost sharing or matching 
requirement unless other provisions of the grant agreement expressly 
permit this kind of income to be used to meet the requirement.
    (6) Records. Costs and third party in-kind contributions counting 
towards satisfying a cost sharing or matching requirement must be 
verifiable from the records of grantees and subgrantee or cost-type 
contractors. These records must show how the value placed on third party 
in-kind contributions was derived. To the extent feasible, volunteer 
services will be supported by the same methods that the organization 
uses to support the allocability of regular personnel costs.
    (7) Special standards for third party in-kind contributions. (i) 
Third party in-kind contributions count towards satisfying a cost 
sharing or matching requirement only where, if the party receiving the 
contributions were to pay for them, the payments would be allowable 
costs.
    (ii) Some third party in-kind contributions are goods and services 
that, if the grantee, subgrantee, or contractor receiving the 
contribution had

[[Page 136]]

to pay for them, the payments would have been an indirect costs. Cost 
sharing or matching credit for such contributions shall be given only if 
the grantee, subgrantee, or contractor has established, along with its 
regular indirect cost rate, a special rate for allocating to individual 
projects or programs the value of the contributions.
    (iii) A third party in-kind contribution to a fixed-price contract 
may count towards satisfying a cost sharing or matching requirement only 
if it results in:
    (A) An increase in the services or property provided under the 
contract (without additional cost to the grantee or subgrantee) or
    (B) A cost savings to the grantee or subgrantee.
    (iv) The values placed on third party in-kind contributions for cost 
sharing or matching purposes will conform to the rules in the succeeding 
sections of this subpart. If a third party in-kind contribution is a 
type not treated in those sections, the value placed upon it shall be 
fair and reasonable.
    (c) Valuation of donated services--(1) Volunteer services. Unpaid 
services provided to a grantee or subgrantee by individuals will be 
valued at rates consistent with those ordinarily paid for similar work 
in the grantee's or subgrantee's organization. If the grantee or 
subgrantee does not have employees performing similar work, the rates 
will be consistent with those ordinarily paid by other employers for 
similar work in the same labor market. In either case, a reasonable 
amount for fringe benefits may be included in the valuation.
    (2) Employees of other organizations. When an employer other than a 
grantee, subgrantee, or cost-type contractor furnishes free of charge 
the services of an employee in the employee's normal line of work, the 
services will be valued at the employee's regular rate of pay exclusive 
of the employee's fringe benefits and overhead costs. If the services 
are in a different line of work, paragraph (c)(1) of this section 
applies.
    (d) Valuation of third party donated supplies and loaned equipment 
or space. (1) If a third party donates supplies, the contribution will 
be valued at the market value of the supplies at the time of donation.
    (2) If a third party donates the use of equipment or space in a 
building but retains title, the contribution will be valued at the fair 
rental rate of the equipment or space.
    (e) Valuation of third party donated equipment, buildings, and land. 
If a third party donates equipment, buildings, or land, and title passes 
to a grantee or subgrantee, the treatment of the donated property will 
depend upon the purpose of the grant or subgrant, as follows:
    (1) Awards for capital expenditures. If the purpose of the grant or 
subgrant is to assist the grantee or subgrantee in the acquisition of 
property, the market value of that property at the time of donation may 
be counted as cost sharing or matching,
    (2) Other awards. If assisting in the acquisition of property is not 
the purpose of the grant or subgrant, paragraphs (e)(2) (i) and (ii) of 
this section apply:
    (i) If approval is obtained from the awarding agency, the market 
value at the time of donation of the donated equipment or buildings and 
the fair rental rate of the donated land may be counted as cost sharing 
or matching. In the case of a subgrant, the terms of the grant agreement 
may require that the approval be obtained from the Federal agency as 
well as the grantee. In all cases, the approval may be given only if a 
purchase of the equipment or rental of the land would be approved as an 
allowable direct cost. If any part of the donated property was acquired 
with Federal funds, only the non-federal share of the property may be 
counted as cost-sharing or matching.
    (ii) If approval is not obtained under paragraph (e)(2)(i) of this 
section, no amount may be counted for donated land, and only 
depreciation or use allowances may be counted for donated equipment and 
buildings. The depreciation or use allowances for this property are not 
treated as third party in-kind contributions. Instead, they are treated 
as costs incurred by the grantee or subgrantee. They are computed and 
allocated (usually as indirect costs) in accordance with the cost 
principles specified in Sec. 600.222, in the same way as

[[Page 137]]

depreciation or use allowances for purchased equipment and buildings. 
The amount of depreciation or use allowances for donated equipment and 
buildings is based on the property's market value at the time it was 
donated.
    (f) Valuation of grantee or subgrantee donated real property for 
construction/acquisition. If a grantee or subgrantee donates real 
property for a construction or facilities acquisition project, the 
current market value of that property may be counted as cost sharing or 
matching. If any part of the donated property was acquired with Federal 
funds, only the non-federal share of the property may be counted as cost 
sharing or matching.
    (g) Appraisal of real property. In some cases under paragraphs (d), 
(e) and (f) of this section, it will be necessary to establish the 
market value of land or a building or the fair rental rate of land or of 
space in a building. In these cases, the Federal agency may require the 
market value or fair rental value be set by an independent appraiser, 
and that the value or rate be certified by the grantee. This requirement 
will also be imposed by the grantee on subgrantees.

[53 FR 8045, 8087, Mar. 11, 1988, as amended at 57 FR 5, Jan. 2, 1992; 
61 FR 7165, Feb. 26, 1996]



Sec. 600.225  Program income.

    (a) General. Grantees are encouraged to earn income to defray 
program costs. Program income includes income from fees for services 
performed, from the use or rental of real or personal property acquired 
with grant funds, from the sale of commodities or items fabricated under 
a grant agreement, and from payments of principal and interest on loans 
made with grant funds. Except as otherwise provided in regulations of 
the Federal agency, program income does not include interest on grant 
funds, rebates, credits, discounts, refunds, etc. and interest earned on 
any of them.
    (b) Definition of program income. Program income means gross income 
received by the grantee or subgrantee directly generated by a grant 
supported activity, or earned only as a result of the grant agreement 
during the grant period. ``During the grant period'' is the time between 
the effective date of the award and the ending date of the award 
reflected in the final financial report.
    (c) Cost of generating program income. If authorized by Federal 
regulations or the grant agreement, costs incident to the generation of 
program income may be deducted from gross income to determine program 
income.
    (d) Governmental revenues. Taxes, special assessments, levies, 
fines, and other such revenues raised by a grantee or subgrantee are not 
program income unless the revenues are specifically identified in the 
grant agreement or Federal agency regulations as program income.
    (e) Royalties. Income from royalties and license fees for 
copyrighted material, patents, and inventions developed by a grantee or 
subgrantee is program income only if the revenues are specifically 
identified in the grant agreement or Federal agency regulations as 
program income. (See Sec. 600.234.)
    (f) Property. Proceeds from the sale of real property or equipment 
will be handled in accordance with the requirements of Secs. 600.231 and 
600.232.
    (g) Use of program income. Program income shall be deducted from 
outlays which may be both Federal and non-Federal as described below, 
unless the Federal agency regulations or the grant agreement specify 
another alternative (or a combination of the alternatives). In 
specifying alternatives, the Federal agency may distinguish between 
income earned by the grantee and income earned by subgrantees and 
between the sources, kinds, or amounts of income. When Federal agencies 
authorize the alternatives in paragraphs (g) (2) and (3) of this 
section, program income in excess of any limits stipulated shall also be 
deducted from outlays.
    (1) Deduction. Ordinarily program income shall be deducted from 
total allowable costs to determine the net allowable costs. Program 
income shall be used for current costs unless the Federal agency 
authorizes otherwise. Program income which the grantee did not 
anticipate at the time of the award shall be used to reduce the Federal 
agency and grantee contributions rather than to increase the funds 
committed to the project.

[[Page 138]]

    (2) Addition. When authorized, program income may be added to the 
funds committed to the grant agreement by the Federal agency and the 
grantee. The program income shall be used for the purposes and under the 
conditions of the grant agreement.
    (3) Cost sharing or matching. When authorized, program income may be 
used to meet the cost sharing or matching requirement of the grant 
agreement. The amount of the Federal grant award remains the same.
    (h) Income after the award period. There are no Federal requirements 
governing the disposition of program income earned after the end of the 
award period (i.e., until the ending date of the final financial report, 
see paragraph (a) of this section), unless the terms of the agreement or 
the Federal agency regulations provide otherwise.

[53 FR 8045, 8087, Mar. 11, 1988. Redesignated at 59 FR 53264, Oct. 21, 
1994, as amended at 61 FR 7165, 7166, Feb. 26, 1996]



Sec. 600.226  Non-Federal audit.

    (a) Basic rule. Grantees and subgrantees are responsible for 
obtaining audits in accordance with the Single Audit Act Amendments of 
1996 (31 U.S.C. 7501-7507) and revised OMB Circular A-133, ``Audits of 
States, Local Governments, and Non-Profit Organizations.'' The audits 
shall be made by an independent auditor in accordance with generally 
accepted government auditing standards covering financial audits.
    (b) Subgrantees. State or local governments, as those terms are 
defined for purposes of the Single Audit Act Amendments of 1996, that 
provide Federal awards to a subgrantee, which expends $300,000 or more 
(or other amount as specified by OMB) in Federal awards in a fiscal 
year, shall:
    (1) Determine whether State or local subgrantees have met the audit 
requirements of the Act and whether subgrantees covered by OMB Circular 
A-110, ``Uniform Administrative Requirements for Grants and Agreements 
with Institutions of Higher Education, Hospitals, and Other Non-Profit 
Organizations,'' have met the audit requirements of the Act. Commercial 
contractors (private for-profit and private and governmental 
organizations) providing goods and services to State and local 
governments are not required to have a single audit performed. State and 
local governments should use their own procedures to ensure that the 
contractor has complied with laws and regulations affecting the 
expenditure of Federal funds;
    (2) Determine whether the subgrantee spent Federal assistance funds 
provided in accordance with applicable laws and regulations. This may be 
accomplished by reviewing an audit of the subgrantee made in accordance 
with the Act, Circular A-110, or through other means (e.g., program 
reviews) if the subgrantee has not had such an audit;
    (3) Ensure that appropriate corrective action is taken within six 
months after receipt of the audit report in instance of noncompliance 
with Federal laws and regulations;
    (4) Consider whether subgrantee audits necessitate adjustment of the 
grantee's own records; and
    (5) Require each subgrantee to permit independent auditors to have 
access to the records and financial statements.
    (c) Auditor selection. In arranging for audit services, Sec. 600.236 
shall be followed.

[53 FR 8045, 8087, Mar. 11, 1988. Redesignated at 59 FR 53264, Oct. 21, 
1994, as amended at 61 FR 7166, Feb. 26, 1996; 62 FR 45939, 45940, Aug. 
29, 1997]

                    Changes, Property, and Subawards



Sec. 600.230  Changes.

    (a) General. Grantees and subgrantees are permitted to rebudget 
within the approved direct cost budget to meet unanticipated 
requirements and may make limited program changes to the approved 
project. However, unless waived by the awarding agency, certain types of 
post-award changes in budgets and projects shall require the prior 
written approval of the awarding agency.
    (b) Relation to cost principles. The applicable cost principles (see 
Sec. 600.222) contain requirements for prior approval of certain types 
of costs. Except where waived, those requirements apply to all grants 
and subgrants even if paragraphs (c) through (f) of this section do not.

[[Page 139]]

    (c) Budget changes--(1) Nonconstruction projects. Except as stated 
in other regulations or an award document, grantees or subgrantees shall 
obtain the prior approval of the awarding agency whenever any of the 
following changes is anticipated under a nonconstruction award:
    (i) Any revision which would result in the need for additional 
funding.
    (ii) Unless waived by the awarding agency, cumulative transfers 
among direct cost categories, or, if applicable, among separately 
budgeted programs, projects, functions, or activities which exceed or 
are expected to exceed ten percent of the current total approved budget, 
whenever the awarding agency's share exceeds $100,000.
    (iii) Transfer of funds allotted for training allowances (i.e., from 
direct payments to trainees to other expense categories).
    (2) Construction projects. Grantees and subgrantees shall obtain 
prior written approval for any budget revision which would result in the 
need for additional funds.
    (3) Combined construction and nonconstruction projects. When a grant 
or subgrant provides funding for both construction and nonconstruction 
activities, the grantee or subgrantee must obtain prior written approval 
from the awarding agency before making any fund or budget transfer from 
nonconstruction to construction or vice versa.
    (d) Programmatic changes. Grantees or subgrantees must obtain the 
prior approval of the awarding agency whenever any of the following 
actions is anticipated:
    (1) Any revision of the scope or objectives of the project 
(regardless of whether there is an associated budget revision requiring 
prior approval).
    (2) Need to extend the period of availability of funds.
    (3) Changes in key persons in cases where specified in an 
application or a grant award. In research projects, a change in the 
project director or principal investigator shall always require approval 
unless waived by the awarding agency.
    (4) Under nonconstruction projects, contracting out, subgranting (if 
authorized by law) or otherwise obtaining the services of a third party 
to perform activities which are central to the purposes of the award. 
This approval requirement is in addition to the approval requirements of 
Sec. 600.236 but does not apply to the procurement of equipment, 
supplies, and general support services.
    (e) Additional prior approval requirements. The awarding agency may 
not require prior approval for any budget revision which is not 
described in paragraph (c) of this section.
    (f) Requesting prior approval. (1) A request for prior approval of 
any budget revision will be in the same budget formal the grantee used 
in its application and shall be accompanied by a narrative justification 
for the proposed revision.
    (2) A request for a prior approval under the applicable Federal cost 
principles (see Sec. 600.222) may be made by letter.
    (3) A request by a subgrantee for prior approval will be addressed 
in writing to the grantee. The grantee will promptly review such request 
and shall approve or disapprove the request in writing. A grantee will 
not approve any budget or project revision which is inconsistent with 
the purpose or terms and conditions of the Federal grant to the grantee. 
If the revision, requested by the subgrantee would result in a change to 
the grantee's approved project which requires Federal prior approval, 
the grantee will obtain the Federal agency's approval before approving 
the subgrantee's request.

[53 FR 8045, 8087, Mar. 11, 1988. Redesignated at 59 FR 53264, Oct. 21, 
1994, as amended at 61 FR 7166, Feb. 26, 1996]



Sec. 600.231  Real property.

    (a) Title. Subject to the obligations and conditions set forth in 
this section, title to real property acquired under a grant or subgrant 
will vest upon acquisition in the grantee or subgrantee respectively.
    (b) Use. Except as otherwise provided by Federal statutes, real 
property will be used for the originally authorized purposes as long as 
needed for that purposes, and the grantee or subgrantee shall not 
dispose of or encumber its title or other interests.

[[Page 140]]

    (c) Disposition. When real property is no longer needed for the 
originally authorized purpose, the grantee or subgrantee will request 
disposition instructions from the awarding agency. The instructions will 
provide for one of the following alternatives:
    (1) Retention of title. Retain title after compensating the awarding 
agency. The amount paid to the awarding agency will be computed by 
applying the awarding agency's percentage of participation in the cost 
of the original purchase to the fair market value of the property. 
However, in those situations where a grantee or subgrantee is disposing 
of real property acquired with grant funds and acquiring replacement 
real property under the same program, the net proceeds from the 
disposition may be used as an offset to the cost of the replacement 
property.
    (2) Sale of property. Sell the property and compensate the awarding 
agency. The amount due to the awarding agency will be calculated by 
applying the awarding agency's percentage of participation in the cost 
of the original purchase to the proceeds of the sale after deduction of 
any actual and reasonable selling and fixing-up expenses. If the grant 
is still active, the net proceeds from sale may be offset against the 
original cost of the property. When a grantee or subgrantee is directed 
to sell property, sales procedures shall be followed that provide for 
competition to the extent practicable and result in the highest possible 
return.
    (3) Transfer of title. Transfer title to the awarding agency or to a 
third-party designated/approved by the awarding agency. The grantee or 
subgrantee shall be paid an amount calculated by applying the grantee or 
subgrantee's percentage of participation in the purchase of the real 
property to the current fair market value of the property.



Sec. 600.232  Equipment.

    (a) Title. Subject to the obligations and conditions set forth in 
this section, title to equipment acquired under a grant or subgrant will 
vest upon acquisition in the grantee or subgrantee respectively.
    (b) States. A State will use, manage, and dispose of equipment 
acquired under a grant by the State in accordance with State laws and 
procedures. Other grantees and subgrantees will follow paragraphs (c) 
through (e) of this section.
    (c) Use. (1) Equipment shall be used by the grantee or subgrantee in 
the program or project for which it was acquired as long as needed, 
whether or not the project or program continues to be supported by 
Federal funds. When no longer needed for the original program or 
project, the equipment may be used in other activities currently or 
previously supported by a Federal agency.
    (2) The grantee or subgrantee shall also make equipment available 
for use on other projects or programs currently or previously supported 
by the Federal Government, providing such use will not interfere with 
the work on the projects or program for which it was originally 
acquired. First preference for other use shall be given to other 
programs or projects supported by the awarding agency. User fees should 
be considered if appropriate.
    (3) Notwithstanding the encouragement in Sec. 600.225(a) to earn 
program income, the grantee or subgrantee must not use equipment 
acquired with grant funds to provide services for a fee to compete 
unfairly with private companies that provide equivalent services, unless 
specifically permitted or contemplated by Federal statute.
    (4) When acquiring replacement equipment, the grantee or subgrantee 
may use the equipment to be replaced as a trade-in or sell the property 
and use the proceeds to offset the cost of the replacement property, 
subject to the approval of the awarding agency.
    (d) Management requirements. Procedures for managing equipment 
(including replacement equipment), whether acquired in whole or in part 
with grant funds, until disposition takes place will, as a minimum, meet 
the following requirements:
    (1) Property records must be maintained that include a description 
of the property, a serial number or other identification number, the 
source of property, who holds title, the acquisition date, and cost of 
the property, percentage of Federal participation in the cost of the 
property, the location, use

[[Page 141]]

and condition of the property, and any ultimate disposition data 
including the date of disposal and sale price of the property.
    (2) A physical inventory of the property must be taken and the 
results reconciled with the property records at least once every two 
years.
    (3) A control system must be developed to ensure adequate safeguards 
to prevent loss, damage, or theft of the property. Any loss, damage, or 
theft shall be investigated.
    (4) Adequate maintenance procedures must be developed to keep the 
property in good condition.
    (5) If the grantee or subgrantee is authorized or required to sell 
the property, proper sales procedures must be established to ensure the 
highest possible return.
    (e) Disposition. When original or replacement equipment acquired 
under a grant or subgrant is no longer needed for the original project 
or program or for other activities currently or previously supported by 
a Federal agency, disposition of the equipment will be made as follows:
    (1) Items of equipment with a current per-unit fair market value of 
less than $5,000 may be retained, sold or otherwise disposed of with no 
further obligation to the awarding agency.
    (2) Items of equipment with a current per unit fair market value in 
excess of $5,000 may be retained or sold and the awarding agency shall 
have a right to an amount calculated by multiplying the current market 
value or proceeds from sale by the awarding agency's share of the 
equipment.
    (3) In cases where a grantee or subgrantee fails to take appropriate 
disposition actions, the awarding agency may direct the grantee or 
subgrantee to take excess and disposition actions.
    (f) Federal equipment. In the event a grantee or subgrantee is 
provided federally-owned equipment:
    (1) Title will remain vested in the Federal Government.
    (2) Grantees or subgrantees will manage the equipment in accordance 
with Federal agency rules and procedures, and submit an annual inventory 
listing.
    (3) When the equipment is no longer needed, the grantee or 
subgrantee will request disposition instructions from the Federal 
agency.
    (g) Right to transfer title. The Federal awarding agency may reserve 
the right to transfer title to the Federal Government or a third party 
named by the awarding agency when such a third party is otherwise 
eligible under existing statutes. Such transfers shall be subject to the 
following standards:
    (1) The property shall be identified in the grant or otherwise made 
known to the grantee in writing.
    (2) The Federal awarding agency shall issue disposition instructions 
within 120 calendar days after the end of the Federal support of the 
project for which it was acquired. If the Federal awarding agency fails 
to issue disposition instructions within the 120 calendar-day period the 
grantee shall follow Sec. 600.232(e).
    (3) When title to equipment is transferred, the grantee shall be 
paid an amount calculated by applying the percentage of participation in 
the purchase to the current fair market value of the property.

[53 FR 8045, 8087, Mar. 11, 1988. Redesignated at 59 FR 53264, Oct. 21, 
1994, as amended at 61 FR 7166, Feb. 26, 1996]



Sec. 600.233  Supplies.

    (a) Title. Title to supplies acquired under a grant or subgrant will 
vest, upon acquisition, in the grantee or subgrantee respectively.
    (b) Disposition. If there is a residual inventory of unused supplies 
exceeding $5,000 in total aggregate fair market value upon termination 
or completion of the award, and if the supplies are not needed for any 
other federally sponsored programs or projects, the grantee or 
subgrantee shall compensate the awarding agency for its share.



Sec. 600.234  Copyrights.

    The Federal awarding agency reserves a royalty-free, nonexclusive, 
and irrevocable license to reproduce, publish or otherwise use, and to 
authorize others to use, for Federal Government purposes:
    (a) The copyright in any work developed under a grant, subgrant, or 
contract under a grant or subgrant; and

[[Page 142]]

    (b) Any rights of copyright to which a grantee, subgrantee or a 
contractor purchases ownership with grant support.



Sec. 600.235  Subawards to debarred and suspended parties.

    Grantees and subgrantees must not make any award or permit any award 
(subgrant or contract) at any tier to any party which is debarred or 
suspended or is otherwise excluded from or ineligible for participation 
in Federal assistance programs under Executive Order 12549, ``Debarment 
and Suspension.''



Sec. 600.236  Procurement.

    (a) States. When procuring property and services under a grant, a 
State will follow the same policies and procedures it uses for 
procurements from its non-Federal funds. The State will ensure that 
every purchase order or other contract includes any clauses required by 
Federal statutes and executive orders and their implementing 
regulations. Other grantees and subgrantees will follow paragraphs (b) 
through (i) in this section.
    (b) Procurement standards. (1) Grantees and subgrantees will use 
their own procurement procedures which reflect applicable State and 
local laws and regulations, provided that the procurements conform to 
applicable Federal law and the standards identified in this section.
    (2) Grantees and subgrantees will maintain a contract administration 
system which ensures that contractors perform in accordance with the 
terms, conditions, and specifications of their contracts or purchase 
orders.
    (3) Grantees and subgrantees will maintain a written code of 
standards of conduct governing the performance of their employees 
engaged in the award and administration of contracts. No employee, 
officer or agent of the grantee or subgrantee shall participate in 
selection, or in the award or administration of a contract supported by 
Federal funds if a conflict of interest, real or apparent, would be 
involved. Such a conflict would arise when:
    (i) The employee, officer or agent,
    (ii) Any member of his immediate family,
    (iii) His or her partner, or
    (iv) An organization which employs, or is about to employ, any of 
the above, has a financial or other interest in the firm selected for 
award. The grantee's or subgrantee's officers, employees or agents will 
neither solicit nor accept gratuities, favors or anything of monetary 
value from contractors, potential contractors, or parties to 
subagreements. Grantee and subgrantees may set minimum rules where the 
financial interest is not substantial or the gift is an unsolicited item 
of nominal intrinsic value. To the extent permitted by State or local 
law or regulations, such standards or conduct will provide for 
penalties, sanctions, or other disciplinary actions for violations of 
such standards by the grantee's and subgrantee's officers, employees, or 
agents, or by contractors or their agents. The awarding agency may in 
regulation provide additional prohibitions relative to real, apparent, 
or potential conflicts of interest.
    (4) Grantee and subgrantee procedures will provide for a review of 
proposed procurements to avoid purchase of unnecessary or duplicative 
items. Consideration should be given to consolidating or breaking out 
procurements to obtain a more economical purchase. Where appropriate, an 
analysis will be made of lease versus purchase alternatives, and any 
other appropriate analysis to determine the most economical approach.
    (5) To foster greater economy and efficiency, grantees and 
subgrantees are encouraged to enter into State and local 
intergovernmental agreements for procurement or use of common goods and 
services.
    (6) Grantees and subgrantees are encouraged to use Federal excess 
and surplus property in lieu of purchasing new equipment and property 
whenever such use is feasible and reduces project costs.
    (7) Grantees and subgrantees are encouraged to use value engineering 
clauses in contracts for construction

[[Page 143]]

projects of sufficient size to offer reasonable opportunities for cost 
reductions. Value engineering is a systematic and creative anaylsis of 
each contract item or task to ensure that its essential function is 
provided at the overall lower cost.
    (8) Grantees and subgrantees will make awards only to responsible 
contractors possessing the ability to perform successfully under the 
terms and conditions of a proposed procurement. Consideration will be 
given to such matters as contractor integrity, compliance with public 
policy, record of past performance, and financial and technical 
resources.
    (9) Grantees and subgrantees will maintain records sufficient to 
detail the significant history of a procurement. These records will 
include, but are not necessarily limited to the following: rationale for 
the method of procurement, selection of contract type, contractor 
selection or rejection, and the basis for the contract price.
    (10) Grantees and subgrantees will use time and material type 
contracts only--
    (i) After a determination that no other contract is suitable, and
    (ii) If the contract includes a ceiling price that the contractor 
exceeds at its own risk.
    (11) Grantees and subgrantees alone will be responsible, in 
accordance with good administrative practice and sound business 
judgment, for the settlement of all contractual and administrative 
issues arising out of procurements. These issues include, but are not 
limited to source evaluation, protests, disputes, and claims. These 
standards do not relieve the grantee or subgrantee of any contractual 
responsibilities under its contracts. Federal agencies will not 
substitute their judgment for that of the grantee or subgrantee unless 
the matter is primarily a Federal concern. Violations of law will be 
referred to the local, State, or Federal authority having proper 
jurisdiction.
    (12) Grantees and subgrantees will have protest procedures to handle 
and resolve disputes relating to their procurements and shall in all 
instances disclose information regarding the protest to the awarding 
agency. A protestor must exhaust all administrative remedies with the 
grantee and subgrantee before pursuing a protest with the Federal 
agency. Reviews of protests by the Federal agency will be limited to:
    (i) Violations of Federal law or regulations and the standards of 
this section (violations of State or local law will be under the 
jurisdiction of State or local authorities) and
    (ii) Violations of the grantee's or subgrantee's protest procedures 
for failure to review a complaint or protest. Protests received by the 
Federal agency other than those specified above will be referred to the 
grantee or subgrantee.
    (c) Competition. (1) All procurement transactions will be conducted 
in a manner providing full and open competition consistent with the 
standards of Sec. 600.236. Some of the situations considered to be 
restrictive of competition include but are not limited to:
    (i) Placing unreasonable requirements on firms in order for them to 
qualify to do business,
    (ii) Requiring unnecessary experience and excessive bonding,
    (iii) Noncompetitive pricing practices between firms or between 
affiliated companies,
    (iv) Noncompetitive awards to consultants that are on retainer 
contracts,
    (v) Organizational conflicts of interest,
    (vi) Specifying only a ``brand name'' product instead of allowing 
``an equal'' product to be offered and describing the performance of 
other relevant requirements of the procurement, and
    (vii) Any arbitrary action in the procurement process.
    (2) Grantees and subgrantees will conduct procurements in a manner 
that prohibits the use of statutorily or administratively imposed in-
State or local geographical preferences in the evaluation of bids or 
proposals, except in those cases where applicable Federal statutes 
expressly mandate or encourage geographic preference. Nothing in this 
section preempts State licensing laws. When contracting for 
architectural and engineering (A/E) services, geographic location may be 
a selection criteria provided its application leaves an appropriate 
number of qualified firms, given the nature and size of the project, to 
compete for the contract.

[[Page 144]]

    (3) Grantees will have written selection procedures for procurement 
transactions. These procedures will ensure that all solicitations:
    (i) Incorporate a clear and accurate description of the technical 
requirements for the material, product, or service to be procured. Such 
description shall not, in competitive procurements, contain features 
which unduly restrict competition. The description may include a 
statement of the qualitative nature of the material, product or service 
to be procured, and when necessary, shall set forth those minimum 
essential characteristics and standards to which it must conform if it 
is to satisfy its intended use. Detailed product specifications should 
be avoided if at all possible. When it is impractical or uneconomical to 
make a clear and accurate description of the technical requirements, a 
``brand name or equal'' description may be used as a means to define the 
performance or other salient requirements of a procurement. The specific 
features of the named brand which must be met by offerors shall be 
clearly stated; and
    (ii) Identify all requirements which the offerors must fulfill and 
all other factors to be used in evaluating bids or proposals.
    (4) Grantees and subgrantees will ensure that all prequalified lists 
of persons, firms, or products which are used in acquiring goods and 
services are current and include enough qualified sources to ensure 
maximum open and free competition. Also, grantees and subgrantees will 
not preclude potential bidders from qualifying during the solicitation 
period.
    (d) Methods of procurement to be followed. (1) Procurement by small 
purchase procedures. Small purchase procedures are those relatively 
simple and informal procurement methods for securing services, supplies, 
or other property that do not cost more than the simplified acquisition 
threshold fixed at 41 U.S.C. 403(11) (currently set at $100,000). If 
small purchase procedures are used, price or rate quotations shall be 
obtained from an adequate number of qualified sources.
    (2) Procurement by sealed bids (formal advertising). Bids are 
publicly solicited and a firm-fixed-price contract (lump sum or unit 
price) is awarded to the responsible bidder whose bid, conforming with 
all the material terms and conditions of the invitation for bids, is the 
lowest in price. The sealed bid method is the preferred method for 
procuring construction, if the conditions in Sec. 600.236(d)(2)(i) 
apply.
    (i) In order for sealed bidding to be feasible, the following 
conditions should be present:
    (A) A complete, adequate, and realistic specification or purchase 
description is available;
    (B) Two or more responsible bidders are willing and able to compete 
effectively and for the business; and
    (C) The procurement lends itself to a firm fixed price contract and 
the selection of the successful bidder can be made principally on the 
basis of price.
    (ii) If sealed bids are used, the following requirements apply:
    (A) The invitation for bids will be publicly advertised and bids 
shall be solicited from an adequate number of known suppliers, providing 
them sufficient time prior to the date set for opening the bids;
    (B) The invitation for bids, which will include any specifications 
and pertinent attachments, shall define the items or services in order 
for the bidder to properly respond;
    (C) All bids will be publicly opened at the time and place 
prescribed in the invitation for bids;
    (D) A firm fixed-price contract award will be made in writing to the 
lowest responsive and responsible bidder. Where specified in bidding 
documents, factors such as discounts, transportation cost, and life 
cycle costs shall be considered in determining which bid is lowest. 
Payment discounts will only be used to determine the low bid when prior 
experience indicates that such discounts are usually taken advantage of; 
and
    (E) Any or all bids may be rejected if there is a sound documented 
reason.
    (3) Procurement by competitive proposals. The technique of 
competitive proposals is normally conducted with more than one source 
submitting an offer, and either a fixed-price or cost-reimbursement type 
contract is awarded. It is generally used when conditions are not 
appropriate for the use of

[[Page 145]]

sealed bids. If this method is used, the following requirements apply:
    (i) Requests for proposals will be publicized and identify all 
evaluation factors and their relative importance. Any response to 
publicized requests for proposals shall be honored to the maximum extent 
practical;
    (ii) Proposals will be solicited from an adequate number of 
qualified sources;
    (iii) Grantees and subgrantees will have a method for conducting 
technical evaluations of the proposals received and for selecting 
awardees;
    (iv) Awards will be made to the responsible firm whose proposal is 
most advantageous to the program, with price and other factors 
considered; and
    (v) Grantees and subgrantees may use competitive proposal procedures 
for qualifications-based procurement of architectural/engineering (A/E) 
professional services whereby competitors' qualifications are evaluated 
and the most qualified competitor is selected, subject to negotiation of 
fair and reasonable compensation. The method, where price is not used as 
a selection factor, can only be used in procurement of A/E professional 
services. It cannot be used to purchase other types of services though 
A/E firms are a potential source to perform the proposed effort.
    (4) Procurement by noncompetitive proposals is procurement through 
solicitation of a proposal from only one source, or after solicitation 
of a number of sources, competition is determined inadequate.
    (i) Procurement by noncompetitive proposals may be used only when 
the award of a contract is infeasible under small purchase procedures, 
sealed bids or competitive proposals and one of the following 
circumstances applies:
    (A) The item is available only from a single source;
    (B) The public exigency or emergency for the requirement will not 
permit a delay resulting from competitive solicitation;
    (C) The awarding agency authorizes noncompetitive proposals; or
    (D) After solicitation of a number of sources, competition is 
determined inadequate.
    (ii) Cost analysis, i.e., verifying the proposed cost data, the 
projections of the data, and the evaluation of the specific elements of 
costs and profits, is required.
    (iii) Grantees and subgrantees may be required to submit the 
proposed procurement to the awarding agency for pre-award review in 
accordance with paragraph (g) of this section.
    (e) Contracting with small and minority firms, women's business 
enterprise and labor surplus area firms. (1) The grantee and subgrantee 
will take all necessary affirmative steps to assure that minority firms, 
women's business enterprises, and labor surplus area firms are used when 
possible.
    (2) Affirmative steps shall include:
    (i) Placing qualified small and minority businesses and women's 
business enterprises on solicitation lists;
    (ii) Assuring that small and minority businesses, and women's 
business enterprises are solicited whenever they are potential sources;
    (iii) Dividing total requirements, when economically feasible, into 
smaller tasks or quantities to permit maximum participation by small and 
minority business, and women's business enterprises;
    (iv) Establishing delivery schedules, where the requirement permits, 
which encourage participation by small and minority business, and 
women's business enterprises;
    (v) Using the services and assistance of the Small Business 
Administration, and the Minority Business Development Agency of the 
Department of Commerce; and
    (vi) Requiring the prime contractor, if subcontracts are to be let, 
to take the affirmative steps listed in paragraphs (e)(2) (i) through 
(v) of this section.
    (f) Contract cost and price. (1) Grantees and subgrantees must 
perform a cost or price analysis in connection with every procurement 
action including contract modifications. The method and degree of 
analysis is dependent on the facts surrounding the particular 
procurement situation, but as a starting point, grantees must make 
independent estimates before receiving bids or proposals. A cost 
analysis must be performed when the offeror is required

[[Page 146]]

to submit the elements of his estimated cost, e.g., under professional, 
consulting, and architectural engineering services contracts. A cost 
analysis will be necessary when adequate price competition is lacking, 
and for sole source procurements, including contract modifications or 
change orders, unless price resonableness can be established on the 
basis of a catalog or market price of a commercial product sold in 
substantial quantities to the general public or based on prices set by 
law or regulation. A price analysis will be used in all other instances 
to determine the reasonableness of the proposed contract price.
    (2) Grantees and subgrantees will negotiate profit as a separate 
element of the price for each contract in which there is no price 
competition and in all cases where cost analysis is performed. To 
establish a fair and reasonable profit, consideration will be given to 
the complexity of the work to be performed, the risk borne by the 
contractor, the contractor's investment, the amount of subcontracting, 
the quality of its record of past performance, and industry profit rates 
in the surrounding geographical area for similar work.
    (3) Costs or prices based on estimated costs for contracts under 
grants will be allowable only to the extent that costs incurred or cost 
estimates included in negotiated prices are consistent with Federal cost 
principles (see Sec. 600.422). Grantees may reference their own cost 
principles that comply with the applicable Federal cost principles.
    (4) The cost plus a percentage of cost and percentage of 
construction cost methods of contracting shall not be used.
    (g) Awarding agency review. (1) Grantees and subgrantees must make 
available, upon request of the awarding agency, technical specifications 
on proposed procurements where the awarding agency believes such review 
is needed to ensure that the item and/or service specified is the one 
being proposed for purchase. This review generally will take place prior 
to the time the specification is incorporated into a solicitation 
document. However, if the grantee or subgrantee desires to have the 
review accomplished after a solicitation has been developed, the 
awarding agency may still review the specifications, with such review 
usually limited to the technical aspects of the proposed purchase.
    (2) Grantees and subgrantees must on request make available for 
awarding agency pre-award review procurement documents, such as requests 
for proposals or invitations for bids, independent cost estimates, etc. 
when:
    (i) A grantee's or subgrantee's procurement procedures or operation 
fails to comply with the procurement standards in this section; or
    (ii) The procurement is expected to exceed the simplified 
acquisition threshold and is to be awarded without competition or only 
one bid or offer is received in response to a solicitation; or
    (iii) The procurement, which is expected to exceed the simplified 
acquisition threshold, specifies a ``brand name'' product; or
    (iv) The proposed award is more than the simplified acquisition 
threshold and is to be awarded to other than the apparent low bidder 
under a sealed bid procurement; or
    (v) A proposed contract modification changes the scope of a contract 
or increases the contract amount by more than the simplified acquisition 
threshold.
    (3) A grantee or subgrantee will be exempt from the pre-award review 
in paragraph (g)(2) of this section if the awarding agency determines 
that its procurement systems comply with the standards of this section.
    (i) A grantee or subgrantee may request that its procurement system 
be reviewed by the awarding agency to determine whether its system meets 
these standards in order for its system to be certified. Generally, 
these reviews shall occur where there is a continuous high-dollar 
funding, and third-party contracts are awarded on a regular basis.
    (ii) A grantee or subgrantee may self-certify its procurement 
system. Such self-certification shall not limit the awarding agency's 
right to survey the system. Under a self-certification procedure, 
awarding agencies may wish to rely on written assurances from the

[[Page 147]]

grantee or subgrantee that it is complying with these standards. A 
grantee or subgrantee will cite specific procedures, regulations, 
standards, etc., as being in compliance with these requirements and have 
its system available for review.
    (h) Bonding requirements. For construction or facility improvement 
contracts or subcontracts exceeding the simplified acquisition 
threshold, the awarding agency may accept the bonding policy and 
requirements of the grantee or subgrantee provided the awarding agency 
has made a determination that the awarding agency's interest is 
adequately protected. If such a determination has not been made, the 
minimum requirements shall be as follows:
    (1) A bid guarantee from each bidder equivalent to five percent of 
the bid price. The ``bid guarantee'' shall consist of a firm commitment 
such as a bid bond, certified check, or other negotiable instrument 
accompanying a bid as assurance that the bidder will, upon acceptance of 
his bid, execute such contractual documents as may be required within 
the time specified.
    (2) A performance bond on the part of the contractor for 100 percent 
of the contract price. A ``performance bond'' is one executed in 
connection with a contract to secure fulfillment of all the contractor's 
obligations under such contract.
    (3) A payment bond on the part of the contractor for 100 percent of 
the contract price. A ``payment bond'' is one executed in connection 
with a contract to assure payment as required by law of all persons 
supplying labor and material in the execution of the work provided for 
in the contract.
    (i) Contract provisions. A grantee's and subgrantee's contracts must 
contain provisions in paragraph (i) of this section. Federal agencies 
are permitted to require changes, remedies, changed conditions, access 
and records retention, suspension of work, and other clauses approved by 
the Office of Federal Procurement Policy.
    (1) Administrative, contractual, or legal remedies in instances 
where contractors violate or breach contract terms, and provide for such 
sanctions and penalties as may be appropriate. (Contracts more than the 
simplified acquisition threshold)
    (2) Termination for cause and for convenience by the grantee or 
subgrantee including the manner by which it will be effected and the 
basis for settlement. (All contracts in excess of $10,000)
    (3) Compliance with Executive Order 11246 of September 24, 1965, 
entitled ``Equal Employment Opportunity,'' as amended by Executive Order 
11375 of October 13, 1967, and as supplemented in Department of Labor 
regulations (41 CFR chapter 60). (All construction contracts awarded in 
excess of $10,000 by grantees and their contractors or subgrantees)
    (4) Compliance with the Copeland ``Anti-Kickback'' Act (18 U.S.C. 
874) as supplemented in Department of Labor regulations (29 CFR Part 3). 
(All contracts and subgrants for construction or repair)
    (5) Compliance with the Davis-Bacon Act (40 U.S.C. 276a to 276a-7) 
as supplemented by Department of Labor regulations (29 CFR Part 5). 
(Construction contracts in excess of $2000 awarded by grantees and 
subgrantees when required by Federal grant program legislation)
    (6) Compliance with Sections 103 and 107 of the Contract Work Hours 
and Safety Standards Act (40 U.S.C. 327-330) as supplemented by 
Department of Labor regulations (29 CFR Part 5). (Construction contracts 
awarded by grantees and subgrantees in excess of $2000, and in excess of 
$2500 for other contracts which involve the employment of mechanics or 
laborers)
    (7) Notice of awarding agency requirements and regulations 
pertaining to reporting.
    (8) Notice of awarding agency requirements and regulations 
pertaining to patent rights with respect to any discovery or invention 
which arises or is developed in the course of or under such contract.
    (9) Awarding agency requirements and regulations pertaining to 
copyrights and rights in data.
    (10) Access by the grantee, the subgrantee, the Federal grantor 
agency, the Comptroller General of the United States, or any of their 
duly authorized

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representatives to any books, documents, papers, and records of the 
contractor which are directly pertinent to that specific contract for 
the purpose of making audit, examination, excerpts, and transcriptions.
    (11) Retention of all required records for three years after 
grantees or subgrantees make final payments and all other pending 
matters are closed.
    (12) Compliance with all applicable standards, orders, or 
requirements issued under section 306 of the Clean Air Act (42 U.S.C. 
1857(h)), section 508 of the Clean Water Act (33 U.S.C. 1368), Executive 
Order 11738, and Environmental Protection Agency regulations (40 CFR 
part 15). (Contracts, subcontracts, and subgrants of amounts in excess 
of $100,000).
    (13) Mandatory standards and policies relating to energy efficiency 
which are contained in the state energy conservation plan issued in 
compliance with the Energy Policy and Conservation Act (Pub. L. 94-163, 
89 Stat. 871).

[53 FR 8045, 8087, Mar. 11, 1988, as amended at 60 FR 19639, 19641, Apr. 
19, 1995; 61 FR 7166, Feb. 26, 1996]



Sec. 600.237  Subgrants.

    (a) States. States shall follow state law and procedures when 
awarding and administering subgrants (whether on a cost reimbursement or 
fixed amount basis) of financial assistance to local and Indian tribal 
governments. States shall:
    (1) Ensure that every subgrant includes any clauses required by 
Federal statute and executive orders and their implementing regulations;
    (2) Ensure that subgrantees are aware of requirements imposed upon 
them by Federal statute and regulation;
    (3) Ensure that a provision for compliance with Sec. 600.242 is 
placed in every cost reimbursement subgrant; and
    (4) Conform any advances of grant funds to subgrantees substantially 
to the same standards of timing and amount that apply to cash advances 
by Federal agencies.
    (b) All other grantees. All other grantees shall follow the 
provisions of this subpart which are applicable to awarding agencies 
when awarding and administering subgrants (whether on a cost 
reimbursement or fixed amount basis) of financial assistance to local 
and Indian tribal governments. Grantees shall:
    (1) Ensure that every subgrant includes a provision for compliance 
with this subpart;
    (2) Ensure that every subgrant includes any clauses required by 
Federal statute and executive orders and their implementing regulations; 
and
    (3) Ensure that subgrantees are aware of requirements imposed upon 
them by Federal statutes and regulations.
    (c) Exceptions. By their own terms, certain provisions of this 
subpart do not apply to the award and administration of subgrants:
    (1) Section 600.210;
    (2) Section 600.211;
    (3) The letter-of-credit procedures specified in Treasury 
Regulations at 31 CFR part 205, cited in Sec. 600.221; and
    (4) Section 600.250.

[53 FR 8045, 8087, Mar. 11, 1988. Redesignated at 59 FR 53264, Oct. 21, 
1994, as amended at 61 FR 7166, Feb. 26, 1996]

               Reports, Records Retention, and Enforcement



Sec. 600.240  Monitoring and reporting program performance.

    (a) Monitoring by grantees. Grantees are responsible for managing 
the day-to-day operations of grant and subgrant supported activities. 
Grantees must monitor grant and subgrant supported activities to assure 
compliance with applicable Federal requirements and that performance 
goals are being achieved. Grantee monitoring must cover each program, 
function or activity.
    (b) Nonconstruction performance reports. The Federal agency may, if 
it decides that performance information available from subsequent 
applications contains sufficient information to meet its programmatic 
needs, require the grantee to submit a performance report only upon 
expiration or termination of grant support. Unless waived by the Federal 
agency this report will be due on the same date as the final Financial 
Status Report.
    (1) Grantees shall submit annual performance reports unless the 
awarding

[[Page 149]]

agency requires quarterly or semi-annual reports. However, performance 
reports will not be required more frequently than quarterly. Annual 
reports shall be due 90 days after the grant year, quarterly or semi-
annual reports shall be due 30 days after the reporting period. The 
final performance report will be due 90 days after the expiration or 
termination of grant support. If a justified request is submitted by a 
grantee, the Federal agency may extend the due date for any performance 
report. Additionally, requirements for unnecessary performance reports 
may be waived by the Federal agency.
    (2) Performance reports will contain, for each grant, brief 
information on the following:
    (i) A comparison of actual accomplishments to the objectives 
established for the period. Where the output of the project can be 
quantified, a computation of the cost per unit of output may be required 
if that information will be useful.
    (ii) The reasons for slippage if established objectives were not 
met.
    (iii) Additional pertinent information including, when appropriate, 
analysis and explanation of cost overruns or high unit costs.
    (3) Grantees will not be required to submit more than the original 
and two copies of performance reports.
    (4) Grantees will adhere to the standards in this section in 
prescribing performance reporting requirements for subgrantees.
    (c) Construction performance reports. For the most part, on-site 
technical inspections and certified percentage-of-completion data are 
relied on heavily by Federal agencies to monitor progress under 
construction grants and subgrants. The Federal agency will require 
additional formal performance reports only when considered necessary, 
and never more frequently than quarterly.
    (d) Significant developments. Events may occur between the scheduled 
performance reporting dates which have significant impact upon the grant 
or subgrant supported activity. In such cases, the grantee must inform 
the Federal agency as soon as the following types of conditions become 
known:
    (1) Problems, delays, or adverse conditions which will materially 
impair the ability to meet the objective of the award. This disclosure 
must include a statement of the action taken, or contemplated, and any 
assistance needed to resolve the situation.
    (2) Favorable developments which enable meeting time schedules and 
objectives sooner or at less cost than anticipated or producing more 
beneficial results than originally planned.
    (e) Federal agencies may make site visits as warranted by program 
needs.
    (f) Waivers, extensions. (1) Federal agencies may waive any 
performance report required by this part if not needed.
    (2) The grantee may waive any performance report from a subgrantee 
when not needed. The grantee may extend the due date for any performance 
report from a subgrantee if the grantee will still be able to meet its 
performance reporting obligations to the Federal agency.



Sec. 600.241  Financial reporting.

    (a) General. (1) Except as provided in paragraphs (a) (2) and (5) of 
this section, grantees will use only the forms specified in paragraphs 
(a) through (e) of this section, and such supplementary or other forms 
as may from time to time be authorized by OMB, for:
    (i) Submitting financial reports to Federal agencies, or
    (ii) Requesting advances or reimbursements when letters of credit 
are not used.
    (2) Grantees need not apply the forms prescribed in this section in 
dealing with their subgrantees. However, grantees shall not impose more 
burdensome requirements on subgrantees.
    (3) Grantees shall follow all applicable standard and supplemental 
Federal agency instructions approved by OMB to the extent required under 
the Paperwork Reduction Act of 1980 for use in connection with forms 
specified in paragraphs (b) through (e) of this section. Federal 
agencies may issue substantive supplementary instructions only with the 
approval of OMB. Federal agencies may shade out or instruct the grantee 
to disregard any line item that

[[Page 150]]

the Federal agency finds unnecessary for its decisionmaking purposes.
    (4) Grantees will not be required to submit more than the original 
and two copies of forms required under this subpart.
    (5) Federal agencies may provide computer outputs to grantees to 
expedite or contribute to the accuracy of reporting. Federal agencies 
may accept the required information from grantees in machine usable 
format or computer printouts instead of prescribed forms.
    (6) Federal agencies may waive any report required by this section 
if not needed.
    (7) Federal agencies may extend the due date of any financial report 
upon receiving a justified request from a grantee.
    (b) Financial Status Report--(1) Form. Grantees will use Standard 
Form 269 or 269A, Financial Status Report, to report the status of funds 
for all nonconstruction grants and for construction grants when required 
in accordance with Sec. 600.241(e)(2)(iii).
    (2) Accounting basis. Each grantee will report program outlays and 
program income on a cash or accrual basis as prescribed by the awarding 
agency. If the Federal agency requires accrual information and the 
grantee's accounting records are not normally kept on the accrual basis, 
the grantee shall not be required to convert its accounting system but 
shall develop such accrual information through and analysis of the 
documentation on hand.
    (3) Frequency. The Federal agency may prescribe the frequency of the 
report for each project or program. However, the report will not be 
required more frequently than quarterly. If the Federal agency does not 
specify the frequency of the report, it will be submitted annually. A 
final report will be required upon expiration or termination of grant 
support.
    (4) Due date. When reports are required on a quarterly or semiannual 
basis, they will be due 30 days after the reporting period. When 
required on an annual basis, they will be due 90 days after the grant 
year. Final reports will be due 90 days after the expiration or 
termination of grant support.
    (c) Federal Cash Transactions Report--(1) Form. (i) For grants paid 
by letter or credit, Treasury check advances or electronic transfer of 
funds, the grantee will submit the Standard Form 272, Federal Cash 
Transactions Report, and when necessary, its continuation sheet, 
Standard Form 272a, unless the terms of the award exempt the grantee 
from this requirement.
    (ii) These reports will be used by the Federal agency to monitor 
cash advanced to grantees and to obtain disbursement or outlay 
information for each grant from grantees. The format of the report may 
be adapted as appropriate when reporting is to be accomplished with the 
assistance of automatic data processing equipment provided that the 
information to be submitted is not changed in substance.
    (2) Forecasts of Federal cash requirements. Forecasts of Federal 
cash requirements may be required in the ``Remarks'' section of the 
report.
    (3) Cash in hands of subgrantees. When considered necessary and 
feasible by the Federal agency, grantees may be required to report the 
amount of cash advances in excess of three days' needs in the hands of 
their subgrantees or contractors and to provide short narrative 
explanations of actions taken by the grantee to reduce the excess 
balances.
    (4) Frequency and due date. Grantees must submit the report no later 
than 15 working days following the end of each quarter. However, where 
an advance either by letter of credit or electronic transfer of funds is 
authorized at an annualized rate of one million dollars or more, the 
Federal agency may require the report to be submitted within 15 working 
days following the end of each month.
    (d) Request for advance or reimbursement--(1) Advance payments. 
Requests for Treasury check advance payments will be submitted on 
Standard Form 270, Request for Advance or Reimbursement. (This form will 
not be used for drawdowns under a letter of credit, electronic funds 
transfer or when Treasury check advance payments are made to the grantee 
automatically on a predetermined basis.)
    (2) Reimbursements. Requests for reimbursement under nonconstruction

[[Page 151]]

grants will also be submitted on Standard Form 270. (For reimbursement 
requests under construction grants, see paragraph (e)(1) of this 
section.)
    (3) The frequency for submitting payment requests is treated in 
Sec. 600.441(b)(3).
    (e) Outlay report and request for reimbursement for construction 
programs--(1) Grants that support construction activities paid by 
reimbursement method. (i) Requests for reimbursement under construction 
grants will be submitted on Standard Form 271, Outlay Report and Request 
for Reimbursement for Construction Programs. Federal agencies may, 
however, prescribe the Request for Advance or Reimbursement form, 
specified in Sec. 600.241(d), instead of this form.
    (ii) The frequency for submitting reimbursement requests is treated 
in Sec. 600.241(b)(3).
    (2) Grants that support construction activities paid by letter of 
credit, electronic funds transfer or Treasury check advance. (i) When a 
construction grant is paid by letter of credit, electronic funds 
transfer or Treasury check advances, the grantee will report its outlays 
to the Federal agency using Standard Form 271, Outlay Report and Request 
for Reimbursement for Construction Programs. The Federal agency will 
provide any necessary special instruction. However, frequency and due 
date shall be governed by Sec. 600.241(b) (3) and (4).
    (ii) When a construction grant is paid by Treasury check advances 
based on periodic requests from the grantee, the advances will be 
requested on the form specified in Sec. 600.241(d).
    (iii) The Federal agency may substitute the Financial Status Report 
specified in Sec. 600.241(b) for the Outlay Report and Request for 
Reimbursement for Construction Programs.
    (3) Accounting basis. The accounting basis for the Outlay Report and 
Request for Reimbursement for Construction Programs shall be governed by 
Sec. 600.241(b)(2).

[53 FR 8045, 8047, Mar. 11, 1988, as amended at 59 FR 53266, Oct. 21, 
1994; 61 FR 7166, Feb. 26, 1996]



Sec. 600.242  Retention and access requirements for records.

    (a) Applicability. (1) This section applies to all financial and 
programmatic records, supporting documents, statistical records, and 
other records of grantees or subgrantees which are:
    (i) Required to be maintained by the terms of this subpart, program 
regulations or the grant agreement, or
    (ii) Otherwise reasonably considered as pertinent to program 
regulations or the grant agreement.
    (2) This section does not apply to records maintained by contractors 
or subcontractors. For a requirement to place a provision concerning 
records in certain kinds of contracts, see Sec. 600.436(i)(10).
    (b) Length of retention period. (1) Except as otherwise provided, 
records must be retained for three years from the starting date 
specified in paragraph (c) of this section.
    (2) If any litigation, claim, negotiation, audit or other action 
involving the records has been started before the expiration of the 3-
year period, the records must be retained until completion of the action 
and resolution of all issues which arise from it, or until the end of 
the regular 3-year period, whichever is later.
    (3) To avoid duplicate recordkeeping, awarding agencies may make 
special arrangements with grantees and subgrantees to retain any records 
which are continuously needed for joint use. The awarding agency will 
request transfer of records to its custody when it determines that the 
records possess long-term retention value. When the records are 
transferred to or maintained by the Federal agency, the 3-year retention 
requirement is not applicable to the grantee or subgrantee.
    (c) Starting date of retention period--(1) General. When grant 
support is continued or renewed at annual or other intervals, the 
retention period for the records of each funding period starts on the 
day the grantee or subgrantee submits to the awarding agency its single 
or last expenditure report for that period. However, if grant support is 
continued or renewed quarterly, the retention period for each year's 
records starts on the day the grantee submits

[[Page 152]]

its expenditure report for the last quarter of the Federal fiscal year. 
In all other cases, the retention period starts on the day the grantee 
submits its final expenditure report. If an expenditure report has been 
waived, the retention period starts on the day the report would have 
been due.
    (2) Real property and equipment records. The retention period for 
real property and equipment records starts from the date of the 
disposition or replacement or transfer at the direction of the awarding 
agency.
    (3) Records for income transactions after grant or subgrant support. 
In some cases grantees must report income after the period of grant 
support. Where there is such a requirement, the retention period for the 
records pertaining to the earning of the income starts from the end of 
the grantee's fiscal year in which the income is earned.
    (4) Indirect cost rate proposals, cost allocations plans, etc. This 
paragraph applies to the following types of documents, and their 
supporting records: indirect cost rate computations or proposals, cost 
allocation plans, and any similar accounting computations of the rate at 
which a particular group of costs is chargeable (such as computer usage 
chargeback rates or composite fringe benefit rates).
    (i) If submitted for negotiation. If the proposal, plan, or other 
computation is required to be submitted to the Federal Government (or to 
the grantee) to form the basis for negotiation of the rate, then the 3-
year retention period for its supporting records starts from the date of 
such submission.
    (ii) If not submitted for negotiation. If the proposal, plan, or 
other computation is not required to be submitted to the Federal 
Government (or to the grantee) for negotiation purposes, then the 3-year 
retention period for the proposal plan, or computation and its 
supporting records starts from end of the fiscal year (or other 
accounting period) covered by the proposal, plan, or other computation.
    (d) Substitution of microfilm. Copies made by microfilming, 
photocopying, or similar methods may be substituted for the original 
records.
    (e) Access to records--(1) Records of grantees and subgrantees. The 
awarding agency and the Comptroller General of the United States, or any 
of their authorized representatives, shall have the right of access to 
any pertinent books, documents, papers, or other records of grantees and 
subgrantees which are pertinent to the grant, in order to make audits, 
examinations, excerpts, and transcripts.
    (2) Expiration of right of access. The rights of access in this 
section must not be limited to the required retention period but shall 
last as long as the records are retained.
    (f) Restrictions on public access. The Federal Freedom of 
Information Act (5 U.S.C. 552) does not apply to records unless required 
by Federal, State, or local law, grantees and subgrantees are not 
required to permit public access to their records.



Sec. 600.243  Enforcement.

    (a) Remedies for noncompliance. If a grantee or subgrantee 
materially fails to comply with any term of an award, whether stated in 
a Federal statute or regulation, an assurance, in a State plan or 
application, a notice of award, or elsewhere, the awarding agency may 
take one or more of the following actions, as appropriate in the 
circumstances:
    (1) Temporarily withhold cash payments pending correction of the 
deficiency by the grantee or subgrantee or more severe enforcement 
action by the awarding agency,
    (2) Disallow (that is, deny both use of funds and matching credit 
for) all or part of the cost of the activity or action not in 
compliance,
    (3) Wholly or partly suspend or terminate the current award for the 
grantee's or subgrantee's program,
    (4) Withhold further awards for the program, or
    (5) Take other remedies that may be legally available.
    (b) Hearings, appeals. In taking an enforcement action, the awarding 
agency will provide the grantee or subgrantee an opportunity for such 
hearing, appeal, or other administrative proceeding to which the grantee 
or subgrantee is entitled under any statute or regulation applicable to 
the action involved.

[[Page 153]]

    (c) Effects of suspension and termination. Costs of grantee or 
subgrantee resulting from obligations incurred by the grantee or 
subgrantee during a suspension or after termination of an award are not 
allowable unless the awarding agency expressly authorizes them in the 
notice of suspension or termination or subsequently. Other grantee or 
subgrantee costs during suspension or after termination which are 
necessary and not reasonably avoidable are allowable if:
    (1) The costs result from obligations which were properly incurred 
by the grantee or subgrantee before the effective date of suspension or 
termination, are not in anticipation of it, and, in the case of a 
termination, are noncancellable, and,
    (2) The costs would be allowable if the award were not suspended or 
expired normally at the end of the funding period in which the 
termination takes effect.
    (d) Relationship to debarment and suspension. The enforcement 
remedies identified in this section, including suspension and 
termination, do not preclude grantee or subgrantee from being subject to 
``Debarment and Suspension'' under E.O. 12549 (see Sec. 600.235).

[53 FR 8045, 8087, Mar. 11, 1988. Redesignated at 59 FR 53264, Oct. 21, 
1994, as amended at 61 FR 7166, Feb. 26, 1996]



Sec. 600.244  Termination for convenience.

    Except as provided in Sec. 600.443 awards may be terminated in whole 
or in part only as follows:
    (a) By the awarding agency with the consent of the grantee or 
subgrantee in which case the two parties shall agree upon the 
termination conditions, including the effective date and in the case of 
partial termination, the portion to be terminated, or
    (b) By the grantee or subgrantee upon written notification to the 
awarding agency, setting forth the reasons for such termination, the 
effective date, and in the case of partial termination, the portion to 
be terminated. However, if, in the case of a partial termination, the 
awarding agency determines that the remaining portion of the award will 
not accomplish the purposes for which the award was made, the awarding 
agency may terminate the award in its entirety under either Sec. 600.243 
or paragraph (a) of this section.

[53 FR 8045, 8087, Mar. 11, 1988. Redesignated at 59 FR 53264, Oct. 21, 
1994, as amended at 61 FR 7166, Feb. 26, 1996]

                      After-the-Grant Requirements



Sec. 600.250  Closeout.

    (a) General. The Federal agency will close out the award when it 
determines that all applicable administrative actions and all required 
work of the grant has been completed.
    (b) Reports. Within 90 days after the expiration or termination of 
the grant, the grantee must submit all financial, performance, and other 
reports required as a condition of the grant. Upon request by the 
grantee, Federal agencies may extend this timeframe. These may include 
but are not limited to:
    (1) Final performance or progress report.
    (2) Financial Status Report (SF 269) or Outlay Report and Request 
for Reimbursement for Construction Programs (SF-271) (as applicable).
    (3) Final request for payment (SF-270) (if applicable).
    (4) Invention disclosure (if applicable).
    (5) Federally-owned property report:

In accordance with Sec. 600.232(f), a grantee must submit an inventory 
of all federally owned property (as distinct from property acquired with 
grant funds) for which it is accountable and request disposition 
instructions from the Federal agency of property no longer needed.
    (c) Cost adjustment. The Federal agency will, within 90 days after 
receipt of reports in paragraph (b) of this section, make upward or 
downward adjustments to the allowable costs.
    (d) Cash adjustments. (1) The Federal agency will make prompt 
payment to the grantee for allowable reimbursable costs.
    (2) The grantee must immediately refund to the Federal agency any 
balance of unobligated (unencumbered) cash advanced that is not 
authorized to be retained for use on other grants.

[53 FR 8045, 8087, Mar. 11, 1988. Redesignated at 59 FR 53264, Oct. 21, 
1994, as amended at 61 FR 7166, Feb. 26, 1996]

[[Page 154]]



Sec. 600.251  Later disallowances and adjustments.

    The closeout of a grant does not affect:
    (a) The Federal agency's right to disallow costs and recover funds 
on the basis of a later audit or other review;
    (b) The grantee's obligation to return any funds due as a result of 
later refunds, corrections, or other transactions;
    (c) Records retention as required in Sec. 600.242;
    (d) Property management requirements in Secs. 600.231 and 600.232; 
and
    (e) Audit requirements in Sec. 600.226.

[53 FR 8045, 8087, Mar. 11, 1988. Redesignated at 59 FR 53264, Oct. 21, 
1994, as amended at 61 FR 7166, Feb. 26, 1996]



Sec. 600.252  Collection of amounts due.

    (a) Any funds paid to a grantee in excess of the amount to which the 
grantee is finally determined to be entitled under the terms of the 
award constitute a debt to the Federal Government. If not paid within a 
reasonable period after demand, the Federal agency may reduce the debt 
by:
    (1) Making an adminstrative offset against other requests for 
reimbursements,
    (2) Withholding advance payments otherwise due to the grantee, or
    (3) Other action permitted by law.
    (b) Except where otherwise provided by statutes or regulations, the 
Federal agency will charge interest on an overdue debt in accordance 
with the Federal Claims Collection Standards (4 CFR Ch. II). The date 
from which interest is computed is not extended by litigation or the 
filing of any form of appeal.

                        Entitlements  [Reserved]

Subpart D-E  [Reserved]



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

    Source: 60 FR 65514, Dec. 20, 1995, unless otherwise noted.



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)).

[[Page 155]]



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 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;

[[Page 156]]

    (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.

        Appendix A to Part 600--Generally Applicable Requirements

                    Socioeconomic Policy Requirements

    Nondiscrimination in Federally Assisted Programs, 10 CFR part 1040 
(45 FR 40514, June 13, 1980), as proposed to be amended by 46 FR 49546 
(October 6, 1981).
    Nondiscrimination Provisions in Federally Assisted Construction 
Contracts, Part III of Executive Order 11246 (September 24, 1965), 3 CFR 
1964--65 Comp., p. 345.
    Comprehensive Alcohol Abuse and Alcoholism Prevention, Treatment and 
Rehabilitation Act of 1970, as amended (42 U.S.C. 4581).
    Drug Abuse Office and Treatment Act of 1972, as amended (21 U.S.C. 
1174).
    Architectural Barriers Act of 1968, as amended (42 U.S.C. 4151 et 
seq.).
    National Environmental Policy Act of 1969, as amended (42 U.S.C. 
4321 et seq.), 40 CFR part 1500, as implemented by (45 FR 20694, March 
28, 1980).
    Sec. 306, Clean Air Act, as amended (42 U.S.C. 7606c).
    Sec. 508, Federal Water Pollution Control Act of 1972 (33 U.S.C. 
1251 et seq.); Executive Order 11738, September 12, 1973.
    Title XIV, Public Health Service Act, as amended (42 U.S.C. 300f--et 
seq.).
    Sec. 102(a), Flood Disaster Protection Act of 1973 (Pub. L. 93-234, 
87 Stat. 975).
    10 CFR part 1022, ``Protection of Wetlands and Floodplains.''
    Uniform Relocation Assistance and Land Acquisition Policies Act of 
1970 (42 U.S.C. 4601 et seq.).
    Coastal Zone Management Act of 1972, as amended (16 U.S.C. 1451 et 
seq.) (15 CFR part 930).
    Endangered Species Act of 1973, as amended (16 U.S.C. 1531 et seq.).
    Fish and Wildlife Coordination Act (16 U.S.C. 661 et seq.).
    Sec. 106, National Historic Preservation Act of 1966, as amended (16 
U.S.C. 470f); Executive Order 11593, ``Protection and Enhancement of the 
Cultural Environment,'' May 13, 1971, 3 CFR 1971 Comp., p. 154; 
Archaeological and Historic Preservation Act of 1966 (16 U.S.C. 469 et 
seq.); Protection of Historic and Cultural Properties, 36 CFR part 800.
    Wild and Scenic Rivers Act of 1968, as amended (16 U.S.C. 1271 et 
seq.).
    Protection of Human Subjects, 10 CFR part 745.
    Federal Laboratory Animal Welfare Act (7 U.S.C. 2131 et seq.) (9 CFR 
parts 1, 2, and 3).
    Lead-Based Paint Prohibition (42 U.S.C. 4831(b)).
    Sec. 7(b), Indian Self-Determination and Education Assistance Act 
(25 U.S.C. 450e(b)).
    Cargo Preference Act of 1954 (46 U.S.C. 1241(b)) (46 CFR 
Sec. 381.7).
    International Air Transportation Fair Competitive Practices Act of 
1974 (49 U.S.C. 1517).
    Executive Order 12138, ``Creating a National Women's Business 
Enterprise Policy and Prescribing Arrangements for Developing, 
Coordinating, and Implementing a National Program for Women's Business 
Enterprise,'' (May 18, 1979) 3 CFR 1979 Comp., p. 393.
    Sec. 403(b), Power Plant and Industrial Fuel Use Act of 1978, (42 
U.S.C. 8373(b)); Executive Order 12185 (December 17, 1979, 3 CFR 1979 
Comp., p. 474).

              Administrative and Fiscal Policy Requirements

    The Hatch Act (5 U.S.C. 1501-1508).
    Federal Reports Act, as amended by the Paperwork Reduction Act of 
1980, Pub. L. 96-511 (44 U.S.C. 3501 et seq.).
    OMB Circular A-111, Jointly Funded Assistance to State and Local 
Governments and Nonprofit Organizations--Policies and Procedures.
    Federal Claims Collection Act of 1966, Pub. L. 89-508, 89 Stat. 309 
(31 U.S.C. 951 et seq.).
    OMB Circular A-88, Coordinating Indirect Cost Rates and Audit at 
Educational Institutions.
    OMB Circular A-73, Audit of Federal Operations and Programs.
    Single Audit Act of 1984, Pub. L. 98-502.
    OMB Circular A-128, Audits of State and Local Governments.

[47 FR 44108, Oct. 5, 1982, as amended at 50 FR 42361, Oct. 18, 1985; 51 
FR 4297, Feb. 4, 1986]

            Appendix B to Part 600--Audit Report Distributees

    Distributee: Manager, Eastern Region, Office of Inspector General, 
U.S. Department of

[[Page 157]]

Energy, P.O. Box 1328, Oak Ridge, Tennessee 37831-1328.
    For recipients in: Alabama, Arkansas, Connecticut, Delaware, 
District of Columbia, Florida, Georgia, Illinois, Indiana, Iowa, 
Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, 
Minnesota, Mississippi, Missouri, New Hampshire, New Jersey, New York, 
North Carolina, Ohio, Pennsylvania, Puerto Rico, Rhode Island, South 
Carolina, Tennessee, Vermont, Virgin Islands, Virginia, West Virginia, 
Wisconsin.
    Distributee: Manager, Western Region, Office of Inspector General, 
U.S. Department of Energy, P.O. Box 5400, Albuquerque, New Mexico 87115.
    For recipients in: Alaska, Arizona, California, Colorado, Hawaii, 
Idaho, Kansas, Montana, Nebraska, Nevada, New Mexico, North Dakota, 
Oklahoma, Oregon, South Dakota, Texas, Utah, Washington, Wyoming.

[50 FR 42361, Oct. 18, 1985; 51 FR 4297, Feb. 4, 1986]



PART 601--NEW RESTRICTIONS ON LOBBYING--Table of Contents




                           Subpart A--General

Sec.
601.100  Conditions on use of funds.
601.105  Definitions.
601.110  Certification and disclosure.

                 Subpart B--Activities by Own Employees

601.200  Agency and legislative liaison.
601.205  Professional and technical services.
601.210  Reporting.

            Subpart C--Activities by Other Than Own Employees

601.300  Professional and technical services.

                  Subpart D--Penalties and Enforcement

601.400  Penalties.
601.405  Penalty procedures.
601.410  Enforcement.

                          Subpart E--Exemptions

601.500  Secretary of Defense.

                        Subpart F--Agency Reports

601.600  Semi-annual compilation.
601.605  Inspector General report.

Appendix A to Part 601--Certification Regarding Lobbying
Appendix B to Part 601--Disclosure Form To Report Lobbying

    Authority: 31 U.S.C. 1352; 42 U.S.C. 7254 and 7256; 31 U.S.C. 6301-
6308; 28 U.S.C. 2461 note.

    Source: 55 FR 6737 and 6746, Feb. 26, 1990, unless otherwise noted.

    Cross Reference: See also Office of Management and Budget notice 
published at 54 FR 52306, Dec. 20, 1989.



                           Subpart A--General



Sec. 601.100  Conditions on use of funds.

    (a) No appropriated funds may be expended by the recipient of a 
Federal contract, grant, loan, or cooperative ageement to pay any person 
for influencing or attempting to influence an officer or employee of any 
agency, a Member of Congress, an officer or employee of Congress, or an 
employee of a Member of Congress in connection with any of the following 
covered Federal actions: the awarding of any Federal contract, the 
making of any Federal grant, the making of any Federal loan, the 
entering into of any cooperative agreement, and the extension, 
continuation, renewal, amendment, or modification of any Federal 
contract, grant, loan, or cooperative agreement.
    (b) Each person who requests or receives from an agency a Federal 
contract, grant, loan, or cooperative agreement shall file with that 
agency a certification, set forth in appendix A, that the person has not 
made, and will not make, any payment prohibited by paragraph (a) of this 
section.
    (c) Each person who requests or receives from an agency a Federal 
contract, grant, loan, or a cooperative agreement shall file with that 
agency a disclosure form, set forth in appendix B, if such person has 
made or has agreed to make any payment using nonappropriated funds (to 
include profits from any covered Federal action), which would be 
prohibited under paragraph (a) of this section if paid for with 
appropriated funds.
    (d) Each person who requests or receives from an agency a commitment 
providing for the United States to insure or guarantee a loan shall file 
with that agency a statement, set forth in appendix A, whether that 
person has made or has agreed to make any payment to influence or 
attempt to influence an officer or employee of any

[[Page 158]]

agency, a Member of Congress, an officer or employee of Congress, or an 
employee of a Member of Congress in connection with that loan insurance 
or guarantee.
    (e) Each person who requests or receives from an agency a commitment 
providing for the United States to insure or guarantee a loan shall file 
with that agency a disclosure form, set forth in appendix B, if that 
person has made or has agreed to make any payment to influence or 
attempt to influence an officer or employee of any agency, a Member of 
Congress, an officer or employee of Congress, or an employee of a Member 
of Congress in connection with that loan insurance or guarantee.



Sec. 601.105  Definitions.

    For purposes of this part:
    (a) Agency, as defined in 5 U.S.C. 552(f), includes Federal 
executive departments and agencies as well as independent regulatory 
commissions and Government corporations, as defined in 31 U.S.C. 
9101(1).
    (b) Covered Federal action means any of the following Federal 
actions:
    (1) The awarding of any Federal contract;
    (2) The making of any Federal grant;
    (3) The making of any Federal loan;
    (4) The entering into of any cooperative agreement; and,
    (5) The extension, continuation, renewal, amendment, or modification 
of any Federal contract, grant, loan, or cooperative agreement.

Covered Federal action does not include receiving from an agency a 
commitment providing for the United States to insure or guarantee a 
loan. Loan guarantees and loan insurance are addressed independently 
within this part.
    (c) Federal contract means an acquisition contract awarded by an 
agency, including those subject to the Federal Acquisition Regulation 
(FAR), and any other acquisition contract for real or personal property 
or services not subject to the FAR.
    (d) Federal cooperative agreement means a cooperative agreement 
entered into by an agency.
    (e) Federal grant means an award of financial assistance in the form 
of money, or property in lieu of money, by the Federal Government or a 
direct appropriation made by law to any person. The term does not 
include technical assistance which provides services instead of money, 
or other assistance in the form of revenue sharing, loans, loan 
guarantees, loan insurance, interest subsidies, insurance, or direct 
United States cash assistance to an individual.
    (f) Federal loan means a loan made by an agency. The term does not 
include loan guarantee or loan insurance.
    (g) Indian tribe and tribal organization have the meaning provided 
in section 4 of the Indian Self-Determination and Education Assistance 
Act (25 U.S.C. 450B). Alaskan Natives are included under the definitions 
of Indian tribes in that Act.
    (h) Influencing or attempting to influence means making, with the 
intent to influence, any communication to or appearance before an 
officer or employee or any agency, a Member of Congress, an officer or 
employee of Congress, or an employee of a Member of Congress in 
connection with any covered Federal action.
    (i) Loan guarantee and loan insurance means an agency's guarantee or 
insurance of a loan made by a person.
    (j) Local government means a unit of government in a State and, if 
chartered, established, or otherwise recognized by a State for the 
performance of a governmental duty, including a local public authority, 
a special district, an intrastate district, a council of governments, a 
sponsor group representative organization, and any other instrumentality 
of a local government.
    (k) Officer or employee of an agency includes the following 
individuals who are employed by an agency:
    (1) An individual who is appointed to a position in the Government 
under title 5, U.S. Code, including a position under a temporary 
appointment;
    (2) A member of the uniformed services as defined in section 101(3), 
title 37, U.S. Code;
    (3) A special Government employee as defined in section 202, title 
18, U.S. Code; and,

[[Page 159]]

    (4) An individual who is a member of a Federal advisory committee, 
as defined by the Federal Advisory Committee Act, title 5, U.S. Code 
appendix 2.
    (l) Person means an individual, corporation, company, association, 
authority, firm, partnership, society, State, and local government, 
regardless of whether such entity is operated for profit or not for 
profit. This term excludes an Indian tribe, tribal organization, or any 
other Indian organization with respect to expenditures specifically 
permitted by other Federal law.
    (m) Reasonable compensation means, with respect to a regularly 
employed officer or employee of any person, compensation that is 
consistent with the normal compensation for such officer or employee for 
work that is not furnished to, not funded by, or not furnished in 
cooperation with the Federal Government.
    (n) Reasonable payment means, with respect to perfessional and other 
technical services, a payment in an amount that is consistent with the 
amount normally paid for such services in the private sector.
    (o) Recipient includes all contractors, subcontractors at any tier, 
and subgrantees at any tier of the recipient of funds received in 
connection with a Federal contract, grant, loan, or cooperative 
agreement. The term excludes an Indian tribe, tribal organization, or 
any other Indian organization with respect to expenditures specifically 
permitted by other Federal law.
    (p) Regularly employed means, with respect to an officer or employee 
of a person requesting or receiving a Federal contract, grant, loan, or 
cooperative agreement or a commitment providing for the United States to 
insure or guarantee a loan, an officer or employee who is employed by 
such person for at least 130 working days within one year immediately 
preceding the date of the submission that initiates agency consideration 
of such person for receipt of such contract, grant, loan, cooperative 
agreement, loan insurance commitment, or loan guarantee commitment. An 
officer or employee who is employed by such person for less than 130 
working days within one year immediately preceding the date of the 
submission that initiates agency consideration of such person shall be 
considered to be regularly employed as soon as he or she is employed by 
such person for 130 working days.
    (q) State means a State of the United States, the District of 
Columbia, the Commonwealth of Puerto Rico, a territory or possession of 
the United States, an agency or instrumentality of a State, and a multi-
State, regional, or interstate entity having governmental duties and 
powers.



Sec. 601.110  Certification and disclosure.

    (a) Each person shall file a certification, and a disclosure form, 
if required, with each submission that initiates agency consideration of 
such person for:
    (1) Award of a Federal contract, grant, or cooperative agreement 
exceeding $100,000; or
    (2) An award of a Federal loan or a commitment providing for the 
United States to insure or guarantee a loan exceeding $150,000.
    (b) Each person shall file a certification, and a disclosure form, 
if required, upon receipt by such person of:
    (1) A Federal contract, grant, or cooperative agreement exceeding 
$100,000; or
    (2) A Federal loan or a commitment providing for the United States 
to insure or guarantee a loan exceeding $150,000,

unless such person previously filed a certification, and a disclosure 
form, if required, under paragraph (a) of this section.
    (c) Each person shall file a disclosure form at the end of each 
calendar quarter in which there occurs any event that requires 
disclosure or that materially affects the accuracy of the information 
contained in any disclosure form previously filed by such person under 
paragraphs (a) or (b) of this section. An event that materially affects 
the accuracy of the information reported includes:
    (1) A cumulative increase of $25,000 or more in the amount paid or 
expected to be paid for influencing or attempting to influence a covered 
Federal action; or

[[Page 160]]

    (2) A change in the person(s) or individual(s) influencing or 
attempting to influence a covered Federal action; or,
    (3) A change in the officer(s), employee(s), or Member(s) contacted 
to influence or attempt to influence a covered Federal action.
    (d) Any person who requests or receives from a person referred to in 
paragraphs (a) or (b) of this section:
    (1) A subcontract exceeding $100,000 at any tier under a Federal 
contract;
    (2) A subgrant, contract, or subcontract exceeding $100,000 at any 
tier under a Federal grant;
    (3) A contract or subcontract exceeding $100,000 at any tier under a 
Federal loan exceeding $150,000; or,
    (4) A contract or subcontract exceeding $100,000 at any tier under a 
Federal cooperative agreement,

shall file a certification, and a disclosure form, if required, to the 
next tier above.

    (e) All disclosure forms, but not certifications, shall be forwarded 
from tier to tier until received by the person referred to in paragraphs 
(a) or (b) of this section. That person shall forward all disclosure 
forms to the agency.
    (f) Any certification or disclosure form filed under paragraph (e) 
of this section shall be treated as a material representation of fact 
upon which all receiving tiers shall rely. All liability arising from an 
erroneous representation shall be borne solely by the tier filing that 
representation and shall not be shared by any tier to which the 
erroneous representation is forwarded. Submitting an erroneous 
certification or disclosure constitutes a failure to file the required 
certification or disclosure, respectively. If a person fails to file a 
required certification or disclosure, the United States may pursue all 
available remedies, including those authorized by section 1352, title 
31, U.S. Code.
    (g) For awards and commitments in process prior to December 23, 
1989, but not made before that date, certifications shall be required at 
award or commitment, covering activities occurring between December 23, 
1989, and the date of award or commitment. However, for awards and 
commitments in process prior to the December 23, 1989 effective date of 
these provisions, but not made before December 23, 1989, disclosure 
forms shall not be required at time of award or commitment but shall be 
filed within 30 days.
    (h) No reporting is required for an activity paid for with 
appropriated funds if that activity is allowable under either subpart B 
or C.



                 Subpart B--Activities by Own Employees



Sec. 601.200  Agency and legislative liaison.

    (a) The prohibition on the use of appropriated funds, in 
Sec. 601.100 (a), does not apply in the case of a payment of reasonable 
compensation made to an officer or employee of a person requesting or 
receiving a Federal contract, grant, loan, or cooperative agreement if 
the payment is for agency and legislative liaison activities not 
directly related to a covered Federal action.
    (b) For purposes of paragraph (a) of this section, providing any 
information specifically requested by an agency or Congress is allowable 
at any time.
    (c) For purposes of paragraph (a) of this section, the following 
agency and legislative liaison activities are allowable at any time only 
where they are not related to a specific solicitation for any covered 
Federal action:
    (1) Discussing with an agency (including individual demonstrations) 
the qualities and characteristics of the person's products or services, 
conditions or terms of sale, and service capabilities; and,
    (2) Technical discussions and other activities regarding the 
application or adaptation of the person's products or services for an 
agency's use.
    (d) For purposes of paragraph (a) of this section, the following 
agencies and legislative liaison activities are allowable only where 
they are prior to formal solicitation of any covered Federal action:
    (1) Providing any information not specifically requested but 
necessary for an agency to make an informed decision about initiation of 
a covered Federal action;
    (2) Technical discussions regarding the preparation of an 
unsolicited proposal prior to its official submission; and,

[[Page 161]]

    (3) Capability presentations by persons seeking awards from an 
agency pursuant to the provisions of the Small Business Act, as amended 
by Public Law 95-507 and other subsequent amendments.
    (e) Only those activities expressly authorized by this section are 
allowable under this section.



Sec. 601.205  Professional and technical services.

    (a) The prohibition on the use of appropriated funds, in 
Sec. 601.100 (a), does not apply in the case of a payment of reasonable 
compensation made to an officer or employee of a person requesting or 
receiving a Federal contract, grant, loan, or cooperative agreement or 
an extension, continuation, renewal, amendment, or modification of a 
Federal contract, grant, loan, or cooperative agreement if payment is 
for professional or technical services rendered directly in the 
preparation, submission, or negotiation of any bid, proposal, or 
application for that Federal contract, grant, loan, or cooperative 
agreement or for meeting requirements imposed by or pursuant to law as a 
condition for receiving that Federal contract, grant, loan, or 
cooperative agreement.
    (b) For purposes of paragraph (a) of this section, ``professional 
and technical services'' shall be limited to advice and analysis 
directly applying any professional or technical discipline. For example, 
drafting of a legal document accompanying a bid or proposal by a lawyer 
is allowable. Similarly, technical advice provided by an engineer on the 
performance or operational capability of a piece of equipment rendered 
directly in the negotiation of a contract is allowable. However, 
communications with the intent to influence made by a professional (such 
as a licensed lawyer) or a technical person (such as a licensed 
accountant) are not allowable under this section unless they provide 
advice and analysis directly applying their professional or technical 
expertise and unless the advice or analysis is rendered directly and 
solely in the preparation, submission or negotiation of a covered 
Federal action. Thus, for example, communications with the intent to 
influence made by a lawyer that do not provide legal advice or analysis 
directly and solely related to the legal aspects of his or her client's 
proposal, but generally advocate one proposal over another are not 
allowable under this section because the lawyer is not providing 
professional legal services. Similarly, communications with the intent 
to influence made by an engineer providing an engineering analysis prior 
to the preparation or submission of a bid or proposal are not allowable 
under this section since the engineer is providing technical services 
but not directly in the preparation, submission or negotiation of a 
covered Federal action.
    (c) Requirements imposed by or pursuant to law as a condition for 
receiving a covered Federal award include those required by law or 
regulation, or reasonably expected to be required by law or regulation, 
and any other requirements in the actual award documents.
    (d) Only those services expressly authorized by this section are 
allowable under this section.



Sec. 601.210  Reporting.

    No reporting is required with respect to payments of reasonable 
compensation made to regularly employed officers or employees of a 
person.



            Subpart C--Activities by Other Than Own Employees



Sec. 601.300  Professional and technical services.

    (a) The prohibition on the use of appropriated funds, in 
Sec. 601.100 (a), does not apply in the case of any reasonable payment 
to a person, other than an officer or employee of a person requesting or 
receiving a covered Federal action, if the payment is for professional 
or technical services rendered directly in the preparation, submission, 
or negotiation of any bid, proposal, or application for that Federal 
contract, grant, loan, or cooperative agreement or for meeting 
requirements imposed by or pursuant to law as a condition for receiving 
that Federal contract, grant, loan, or cooperative agreement.
    (b) The reporting requirements in Sec. 601.110 (a) and (b) regarding 
filing a

[[Page 162]]

disclosure form by each person, if required, shall not apply with 
respect to professional or technical services rendered directly in the 
preparation, submission, or negotiation of any commitment providing for 
the United States to insure or guarantee a loan.
    (c) For purposes of paragraph (a) of this section, ``professional 
and technical services'' shall be limited to advice and analysis 
directly applying any professional or technical discipline. For example, 
drafting or a legal document accompanying a bid or proposal by a lawyer 
is allowable. Similarly, technical advice provided by an engineer on the 
performance or operational capability of a piece of equipment rendered 
directly in the negotiation of a contract is allowable. However, 
communications with the intent to influence made by a professional (such 
as a licensed lawyer) or a technical person (such as a licensed 
accountant) are not allowable under this section unless they provide 
advice and analysis directly applying their professional or technical 
expertise and unless the advice or analysis is rendered directly and 
solely in the preparation, submission or negotiation of a covered 
Federal action. Thus, for example, communications with the intent to 
influence made by a lawyer that do not provide legal advice or analysis 
directly and solely related to the legal aspects of his or her client's 
proposal, but generally advocate one proposal over another are not 
allowable under this section because the lawyer is not providing 
professional legal services. Similarly, communications with the intent 
to influence made by an engineer providing an engineering analysis prior 
to the preparation or submission of a bid or proposal are not allowable 
under this section since the engineer is providing technical services 
but not directly in the preparation, submission or negotiation of a 
covered Federal action.
    (d) Requirements imposed by or pursuant to law as a condition for 
receiving a covered Federal award include those required by law or 
regulation, or reasonably expected to be required by law or regulation, 
and any other requirements in the actual award documents.
    (e) Persons other than officers or employees of a person requesting 
or receiving a covered Federal action include consultants and trade 
associations.
    (f) Only those services expressly authorized by this section are 
allowable under this section.



                  Subpart D--Penalties and Enforcement



Sec. 601.400  Penalties.

    (a) Any person who makes an expenditure prohibited herein shall be 
subject to a civil penalty of not less than $11,000 and not more than 
$110,000 for each such expenditure.
    (b) Any person who fails to file or amend the disclosure form (see 
appendix B) to be filed or amended if required herein, shall be subject 
to a civil penalty of not less than $11,000 and not more than $110,000 
for each such failure.
    (c) A filing or amended filing on or after the date on which an 
administrative action for the imposition of a civil penalty is commenced 
does not prevent the imposition of such civil penalty for a failure 
occurring before that date. An administrative action is commenced with 
respect to a failure when an investigating official determines in 
writing to commence an investigation of an allegation of such failure.
    (d) In determining whether to impose a civil penalty, and the amount 
of any such penalty, by reason of a violation by any person, the agency 
shall consider the nature, circumstances, extent, and gravity of the 
violation, the effect on the ability of such person to continue in 
business, any prior violations by such person, the degree of culpability 
of such person, the ability of the person to pay the penalty, and such 
other matters as may be appropriate.
    (e) First offenders under paragraphs (a) or (b) of this section 
shall be subject to a civil penalty of $11,000, absent aggravating 
circumstances. Second and subsequent offenses by persons shall be 
subject to an appropriate civil penalty between $11,000 and $110,000, as 
determined by the agency head or his or her designee.
    (f) An imposition of a civil penalty under this section does not 
prevent the

[[Page 163]]

United States from seeking any other remedy that may apply to the same 
conduct that is the basis for the imposition of such civil penalty.

[55 FR 6737 and 6746, Feb. 26, 1990, as amended at 62 FR 46183, Sept. 2, 
1997]



Sec. 601.405  Penalty procedures.

    Agencies shall impose and collect civil penalties pursuant to the 
provisions of the Program Fraud and Civil Remedies Act, 31 U.S.C. 3803 
(except subsection (c)), 3804, 3805, 3806, 3807, 3808, and 3812, insofar 
as these provisions are not inconsistent with the requirements herein.



Sec. 601.410  Enforcement.

    The head of each agency shall take such actions as are necessary to 
ensure that the provisions herein are vigorously implemented and 
enforced in that agency.



                          Subpart E--Exemptions



Sec. 601.500  Secretary of Defense.

    (a) The Secretary of Defense may exempt, on a case-by-case basis, a 
covered Federal action from the prohibition whenever the Secretary 
determines, in writing, that such an exemption is in the national 
interest. The Secretary shall transmit a copy of each such written 
exemption to Congress immediately after making such a determination.
    (b) The Department of Defense may issue supplemental regulations to 
implement paragraph (a) of this section.



                        Subpart F--Agency Reports



Sec. 601.600  Semi-annual compilation.

    (a) The head of each agency shall collect and compile the disclosure 
reports (see appendix B) and, on May 31 and November 30 of each year, 
submit to the Secretary of the Senate and the Clerk of the House of 
Representatives a report containing a compilation of the information 
contained in the disclosure reports received during the six-month period 
ending on March 31 or September 30, respectively, of that year.
    (b) The report, including the compilation, shall be available for 
public inspection 30 days after receipt of the report by the Secretary 
and the Clerk.
    (c) Information that involves intelligence matters shall be reported 
only to the Select Committee on Intelligence of the Senate, the 
Permanent Select Committee on Intelligence of the House of 
Representatives, and the Committees on Appropriations of the Senate and 
the House of Representatives in accordance with procedures agreed to by 
such committees. Such information shall not be available for public 
inspection.
    (d) Information that is classified under Executive Order 12356 or 
any successor order shall be reported only to the Committee on Foreign 
Relations of the Senate and the Committee on Foreign Affairs of the 
House of Representatives or the Committees on Armed Services of the 
Senate and the House of Representatives (whichever such committees have 
jurisdiction of matters involving such information) and to the 
Committees on Appropriations of the Senate and the House of 
Representatives in accordance with procedures agreed to by such 
committees. Such information shall not be available for public 
inspection.
    (e) The first semi-annual compilation shall be submitted on May 31, 
1990, and shall contain a compilation of the disclosure reports received 
from December 23, 1989 to March 31, 1990.
    (f) Major agencies, designated by the Office of Management and 
Budget (OMB), are required to provide machine-readable compilations to 
the Secretary of the Senate and the Clerk of the House of 
Representatives no later than with the compilations due on May 31, 1991. 
OMB shall provide detailed specifications in a memorandum to these 
agencies.
    (g) Non-major agencies are requested to provide machine-readable 
compilations to the Secretary of the Senate and the Clerk of the House 
of Representatives.
    (h) Agencies shall keep the originals of all disclosure reports in 
the official files of the agency.



Sec. 601.605  Inspector General report.

    (a) The Inspector General, or other official as specified in 
paragraph (b) of

[[Page 164]]

this section, of each agency shall prepare and submit to Congress each 
year, commencing with submission of the President's Budget in 1991, an 
evaluation of the compliance of that agency with, and the effectiveness 
of, the requirements herein. The evaluation may include any recommended 
changes that may be necessary to strengthen or improve the requirements.
    (b) In the case of an agency that does not have an Inspector 
General, the agency official comparable to an Inspector General shall 
prepare and submit the annual report, or, if there is no such comparable 
official, the head of the agency shall prepare and submit the annual 
report.
    (c) The annual report shall be submitted at the same time the agency 
submits its annual budget justifications to Congress.
    (d) The annual report shall include the following: All alleged 
violations relating to the agency's covered Federal actions during the 
year covered by the report, the actions taken by the head of the agency 
in the year covered by the report with respect to those alleged 
violations and alleged violations in previous years, and the amounts of 
civil penalties imposed by the agency in the year covered by the report.

        Appendix A to Part 601--Certification Regarding Lobbying

 Certification for Contracts, Grants, Loans, and Cooperative Agreements

    The undersigned certifies, to the best of his or her knowledge and 
belief, that:
    (1) No Federal appropriated funds have been paid or will be paid, by 
or on behalf of the undersigned, to any person for influencing or 
attempting to influence an officer or employee of an agency, a Member of 
Congress, an officer or employee of Congress, or an employee of a Member 
of Congress in connection with the awarding of any Federal contract, the 
making of any Federal grant, the making of any Federal loan, the 
entering into of any cooperative agreement, and the extension, 
continuation, renewal, amendment, or modification of any Federal 
contract, grant, loan, or cooperative agreement.
    (2) If any funds other than Federal appropriated funds have been 
paid or will be paid to any person for influencing or attempting to 
influence an officer or employee of any agency, a Member of Congress, an 
officer or employee of Congress, or an employee of a Member of Congress 
in connection with this Federal contract, grant, loan, or cooperative 
agreement, the undersigned shall complete and submit Standard Form-LLL, 
``Disclosure Form to Report Lobbying,'' in accordance with its 
instructions.
    (3) The undersigned shall require that the language of this 
certification be included in the award documents for all subawards at 
all tiers (including subcontracts, subgrants, and contracts under 
grants, loans, and cooperative agreements) and that all subrecipients 
shall certify and disclose accordingly.
    This certification is a material representation of fact upon which 
reliance was placed when this transaction was made or entered into. 
Submission of this certification is a prerequisite for making or 
entering into this transaction imposed by section 1352, title 31, U.S. 
Code. Any person who fails to file the required certification shall be 
subject to a civil penalty of not less than $11,000 and not more than 
$110,000 for each such failure.

            Statement for Loan Guarantees and Loan Insurance

    The undersigned states, to the best of his or her knowledge and 
belief, that:
    If any funds have been paid or will be paid to any person for 
influencing or attempting to influence an officer or employee of any 
agency, a Member of Congress, an officer or employee of Congress, or an 
employee of a Member of Congress in connection with this commitment 
providing for the United States to insure or guarantee a loan, the 
undersigned shall complete and submit Standard Form-LLL, ``Disclosure 
Form to Report Lobbying,'' in accordance with its instructions.
    Submission of this statement is a prerequisite for making or 
entering into this transaction imposed by section 1352, title 31, U.S. 
Code. Any person who fails to file the required statement shall be 
subject to a civil penalty of not less than $11,000 and not more than 
$110,000 for each such failure.

[55 FR 6737 and 6746, Feb. 26, 1990, as amended at 62 FR 46184, Sept. 2, 
1997]

[[Page 165]]

       Appendix B to part 601-- Disclosure Form To Report Lobbying
      [GRAPHIC] [TIFF OMITTED] TC01OC91.009
      

[[Page 166]]


[GRAPHIC] [TIFF OMITTED] TC01OC91.010


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[GRAPHIC] [TIFF OMITTED] TC01OC91.011


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PART 602--EPIDEMIOLOGY AND OTHER HEALTH STUDIES FINANCIAL ASSISTANCE PROGRAM--Table of Contents




Sec.
602.1  Purpose and scope.
602.2  Applicability.
602.3  Definitions.
602.4  Deviations.
602.5  Epidemiology and Other Health Studies Financial Assistance 
          Program.
602.6  Eligibility.
602.7  Solicitation.
602.8  Application requirements.
602.9  Application evaluation and selection.
602.10  Additional requirements.
602.11  Funding.
602.12  Cost sharing.
602.13  Limitation of DOE liability.
602.14  Fee.
602.15  Indirect cost limitations.
602.16  National security.
602.17  Continuation funding and reporting requirements.
602.18  Dissemination of results.
602.19  Records and data.

Appendix A to Part 602--Schedule of Renewal Applications and Reports

    Authority: 42 U.S.C. 2051; 42 U.S.C. 5817; 42 U.S.C. 5901-5920; 42 
U.S.C. 7254 and 7256; 31 U.S.C. 6301-6308.

    Source: 60 FR 5841, Jan. 31, 1995, unless otherwise noted.



Sec. 602.1  Purpose and scope.

    This part sets forth the policies and procedures applicable to the 
award and administration of grants and cooperative agreements by DOE 
(through the Office of Environment, Safety and Health or any office to 
which its functions are subsequently redelegated) for health related 
research, education/training, conferences, communication, and related 
activities.



Sec. 602.2  Applicability.

    (a) This part applies to all grants and cooperative agreements 
awarded after the effective date of this rule.
    (b) Except as otherwise provided by this part, the award and 
administration of grants and cooperative agreements shall be governed by 
10 CFR part 600 (DOE Financial Assistance Rules).



Sec. 602.3  Definitions.

    In addition to the definitions provided in 10 CFR part 600, the 
following definitions are provided for purposes of this part:
    Conference and communication activities means scientific or 
technical conferences, symposia, workshops, seminars, public meetings, 
publications, video or slide shows, and other presentations for the 
purpose of communicating or exchanging information or views pertinent to 
DOE.
    DOE means the United States Department of Energy.
    Education/Training means support for education or related activities 
for an individual or organization that will enhance educational levels 
and skills, in particular, scientific or technical areas of interest to 
DOE.
    Epidemiology and Other Health Studies means research pertaining to 
potential health effects resulting from DOE or predecessor agency 
operations or from any aspect of energy production, transmission, or use 
(including electromagnetic fields) in the United States and abroad. 
Related systems or activities to enhance these areas, as well as other 
program areas that may be described by notice published in the Federal 
Register, are also included.
    Principal investigator means the scientist or other individual 
designated by the recipient to direct the project.
    Research means basic and applied research and that part of 
development not related to the development of specific systems or 
products. The primary aim of research is scientific study and 
experimentation directed toward advancing the state of the art or 
increasing knowledge or understanding rather than focusing on a specific 
system or product.



Sec. 602.4  Deviations.

    (a) Single-case deviations from this part may be authorized in 
writing by the Assistant Secretary for Environment, Safety and Health, 
the Head of the Contracting Activity, or their designees, upon the 
written request of DOE staff, an applicant for award, or a recipient. A 
request from an applicant or a recipient must be submitted to or through 
the cognizant contracting officer.
    (b) Whenever a proposed deviation from this part would be a 
deviation from 10 CFR part 600, the deviation must also be authorized in 
accordance

[[Page 169]]

with the procedures prescribed in that part.



Sec. 602.5  Epidemiology and Other Health Studies Financial Assistance Program.

    (a) DOE may issue under this part awards for research, education/
training, conferences, communication, and related activities in the 
Office of Environment, Safety and Health program areas set forth in 
paragraph (b) of this section.
    (b) The program areas are:
    (1) Health experience of DOE and DOE contractor workers;
    (2) Health experience of populations living near DOE facilities;
    (3) Workers exposed to toxic substances, such as beryllium;
    (4) Use of biomarkers to recognize exposure to toxic substances;
    (5) Epidemiology and other health studies relating to energy 
production, transmission, and use (including electromagnetic fields) in 
the United States and abroad;
    (6) Compilation, documentation, management, use, and analysis of 
data for the DOE Comprehensive Epidemiologic Data Resource; and
    (7) Other systems or activities enhancing these areas, as well as 
other program areas as may be described by notice published in the 
Federal Register.



Sec. 602.6  Eligibility.

    Any individual or entity other than a Federal agency is eligible for 
a grant or cooperative agreement. An unaffiliated individual is also 
eligible for a grant or cooperative agreement.



Sec. 602.7  Solicitation.

    (a) The Catalog of Federal Domestic Assistance number for 10 CFR 
part 602 is 81.108 and its solicitation control number is EOHSFAP 10 CFR 
part 602.
    (b) An application for a new or renewal award under this 
solicitation may be submitted at any time to DOE at the address 
specified in paragraph (c) of this section. New or renewal applications 
shall receive consideration for funding generally within 6 months but, 
in any event, no later than 12 months from the date of receipt by DOE.
    (c) Except as otherwise provided in a notice of availability, 
applicants may obtain application forms, described in 602.8(b) of this 
part, and additional information from the Office of Epidemiology and 
Health Surveillance (EH-42), U.S. Department of Energy, Washington, DC 
20585, (301) 903-5926, and shall submit applications to the same 
address.
    (d) DOE will publish program notices in the Federal Register 
regarding the availability of epidemiology and other health studies 
financial assistance. DOE may also use other means of communication, as 
appropriate, such as the publication of notices of availability in trade 
and professional journals and news media.
    (1) Each notice of availability shall cite this part and shall 
include:
    (i) The Catalog of Federal Domestic Assistance number and 
solicitation control number of the program;
    (ii) The amount of money available or estimated to be available for 
award;
    (iii) The name of the responsible DOE program official to contact 
for additional information and an address where application forms may be 
obtained;
    (iv) The address for submission of applications; and
    (v) Any evaluation criteria in addition to those set forth in 
Sec. 602.9 of this part.
    (2) The notice of availability may also include any other relevant 
information helpful to applicants such as:
    (i) Program objectives;
    (ii) A project agenda or potential area of project initiatives;
    (iii) Problem areas requiring additional effort; and
    (iv) Any other information that identifies areas in which grants or 
cooperative agreements may be made.
    (e) DOE is under no obligation to pay for any costs associated with 
the preparation or submission of applications.
    (f) DOE reserves the right to fund, in whole or in part, any, all, 
or none of the applications submitted.
    (g) To be considered for a renewal award under this part, an 
incumbent recipient shall submit a continuation or renewal application, 
as provided in Sec. 602.8 (c) and (h) of this part.

[[Page 170]]



Sec. 602.8  Application requirements.

    (a) An original and seven copies of the application for initial 
support must be submitted, except that State and local governments and 
Indian tribal governments shall not be required to submit more than the 
original and two copies of the application.
    (b) Each new or renewal application in response to this part must 
include:
    (1) An application face page, DOE Form 4650.2 (approved by OMB under 
OMB Control No. 1910-1400). However, the face page of an application 
submitted by a State or local government or an Indian tribal government 
shall be the face page of Standard Form 424 (approved by OMB under OMB 
Control Number 0348-0043).
    (2) A detailed description of the proposed project, including its 
objectives, its relationship to DOE's program, its impact on the 
environment, if any, and the applicant's plan for carrying it out.
    (3) Detailed information about the background and experience of the 
recipients of funds or, as appropriate, the principal investigator(s) 
(including references to publications), the facilities and experience of 
the applicant, and the cost-sharing arrangements, if any.
    (4) A detailed budget for the entire proposed period of support with 
written justification sufficient to evaluate the itemized list of costs 
provided on the entire project. Applicants should note the following 
when preparing budgets:
    (i) Numerical details on items of cost provided by State and local 
government and Indian tribal government applicants shall be on Standard 
Form 424A, ``Budget Information for Non-Construction Programs'' 
(approved under OMB Control No. 0348-0044). All other applicants shall 
use budget forms ERF 4620.1 (approved by OMB under Control No. 1910-
1400).
    (ii) DOE may, subsequent to receipt of an application, request 
additional budgetary information from an applicant when necessary for 
clarification or make informed pre-award determinations under 10 CFR 
part 600.
    (5) Any pre-award assurances required pursuant to 10 CFR parts 600 
and 602.
    (c) Applications for a renewal award must be submitted with an 
original and seven copies, except that State and local governments and 
Indian tribal government applicants are required to submit only an 
original and two copies (Approved by OMB under OMB Control Numbers 0348-
00050348-0009.)
    (d) The application must be signed by an official who is authorized 
to act for the applicant organization and to commit the applicant to 
comply with the terms and conditions of the award, if one is issued, or 
if unaffiliated, by the individual applicant. (See Sec. 602.17(a)(1) for 
requirements on continuation awards.)
    (e) DOE may return an application that does not include all 
information and documentation required by statute, this part, 10 CFR 
part 600, or the notice of availability, when the nature of the omission 
precludes review of the application.
    (f) During the review of a complete application, DOE may request the 
submission of additional information only if the information is 
essential to evaluate the application.
    (g) In addition to including the information described in paragraphs 
(b), (c), and (d) of this section, an application for a renewal award 
must be submitted no later than 6 months before the expiration of the 
project period and must be on the same forms as required for initial 
applications. The renewal application must outline and justify a program 
and budget for the proposed project period, showing in detail the 
estimated cost of the proposed project, together with an indication of 
the amount of cost sharing, if any. The application shall also describe 
and explain the reasons for any change in the scope or objectives of the 
proposed project and shall compare and explain any difference between 
the estimates in the proposed budget and actual costs experienced as of 
the date of the application.
    (h) DOE is not required to return an application to the applicant.
    (i) Renewal applications must include a separate section that 
describes the results of work accomplished through the date of the 
renewal application and how such results relate to the activities 
proposed to be undertaken in the renewal period.

[[Page 171]]



Sec. 602.9  Application evaluation and selection.

    (a) Applications shall be evaluated for funding generally within 6 
months, but in any event no later than 12 months, from the date of 
receipt by DOE. After DOE has held an application for 6 months, the 
applicant may, in response to DOE's request, be required to revalidate 
the terms of the original application.
    (b) DOE shall perform an initial evaluation of all applications to 
ensure that the information required by this part is provided, that the 
proposed effort is technically sound and feasible, and that the effort 
is consistent with program funding priorities. For applications that 
pass the initial evaluation, DOE shall review and evaluate each 
application received based on the criteria set forth below and in 
accordance with the Office of Environment, Safety and Health Merit 
Review System developed, as required, under DOE Financial Assistance 
Regulations, 10 CFR part 600.
    (c) DOE shall select evaluators on the basis of their professional 
qualifications and expertise. To ensure credible and inclusive peer 
review of applications, every effort will be made to select evaluators 
apart from DOE employees and contractors. Evaluators shall be required 
to comply with all applicable DOE rules or directives concerning the use 
of outside evaluators.
    (d) DOE shall evaluate new and renewal applications based on the 
following criteria that are listed in descending order of importance:
    (1) The scientific and technical merit of the proposed research;
    (2) The appropriateness of the proposed method or approach;
    (3) Competency of research personnel and adequacy of proposed 
resources;
    (4) Reasonableness and appropriateness of the proposed budget; and
    (5) Other appropriate factors consistent with the purpose of this 
part established and set forth in a Notice of Availability or in a 
specific solicitation.
    (e) DOE shall also consider as part of the evaluation other 
available advice or information, as well as program policy factors, such 
as ensuring an appropriate balance among the program areas listed in 
Sec. 602.5 of this part.
    (f) In addition to the evaluation criteria set forth in paragraphs 
(d) and (e) of this section, DOE shall consider the recipient's 
performance under the existing award during the evaluation of a renewal 
application.
    (g) Selection of applications for award will be based upon the 
findings of the technical evaluations (including peer reviews, as 
specified in the Office of Environment, Safety and Health Merit Review 
System), the importance and relevance of the proposal to the Office of 
Environment, Safety and Health's mission, and the availability of funds. 
Cost reasonableness and realism will also be considered.
    (h) After the selection of an application, DOE may, if necessary, 
enter into negotiations with an applicant. Such negotiations are not a 
commitment that DOE will make an award.



Sec. 602.10  Additional requirements.

    (a) A recipient performing research or related activities involving 
the use of human subjects must comply with DOE regulations in 10 CFR 
part 745, ``Protection of Human Subjects,'' and any additional 
provisions that may be included in the special terms and conditions of 
an award.
    (b) A recipient performing research involving recombinant DNA 
molecules and/or organisms and viruses containing recombinant DNA 
molecules shall comply with the National Institutes of Health 
``Guidelines for Research Involving Recombinant DNA Molecules'' (51 FR 
16958, May 7, 1986), or such later revision of those guidelines, as may 
be published in the Federal Register. (The guidelines are available from 
the Office of Recombinant DNA Activities, National Institutes of Health, 
Building 31, Room BBB, Bethesda, MD 20892, or from the Office of 
Epidemiology and Health Surveillance, (EH-42), U.S. Department of 
Energy, Washington, DC 20585).
    (c) A recipient performing research on warm-blooded animals shall 
comply with the Federal Laboratory Animal Welfare Act of 1966, as 
amended (7 USC 2131 et seq.), and the regulations promulgated thereunder 
by the Secretary

[[Page 172]]

of Agriculture at 9 CFR chapter I, subchapter A, pertaining to the care, 
handling, and treatment of warm-blooded animals held or used for 
research, teaching, or other activities supported by Federal awards. The 
recipient shall comply with the guidelines described in the Department 
of Health and Human Services Publication No. [NIH] 86-23, ``Guide for 
the Care and Use of Laboratory Animals,'' or succeeding revised 
editions. (This guide is available from the Office for Protection from 
Research Risks, Office of the Director, National Institutes of Health, 
Building 31, Room 4B09, Bethesda, MD 20892, or from the Office of 
Epidemiology and Health Surveillance, (EH-42), U.S. Department of 
Energy, Washington, DC 20585).



Sec. 602.11  Funding.

    (a) The project period during which DOE expects to provide support 
for an approved project under this part shall generally not exceed 3 
years and may exceed 5 years only if DOE makes a renewal award or 
otherwise extends the award. The project period shall be specified on 
the Notice of Financial Assistance Grant (DOE Form 4600.1).
    (b) Each budget period of an award under this part shall generally 
be 12 months and may be as much as 24 months, as DOE deems appropriate.



Sec. 602.12  Cost sharing.

    Cost sharing is not required, nor will it be considered, as a 
criterion in the evaluation and selection process unless otherwise 
provided under Sec. 602.9(d)(5).



Sec. 602.13  Limitation of DOE liability.

    Awards made under this part are subject to the requirement that the 
maximum DOE obligation to the recipient is the amount shown in the 
Notice of Financial Assistance Award as the amount of DOE funds 
obligated. DOE shall not be obligated to make any additional, 
supplemental, continuation, renewal, or other award for the same or any 
other purpose.



Sec. 602.14  Fee.

    (a) Notwithstanding 10 CFR part 600, a fee may be paid, in 
appropriate circumstances, to a recipient that is a small business 
concern, as qualified under the criteria and size standards of 13 CFR 
part 121, in order to permit the concern to participate in the 
Epidemiology and Other Health Studies Financial Assistance Program. 
Whether or not it is appropriate to pay a fee shall be determined by the 
contracting officer, who shall, at a minimum, apply the following 
guidelines:
    (1) Whether the acceptance of an award will displace other work that 
the small business is currently engaged in or committed to assume in the 
near future; or
    (2) Whether the acceptance of an award will, in the absence of 
paying a fee, cause substantial financial distress to the business. In 
evaluating financial distress, the contracting officer shall balance 
current displacement against reasonable future benefit to the company. 
(If the award will result in the beneficial expansion of the existing 
business base of the company, then no fee would generally be 
appropriate.) Fees shall not be paid to other entities except as a 
deviation from 10 CFR part 600, nor shall fees be paid under awards in 
support of conferences.
    (b) To request a fee, a small business concern shall submit with its 
application a written self-certification that it is a small business 
concern qualified under the criteria and size standards in 13 CFR part 
121. In addition, the application must state the amount of fee requested 
for the entire project period and the basis for requesting the amount 
and must also state why payment of a fee by DOE would be appropriate.
    (c) If the contracting officer determines that payment of a fee is 
appropriate under paragraph (a) of this section, the amount of fee shall 
be that determined to be reasonable by the contracting officer. The 
contracting officer shall, at a minimum, apply the following guidelines 
in determining the fee amount:
    (1) The fee base shall include the estimated allowable cost of 
direct salaries and wages and allocable fringe benefits. This fee base 
shall exclude all other direct and indirect costs.
    (2) The fee amount expressed as a percentage of the appropriate fee 
base, pursuant to paragraph (c)(1) of this section, shall not exceed the 
percentage

[[Page 173]]

rate of fee that would result if a Federal agency contracted for the 
same amount of salaries, wages, and allocable fringe benefits under a 
cost reimbursement contract.
    (3) Fee amounts, determined pursuant to paragraphs (c)(1) and (c)(2) 
of this section, shall be appropriately reduced when:
    (i) Advance payments are provided; and/or
    (ii) Title to property acquired with DOE funds vests in the 
recipient (10 CFR part 600).
    (d) Notwithstanding 10 CFR part 600, any fee awarded shall be a 
fixed fee and shall be payable on an annual basis in proportion to the 
work completed, as determined by the contracting officer, upon 
satisfactory submission and acceptance by DOE of the progress report. If 
the project period is shortened due to termination, or the project 
period is not fully funded, the fee shall be reduced by an appropriate 
amount.



Sec. 602.15  Indirect cost limitations.

    Awards issued under this part for conferences and scientific/
technical meetings will not include payment for indirect costs.



Sec. 602.16  National security.

    Activities under the Epidemiology and Other Health Studies Financial 
Assistance Program are not expected to involve classified information 
(i.e., Restricted Data, Formerly Restricted Data, National Security 
Information). However, if in the opinion of the recipient or DOE such 
involvement becomes expected prior to the closeout of the award, the 
recipient or DOE shall notify the other in writing immediately. If the 
recipient believes any information developed or acquired may be 
classified, the recipient shall not provide the potentially classified 
information to anyone, including DOE officials with whom the recipient 
normally communicates, except the Director of Declassification, and 
shall protect such information as if it were classified until notified 
by DOE that a determination has been made that it does not require such 
handling. Correspondence that includes the specific information in 
question shall be sent by registered mail to the U.S. Department of 
Energy, Attn: Director of Declassification, NN-50, Washington, DC 20585. 
If the information is determined to be classified, the recipient may 
wish to discontinue the project, in which case the recipient and DOE 
shall terminate the award by mutual agreement. If the award is to be 
terminated, all material deemed by DOE to be classified shall be 
forwarded to DOE in a manner specified by DOE for proper disposition. If 
the recipient and DOE wish to continue the award, even though classified 
information is involved, the recipient shall be requested to obtain both 
personnel and facility security clearances through the Office of 
Safeguards and Security for Headquarters awards or from the cognizant 
field office Division of Safeguards and Security for awards obtained 
through DOE field organizations. Costs associated with handling and 
protecting any such classified information shall be negotiated at the 
time that the determination to proceed is made.



Sec. 602.17  Continuation funding and reporting requirements.

    (a) A recipient shall periodically report to DOE on the project's 
progress in meeting the project objectives of the award. The following 
types of reports shall be used:
    (1) Progress Reports. After issuance of an initial award, recipients 
must submit a satisfactory progress report to receive a continuation 
award for the remainder of the project period. The original and two 
copies of the required report must be submitted to the Office of 
Environment, Safety and Health program manager 90 days prior to the 
anticipated continuation funding date. The report should include results 
of work to date and emphasize findings and their significance to the 
field, and any real or anticipated problems. The report also should 
contain the following information: On the first page, provide the 
project title, principal investigator/project director name, period of 
time the report covers, name and address of recipient organization, DOE 
award number, the amount of unexpended funds, if any, that are 
anticipated to be left at the end of the current budget period. If the 
amount exceeds 10 percent of the funds available

[[Page 174]]

for the budget period, provide information as to why the excess funds 
are anticipated to be available and how they will be used in the next 
budget period. The report should state whether the aims have changed 
from the original application, and if they have, provide revised aims. A 
completed budget page must be submitted with the continuation progress 
report when a change to anticipated future costs will exceed 25 percent 
of the original recommended future budget.
    (2) Notice of Energy Research and Development (R&D) Project. A 
Notice of Energy R&D Project, DOE Form 1430.22, which summarizes the 
purpose and scope of the project, must be submitted in accordance with 
the Distribution and Schedule of Documents set forth in Appendix A to 
this part, Schedule of Renewal Applications and Reports. Copies of the 
form may be obtained from a DOE contracting office.
    (3) Special Reports. The recipient shall report the following events 
to DOE as soon after they occur as possible:
    (i) Problems, delays, or adverse conditions that will materially 
affect the ability to attain project objectives or prevent the meeting 
of time schedules and goals. The report must describe remedial action 
that the recipient has taken, or plans to take, and any action DOE 
should take to alleviate the problems.
    (ii) Favorable developments or events that enable meeting time 
schedules and goals sooner, or a lower cost than anticipated, or 
producing more beneficial results than originally projected.
    (4) Final Report. A final report covering the entire project must be 
submitted by the recipient within 90 days after the project period ends 
or the award is terminated. Satisfactory completion of an award will be 
contingent upon the receipt of this report. The final report shall 
follow the same outline as progress reports. Recipients will provide, as 
part of the final report, a description of records and data compiled 
during the project, along with a plan for its preservation or 
disposition (see Sec. 602.19 of this part). All manuscripts prepared for 
publication should be appended to the final report.
    (5) Financial Status Report (FSR) (OMB No. 0348-0039). The FSR is 
required within 90 days after completion of each budget period. For 
budget periods exceeding 12 months, an FSR is also required within 90 
days after this first 12 months unless waived by the contracting 
officer.
    (b) DOE may extend the deadline date for any report if the recipient 
submits a written request before the deadline, that adequately justifies 
an extension.
    (c) A table summarizing the various types of reports, time for 
submission, and number of copies is set forth in appendix A to this 
part. The schedule of reports shall be as prescribed in this table, 
unless the award document specifies otherwise. These reports shall be 
submitted by the recipient to the awarding office.
    (d) DOE, or its authorized representatives, may make site visits, at 
any reasonable time, to review the project. DOE may provide such 
technical assistance as may be requested.
    (e) Recipients may place performance reporting requirements on a 
subrecipient consistent with the provisions of this section.



Sec. 602.18  Dissemination of results.

    (a) Recipients are encouraged to disseminate research results 
promptly. DOE reserves the right to utilize, and have others utilize to 
the extent it deems appropriate, the reports resulting from research 
awards.
    (b) DOE may waive the technical reporting requirement of progress 
reports set forth in Sec. 602.17, if the recipient submits to DOE a copy 
of its own report that is published or accepted for publication in a 
recognized scientific or technical journal and that satisfies the 
information requirements of the program.
    (c) Recipients are urged to publish results through normal 
publication channels in accordance with the applicable provisions of 10 
CFR part 600.
    (d) The article shall include an acknowledgement that the project 
was supported, in whole or in part, by a DOE award, and specify the 
award number, but state that such support does not constitute an 
endorsement by DOE of the views expressed in the article.

[[Page 175]]



Sec. 602.19  Records and data.

    (a) In some cases, DOE will require submission of certain project 
records or data to facilitate mission-related activities. Recipients, 
therefore, must take adequate steps to ensure proper management, 
control, and preservation of all project records and data.
    (b) Awardees must ensure that all project data is adequately 
documented. Documentation shall:
    (1) Reference software used to compile, manage, and analyze data;
    (2) Define all technical characteristics necessary for reading or 
processing the records;
    (3) Define file and record content and codes;
    (4) Describe update cycles or conditions and rules for adding or 
deleting information; and
    (5) Detail instrument calibration effects, sampling and analysis, 
space and time coverage, quality control measures, data algorithms and 
reduction methods, and other activities relevant to data collection and 
assembly.
    (c) Recipients agree to comply with designated DOE records and data 
management requirements, including providing electronic data in 
prescribed formats and retention of specified records and data for 
eventual transfer to the Comprehensive Epidemiologic Data Resource or to 
another repository, as directed by DOE. Recipients will provide, as part 
of the final report, a description of records and data compiled during 
the project along with a plan for its preservation or disposition.
    (d) Recipients agree to make project records and data available as 
soon as possible when requested by DOE.
      Appendix A to Part 602--Schedule of Renewal Applications and 
                                Reports

------------------------------------------------------------------------
                                                               Number of
                                                                 copies
               Type                          When due             for
                                                                awarding
                                                                 office
------------------------------------------------------------------------
1. Summary: 200 words on scope and  Immediately after a grant          3
 purpose (Notice of Energy R&D       is awarded and with each
 Project).                           application for renewal.
2. Renewal period ends............  6 months before the                8
                                     budget.
3. Progress Report period (or as    90 days prior to the next          3
 part of a renewal application).     budget period.
4. Other progress reports, brief    As deemed appropriate by           3
 topical reports, etc. (Designated   DOE or the recipient.
 when significant results develop
 or when work has direct
 programmatic impact).
5. Reprints, Conference...........  Same as 4. above.........          3
6. Final report of the project....  Within 90 days after               3
                                     completion.
7. Financial Status Report (FSR)..  Within 90 days after              3
                                     completion of the
                                     project period; for
                                     budget periods exceeding
                                     12 months an FSR is also
                                     required within 90 days
                                     after the first 12-month
                                     period.
------------------------------------------------------------------------
Note: Report types 5 and 6 require with submission two copies of DOE
  Form 1332.16, University-Type Contractor and Grantee Recommendations
  for Disposition of Scientific and Technical Document.



PART 605--THE OFFICE OF ENERGY RESEARCH FINANCIAL ASSISTANCE PROGRAM--Table of Contents




Sec.
605.1  Purpose and scope.
605.2  Applicability.
605.3  Definitions.
605.4  Deviations.
605.5  The Office of Energy Research Financial Assistance Program.
605.6  Eligibility.
605.7  [Reserved]
605.8  Solicitation.
605.9  Application requirements.
605.10  Application evaluation and selection.
605.11  Additional requirements.
605.12  Funding.
605.13  Cost sharing.
605.14  Limitation of DOE liability.
605.15  Fee.
605.16  Indirect cost limitations.
605.17  [Reserved]
605.18  National security.
605.19  Continuation funding and reporting requirements.
605.20  Dissemination of results.

Appendix A to Part 605--Energy Research Program Office Descriptions

    Authority: Section 31 of the Atomic Energy Act, as amended, Pub. L. 
83-703, 68 Stat. 919 (42 U.S.C. 2051); sec. 107 of the Energy 
Reorganization Act of 1974, Pub. L. 93-438, 88 Stat. 1240 (42 U.S.C. 
5817); Federal Nonnuclear Energy Research and Development

[[Page 176]]

Act of 1974, Pub. L. 93-577, 88 Stat. 1878 (42 U.S.C. 5901 et seq.); 
secs. 644 and 646 of the Department of Energy Organization Act, Pub. L. 
95-91, 91 Stat. 599 (42 U.S.C. 7254 and 7256); Federal Grant and 
Cooperative Agreement Act, as amended (31 U.S.C. 6301 et seq.).

    Source: 57 FR 40583, Sept. 3, 1992, unless otherwise noted.



Sec. 605.1  Purpose and scope.

    This part sets forth the policies and procedures applicable to the 
award and administration of grants and cooperative agreements by the DOE 
Office of Energy Research (ER) and the Science and Technology Advisor 
(STA) Organization for basic and applied research, educational and/or 
training activities, conferences and related activities.



Sec. 605.2  Applicability.

    (a) This part applies to all grants and cooperative agreements 
awarded after the effective date of this amended rule.
    (b) Except as otherwise provided by this part, the award and 
administration of grants and cooperative agreements shall be governed by 
10 CFR part 600 (DOE Financial Assistance Rules).



Sec. 605.3  Definitions.

    In addition to the definitions provided in 10 CFR part 600, the 
following definitions are provided for purposes of this part--
    Basic and applied research means basic and applied research and that 
part of development not related to the development of specific systems 
or products. The primary aim of research is scientific study and 
experimentation directed toward advancing the state of the art or 
increasing knowledge or understanding rather than focusing on a specific 
system or product.
    Educational/Training means support for education or related 
activities for an individual or organization that will enhance education 
levels and skills in particular scientific or technical areas of 
interest to DOE.
    Principal investigator means the scientist or other individual 
designated by the recipient to direct the project.
    Recipient obligation means the amounts of orders placed, contracts 
and subawards issued, services received, and similar transactions during 
a given period that will require payment by the recipient during the 
same or a future period.
    Related conference means scientific or technical conferences, 
symposia, workshops or seminars for the purpose of communicating or 
exchanging information or views pertinent to ER/STA.
    Special purpose equipment means equipment which is used only for 
research, medical, scientific, educational, or other related project 
activity.



Sec. 605.4  Deviations.

    Single-case deviations from this part may be authorized in writing 
by the Director or Deputy Director of ER or the Head of a Contracting 
Activity upon the written request of DOE staff, an applicant for an 
award, or a recipient. A request from an applicant or a recipient must 
be submitted to or through the cognizant contracting officer. Whenever a 
proposed deviation from this part would be a deviation from 10 CFR part 
600, the deviation must also be authorized in accordance with the 
procedures prescribed in that part.



Sec. 605.5  The Office of Energy Research Financial Assistance Program.

    (a) DOE may issue, under the Office of Energy Research Financial 
Assistance Program, 10 CFR part 605, awards for basic and applied 
research, educational/training activities, conferences, and other 
related activities under the ER program areas set forth in paragraph (b) 
of this section and described in appendix A of this part.
    (b) The Program areas are:
    (1) Basic Energy Sciences
    (2) Field Operations Management
    (3) Fusion Energy
    (4) Health and Environmental Research
    (5) High Energy and Nuclear Physics
    (6) Scientific Computing Staff
    (7) Superconducting Super Collider
    (8) University and Science Education Programs
    (9) Program Analysis; and
    (10) Other program areas of interest as may be described in a notice 
of availability published in the Federal Register.

[[Page 177]]



Sec. 605.6  Eligibility.

    Any university or other institution of higher education or other 
non-profit or for-profit organization, non-Federal agency, or entity is 
eligible for a grant or cooperative agreement. An unaffiliated 
individual also is eligible for a grant or cooperative agreement.



Sec. 605.7  [Reserved]



Sec. 605.8  Solicitation.

    (a) The Catalog of Federal Domestic Assistance number for this 
program is 81.049, and its solicitation control number is ERFAP 10 CFR 
part 605.
    (b) An application for a new or renewal award under this 
solicitation may be submitted at any time to DOE at the address 
specified in paragraph (c) of this section. New or renewal applications 
shall receive consideration for funding generally within 6 months but, 
in any event, no later than 12 months from the date of receipt by DOE.
    (c) Applicants may obtain application forms, described in 
Sec. 605.9(b), and additional information from the Acquisition and 
Assistance Management Division, Office of Energy Research, ER-64, 
Department of Energy, Washington, DC 20585, (301) 903-5544, and shall 
submit applications to the same address.
    (d) DOE shall publish annually, in the Federal Register, a notice of 
the availability of the Office of Energy Research Financial Assistance 
Program. DOE shall also publish notices or abbreviated notices of 
availability in trade and professional journals, and news media, and use 
other means of communication, as appropriate.
    (1) Each notice of availability shall cite this part and shall 
include:
    (i) The Catalog of Federal Domestic Assistance number and 
solicitation control number of the program;
    (ii) The amount of money available or estimated to be available for 
award;
    (iii) The name of the responsible DOE program official to contact 
for additional information, and an address where application forms may 
be obtained;
    (iv) The address for submission of applications; and
    (v) Any evaluation criteria in addition to those set forth in 
Sec. 605.10.
    (2) The notice of availability may also include any other relevant 
information helpful to applicants such as:
    (i) Program objectives,
    (ii) A project agenda or potential areas for project initiatives,
    (iii) Problem areas requiring additional effort, and
    (iv) Any other information which identifies areas in which grants or 
cooperative agreements may be made.
    (e) DOE is under no obligation to pay for any costs associated with 
the preparation or submission of applications.
    (f) DOE reserves the right to fund, in whole or in part, any, all, 
or none of the applications submitted.
    (g) To be considered for a renewal award under this part, an 
incumbent recipient shall submit a renewal application as provided in 
Sec. 605.9 (c) and (h).



Sec. 605.9  Application requirements.

    (a) An original and seven copies of the application for initial 
support must be submitted except that State governments, local 
governments, or Indian tribal governments shall not be required to 
submit more than the original and two copies of the application.
    (b) Each new or renewal application in response to this part must 
include:
    (1) An application face page, DOE Form 4650.2 (approved by OMB under 
OMB Control No. 1910-1400). However, the facesheet of the application 
for State and local governments and Indian tribal government applicants 
shall be the facesheet of Standard Form (SF) 424 (approved by OMB under 
OMB Control Number 0348-0043).
    (2) A detailed description of the proposed project, including the 
objectives of the project, in relationship to DOE's program and the 
applicant's plan for carrying it out;
    (3) Detailed information about the background and experience of the 
principal investigator(s) (including references to publications), the 
facilities and experience of the applicant, and the cost-sharing 
arrangements, if any.
    (4) A detailed budget for the entire proposed period of support with 
written justification sufficient to evaluate the itemized list of costs 
provided on the entire project.

[[Page 178]]

    (i) Numerical details on items of cost provided by State and local 
government and Indian tribal government applicants shall be on Standard 
Form 424A, Budget Information for Non-Construction Programs (approved 
under OMB Control No. 0348-0044). All other applicants shall use budget 
form ERF 4620.1 (approved by OMB under Control No. 1910-1400).
    (ii) DOE may, subsequent to receipt of an application, request 
additional budgetary information from an applicant when necessary for 
clarification or to make informed preaward determinations under 10 CFR 
part 600.
    (5) Any preaward assurances required pursuant to 10 CFR parts 600 
and 605.
    (c) Applications for a renewal award must be submitted in an 
original and seven copies, except that State governments, local 
governments, or Indian tribes are required to submit only an original 
and two copies. (Approved by OMB under OMB Control Numbers 0348-0005--
0348-0009).
    (d) The application must be signed by an official who is authorized 
to act for the applicant organization and to commit the applicant to 
comply with the terms and conditions of the award, if one is issued, or 
if unaffiliated, by the individual applicant. (See Sec. 605.19(a)(1) for 
requirements on continuation awards.)
    (e) All applications which involve research, development, or 
demonstration activities when such activities:
    (1) Have a unique geographic focus and are directly relevant to the 
governmental responsibilities of a State or local government within the 
geographic area;
    (2) Necessitate the preparation of an Environmental Impact Statement 
under the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et 
seq. (1976)); or
    (3) Are to be initiated at a particular site or location and require 
unusual measures to limit the possibility of adverse exposure or hazard 
to the general public, are subject to the provisions of Executive Order 
12372 and 10 CFR part 1005.

Anyone planning to submit such applications should contact ER for 
further information about compliance requirements.
    (f) DOE may return an application which does not include all 
information and documentation required by statute, this part, 10 CFR 
part 600 or the notice of availability, when the nature of the omission 
precludes review of the application.
    (g) During the review of the complete application, DOE may request 
the submission of additional information only if the information is 
essential to evaluate the application.
    (h) In addition to including the information described in paragraphs 
(b), (c), and (d) of this section, an application for a renewal award 
must be submitted no later than six months prior to the scheduled 
expiration of the project period and must be on the same forms and 
include the same type of information as that required for initial 
applications. The renewal application must outline and justify a program 
and budget for the proposed project period, showing in detail the 
estimated cost of the proposed project, together with an indication of 
the amount of funds needed and the amount of cost sharing, if any. The 
application also shall describe and explain the reasons for any change 
in the scope or objectives of the proposed project, and shall compare 
and explain any difference between the estimates in the proposed budget 
and actual costs experienced as of the date of the application.
    (i) DOE is not required to return to the applicant an application 
which is not selected or funded.
    (j) Renewal applications must include a separate section that 
describes the results of work accomplished through the date of the 
renewal application and how such results relate to the activities 
proposed to be undertaken in the renewal period.



Sec. 605.10  Application evaluation and selection.

    (a) Applications shall be evaluated for funding generally within 6 
months but, in any event, no later than 12 months from the date of 
receipt by DOE. After DOE has held an application for 6 months, the 
applicant may, in response to DOE's request, be required to revalidate 
the terms of the original application.

[[Page 179]]

    (b) DOE staff shall perform an initial evaluation of all 
applications to ensure that the information required by this part is 
provided, that the proposed effort is technically sound and feasible, 
and that the effort is consistent with program funding priorities. For 
applications which pass the initial evaluation, DOE shall review and 
evaluate each application received based on the criteria set forth below 
and in accordance with the Merit Review System developed as required 
under DOE Financial Assistance Regulations, 10 CFR part 600.
    (c) DOE shall select evaluators on the basis of their professional 
qualifications and expertise. Evaluators shall be required to comply 
with all applicable DOE rules or directives concerning the use of 
outside evaluators.
    (d) DOE shall evaluate new and renewal applications based on the 
following criteria which are listed in descending order of importance:
    (1) Scientific and/or technical merit or the educational benefits of 
the project;
    (2) Appropriateness of the proposed method or approach;
    (3) Competency of applicant's personnel and adequacy of proposed 
resources;
    (4) Reasonableness and appropriateness of the proposed budget; and
    (5) Other appropriate factors established and set forth by ER in a 
notice of availability or in a specific solicitation.
    (e) Also, DOE shall consider, as part of the evaluation, other 
available advice or information as well as program policy factors such 
as ensuring an appropriate balance among the program areas listed in 
Sec. 605.5(b) of this part.
    (f) In addition to the evaluation criteria set forth in paragraphs 
(d) and (e) of this section, DOE shall consider the recipient's 
performance under the existing award during the evaluation of a renewal 
application.
    (g) Selection of applications for award will be based upon the 
findings of the technical evaluations, the importance and relevance of 
the proposed application to ER's mission, and fund availability. Cost 
reasonableness and realism will also be considered to the extent 
appropriate.
    (h) After the selection of an application, DOE may, if necessary, 
enter into negotiation with an applicant. Such negotiations are not a 
commitment that DOE will make an award.



Sec. 605.11  Additional requirements.

    (a) A recipient performing research, development, or related 
activities involving the use of human subjects must comply with DOE 
regulations in 10 CFR part 745, ``Protection of Human Subjects,'' and 
any additional provisions which may be included in the Special Terms and 
Conditions of an award.
    (b) A recipient performing research involving recombinant DNA 
molecules and/or organisms and viruses containing recombinant DNA 
molecules shall comply with the National Institutes of Health 
``Guidelines for Research Involving Recombinant DNA Molecules'' (51 FR 
16958, May 7, 1986), or such later revision of those guidelines as may 
be published in the Federal Register. (The guidelines are available from 
the Office of Recombinant DNA Activities, National Institutes of Health, 
Building 31, room 4B11, Bethesda, Maryland 20892.)
    (c) Any recipient performing research on warm-blooded animals shall 
comply with the Federal Laboratory Animal Welfare Act of 1966, as 
amended (7 U.S.C. 2131 et seq.) and the regulations promulgated 
thereunder by the Secretary of Agriculture at 9 CFR chapter I, 
subchapter A, pertaining to the care, handling, and treatment of warm 
blooded animals held or used for research, teaching, or other activities 
supported by Federal awards. The recipient shall comply with the 
guidelines described in DHHS Publication No. [NIH] 86-23, ``Guide for 
the Care and Use of Laboratory Animals,'' or succeeding revised 
editions. (This guide is available from the Office for Protection from 
Research Risks, Office of the Director, National Institutes of Health, 
Building 31, room 4B09, Bethesda, Maryland 20205.)



Sec. 605.12  Funding.

    (a) The project period during which DOE expects to provide support 
for an approved project under this part shall generally not exceed 3 
years and may

[[Page 180]]

exceed 5 years only if DOE makes a renewal award or otherwise extends 
the award. The project period shall be specified on the Notice of 
Financial Assistance Award (DOE Form 4600.1).
    (b) Each budget period, of an award under this part, shall generally 
be 12 months and may be as much as 24 months as determined appropriate 
by ER.



Sec. 605.13  Cost sharing.

    Cost sharing is not required nor will it be considered as a 
criterion in the evaluation and selection process unless otherwise 
provided under Sec. 605.10(d)(5).



Sec. 605.14  Limitation of DOE liability.

    Awards under this part are subject to the requirement that the 
maximum DOE obligation to the recipient is the amount shown in the 
Notice of Financial Assistance Award as the amount of DOE funds 
obligated. DOE shall not be obligated to make any additional, 
supplemental, continuation, renewal or other awards for the same or any 
other purpose.



Sec. 605.15  Fee.

    (a) Notwithstanding 10 CFR part 600, a fee may be paid, in 
appropriate circumstances, to a recipient which is a small business 
concern as qualified under the criteria and size standards of 13 CFR 
part 121 in order to permit the concern to participate in the ER 
Financial Assistance Program. Whether or not it is appropriate to pay a 
fee shall be determined by the Contracting Officer who shall, at a 
minimum, apply the following guidelines:
    (1) Whether the acceptance of an award will displace other work the 
small business is currently engaged in or committed to assume in the 
near future; or
    (2) Whether the acceptance of an award will, in the absence of 
paying a fee, cause substantial financial distress to the business. In 
evaluating financial distress, the Contracting Officer shall balance 
current displacement against reasonable future benefit to the company. 
(If the award will result in the beneficial expansion of the existing 
business base of the company, then no fee would generally be 
appropriate.) Fees shall not be paid to other entities except as a 
deviation from 10 CFR part 600, nor shall fees be paid under awards in 
support of conferences.
    (b) To request a fee, a small business concern shall submit with its 
application a written self certification that it is a small business 
concern qualified under the criteria and size standards in 13 CFR part 
121. In addition, the application must state the amount of fee requested 
for the entire project period and the basis for requesting the amount, 
and must also state why payment of a fee by DOE would be appropriate.
    (c) If the Contracting Officer determines that payment of a fee is 
appropriate under paragraph (a) of this section, the amount of fee shall 
be that determined to be reasonable by the Contracting Officer. The 
Contracting Officer shall, at a minimum, apply the following guidelines 
in determining the fee amount:
    (1) The fee base shall include the estimated allowable cost of 
direct salaries and wages and allocable fringe benefits. This fee base 
shall exclude all other direct and indirect costs.
    (2) The fee amount expressed as a percentage of the appropriate fee 
base pursuant to paragraph (c)(1) of this section, shall not exceed the 
percentage rate of fee that would result if a Federal agency contracted 
for the same amount of salaries, wages, and allocable fringe benefits 
under a cost reimbursement contract.
    (3) Fee amounts, determined pursuant to paragraphs (c)(1) and (c)(2) 
of this section, shall be appropriately reduced when:
    (i) Advance payments are provided; and/or
    (ii) Title to property acquired with DOE funds vests in the 
recipient (10 CFR part 600).
    (d) Notwithstanding 10 CFR part 600, any fee awarded shall be a 
fixed fee and shall be payable on an annual basis in proportion to the 
work completed, as determined by the Contracting Officer, upon 
satisfactory submission and acceptance by DOE of the progress report. If 
the project period is shortened due to termination, or the project 
period is not fully funded, the fee shall be reduced by an appropriate 
amount.

[[Page 181]]



Sec. 605.16  Indirect cost limitations.

    Awards issued under this part for conferences and scientific/
technical meetings will not include payment for indirect costs.



Sec. 605.17  [Reserved]



Sec. 605.18  National security.

    Activities under ER's Financial Assistance Program shall not involve 
classified information (i.e., Restricted Data, formerly Restricted Data, 
National Security Information). However, if in the opinion of the 
recipient or DOE such involvement becomes expected prior to the closeout 
of the award, the recipient or DOE shall notify the other in writing 
immediately. If the recipient believes any information developed or 
acquired may be classifiable, the recipient shall not provide the 
potentially classifiable information to anyone, including the DOE 
officials with whom the recipient normally communicates, except the 
Director of Classification, and shall protect such information as if it 
were classified until notified by DOE that a determination has been made 
that it does not require such handling. Correspondence which includes 
the specific information in question shall be sent by registered mail to 
U.S. Department of Energy, Attn: Director of Classification, DP-32, 
Washington, DC 20585. If the information is determined to be classified, 
the recipient may wish to discontinue the project in which case the 
recipient and DOE shall terminate the award by mutual agreement. If the 
award is to be terminated, all material deemed by DOE to be classified 
shall be forwarded to DOE, in a manner specified by DOE, for proper 
disposition. If the recipient and DOE wish to continue the award, even 
though classified information is involved, the recipient shall be 
required to obtain both personnel and facility security clearances 
through the Office of Safeguards and Security for Headquarters awards, 
or from the cognizant field office Division of Safeguards and Security 
for awards obtained through DOE field organizations. Costs associated 
with handling and protecting any such classified information shall be 
negotiated at the time that the determination to proceed is made.



Sec. 605.19  Continuation funding and reporting requirements.

    (a) A recipient shall periodically report to DOE on the project's 
progress in meeting the project objectives of the award. The following 
types of reports shall be used:
    (1) Progress reports. After issuance of an initial award and if 
future support is recommended, recipients must submit a satisfactory 
progress report in order to receive continuation awards for the 
remainder of the project period. The original and two copies of the 
required report (generally not to exceed two pages per project or task) 
must be submitted to the ER program manager 90 days prior to the 
anticipated continuation funding date and contain the following 
information: on the first page, provide the project title, principal 
investigator/project director name, period of time report covers, name 
and address of recipient organization, DOE award number, the amount of 
unexpended funds, if any, that are anticipated to be left at the end of 
the current budget period, and if the amount exceeds 10 percent of the 
funds available for the budget period, provide information as to why the 
excess funds are anticipated to be available and how they will be used 
in the next budget period. Report should state whether aims have changed 
from original application and if they have, provided revised aims. 
Include results of work to date. Emphasize findings and their 
significance to the field, and any real or anticipated problems. A 
completed budget page must be submitted with the continuation progress 
report when a change to anticipated future costs will exceed 25 percent 
of the original recommended future budget.
    (2) Notice of Energy R&D Project. A Notice of Energy R&D Project, 
DOE Form 1430.22, which summarizes the purpose and scope of the project, 
must be submitted in accordance with the Distribution and Schedule of 
Documents set forth at the end of this section. Copies of the form may 
be obtained from a DOE Contracting Office.

[[Page 182]]

    (3) Special reports. The recipient shall report the following events 
to DOE as soon after they occur as possible:
    (i) Problems, delays, or adverse conditions which will materially 
affect the ability to attain project objectives, or prevent the meeting 
of time schedules and goals. The report must describe the remedial 
action the recipient has taken or plans to take and any action DOE 
should take to alleviate the problems.
    (ii) Favorable developments or events which enable meeting time 
schedules and goals sooner or at less cost than anticipated or producing 
more beneficial results than originally projected.
    (4) Final report. A final report summarizing the entire 
investigation must be submitted by the recipient within 90 days after 
the final project period ends or the award is terminated. Satisfactory 
completion of an award will be contingent upon the receipt of this 
report. The final report shall follow the same outline as a progress 
report. Manuscripts prepared for publication should be appended.
    (5) Financial status report (FSR) (OMB No. 0348-0039). The FSR is 
required within 90 days after completion of each budget period; for 
budget periods exceeding 12 months, an FSR is also required within 90 
days after this first 12 months unless waived by the Contracting 
Officer.
    (b) DOE may extend the deadline date for any report if the recipient 
submits a written request before the deadline which adequately justifies 
an extension.
    (c) A table summarizing the various types of reports, time for 
submission, number of copies is set forth below. The schedule of reports 
shall be as prescribed in this table, unless the award document 
specifies otherwise.
    (d) DOE review of performance. DOE or its authorized representatives 
may make site visits, at any reasonable time, to review the project. DOE 
may provide such technical assistance as may be requested.
    (e) Subrecipient progress reporting. Recipients may place progress 
reporting requirements on a subrecipient consistent with the provisions 
of this section.

                 Distribution and Schedule of Documents
------------------------------------------------------------------------
                                                               Number of
                                                               copies to
                Type                          When due             be
                                                               submitted
------------------------------------------------------------------------
1. Summary: 200 words on scope and    Immediately after award         3
 purpose (Notice of Energy R&D         and with each
 Project).                             application for
                                       renewal.
2. Renewal..........................  6 months before the             8
                                       project period ends.
3. Progress Report..................  90 days prior to the            3
                                       next budget period (or
                                       as part of a renewal
                                       application).
4. Other progress reports, brief      As deemed appropriate           3
 topical reports, etc. (Designated     by the recipient.
 when significant results develop or
 when work has direct programmatic
 impact).
5. Reprints, Conference papers......  Same as 4 above........         3
6. Final Report.....................  Within 90 days after            3
                                       termination of the
                                       project.
7. Financial Status Report. (FSR)...  Within 90 days after            3
                                       completion of the
                                       project period; for
                                       budget periods
                                       exceeding 12 months an
                                       FSR is also required
                                       within 90 days after
                                       the first 12-month
                                       period.
------------------------------------------------------------------------
Note: Report types 5 and 6 require with submission two copies of DOE
  Form 1332.16, University-Type Contractor and Grantee Recommendations
  for Disposition of Scientific and Technical Document.



Sec. 605.20  Dissemination of results.

    (a) Recipients are encouraged to disseminate project results 
promptly. DOE reserves the right to utilize, and have others utilize, to 
the extent it deems appropriate, the reports resulting from awards.
    (b) DOE may waive progress reporting requirements set forth in 
Sec. 605.19, if the recipient submits to DOE a copy of its own report 
which is published or accepted for publication in a recognized 
scientific or technical journal and which satisfies the information 
requirements of the program.
    (c) Recipients are urged to publish results through normal 
publication channels in accordance with the applicable provisions of 10 
CFR part 600.
    (d) The article shall include an acknowledgment that the project was 
supported, in whole or in part, by a DOE award, and specify the award 
number, but state that such support

[[Page 183]]

does not constitute an endorsement by DOE of the views expressed in the 
article.

 Appendix A to Part 605--The Energy Research Program Office Descriptions

                        1. Basic Energy Sciences

    This program supports basic science research efforts in a variety of 
disciplines to broaden the energy supply and technological base 
knowledge. The major science division and its objectives are as follows:

                         (a) Energy Biosciences

    The primary objective of this program is to generate a basis of 
understanding of fundamental biological mechanisms in the areas of 
botanical and microbiological sciences that will support biotechnology 
development related to energy. The research serves as the basic 
information foundation with respect to renewable resource productivity 
for fuels and chemicals, microbial conversions or renewable materials 
and biological systems for the conservation of energy. This office has 
special requirements on the submission of preapplications, when to 
submit, and the length of the preapplication/application; applicants are 
encouraged to contact the office regarding these requirements.

                          (b) Chemical Sciences

    This program sponsors experimental and theoretical research on 
liquids, gases, plasmas, and solids. The focus is on their chemical 
properties and the interactions of their component molecules, atoms, 
ions, and electrons. The subprogram objective is to expand, through 
support of basic research, our knowledge in the various areas of 
chemistry; the long-term goal is to contribute to new or improved 
processes for developing and using domestic energy resources in an 
efficient and environmentally sound manner. Disciplinary areas covered 
include physical, organic, and inorganic chemistry; chemical physics; 
atomic physics; photochemistry; radiation chemistry; thermodynamics; 
thermophysics; separations science; analytical chemistry; and actinide 
chemistry.

                             (c) Geosciences

    The goal of this program is to develop a quantitative and predictive 
understanding of the energy-related aspects of processes within the 
earth and at the solar-terrestrial interface. The emphasis is on the 
upper levels of the earth's crust and the focus is on geophysics and 
geochemistry of rock-fluid systems and interactions. Specific topical 
areas receiving emphasis include: High resolution geophysical imaging; 
fundamental properties of rocks, minerals, and fluids; scientific 
drilling; and sedimentary basin systems. The resulting improved 
understanding and knowledge base are needed to assist efforts in the 
utilization of the Nation's energy resources in an environmentally 
acceptable fashion.

                        (d) Engineering Research

    This program's objectives are: (1) To extend the body of knowledge 
underlying current engineering practice in order to open new ways for 
enhancing energy savings and production, prolonging useful equipment 
life, and reducing costs while maintaining output and performance 
quality; and (2) to broaden the technical and conceptual base for 
solving future engineering problems in the energy technologies. Long-
term research topics of current interest include: foundations of 
bioprocessing of fuels and energy related wastes, fracture mechanics, 
experimental and theoretical studies of multiphase flows, intelligent 
machines, and diagnostics and control for plasma processing of 
materials.

                         (e) Materials Sciences

    The objective of this program is to increase the understanding of 
phenomena and properties important to materials behavior that will 
contribute to meeting the needs of present and future energy 
technologies. It is comprised of the subfields metallurgy, ceramics, 
solid state physics, materials chemistry, and related disciplines where 
the emphasis is on the science of materials.

                      (f) Advanced Energy Projects

    The objective of this program is to support exploratory research on 
novel concepts related to energy. The concepts may be in any field 
related to energy but must not fall into an area of programmatic 
responsibility of an existing ER technical program. The research is 
usually aimed at establishing the scientific feasibility of a concept 
and, where appropriate, at estimating its economic viability.

                     2. Field Operations Management

    This office administers special purpose support programs that cut 
across DOE program areas. In conjunction with this activity, it supports 
related conferences, research, and training initiatives that further 
these areas of interest.

               (a) Laboratory Technology Transfer Program

    The ER Laboratory Technology Transfer (LTT) Program has dedicated 
funding which fulfills the legislative mandate to more effectively 
transfer research and technology from Energy Research laboratories to 
industry. By design, this program provides only partial funding for 
technology research projects and personnel exchanges with industry and 
universities. Mandatory cost-sharing

[[Page 184]]

by industry and other partners ensures that cooperative projects will 
focus on those that generate real interest in the private sector and 
facilitate the transfer of technology. The program supports laboratory-
industry personnel exchanges; comprehensive program evaluation; and 
cost-shared technology research, especially CRADAs to advance 
precompetitive research projects to a point where they can be evaluated 
for commercial applications. Other activities of the ER Laboratory 
Technology Transfer Program include coordinating technology transfer 
operations throughout the ER laboratory system; coordinating technology 
transfer elements of the institutional planning process; contributing to 
Departmental technology transfer policy development; and implementing 
appropriate outreach activities.

                            3. Fusion Energy

    The magnetic fusion energy program is an applied research and 
development program whose goal is to develop the scientific and 
technological information required to design and construct magnetic 
fusion energy systems. This goal is pursued by three divisions, whose 
major functions are listed below.

                    (a) Applied Plasma Physics (APP)

    This Division seeks to develop that body of physics knowledge which 
permits advancement of the fusion program on a sound basis. APP research 
programs provide: (1) The theoretical understanding of fusion plasmas 
necessary for interpreting results from present experiments, and the 
planning and design of future confinement devices; (2) the data on 
plasma properties, atomic physics and new diagnostic techniques for 
operational support of confinement experiments; research and development 
of Heavy Ion Fusion Accelerator (HIFAR) and reactor studies in support 
of the development of Inertial Fusion Energy (IFE).

                         (b) Confinement Systems

    This Division has as its primary objective the conduct of research 
efforts to investigate and resolve basic physics issues associated with 
medium- to large-scale confinement devices. These devices are used to 
experimentally explore the limits of specific confinement concepts as 
well as to study associated physical phenomena. Specific areas of 
interest include: the production of increased plasma densities and 
temperatures; the understanding of the physical laws governing plasma 
energy transport and confinement scaling; equilibrium and stability of 
high plasma pressure; the investigation of plasma interaction with 
radio-frequency waves; and the study and control of particle transport 
in the plasma.

                     (c) Development and Technology

    This Division supports research and development of the technology 
necessary for fabrication and operation of present and future plasma and 
fusion devices. The program also pursues R&D and system studies 
pertaining to critical feasibility issues of fusion technology and 
development.

                  4. Health and Environmental Research

    The goals of this research program are as follows: (1) To provide, 
through basic and applied research, the scientific information required 
to identify, understand and anticipate the long-term health and 
environmental consequences of energy use and development; and (2) to 
utilize the Department's unique resources to solve major scientific 
problems in medicine, biology and the environment. The goals of the 
program are accomplished through the effort of its divisions, which are:

              (a) Health Effects and Life Sciences Research

    This is a broad program of basic and applied biological research. 
The objectives are: (1) To develop experimental information from 
biological systems for estimating or predicting risks of carcinogenesis, 
mutagenesis, and delayed toxicological effects associated with low level 
human exposures to energy-related radiations and chemicals; (2) to 
define mechanisms involved in the induction of biological damage 
following exposure to low levels of energy-related agents; (3) to 
develop new technologies for detecting and quantifying latent health 
effects associated with such agents; (4) to support fundamental research 
in structural biology user facilities at DOE laboratories; and (5) to 
create and apply new technologies and resources for characterizing the 
molecular nature of the human genome.
    Increasing emphasis will be placed on: Understanding of mechanisms 
by which low level exposures to radiation and/or energy-related 
chemicals produce long-term health impacts; development of new 
technologies for estimating human health risks from low level exposures; 
development and application of technologies and approaches for cost-
effective characterization of the human genome.

            (b) Medical Applications and Biophysical Research

    The objectives of this program comprise several areas: (1) To 
develop new concepts and techniques for detecting and measuring 
hazardous physical and chemical agents related to energy production; (2) 
to evaluate chemical and radiation exposures and dosimetry for health 
protection application; (3) to determine the physical and chemical 
mechanisms of radiation action in biological systems; and (4) to develop 
new instrumentation and technology for biological and biomedical

[[Page 185]]

research. In addition, Medical Application research is aimed at 
enhancing the beneficial applications of radiation, and radionuclides, 
in the diagnosis, study, and treatment of human diseases. This includes 
the development of new techniques for radioactive isotope production, 
labeled pharmaceuticals, imaging devices, and radiation beam 
applications for the improved diagnosis and therapy of human diseases or 
the study of human physiological processes. A new area of interest 
involves the integration of Nuclear Medicine and Molecular Biology. This 
includes development of radioisotopes and new molecular 
radiopharmaceutical probes specific to disease-associated targets for 
improved diagnosis and therapy.

                       (c) Environmental Sciences

    The objectives of the program relate to environmental processes 
affected by energy production and use. For example, the program develops 
information on the physical, chemical and biological processes that 
cycle and transport energy related material and nutrients through the 
atmosphere, and the ocean margin. Specific emphasis is placed on 
hydrological transport, mobility and degradation of energy-related 
contaminants by microorganisms in subsurface systems.
    This program also addresses global environmental change from 
increases in atmospheric carbon dioxide and other greenhouse gases. The 
scope of the global change program encompasses the carbon cycle, climate 
modeling and diagnostics, ecosystem responses, the role of the ocean in 
global change and experiments to quantify the links between greenhouse 
gas increases and climate change. A new dimension of this program 
addresses the role of molecular biology in understanding the ecosystem 
response to global change.

                   5. High Energy and Nuclear Physics

    This program supports 90 percent of the U.S. efforts in high energy 
and nuclear physics. The objectives of these programs are indicated 
below:

          (a) Nuclear Physics (Including Nuclear Data Program)

    The primary objectives of this program are an understanding of the 
interactions and structures of atomic nuclei and nuclear matter at the 
most elementary level possible, and an understanding of the fundamental 
forces of nature as manifested in nuclear matter.

                         (b) High Energy Physics

    The primary objectives of this program are to understand the nature 
and relationships among fundamental forces of nature and to understand 
the ultimate structure of matter in terms of the properties and 
interrelations of its basic constituents.

                      6. Scientific Computing Staff

    The goal of this program is to advance the understanding of the 
fundamental concepts of mathematics, statistics, and computer science 
underlying the complex mathematical models of the key physical processes 
involved in the research and development programs of DOE. Broad emphasis 
is given in three major categories: analytical and numerical methods, 
information analysis techniques, and advanced concepts.

                 7. Superconducting Super Collider (SSC)

    The goals of the Superconducting Super Collider are to build a 
proton-proton collider with an energy of 20 TeV per proton, to construct 
and operate experimental systems to study the interactions of these 
protons, to establish the premier international laboratory for high 
energy physics reasearch, and to create a major resource for science 
education. The Office of the Superconducting Super Collider administers 
research grants associated with the SSC Laboratory's physics, 
accelerator, and associated technology research and development 
programs.

                   8. University and Science Education

    The Office of University and Science Education supports a variety of 
science, mathematics and engineering education precollege through 
postgraduate programs aimed at strengthening the Nation's science 
education and research infrastructure. DOE's education mission has been 
expanded to include increasing emphasis on the precollege and general 
public literacy areas. Much of the support involves the use of the 
unique resources (scientists, facilities and equipment) at DOE's 
national laboratories and research facilities, and includes research 
and/or other ``hands-on'' opportunities for precollege and postsecondary 
students, teachers, and faculty members. In addition to programs 
centered in DOE facilities, a number of other educational activities are 
supported, including:

               (a) Pre-Freshman Enrichment Program (PREP)

    PREP supports projects at colleges and universities aimed at seeking 
out gindividuals, typically under-represented in science-based careers, 
during junior high school and early high school years (sixth through 
tenth grades) and providing these individuals with pre-freshman 
enrichment activities to identify, motivate and prepare them for 
science-based careers. Projects must include concentrated, integrated 
activities that enhance the student's understanding of science and 
mathematics, must have a summer component at least four

[[Page 186]]

weeks in length, and may also include a pre-summer or post-summer 
component.

                  (b) Museum Science Education Program

    This program funds museum projects that support the development of 
the media of informal energy-related science education. The media of 
informal science education include, but are not limited to: Interactive 
exhibits, demonstrations, hands-on activities, teacher-student 
curriculum and film/video/software productions. Examples of energy-
related subjects include, but are not limited to: high energy and 
nuclear physics, nuclear science and technologies, global warming, waste 
management, energy efficiency, new materials development, fossil energy 
resources, renewable technologies, risk assessment, energy/environment 
and other timely topics. The purpose of the program is the development 
and use of creative informal science education media which focus on 
energy-related science and technology.

             (c) University Research Instrumentation Program

    The University Research Instrumentation Program has been developed 
as part of an interagency effort under the coordination of the Office of 
Science and Technology Policy to help alleviate the overall shortage of 
sophisticated state-of-the-art instruments required for advanced 
scientific and technical research at universities. The overall program 
objective is to assist university and college scientists in 
strengthening their capabilities to conduct long-range experimental/
scientific research in specific energy areas of direct interest to DOE 
through the acquisition of large scientific/technical pieces of 
equipment. Only those colleges and universities that currently have DOE 
funded research projects, which require the requested equipment, 
totalling at least $150,000 in the specific area will be selected (more 
complete eligibility guidelines and principal research areas of 
particular DOE interest in any given year are available from the program 
office). Smaller research instruments (less than $100,000 each) are not 
eligible for consideration in this program. No specific fraction of cost 
sharing is required but the level of non-Federal funds to be provided 
will be considered in final selection of awards under the program.

       (d) Experimental Program To Stimulate Competitive Research

    The purpose of the DOE Experimental Program to Stimulate Competitive 
Research is to enhance the capabilities of the eligible designated 
States to develop science and engineering manpower in energy-related 
areas and to conduct nationally competitive energy-related research. 
Planning committees within eligible States may apply for planning, 
implementation and/or training efforts (list of eligible States and 
activities to be supported in any given year as well as cost-sharing 
requirements are available from the program office). Separate 
applications for planning/implementation and graduate traineeships are 
required. Planning/implementation applications must contain information 
that details development of a State-wide improvement plan for energy-
related research and human resources, while training grant applications 
must detail the need for energy-related specific and technical 
educational disciplines.

                    (e) Nuclear Engineering Research

    The objective of this program is to support research efforts aimed 
at strengthening University-based nuclear engineering programs. Specific 
areas of basic and applied research of interest include, but are not 
limited to: (1) Material behavior in a radiation environment typical of 
advanced nuclear power plants; (2) real-time instrumentation that 
identifies and applies innovative measurements technologies in nuclear-
related fields; (3) advanced nuclear reactor concepts; (4) applied 
nuclear sciences that address improvements in the applications of 
radiation and the understanding of the interaction of radiation with 
matter; (5) engineering science research applicable to advanced nuclear 
reactor concepts, industry safety and reliability concerns; (6) 
neutronics that address improvements in reactor computational 
methodologies and knowledge of the basic fission processes; and (7) 
nuclear thermal hydraulics that address improvements of models and 
analysis of thermal hydraulic behavior in an advanced nuclear reactor 
system.

       (f) Used Energy-Related Laboratory Equipment (ERIE) Program

    In accordance with DOE's responsibility to encourage research and 
development in the energy area, grants of used energy-related laboratory 
equipment for use in energy-oriented educational programs in the life, 
physical and environmental sciences, and engineering are available to 
universities, colleges and other non-profit educational institutions of 
higher learning in the United States. An institution is not required to 
have a current DOE grant or contract in order to participate in this 
program. The program office should be contacted for specific information 
on how to access the list of eligible equipment under this program. The 
cost of care and handling incident to the grant must be borne by the 
institution.

                           9. Program Analysis

    The Office of Program Analysis conducts assessments to identify 
research opportunities in specific areas of interest to DOE programs.

[[Page 187]]





                     SUBCHAPTER I--SALES REGULATION


PART 622--CONTRACTUAL PROVISIONS--Table of Contents



Sec. 622.103  Dispute provisions.

    (a) Except as provided in paragraph (b) of this section, all DOE 
contracts for the sale of personal property to any organization outside 
the U.S. Government shall include a Disputes clause which provides for:
    (1) Binding final decisions by the Contracting Officer, subject to 
appeal;
    (2) Appeal rights pursuant to the Contract Disputes Act of 1978;
    (3) Continuation of performance by the contractor at the direction 
of the contracting officer pending final resolution of the dispute.
    (b) Exceptions:
    (1) The provisions of this part shall not apply to contracts for 
sale of electric power by the Power Marketing Administrations;
    (2) The Secretary may exempt a contract or class of contracts from 
this requirement upon determination that it would not be in the public 
interest in an individual contract or class of contracts with a foreign 
government, or agency thereof, or international organization, or 
subsidiary body thereof, to include the Disputes clause, as permitted by 
section 3 of the Contract Disputes Act of 1978.
    (c) The Energy Board of Contract Appeals (EBCA) has cognizance over 
disputes relating to DOE Sales contracts.
    (d) The Disputes clause in Sec. 624.102-4 shall be used in 
accordance with this Sec. 622.103.

(Sec. 644, Department of Energy Organization Act, Pub. L. 95-91, 91 
Stat. 599 (42 U.S.C. 7254))

[46 FR 34559, July 2, 1981]



PART 624--CONTRACT CLAUSES--Table of Contents


Sec. 624.102-4  Disputes.

    The following clause shall be used in accordance with the provisions 
of Sec. 622.103:

                                Disputes

    (a) This contract is subject to the Contract Disputes Act of 1978 
(41 U.S.C. 601 et seq.). If a dispute arises relating to the contract, 
the purchaser may submit a claim to the Contracting Officer who shall 
issue a written decision on the dispute.
    (b) Claim means:
    (1) A written request submitted to the Contracting Officer;
    (2) For payment of money, adjustment of contract terms, or other 
relief;
    (3) Which is in dispute or remains unresolved after a reasonable 
time for its review and disposition by the Government; and
    (4) For which a Contracting Officer's decision is demanded.
    (c) In the case of disputed requests or amendments to such requests 
for payment exceeding $50,000, or with any amendment causing the total 
request in dispute to exceed $50,000, the purchaser shall certify, at 
the time of submission of a claim, as follows:

    I certify that the claim is made in good faith, that the supporting 
data is accurate and complete to the best of my knowledge and belief, 
and that the amount requested accurately reflects the contract 
adjustment for which the Purchaser believes the Government is liable.

(Purchaser's Name)______________________________________________________

(Title)_________________________________________________________________

    (d) The Government shall pay the Purchaser interest.
    (1) On the amount found due to the purchaser and unpaid on claims 
submitted under this clause;
    (2) At the rates fixed by the Secretary of the Treasury;
    (3) From the date the amount is due until the Government makes 
payment.
    (e) The purchaser shall pay the Government interest:
    (1) On the amount found due to the Government and unpaid on claims 
submitted under this clause;
    (2) At the rates fixed by the Department of Energy for the payment 
of interest on past due accounts;
    (3) From the date the amount is due until the purchaser makes 
payment.

[[Page 188]]

    (f) The decision of the Contracting Officer shall be final and 
conclusive and not subject to review by any forum, tribunal, or 
Government agency unless an appeal or action is timely commenced within 
the times specified by the Contract Disputes Act of 1978.
    (g) The purchaser shall comply with any decision of the Contracting 
Officer and at the direction of the Contracting Officer shall proceed 
diligently with performance of this contract pending final resolution of 
any request for relief, claim, appeal, or action related to this 
contract.

(Sec. 644, Department of Energy Organization Act, Pub. L. 95-91, 91 
Stat. 599 (42 U.S.C. 7254))



PART 625--PRICE COMPETITIVE SALE OF STRATEGIC PETROLEUM RESERVE PETROLEUM--Table of Contents




Sec.
625.1  Application and purpose.
625.2  Definitions.
625.3  Standard sales provisions.
625.4  Publication of the Standard Sales Provisions.
625.5  Failure to perform in accordance with SPR Contracts of Sale.

Appendix A to Part 625--Standard Sales Provisions

    Authority: 15 U.S.C. 761; 42 U.S.C. 7101; 42 U.S.C. 6201.

    Source: 48 FR 56541, Dec. 21, 1983, unless otherwise noted.



Sec. 625.1  Application and purpose.

    This part shall apply to all price competitive sales of SPR 
petroleum by DOE. This section provides the rules for developing 
standard contract terms and conditions and financial and performance 
responsibility measures; notifying potential purchasers of those terms, 
conditions and measures; choosing applicable terms, conditions and 
measures for each sale of SPR petroleum; and notifying potential 
purchasers of which terms, conditions and measures will be applicable to 
particular sales of SPR petroleum.



Sec. 625.2  Definitions.

    (a) DOE. DOE is the Department of Energy established by Public Law 
95-91 (42 U.S.C. 7101 et seq.) and any component thereof including the 
SPR Office.
    (b) Notice of Sale. The Notice of Sale is the document announcing 
the sale of SPR petroleum, the amount, type and location of the 
petroleum being sold, the delivery period and the procedures for 
submitting offers. The Notice of Sale will specify which contractual 
provisions and financial and performance responsibility measures are 
applicable to that particular sale of petroleum, and will provide other 
pertinent information.
    (c) Petroleum. Petroleum means crude oil, residual fuel oil or any 
refined petroleum product (including any natural gas liquid and any 
natural gas liquid product) owned or contracted for by DOE and in 
storage in any permanent SPR facility, or temporarily stored in other 
storage facilities, or in transit to such facilities (including 
petroleum under contract but not yet delivered to a loading terminal).
    (d) Price Competitive Sale. A price competitive sale of SPR 
petroleum is one in which contract awards are made to those responsive, 
responsible persons offering the highest prices; sales conducted 
pursuant to rules adopted under section 161(e) of the Energy Policy and 
Conservation Act (EPCA), Public Law 94-163 (42 U.S.C. 6201 et seq.), are 
not price competitive sales.
    (e) Purchaser. A purchaser is any person or entity (including a 
Government agency) which enters into a contract with DOE to purchase SPR 
petroleum.
    (f) SPR. SPR is the Strategic Petroleum Reserve, that program of the 
Department of Energy established by title I, part B of EPCA.
    (g) Standard Sales Provisions. The Standard Sales Provisions are a 
set of terms and conditions of sale, which may contain or describe 
financial and performance responsibility measures, for petroleum sold 
from the SPR under this part.



Sec. 625.3  Standard sales provisions.

    (a) Contents. The Standards Sales Provisions shall contain contract 
clauses which may be applicable to price competitive sales of SPR 
petroleum, including terms and conditions of sale, and purchaser 
financial and performance responsibility measures, or descriptions 
thereof. At his discretion, the Secretary or his designee may

[[Page 189]]

specify in a Notice of Sale which of such terms and conditions, or 
financial and performance responsibility measures, shall apply to a 
particular sale of SPR petroleum; and, he may specify any revisions in 
such terms, conditions and measures, and any additional terms, 
conditions and measures which shall be applicable to that sale, that are 
consistent with the SPR Drawdown Plan adopted on December 1, 1982.
    (b) Acceptance by offerors. All offerors must, as part of their 
offers for SPR petroleum in response to a Notice of Sale, agree without 
exception to all contractual provisions and financial and performance 
responsibility measures which the Notice of Sale makes applicable to the 
particular sale.
    (c) Award of contracts. No contract for the sale of SPR petroleum 
may be awarded to any offeror who has not unconditionally agreed to all 
contractual provisions and financial and performance responsibility 
measures which the Notice of Sale makes applicable to the particular 
sale.
    (d) Contract documents. The terms and conditions which the Notice of 
Sale makes applicable to a particular sale may be incorporated into a 
contract for the sale of SPR petroleum by reference to the Notice of 
Sale.



Sec. 625.4  Publication of the Standard Sales Provisions.

    (a) Publication. The Standard Sales Provisions shall be published in 
the Federal Register and in the Code of Federal Regulations as an 
appendix to this rule.
    (b) Revisions of the Standard Sales Provisions. The Standard Sales 
Provisions shall be reviewed periodically and republished in the Federal 
Register, with any revisions.
    (c) Notification of applicable clauses. The Notice of Sale will 
specify, by referencing the Federal Register and the Code of Federal 
Regulations in which the latest version of the Standard Sales Provisions 
was published, which contractual terms and conditions and contractor 
financial and performance responsibility measures contained or described 
therein are applicable to that particular sale.



Sec. 625.5  Failure to perform in accordance with SPR Contracts of Sale.

    (a) Ineligibility. In addition to any remedies available to the 
Government under the Contract of Sale, in the event that a purchaser 
fails to perform in accordance with applicable SPR petroleum sale 
contractual provisions, and such failure is not excused by those 
provisions, the Headquarters Senior Procurement Official, at his 
discretion, may make such purchaser ineligible for future awards of SPR 
petroleum sales contracts.
    (b) Determination of ineligibility. No purchaser shall be made 
ineligible for the award of any SPR sales contract prior to notice and 
opportunity to respond in accordance with the requirements of this 
subsection.
    (1) Upon the determination that a purchaser is to be considered for 
ineligibility, the purchaser shall be sent by certified mail return 
receipt requested, the following:
    (i) Notification that the Headquarters Senior Procurement Official 
is considering making the purchaser ineligible for future awards;
    (ii) Identification of the SPR sales contract which the purchaser 
failed to comply with, along with a brief description of the events and 
circumstances relating to such failure;
    (iii) Advice that the purchaser may submit in writing for 
consideration by the Headquarters Senior Procurement Official in 
determining whether or not to impose ineligibility on the purchaser, any 
information or argument in opposition to the ineligibility; and
    (iv) Advice that such information or argument in opposition to the 
ineligibility must be submitted within a certain time in order to be 
considered by the Headquarters Senior Procurement Official, such time to 
be not less than 21 days.
    (2) After elapse of the time period established under paragraph 
(b)(1) of this section for receipt of the purchaser's response, the 
Headquarters Senior Procurement Official, at his discretion, and after 
consideration of the purchaser's written response, if any, may make the 
purchaser ineligible for future awards of SPR petroleum sales contracts. 
Such ineligibility shall continue for the time period determined

[[Page 190]]

by the Headquarters Senior Procurement Official, as appropriate under 
the circumstances.
    (3) The purchaser shall be notified of the Headquarters Senior 
Procurement Official's decision.
    (c) Reconsideration. Any purchaser who has been excluded from 
participating in any SPR sale under paragraph (a) may request that the 
Headquarters Senior Procurement Offical reconsider the purchaser's 
ineligibility. The Headquarters Senior Procurement Official, at his 
discretion, may reinstate any such purchaser to eligibility for future 
competitive sales.

            Appendix A to Part 625--Standard Sales Provisions

                                  Index

Section A--General Pre-Sale Information
    A.1  List of abbreviations
    A.2  Definitions
    A.3  Standard Sales Provisions (SSPs)
    A.4  Periodic revisions of the Standard Sales Provisions
    A.5  Sales Offerors' Mailing List (SOML)
    A.6  Publicizing the Notice of Sale
    A.7  Penalty for false statements in offers to buy SPR petroleum
Section B--Sales Solicitation Provisions
    B.1  Requirements for a valid offer--caution to offerors
    B.2  Price indexing
    B.3  Certification of independent price determination
    B.4  Requirements for vessels--caution to offerors
    B.5  ``Superfund'' tax on SPR petroleum--caution to offerors
    B.6  Export limitations and licensing--caution to offerors
    B.7  Issuance of the Notice of Sale
    B.8  Submission of offers and modification of previously submitted 
offers
    B.9   Acknowledgment of amendments to a Notice of Sale
    B.10  Late offers, modifications of offers, and withdrawal of offers
    B.11  Offer guarantee
    B.12  Explanation requests from offerors
    B.13  Currency for offers
    B.14  Language of offers and contracts
    B.15  Proprietary data
    B.16  SPR crude oil streams and delivery points
    B.17  Notice of Sale line item schedule--petroleum quantity, 
quality, and delivery method
    B.18  Line item information to be provided in the offer
    B.19  Mistake in offer
    B.20  Evaluation of offers
    B.21  Procedures for evaluation of offers
    B.22  Financial statements and other information
    B.23  Resolicitation procedures on unsold petroleum
    B.24  Offeror's certification of acceptance period
    B.25  Notification of Apparently Successful Offeror
    B.26  Contract documents
    B.27  Purchaser's representative
    B.28  Procedures for selling to other U.S. Government agencies
SECTION C--Sales Contract Provisions
    C.1  Delivery of SPR petroleum
    C.2  Compliance with the ``Jones Act'' and the U.S. export control 
laws
    C.3  Storage of SPR petroleum
    C.4  Environmental compliance
    C.5  Delivery and transportation scheduling
    C.6  Contract modification--alternate delivery line items
    C.7  Application procedures for ``Jones Act'' and Construction 
Differential Subsidy waivers
    C.8  Vessel loading procedures
    C.9  Vessel laytime and demurrage
    C.10  Vessel loading expedition options
    C.11  Purchaser liability for excessive berth time
    C.12  Pipeline delivery procedures
    C.13  Title and risk of loss
    C.14  Acceptance of crude oil
    C.15  Delivery acceptance and verification
    C.16  Price adjustments for quality differentials
    C.17  Determination of quality
    C.18  Determination of quantity
    C.19  Delivery documentation
    C.20  Contract amounts
    C.21  Payment and Performance Letter of Credit
    C.22  Billing and payment
    C.23  Method of payments
    C.24  Interest
    C.25  Termination
    C.26  Other Government remedies
    C.27  Liquidated damages
    C.28  Failure to perform under SPR contracts
    C.29  Government options in case of impossibility of performance
    C.30  Limitation of Government liability
    C.31  Notices
    C.32  Disputes
    C.33  Assignment
    C.34  Order of precedence
    C.35  Gratuities

                                Exhibits

A--SPR Sales Offer Form
B--Sample Notice of Sale
C--SPRPMO Form 33S
D--SPR Crude Oil Comprehensive Analysis
E--SPR Delivery Point Data
F--Offer Standby Letter of Credit

[[Page 191]]

G--Payment and Performance Letter of Credit
H--Strategic Petroleum Reserve Crude Oil Delivery Report--SPRPMO-F-
          6110.2-14b 1/87 REV. 8/91
I--Instruction Guide for Return of Offer Guarantees by Electronic 
          Transfer or Treasury Check
J--Offer Guarantee Calculation Worksheet

                 SECTION A--General Pre-Sale Information

                       A.1  List of Abbreviations

(a) ASO: Apparently Successful Offeror
(b) DLI: Delivery Line Item
(c) DOE: U.S. Department of Energy
(d) MLI: Master Line Item
(e) NA: Notice of Acceptance
(f) NS: Notice of Sale
(g) SOML: Sales Offerors Mailing List
(h) SSPs: Standard Sales Provisions
(i) SPR: Strategic Petroleum Reserve
(j) SPRCODR: SPR Crude Oil Delivery Report (Exhibit H)
(k) SPR/PMO: Strategic Petroleum Reserve Project Management Office

                            A.2  Definitions

    (a) Affiliate. The term ``affiliate'' means associated business 
concerns or individuals if, directly or indirectly, (1) either one 
controls or can control the other, or (2) a third party controls or can 
control both.
    (b) Business Day. The term ``business day'' means any day except 
Saturday, Sunday or a U.S. Government holiday.
    (c) Contract. The term ``contract'' means the contract under which 
DOE sells SPR petroleum. It is composed of the NS, the NA, the 
successful offer, and the SSPs incorporated by reference.
    (d) Contracting Officer. The term ``Contracting Officer'' means the 
person executing sales contracts on behalf of the Government, and any 
other Government employee properly designated as Contracting Officer. 
The term includes the authorized representative of a Contracting Officer 
acting within the limits of his or her authority.
    (e) Government. The term ``Government'', unless otherwise indicated 
in the text, means the United States Government.
    (f) Head of the Contracting Activity. The term ``Head of the 
Contracting Activity'' means Project Manager, Strategic Petroleum 
Reserve Project Management Office.
    (g) Notice of Acceptance (NA). The term ``Notice of Acceptance'' 
means the document that is sent by DOE to accept the purchaser's offer 
to create a contract.
    (h) Notification of Apparently Successful Offeror (ASO). The term 
``notification of apparently successful offeror'' means the notice, 
written or oral, by the Contracting Officer to an offeror that it will 
be awarded a contract if it is determined to be responsible.
    (i) Notice of Sale (NS). The term ``Notice of Sale'' means the 
document announcing the sale of SPR petroleum, the amount, 
characteristics and location of the petroleum being sold, the delivery 
period and the procedures for submitting offers. The NS will specify 
what contractual provisions and financial and performance responsibility 
measures are applicable to that particular sale of petroleum and provide 
other pertinent information. (See Exhibit B, Sample Notice of Sale)
    (j) Offeror. The term ``offeror'' means any person or entity 
(including a government agency) who submits an offer in response to a 
NS.
    (k) Petroleum. The term ``petroleum'' means crude oil, residual fuel 
oil, or any refined product (including any natural gas liquid, and any 
natural gas liquid product) owned or contracted for by DOE and in 
storage in any permanent SPR facility, temporarily stored in other 
storage facilities, or in transit to such facilities (including 
petroleum under contract but not yet delivered to a loading terminal).
    (l) Project Management Office (SPR/PMO). The term ``Project 
Management Office'' means the DOE personnel and DOE contractors located 
in Louisiana and Texas responsible for the operation of the SPR.
    (m) Purchaser. The term ``purchaser'' means any person or entity 
(including a government agency) who enters into a contract with DOE to 
purchase SPR petroleum.
    (n) Standard Sales Provisions (SSPs). The term ``Standard Sales 
Provisions'' means this set of terms and conditions of sale applicable 
to price competitive sales of SPR petroleum. These SSPs constitute the 
``standard sales agreement'' referenced in the Strategic Petroleum 
Reserve ``Drawdown'' (Distribution) Plan, Amendment No. 4 (December 1, 
1982, DOE/EP 0073) to the SPR Plan.
    (o) Strategic Petroleum Reserve (SPR). The term ``Strategic 
Petroleum Reserve'' means that DOE program established by Title I, Part 
B, of the Energy Policy and Conservation Act, 42 U.S.C. Section 6201, et 
seq.
    (p) Vessel. The term ``vessel'' means a tankship, an integrated tug-
barge (ITB) system, a self-propelled barge, or other barge.

                  A.3  Standard Sales Provisions (SSPs)

    (a) These SSPs contain pre-sale information, sales solicitation 
provisions, and sales contract clauses setting forth terms and 
conditions of sale, including purchaser financial and performance 
responsibility measures, or descriptions thereof, which may be 
applicable to price competitive sales of petroleum from the SPR in 
accordance with the SPR Sales Rule, 10 CFR Part 625. The NS will specify 
which of these provisions shall apply to a particular sale of such 
petroleum, and it may specify any revisions therein and any

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additional provisions which shall be applicable to that sale. (See 
Exhibit B, Sample Notice of Sale)
    (b) All offerors must, as part of their offers for SPR petroleum in 
response to a NS, agree without exception to all sales provisions of 
that NS. Offerors shall indicate their agreement by signing the Sales 
Offer Form (Exhibit A) or other form generated from electronic media 
used for submitting offers as specified by DOE in the NS. The Government 
will not award a contract to an offeror who has failed to so agree.

        A.4  Periodic Revisions of the Standard Sales Provisions

    DOE will review the SSPs periodically and republish them in the 
Federal Register, with any revisions. When an NS is issued, it will cite 
the Federal Register and the Code of Federal Regulations (if any) in 
which the latest version of the SSPs was published. Offerors are 
cautioned that the Code of Federal Regulations may not contain the 
latest version of the SSPs published in the Federal Register. Interested 
persons may obtain a copy of the current SSPs by contacting the SPR/PMO 
at the address set forth in Provision No. A.5.

                A.5  Sales Offerors' Mailing List (SOML)

    (a) The SPR/PMO will maintain a Sales Offerors Mailing List (SOML) 
of those potential offerors who wish to receive an NS whenever one is 
issued. In order to assure that prospective offerors will receive the NS 
or offer forms in a timely fashion, all potential offerors are 
encouraged to submit the information in (d) of this provision as soon as 
possible. An NS may be issued with a week or less allowed for the 
receipt of offers. While DOE will use its best efforts to timely supply 
copies of the NS to persons not on the list who request the NS at the 
time an SPR petroleum sale is announced, this may not always be feasible 
in light of the short amount of time available before offers must be 
received.
    (b) Any firm or individual may request to be on the SOML by 
providing the information in (d) of this provision by letter, telephone 
or electronic means to: Sales Offerors Mailing List (SOML), U.S. 
Department of Energy, Strategic Petroleum Reserve, Project Management 
Office, Acquisition and Sales Division, Mail Stop FE-4451, 900 Commerce 
Road East, New Orleans, Louisiana 70123, Telephone Number (504) 734-
4249/4201, Facsimile (504) 734-4427, e-mail: soml@spr.doe.gov
    Any envelope should be marked ``SPR Sales Offerors'' Mailing List.''
    (c) Copies of the SSPs and the NS, when one is issued, may also be 
obtained from this address.
    (d) A request to be placed on the SOML should include the following 
information:

Name of firm
Mailing address (Street and P.O. Box)
City, State, Zip Code
Name of authorized agent and alternate authorized agent
Telephone numbers for agent and alternate including area code
Agent address, if different from firm represented
Internet address
Telephone number for facsimile transmission, including area code
Telephone number for verification of message receipt, including area 
code
Dun's number

    As DOE may use express mail, which cannot be delivered to a Post 
Office box, failure to provide a street address could result in untimely 
receipt of the NS and will be at the offeror's risk.

                   A.6  Publicizing the Notice of Sale

    (a) The NS will be sent to names on the SOML referenced in Provision 
No. A.5. Interested persons may send a representative to the address in 
Provision No. A.5 to obtain a copy of the NS.
    (b) In addition to those on the SOML, the NS will also be sent to 
anyone requesting it when a sale is announced.
    (c) A DOE press release, which will include the salient features of 
the NS, will be made available to all news agencies.
    (d) At the option of the Contracting Officer, advertisements may be 
placed in publications or media (including the Internet) likely to reach 
interested parties. The advertisements will contain the salient features 
of the NS and a point of contact at the SPR/PMO for further information.

    A.7  Penalty for False Statements in Offers To Buy SPR Petroleum

    (a) Making false statements in an offer to buy SPR petroleum may 
expose an offeror to a penalty under the False Statements Act, 18 U.S.C. 
Section 1001, which provides:
    Whoever, in any matter within the jurisdiction of any department or 
agency of the United States knowingly and willfully falsifies, conceals 
or covers up by any trick, scheme, or device a material fact, or makes 
any false, fictitious or fraudulent statements or representations, or 
makes or uses any false writing or document knowing the same to contain 
any false, fictitious or fraudulent statement or entry, shall be fined 
under this title or imprisoned not more than 5 years, or both.
    (b) Under 18 U.S.C. 3571, the maximum fine to which an individual or 
organization may be sentenced for violations of 18 U.S.C. (including 
Section 1001) is set at $250,000 and

[[Page 193]]

$500,000 respectively, unless there is a greater amount specified in the 
statute setting out the offense, or the violation is subject to special 
factors set out in Section 3571. The United States Sentencing Guidelines 
also apply to violations of Section 1001, and offenders may be subject 
to a range of fines under the guidelines up to and including the maximum 
amounts permitted by law.

                SECTION B--Sales Solicitation Provisions

        B.1  Requirements for a Valid Offer--Caution to Offerors

    A valid offer to purchase SPR petroleum must meet the following 
conditions:
    (a) The offer guarantee (see Provision No. B.11) must be received no 
later than the time set for the receipt of offers;
    (b) The offer must include a completed Sales Offer Form, i.e., 
Exhibit A or other form generated by electronic means for submitting 
offers as specified by DOE in the NS, and signed SPRPMO Form 33S 
(Exhibit C) or other forms as specified in the NS;
    (c) The offer must be received no later than the time set for 
receipt of offers;
    (d) Any amendments to the NS that explicitly require acknowledgment 
of receipt must be properly acknowledged as provided for on Exhibit C; 
and
    (e) The offeror must agree without exception to all provisions of 
the SSPs that the NS makes applicable to a particular sale, as well as 
to all provisions in the NS.

                           B.2  Price Indexing

    The Government, at its discretion, may make use of a price indexing 
mechanism to effect contract price adjustments based on petroleum market 
conditions, e.g., crude oil market price changes between the times of 
offer price submissions and physical deliveries. The NS will set forth 
the provisions applicable to any such mechanism.

          B.3  Certification of Independent Price Determination

    (a) The offeror certifies that:
    (1) The prices in this offer have been arrived at independently, 
without, for the purposes of restricting competition, any consultation, 
communication, or agreement with any other offeror or competitor 
relating to: (i) those prices; (ii) the intention to submit an offer; or 
(iii) the methods or factors used to calculate the prices offered.
    (2) The prices in this offer have not been and will not be knowingly 
disclosed by the offeror, directly or indirectly, to any other offeror 
or to any competitor before the time set for receipt of offers, unless 
otherwise required by law; and
    (3) No attempt has been made or will be made by the offeror to 
induce any other concern to submit or not to submit an offer for the 
purpose of restricting competition.
    (b) Each signature on the offer is considered to be a certification 
by the signatory that the signatory:
    (1) Is the person within the offeror's organization responsible for 
determining the prices being offered, and that the signatory has not 
participated, and will not participate, in any action contrary to (a)(l) 
through (a)(3) of this provision; or
    (2) (i) Has been authorized in writing to act as agent for the 
persons responsible for such decision in certifying that such persons 
have not participated, and will not participate, in any action contrary 
to (a)(l) through (a)(3) of this provision; (ii) as their agent does 
hereby so certify; and (iii) as their agent has not participated, and 
will not participate, in any action contrary to (a)(l) through (a)(3) of 
this provision.
    (c) An offer will not be considered for award where (a)(l),(a)(3), 
or (b) of this provision has been deleted or modified. If the offeror 
deletes or modifies (a)(2) of this provision, the offeror must furnish 
with the offer a signed statement setting forth in detail the 
circumstances of the disclosure.

           B.4  Requirements for Vessels--Caution to Offerors

    (a) The ``Jones Act'', 46 U.S.C. 883, prohibits the transportation 
of any merchandise, including SPR petroleum, by water or land and water, 
on penalty of forfeiture thereof, between points within the United 
States (including Puerto Rico, but excluding the Virgin Islands) in 
vessels other than vessels built in and documented under laws of the 
United States, and owned by United States citizens, unless the 
prohibition has been waived by the Secretary of Treasury. Further, 
certain U.S.-flag vessels built with Construction Differential Subsidies 
(CDS) are precluded by Section 506 of the Merchant Marine Act of 1936 
(46 U.S.C. 1156) from participating in U.S. coastwise trade, unless such 
prohibition has been waived by the Secretary of Transportation, the 
waiver being limited to a maximum of 6 months in any given year. CDS 
vessels may also receive Operating Differential Subsidies, requiring 
separate permission from the Secretary of Transportation for domestic 
operation, under Section 805(a) of the same statute. The NS will advise 
offerors of any general waivers allowing use of non-coastwise qualified 
vessels or vessels built with Construction Differential Subsidies for a 
particular sale of SPR petroleum. If there is no general waiver, 
purchasers may request waivers in accordance with Provision No. C.7, but 
remain obligated to complete performance under this contract regardless 
of the outcome of that waiver process.

[[Page 194]]

    (b) The Department of Transportation's interim rule concerning 
Reception Facility Requirements for Waste Materials Retained on Board 
(33 CFR Parts 151 and 158) implements the reception facility 
requirements of the International Convention for the Prevention of 
Pollution from Ships, 1973, as modified by the 1978 Protocol relating 
thereto (MARPOL 73/78). This rule prohibits any oceangoing tankship, 
required to retain oil or oily mixtures on-board while at sea, from 
entering any port or terminal unless the port or terminal has a valid 
Certificate of Adequacy as to its oily waste reception facilities. SPR 
marine terminals (see Exhibit E, SPR Delivery Point Data) have 
Certificates of Adequacy and reception facilities for vessel sludge and 
oily bilge water wastes, all costs for which will be borne by the 
vessel. The terminals, however, may not have reception facilities for 
oily ballast. Accordingly, tankships without segregated ballast systems 
will be required to make arrangements for and be responsible for all 
costs associated with appropriate disposal of such ballast, or they will 
be denied permission to load SPR petroleum at terminals that lack 
reception facilities for oily ballast.
    (c) By submission of an offer, the offeror certifies that it will 
comply with the ``Jones Act'' and all applicable ballast disposal 
requirements.

      B.5  ``Superfund'' Tax on SPR Petroleum--Caution to Offerors

    (a) Sections 4611 and 4612 of the Internal Revenue Code, which 
imposed a tax on domestic and imported petroleum to support the 
Hazardous Substance Response Fund (the ``Superfund''), were revised by 
the Superfund Amendments and Reauthorization Act of 1986, Public Law 99-
499; and the Omnibus Budget Reconciliation Act of 1986, Public Law 99-
509; the Steel Trade Liberalization Program Implementation Act, Public 
Law 101-221; and the Omnibus Budget Reconciliation Act of 1989, Public 
Law 101-239. As amended, these sections impose taxes to finance the 
Hazardous Substance Superfund and the Oil Spill Liability Trust Fund 
(``Trust Fund'').
    (b) Section 4611 imposes taxes on domestic crude oil and on imported 
crude oil to support the Superfund and the Trust Fund. The taxes are 
imposed on (1) crude oil received at a United States refinery and (2) 
petroleum products (including crude oil) entered into the United States 
for consumption, use, or warehousing. Section 4612 provides that no tax 
is imposed if it is established that a prior tax imposed by Section 4611 
has already been paid with respect to a barrel of oil. Additionally, as 
determined by the Secretary of Treasury, the Hazardous Substance 
Superfund tax and the Oil Spill Liability Trust Fund tax may not be 
imposed during certain periods when the unobligated balances of the 
funds reach particular statutorily-prescribed levels.
    (c) DOE has already paid the Superfund and Trust Fund taxes on some 
of the oil imported and stored in the SPR. However, no Superfund or 
Trust Fund tax has been paid on imported oil stored prior to the 
effective dates of these Acts or on any domestic oil stored in the SPR. 
Because domestic and imported crude oil for which no taxes have been 
paid and crude oils for which Superfund and Trust Fund taxes have been 
paid have been commingled in the SPR, upon drawdown of the SPR, the NS 
will advise purchasers of the tax liability.

       B.6  Export Limitations and Licensing--Caution to Offerors

    (a) Offerors for SPR petroleum are put on notice that export of SPR 
crude oil is subject to U.S. export control laws implemented by the 
Department of Commerce Short Supply Controls, codified at 15 CFR part 
754, Sec. 754.2, Crude oil. Subsections of Sec. 754.2 provide for the 
approval of applications to export crude oil from the SPR in connection 
with refining or exchange of SPR oil. Specifically, these subsections 
are Sec. 754.2(b)(iii), and 754.2(g), Refining or exchange of Strategic 
Petroleum Reserve Oil. These provisions are issued under 42 U.S.C. 
6241(i), and implement the authority given to the President to permit 
the export of oil in the SPR for the purpose of obtaining refined 
petroleum for the U.S. market. In addition, the President could waive 
the requirement for an export license all together. The NS will advise 
of any waivers under this Presidential authority.
    (b) By submission of an offer, the offeror certifies that it will 
comply with any applicable U.S. export control laws.

                   B.7  Issuance of the Notice of Sale

    In the event petroleum is sold from the SPR, DOE will issue a NS 
containing all the pertinent information necessary for the offeror to 
prepare a priced offer. A NS may be issued with a week or less allowed 
for the receipt of offers. Offerors are expected to examine the complete 
NS document, and to become familiar with the SSPs cited therein. Failure 
to do so will be at the offeror's risk.

   B.8  Submission of Offers and Modification of Previously Submitted 
                                 Offers

    (a) Unless otherwise provided in the NS, offers must be submitted to 
the SPR/PMO in New Orleans, Louisiana, by mail, hand-delivery, or 
electronic means as specified in the NS. Any direct cash deposits as 
offer guarantees shall be sent by wire or electronic funds transfer in 
accordance with Provision No. C.23.
    (b) Unless otherwise provided in the NS, offers may be modified or 
withdrawn by hand

[[Page 195]]

delivery, mail, telegram, or electronic means specified in the NS, 
provided that the hand delivery, mail, telegram, or electronic 
submission is received at the designated office prior to the time 
specified for receipt of offers.
    (c) Envelopes containing offers and any material related to offers 
shall be plainly marked on the outside; ``RE: NS # __________ FOR SALE 
OF PETROLEUM FROM STRATEGIC PETROLEUM RESERVE. OFFERS ARE DUE (insert 
time of opening), LOCAL NEW ORLEANS, LA TIME ON (insert date of 
opening). MAIL ROOM MUST MARK DATE AND TIME OF RECEIPT ON FACE OF THE 
ENVELOPE.'' Envelopes containing modified offers or any material related 
to supplements or modifications of offers, shall be plainly marked on 
the outside: ``RE: NS #__________ FOR SALE OF PETROLEUM FROM STRATEGIC 
PETROLEUM RESERVE. OFFER MODIFICATION. MAIL ROOM MUST MARK DATE AND TIME 
OF RECEIPT ON FACE OF THE ENVELOPE.''
    (d) All envelopes shall be marked with the full name and return 
address of the offeror.
    (e) Offers being sent by mail and modifications being sent by hand 
delivery, mail, telegram, or electronic means must be received at the 
address specified in the NS. Offers or modifications submitted by 
electronic means must contain the required signatures. If requested by 
the contracting officer, the offeror agrees to promptly submit the 
complete original signed offer/modification.
    (f) If the offeror chooses to transmit an offer/modification by 
electronic means, the Government will not be responsible for any failure 
attributable to the transmission or receipt of the offer/modification, 
including, but not limited to, the following:
    (1) Receipt of garbled or incomplete offer/modification,
    (2) Availability or condition of the receiving equipment,
    (3) Incompatibility between the sending and receiving equipment,
    (4) Delay in transmission or receipt of the offer/modification,
    (5) Failure of the offeror to properly identify the offer/
modification,
    (6) Illegibility of offer/modification
    (7) Security of the data contained in the offer/modification.
    (g) Handcarried offers brought during normal business hours on the 
day set for receipt of offers, or any day prior to that day, shall be 
taken by the offeror to the place specified in the NS. This includes 
mail being delivered by a delivery service.
    (h) Public opening of offers is not anticipated unless otherwise 
indicated in the NS. DOE will not release to the general public the 
identities of the offerors, or their offer quantities and prices, until 
the Apparently Successful Offerors have been determined. DOE will inform 
simultaneously all offerors and other interested parties of the 
successful and unsuccessful offerors and their offer data by means of a 
public ``offer posting.'' The offer posting will normally occur within a 
week of receipt of offers and will provide all interested parties access 
to offer data as well as any DOE changes in the petroleum quantities or 
quality to be sold. DOE will announce the date, time, and location of 
the offer posting as soon as practicable.

          B.9  Acknowledgment of Amendments to a Notice of Sale

    When an amendment to a NS requires acknowledgment of receipt by an 
offeror, it must be acknowledged either by (a) signing and returning the 
amendment; (b) identifying the amendment number and date in the space 
provided for this purpose on SPRPMO Form 33S (Exhibit C); or (c) letter, 
telegram, or electronic means as specified in the NS, sent to the 
address specified in the NS. Such acknowledgment must be received prior 
to the time specified for receipt of offers.

  B.10  Late Offers, Modifications of Offers, and Withdrawal of Offers

    (a) Any offer received at the office designated in the NS after the 
date and time specified for receipt will be considered only if it is 
received before award is made and only under the following conditions:
    (1) It was sent by registered or certified mail not later than the 
fifth calendar day prior to the date specified for the receipt of offers 
(e.g., an offer submitted in response to a NS requiring receipt of 
offers by the 20th of the month must have been mailed by the 15th or 
earlier); or,
    (2) It was sent by U.S. Postal Service Express Mail Next Day 
Service-Post Office to Addressee, or established commercial express 
service, not later than the close of business at the place of mailing 2 
working days prior to the date specified for receipt of offers. The 
working days exclude weekends and U.S. Federal holidays; or,
    (3) It was sent by mail, express mail, telegram or electronic means 
as specified in the NS, and it is determined by the Contracting Officer 
that the late receipt was due solely to mishandling by the SPR/PMO after 
receipt at the address specified in the NS; or
    (4) It is the only offer received.
    (b) Any modification or withdrawal of an offer is subject to the 
same conditions as in (a) of this provision, except that it shall be 
mailed not less than the third calendar day prior to the date specified 
for receipt of offers. An offer may also be withdrawn in person by an 
offeror or its authorized representative, provided the representative's 
identity is made known and the representative signs a receipt for the 
offer, but only if the withdrawal is made prior to the time set for 
receipt of offers.

[[Page 196]]

    (c) The only acceptable evidence to establish:
    (1) The date of mailing of a late offer, modification, or withdrawal 
sent either by registered or certified mail is the U.S. Postal Service 
postmark on either (i) the envelope or wrapper, or (ii) the original 
receipt from the U.S. Postal Service. If neither postmark shows a 
legible date, the offer, modification or withdrawal shall be deemed to 
have been mailed late. Postmark means a printed, stamped, or otherwise 
placed impression, exclusive of a postage meter machine impression, that 
is readily identifiable without further action as having been supplied 
and affixed on the date of mailing by employees of the U.S. Postal 
Service. Therefore, offerors should request the postal clerk to place a 
hand cancellation ``bull's-eye'' postmark on both the receipt and the 
envelope or wrapper.
    (2) The date of mailing of a late offer, modification, or withdrawal 
sent by Express Mail Next Day Service-Post Office to Addressee or 
established commercial service is the date entered by the receiving 
clerk on the ``Express Mail Next Day Service-Post Office to Addressee'' 
or other comparable service label and the postmark on both the envelope 
or wrapper and on the original receipt from the U.S. Postal Service or 
commercial service.
    (3) The time of receipt at the address specified in the NS is the 
time/date stamp at such address on the offer's wrapper or other 
documentary evidence of receipt maintained at the place of receipt.
    (d) Notwithstanding (a) and (b) of this provision, a late 
modification of an otherwise successful offer that makes its terms more 
favorable to the Government will be considered at any time it is 
received and may be accepted.

                          B.11  Offer Guarantee

    (a) Each offeror must submit an acceptable offer guarantee for each 
offer submitted. Each offer guarantee must be received at the place 
specified for receipt of offers no later than the time and date set for 
receipt of offers.
    (b) An offeror's failure to submit a timely, acceptable guarantee 
will result in rejection of its offer.
    (c) The amount of each offer guarantee is $10 million or 5 percent 
of the maximum potential contract amount, whichever is less. The maximum 
potential contract amount is the sum of the products determined by 
multiplying the offer's maximum purchase quantity for each master line 
item, times the highest offer prices that the offeror would have to pay 
for that master line item if the offer were to be successful. To assist 
in this calculation, instructions and a worksheet are available at 
Exhibit J. Submission of the worksheet is not desired.
    (d) Each offeror must submit one of the following types of offer 
guarantees with each offer:
    (1) A cash wire deposit or electronic funds transfer to the account 
of the U.S. Treasury in accordance with Provision No. C.23, all 
attendant costs to be borne by the offeror; or
    (2) A irrevocable standby letter of credit from a U.S. depository 
institution containing the substantive provisions set out in Exhibit F, 
Offer Standby Letter of Credit, all letter of credit costs to be borne 
by the offeror. If the letter or credit contains any provisions at 
variance with Exhibit F or fails to include any provisions contained in 
Exhibit F, nonconforming provisions must be deleted and missing 
substantive provisions must be added or the letter of credit will not be 
accepted. The depository institution must be located in and authorized 
to do business in any state of the United States or the District of 
Columbia, and authorized to issue letters of credit by the banking laws 
of the United States or any state of the United States or the District 
of Columbia. The original of the letter of credit must be sent to the 
Contracting Officer. The issuing bank must provide documentation 
indicating that the person signing the letter of credit is authorized to 
do so, in the form of corporate minutes, the Authorized Signature List, 
or the General Resolution of Signature Authority.
    (e) If the offeror elects to make an offer guarantee by cash wire 
deposit or electronic funds transfer, the Sales Offer Form shall be 
annotated with the statement ``Offer guarantee made by cash wire deposit 
(or electronic funds transfer.)'' The amount transferred shall be 
annotated on the bottom of the first page of the offer form. In 
addition, the information identified in Exhibit I, Instruction Guide for 
Return of Offer Guarantees by Electronic Transfer or Treasury Check, 
shall be provided with the offer.
    (f) If the offeror or bank forwards the letter of credit separately 
from the offer, the envelope shall clearly be marked ``Offer Standby 
Letter of Credit (Name of Company)'' and also marked in accordance with 
Provision No. B.8(c). Offerors are cautioned that if they provide more 
than one Offer Standby Letter of Credit for multiple offers and, due to 
the absence of clear information from the offeror, the Government is 
unable to identify which Letter of Credit applies to which offer, the 
Contracting Officer in his sole discretion may assign the Letters of 
Credit to specific offers.
    (g) The offeror shall be liable for any amount lost by DOE due to 
the difference between the offer and the resale price, and for any 
additional resale costs incurred by DOE in the event that the offeror:
    (1) Withdraws its offer within l0 days following the time set for 
receipt of offers;
    (2) Withdraws its offer after having agreed to extend its acceptance 
period; or

[[Page 197]]

    (3) Having received a notification of ASO, fails to furnish an 
acceptable payment and performance letter of credit (see Provision C.21) 
within the time limit specified by the Contracting Officer.
    The offer guarantee shall be used toward offsetting such price 
difference or additional resale costs. Use of the offer guarantee for 
such recovery shall not preclude recovery by DOE of damages in excess of 
the amount of the offer guarantee caused by such failure of the offeror.
    (h) Letters of credit furnished as offer guarantees must be valid 
for at least 60 calendar days after the date set for the receipt of 
offers.
    (i) Offer guarantees (except letters of credit) will be returned to 
an unsuccessful offeror 5 business days after expiration of the 
offeror's acceptance period, and, except as provided in (k) of this 
provision, to a successful offeror upon receipt of a satisfactory 
payment and performance letter of credit. Cash offer guarantees will be 
subsequently returned to unsuccessful offerors via Treasury check or 
electronic transfer in accordance with the information delineated in 
Exhibit I. Letters of credit will be returned only upon request.
    (j) Where the offer guarantee was a cash wire deposit or electronic 
funds transfer, a successful offeror may apply it toward the first 
invoice for delivery under the resultant contract.
    (k) If an offeror defaults on its offer, DOE will hold the offer 
guarantee so that damages can be assessed against it.

                B.12  Explanation Requests From Offerors

    Offerors may request explanations regarding meaning or 
interpretation of the NS from the individual at the telephone number 
indicated in the NS. On complex and/or significant questions, DOE 
reserves the right to have the offeror put the question in writing; 
explanation or instructions regarding these questions will be given as 
an amendment to the NS.

                        B.13  Currency for Offers

    Prices shall be stated and invoices shall be paid in U.S. dollars.

                 B.14  Language of Offers and Contracts

    All offers in response to the NS and all modifications of offers 
shall be in English. All correspondence between offerors or purchasers 
and DOE shall be in English.

                         B.15  Proprietary Data

    If any information submitted in connection with a sale is considered 
proprietary, that information should be so marked, and an explanation 
provided as to the reason such data should be considered proprietary. 
Any final decision as to whether the material so marked is proprietary 
will be made by DOE. DOE's Freedom of Information Act regulations 
governing the release of proprietary data shall apply.

             B.16  SPR Crude Oil Streams and Delivery Points

    (a) The geographical locations of the terminals, pipelines, and 
docks interconnected with permanent SPR storage locations, the SPR crude 
oil streams available at each location and the delivery points for those 
streams are as follows, (See also Exhibit D, SPR Crude Oil Comprehensive 
Analysis, and Exhibit E, SPR Delivery Point Data):

------------------------------------------------------------------------
    Geographical location        Delivery points      Crude oil stream
------------------------------------------------------------------------
Freeport, Texas.............  Seaway Terminal or    SPR Bryan Mound
                               Seaway, Pipeline      Sweet, SPR Bryan
                               Jones Creek.          Mound Sour, SPR
                                                     Bryan Mound Maya.
Texas City, Texas...........  Seaway Terminal or    SPR Bryan Mound
                               Seaway, Local         Sweet, SPR Bryan
                               Pipelines.            Mound Sour, SPR
                                                     Bryan Mound Maya.
Nederland, Texas............  Sun Pipe Line         SPR West Hackberry
                               Company, Nederland    Sweet, SPR West
                               Terminal.             Hackberry Sour, SPR
                                                     Big Hill Sweet, SPR
                                                     Big Hill Sour.
Lake Charles, Louisiana.....  Texaco 22-Inch/DOE    SPR West Hackberry
                               Lake, Charles         Sweet, SPR West
                               Pipeline Connection.  Hackberry Sour.
St. James, Louisiana........  Equilon Sugarland     SPR Bayou Choctaw
                               Terminal connected    Sweet, SPR Bayou
                               to LOCAP and          Choctaw Sour.
                               Capline.
Beaumont, Texas.............  Unocal Terminal.....  SPR Big Hill Sweet,
                                                     SPR Big Hill Sour.
Winnie, Texas...............  TPLI 20-Inch Meter    SPR Big Hill Sweet,
                               Station.              SPR Big Hill Sour.
------------------------------------------------------------------------

    (b) The NS may change delivery points and it may also include 
additional terminals, temporary storage facilities or systems utilized 
in connection with petroleum in transit to the SPR. Alternatively, DOE 
may provide for transportation to the purchaser's facility, for example, 
when the petroleum is in transit to the SPR at time of sale.
    (c) The NS may contain additional information supplementing Exhibit 
E, SPR Delivery Point Data.

[[Page 198]]

 B.17  Notice of Sale Line Item Schedule--Petroleum Quantity, Quality, 
                           and Delivery Method

    (a) Unless the NS provides otherwise, the possible master line items 
(MLI) that may be offered are as provided in Exhibit A, SPR Sales Offer 
Form. Currently, there are nine MLIs in Exhibit A, one for each of the 
nine crude oil streams that the SPR has in storage. The NS may not offer 
all the possible MLIs.
    (b) Each MLI contains several delivery line items (DLIs), each of 
which specifies an available delivery method and the nominal delivery 
period. Offerors are cautioned that the NS may alter the period of time 
covered by each DLI. This is most likely to occur in the first sales 
period of a drawdown if the period of sale does not correspond to a 
calendar month. The NS will specify which DLIs are offered for each MLI.
    (1) DLI-A covers petroleum to be transported by pipeline, either 
common carrier or local. The nominal delivery period is one month.
    (2) DLI-B, DLI-C and DLI-D cover petroleum to be transported by 
tankships: DLI-B, covering tankships to be loaded from the 1st through 
the 10th of the month; DLI-C, tankships to be loaded from the 11th 
through the 20th; and DLI-D, tankships to be loaded from the 21st 
through the last day of the month.
    (3) DLI-E, DLI-F and DLI-G cover petroleum to be transported by 
barges (Caution: These DLIs are currently only applicable to deliveries 
of West Hackberry and Big Hill Sweet and Sour crude oil streams from Sun 
Docks); DLI-E, covering barges to be loaded from the 1st through the 
10th of the month; DLI-F, barges to be loaded from the 11th through the 
20th; and DLI-G, barges to be loaded from the 21st through the last day 
of the month.
    (4) Where the storage site is connected to more than one terminal or 
pipeline, additional DLIs will be offered. The additional DLIs will 
include DLI-H, covering petroleum to be transported by pipeline over the 
period of a month; DLI-I thru DLI-K, covering tankships, etc. The Notice 
of Sale will specify any additional DLIs which may be applicable.
    (c) The NS will state the total estimated number of barrels to be 
sold on each MLI. An offeror may offer to buy all or part of the 
petroleum offered on an MLI. In making awards, the Contracting Officer 
shall attempt to achieve award of the exact quantities offered by the 
NS, but may sell a quantity of petroleum in excess of the quantity 
offered for sale on a particular MLI in order to match the DLI offers 
received. In addition, the Contracting Officer may reduce the MLI 
quantity available for award by any amount and reject otherwise 
acceptable offers, if he determines, in his sole discretion after 
consideration of the offers received on all of the MLIs, that award of 
those quantities is not in the best interest of the Government because 
the prices offered for them are not reasonable, or that, in light of 
market conditions after offers are received, a lesser quantity than that 
offered should be sold.
    (d) The NS will specify a minimum contract quantity for each DLI. To 
be responsive, an offer on a DLI must be for at least that quantity.
    (e) The NS will specify the maximum quantity that could be sold on 
each of the DLIs. The maximum quantity is not an indication of the 
amount of petroleum that, in fact, will be sold on that DLI. Rather, it 
represents DOE's best estimate of the maximum amount of the particular 
SPR crude oil stream that can be moved by that transportation system 
over the delivery period. The total DOE estimated DLI maximums may 
exceed the total number of barrels to be sold on that MLI, as the NS DLI 
estimates represent estimated transportation capacity, not the amount of 
petroleum offered for sale.
    (f) The NS will not specify what portion of the petroleum that DOE 
offers on a MLI will, in fact, be sold on any given DLI. Rather, the 
highest priced offers received on the MLI will determine the DLIs 
against which the offered petroleum is sold.
    (g) DOE will not sell petroleum on a DLI in excess of the DLI 
maximum; however, DOE reserves the right to revise its estimates at any 
time and to award or modify contracts in accordance with its revised 
estimates. Offerors are cautioned that: DOE cannot guarantee that such 
transportation capacity is available; offerors should undertake their 
own analyses of available transportation capacity; and each purchaser is 
wholly responsible for arranging all transportation other than terminal 
arrangements at the terminals listed in Provision No. B.16, which shall 
be made in accordance with Provision No. C.5. A purchaser against one 
DLI cannot change a transportation mode without prior written permission 
from DOE, although such permission will be given whenever possible, in 
accordance with Provision No. C.6.
    (h) Exhibit D, SPR Crude Oil Comprehensive Analysis, contains 
nominal characteristics for each SPR crude oil stream. Prospective 
offerors are cautioned that these data will change with SPR inventory 
changes. The NS will provide, to the maximum extent practicable, the 
latest data on each stream offered.

         B.18  Line Item Information to be Provided in the Offer

    (a) Each offeror, if determined to be an ASO on a DLI, agrees to 
enter into a contract under the terms of its offer for the purchase of 
petroleum in the offer and to take delivery of that petroleum (plus or 
minus 10 percent as provided for in Provision No. C.20)

[[Page 199]]

in accordance with the terms of that contract.
    (b) An offeror may submit an offer which is for more than one MLI. 
However, offerors are cautioned that alternate offers on different MLIs 
are not permitted. For example, an offeror may offer to purchase 
1,000,000 barrels of SPR West Hackberry Sweet and 1,000,000 barrels of 
SPR West Hackberry Sour, but may not offer to purchase, in the 
alternative, either 1,000,000 barrels of sweet or 1,000,000 barrels of 
sour.
    (c) An offeror may submit multiple offers. However, separate offer 
forms and offer guarantees must be submitted and each offer will be 
evaluated on an individual basis.
    (d) The following information will be provided to DOE by the offeror 
on the form in Exhibit A or other forms as required by the NS:
    (1) MLI quantity. (``MAXQ'' on the Exhibit A offer form) The offer 
shall state the maximum quantity of each crude oil stream that the 
offeror is willing to buy.
    (2) DLI quantity. (``DESQ'') The offer shall state the number of 
barrels that the offeror will accept on each DLI, i.e., by the delivery 
mode and during the delivery period specified. The quantity stated on a 
single DLI shall not exceed the MAXQ for the MLI. The offeror shall 
designate a quantity on at least one DLI for the MLI, but may designate 
quantities on more than one DLI. If the offeror is willing to accept 
alternate DLIs, the total of its designated DLI quantities would exceed 
its maximum MLI quantity; otherwise, the total of its designated DLI 
quantities should equal its maximum MLI quantity.
    (3) DLI unit price (``UP$$'') and total price. The offer shall state 
the price per barrel for each DLI for which the offeror has designated a 
desired quantity, as well as the total price (quantity times unit 
price). Where offers have indicated quantities on more than one DLI with 
a different price on each, DOE will award the highest priced DLI first. 
If the offeror has the same price for two or more DLIs, it may indicate 
its first choice, second choice, etc., for award of those items; if the 
offeror does not indicate a preference, or indicates the same preference 
for more than one DLI, DOE may select the DLIs to be awarded at its 
discretion. Prices may be stated in hundredths of a cent ($0.0001). DOE 
shall drop from the offer and not consider any numbers of less than one 
one-hundredth of a cent.
    (4) Minimum DLI quantity acceptable. (``MINQ'') The offeror must 
choose whether to accept only the stated DLI quantity (DESQ) or, in the 
alternative, to accept any quantity awarded between the offer's stated 
DLI quantity and the minimum contract quantity for the DLI (indicated by 
the ``N'' and ``Y'' blocks respectively under ``MINQ'' on the offer 
form). However, DOE will award less than the DESQ only if the quantity 
available to be awarded is less than the DESQ. If the offer fails to 
indicate the offeror's choice, the offer will be evaluated as though the 
offeror has indicated willingness to accept the minimum contract 
quantity.
    (5) Any other data required by the NS.

                         B.19  Mistake in Offer

    (a) After opening and recording offers, the Contracting Officer 
shall examine all offers for mistakes. If the Contracting Officer 
discovers any price discrepancies or quantity discrepancies, he may 
obtain from the offeror oral or written verification of the offer 
actually intended, but in any event, he shall proceed with offer 
evaluation applying the following procedures:
    (1) Price discrepancy: An offer for a DLI must contain the unit 
price per barrel being offered, the desired quantity of barrels to which 
the unit price applies, and an extension price which is the total of the 
quantity desired multiplied by the unit price offered. If there is a 
discrepancy between the unit price and the extension price, the unit 
price will govern and be recorded as the offer, unless it is clearly 
apparent on the face of the offer that there has been a clerical error, 
in which case the Contracting Officer may correct the offer.
    (2) Quantity discrepancy: In case of conflict between the maximum 
MLI quantity and the stated DLI quantities (for example, if a single 
stated DLI quantity exceeds the corresponding maximum MLI quantity), the 
lesser quantity will govern in the evaluation of the offer. In the event 
that the offer fails to specify a maximum MLI quantity, the offer will 
be evaluated as though the largest stated DLI quantity is the offer's 
maximum MLI quantity.
    (b) In cases where the Contracting Officer has reason to believe a 
mistake not covered by the procedures set forth in (a) may have been 
made, he shall request from the offeror a verification of the offer, 
calling attention to the suspected mistake. The Contracting Officer may 
telephone the offeror and confirm the request by electronic means. The 
Contracting Officer may set a limit of as little as 6 hours for 
telephone response, with any required written documentation to be 
received within as little as 2 business days. If no response is 
received, the Contracting Officer may determine that no error exists and 
proceed with offer evaluation.
    (c) The Head of the Contracting Activity will make administrative 
determinations described in (1) and (2) of this provision if an offeror 
alleges a mistake after opening of offers and before award.
    (1) The Head of the Contracting Activity may refuse to permit the 
offeror to withdraw an offer, but permit correction of the offer if 
clear and convincing evidence establishes

[[Page 200]]

both the existence of a mistake and the offer actually intended. 
However, if such correction would result in displacing one or more 
higher acceptable offers, the Head of the Contracting Activity shall not 
so determine unless the existence of the mistake and the offer actually 
intended are ascertainable substantially from the NS and offer itself.
    (2) The Head of the Contracting Activity may determine that an 
offeror shall be permitted to withdraw an offer in whole, or in part if 
only part of the offer is affected, without penalty under the offer 
guarantee, where the offeror requests permission to do so and clear and 
convincing evidence establishes the existence of a mistake, but not the 
offer actually intended.
    (d) In all cases where the offeror is allowed to make verbal 
corrections to the original offer, confirmation of these corrections 
must be received in writing within the time set by the Contracting 
Officer or the original offer will stand as submitted.

                       B.20  Evaluation of Offers

    (a) The Contracting Officer will be the determining official as to 
whether an offer is responsive to the SSPs and the NS. DOE reserves the 
right to reject any or all offers and to waive minor informalities or 
irregularities in offers received.
    (b) A minor informality or irregularity in an offer is an 
inconsequential defect the waiver or correction of which would not be 
prejudicial to other offerors. Such a defect or variation from the 
strict requirements of the NS is inconsequential when its significance 
as to price, quantity, quality or delivery is negligible.

                B.21  Procedures for Evaluation of Offers

    (a) Award on each DLI will be made to the responsible offerors that 
submit the highest priced offers responsive to the SSPs and the NS and 
that have provided the required payment and performance guarantee as 
required by Provision No. C.21.
    (b) DOE will array all offers on an MLI from highest price to lowest 
price for award evaluation regardless of DLI. However, DOE will award 
against the DLIs and will not award a greater quantity on a DLI than 
DOE's estimate (which is subject to change at any time) of the maximum 
quantity that can be moved by the delivery method. Selection of the 
apparently successful offers involves the following steps:
    (1) Any offers below the minimum acceptable price, if any minimum 
price has been established for the sale, will be rejected as 
nonresponsive.
    (2) All offers on each MLI will be arrayed from highest price to 
lowest price.
    (3) The highest priced offers will be reviewed for responsiveness to 
the NS.
    (4) In the event the highest priced offer does not take all the 
petroleum available on the MLI, sequentially, the next highest priced 
offer will be selected until all of the petroleum offered on the MLI is 
awarded or there are no more acceptable offers. In the event that 
acceptance of an offer against an MLI or a DLI would result in the sale 
of more petroleum on an MLI than DOE has offered or the sale of more 
petroleum on a DLI than DOE estimates can be delivered by the specified 
delivery method, DOE will not award the full amount of the offer, but 
rather the remaining MLI quantity or DLI capacity, provided such portion 
exceeds DOE's minimum contract quantity. In the event that the quantity 
remaining is less than the offeror is willing to accept, but more than 
DOE's minimum contract quantity, the Contracting Officer shall proceed 
to the next highest priced offer.
    (5) In the event of tied offers and an insufficient remaining 
quantity available on the MLI or insufficient remaining capacity on the 
DLI to fully award all tied offers, the Contracting Officer shall apply 
an objective random methodology for allocating the remaining MLI 
quantity or DLI capacity among the tied offers, taking into 
consideration the quantity the offeror is willing to accept as indicated 
in its offer. When making this allocation, the Contracting Officer in 
his sole discretion may do one or more of the following:
    (i) Make an additional quantity or capacity available;
    (ii) Contact an offeror to determine whether alternative delivery 
arrangements can be made; or
    (iii) Not award all or part of the remaining quantity of petroleum.
    (6) The Contracting Officer may reduce the MLI quantity available 
for award by any amount and reject otherwise acceptable offers if in his 
sole discretion he determines, after consideration of the offers 
received on all of the MLIs, that award of those quantities is not in 
the best interest of the Government because the prices offered for them 
are not reasonable; or if the Government determines, in light of market 
conditions after offers are received, to sell less than the overall 
quantity of SPR petroleum offered for sale.
    (7) Determinations of ASO responsibility will be made by the 
Contracting Officer before each award. All ASOs will be notified and 
advised to provide to the Contracting Officer, within five business days 
or such other longer time as the Contracting Officer shall determine, a 
letter of credit (See Exhibit G, Payment and Performance Letter of 
Credit) as specified in Provision No. C.21, all letter of credit costs 
to be borne by the purchaser.
    (8) Compliance with required payment and performance guarantees will 
effectively assure a finding of responsibility of offerors,

[[Page 201]]

except where: (i) an offeror is on either DOE's or the Federal 
Government's list of debarred, ineligible and suspended bidders; or (ii) 
evidence, with respect to an offeror, comes to the attention of the 
Contracting Officer of conduct or activity that represents a violation 
of law or regulation (including an Executive Order); or (iii) evidence 
is brought to the attention of the Contracting Officer of past activity 
or conduct of an offeror that shows a lack of integrity (including 
actions inimical to the welfare of the United States) or willingness to 
perform, so as to substantially diminish the Contracting Officer's 
confidence in the offeror's performance under the proposed contract.

            B.22  Financial Statements and Other Information

    (a) As indicated in Provision No. B.21(b)(8), compliance with the 
required payment and performance guarantee will in most instances 
effectively assure a finding of responsibility. Therefore, DOE does not 
intend to ask for financial information from all offerors. However, 
after receipt of offers, but prior to making award, DOE reserves the 
right to ask for the audited financial statements for an offeror's most 
recent fiscal year and unaudited financial statements for any subsequent 
quarters. These financial statements must include a balance sheet and 
profit and loss statement for each period covered thereby. A 
certification by a principal accounting officer that there have been no 
material changes in financial condition since the date of the audited 
statements, and that these present the true financial condition as of 
the date of the offer, shall accompany the statements. If there has been 
a change, the amount and nature of the change must be specified and 
explained in the unaudited statements and a principal accounting officer 
shall certify that they are accurate. The Contracting Officer shall set 
a deadline for receipt of this information.
    (b) DOE also reserves the right to require the submission of 
information from the offeror regarding its plans for use of the 
petroleum, the status of requests for export licenses, plans for 
complying with the Jones Act, and any other information relevant to the 
performance of the contract. The Contracting Officer shall set a 
deadline for receipt of this information.

           B.23  Resolicitation Procedures on Unsold Petroleum

    (a) In the event that petroleum offered on an MLI remains unsold 
after evaluation of all offers, the Contracting Officer, at his option, 
may issue an amendment to the NS, resoliciting offers from all 
interested parties. DOE reserves the right to alter the MLIs and/or 
offer different MLIs in the resolicitation.
    (b) In the event that for any reason petroleum that has been awarded 
or allotted for award becomes available to DOE for resale, the following 
procedures will apply:
    (1) If priced offers remain valid in accordance with Provision No. 
B.24, the petroleum may go to the next highest ranked offer.
    (2) If offers have expired in accordance with Provision No. B.24, 
the Contracting Officer at his option may offer the petroleum to the 
highest offeror for that MLI. The pertinent offeror may, at its option, 
accept or reject that petroleum at the price it originally offered. If 
that offeror rejects the petroleum, it may be offered to the next 
highest offeror. This process may continue until all the remaining 
petroleum has been allotted for award.
    (3) If the petroleum is not then resold, the Contracting Officer may 
at his option proceed to amend the NS to resolicit offers for that 
petroleum or add the petroleum to the next sales cycle.

           B.24  Offeror's Certification of Acceptance Period

    (a) By submission of an offer, the offeror certifies that its priced 
offer will remain valid for 10 calendar days after the date set for the 
receipt of offers, and further that the successful line items of its 
offer will remain valid for an additional 30 calendar days should it 
receive a notification of ASO either by telephone or in writing during 
the initial 10-day period.
    (b) By mutual agreement of DOE and the offeror, an individual 
offeror's acceptance period may be extended for a longer period.

           B.25  Notification of Apparently Successful Offeror

    The following information concerning its offer will be provided to 
the apparently successful offeror by DOE in the notification of ASO:
    (a) Identification of SPR crude oil streams to be awarded;
    (b) Total quantity to be awarded on each MLI and on each DLI;
    (c) Price in U.S. dollars per barrel for each DLI;
    (d) Extended total price offer for each DLI;
    (e) Provisional contract number;
    (f) Any other data necessary.

                        B.26  Contract Documents

    If an offeror is successful, DOE will make award using an NA signed 
by the Contracting Officer. The NA will identify the items, quantities, 
prices and delivery method which DOE is accepting. Attached to the NA 
will be the NS and the successful offer. Provisions of

[[Page 202]]

the SSPs will be made applicable through incorporation by reference in 
the NS. The Contracting Officer also shall provide the purchaser with an 
information copy of the current SSPs as published in the Federal 
Register. DOE may accept the offeror's offer by an electronic notice and 
the contract award shall be effective upon issuance of such notice. The 
electronic notice will be followed by a mailing of full documentation as 
described in Provision B.25.

                    B.27  Purchaser's Representative

    As part of its offer, each offeror shall designate an agent as a 
point of contact for any telephone calls or correspondence from the 
Contracting Officer. Any such agent shall have a U.S. address and 
telephone number and must be conversant in English.

     B.28  Procedures for Selling to Other U.S. Government Agencies

    (a) If a U.S. Government agency submits an offer for petroleum in a 
price competitive sale, that offer will be arrayed for award 
consideration in accordance with Provision No. B.21. If a U.S. 
Government agency is an ASO, award and payment will be made exclusively 
in accordance with statutory and regulatory requirements governing 
transactions between agencies, and the U.S. Government agency will be 
responsible for complying with these requirements within the time limits 
set by the Contracting Officer.
    (b) U.S. Government agencies are exempt from all guarantee 
requirements, but must make all necessary arrangements to accept 
delivery of and transport SPR petroleum as set out in Provision No. C.1. 
Failure by a U.S. Government agency to comply with any of the 
requirements of these SSPs shall not provide a basis for challenging a 
contract award to that agency.

                  Section C--Sales Contract Provisions

                     C.l  Delivery of SPR Petroleum

    (a) The purchaser, at its expense, shall make all necessary 
arrangements to accept delivery of and transport the SPR petroleum, 
except for terminal arrangements which shall be coordinated with the 
SPR/PMO. The DOE will deliver and the purchaser will accept the 
petroleum at delivery points listed in the NS. The purchaser also shall 
be responsible for meeting any delivery requirements imposed at those 
points including complying with the rules, regulations, and procedures 
contained in applicable port/terminal manuals, pipeline tariffs or other 
applicable documents.
    (b) For petroleum in the SPR's permanent storage sites, DOE shall 
provide, at no cost to the purchaser, transportation by pipeline from 
the SPR to the supporting SPR distribution terminal facility specified 
for the MLI and, for vessel loadings, a safe berth and loading 
facilities sufficient to deliver petroleum to the vessel's permanent 
hose connection. The purchaser agrees to assume responsibility for, to 
pay for, and to indemnify and hold DOE harmless for any other costs 
associated with terminal, port, vessel and pipeline services necessary 
to receive and transport the petroleum, including but not limited to 
demurrage charges assessed by the terminal, ballast and oily waste 
reception services other than those provided by DOE or its agent, 
mooring and line-handling services, tank storage charges and port 
charges incurred in the delivery of SPR petroleum to the purchaser. The 
purchaser also agrees to assume responsibility for, to pay for and to 
indemnify and hold DOE harmless for any liability, including 
consequential or other damages, incurred or occasioned by the purchaser, 
its agent, subcontractor at any tier, assignee or any subsequent 
purchaser, in connection with movement of petroleum sold under a 
contract incorporating this provision.

 C.2  Compliance With the ``Jones Act'' and the U.S. Export Control Laws

    Failure to comply with the ``Jones Act,'' 46 U.S.C. 883, regarding 
use of U.S.-flag vessels in the transportation of oil between points 
within the United States, and with any applicable U.S. export control 
laws affecting the export of SPR petroleum will be considered to be a 
failure to comply with the terms of any contract containing these SSPs 
and may result in termination for default in accordance with Provision 
No. C.25. Purchasers who have failed to comply with the ``Jones Act'' or 
the export control laws in SPR sales may be found to be non-responsible 
in the evaluation of offers in subsequent sales under Provision No. B.21 
of the SSPs. Those purchasers may also be subject to proceedings to make 
them ineligible for future awards in accordance with 10 CFR Part 625.

                      C.3  Storage of SPR Petroleum

    Continued storage of purchasers' oil in the SPR facilities after the 
end of the contract delivery periods is not permitted, unless 
specifically authorized by the Secretary of Energy and provided for in 
the NS. Allowing petroleum to remain in storage as the result of failure 
to complete delivery arrangements may result in assessment of liquidated 
damages under Provision Nos. C.25 through C.27 unless such failure is 
excused pursuant to those provisions.

                      C.4  Environmental Compliance

    (a) SPR offerors must ensure that vessels used to transport SPR oil 
comply with all applicable statutes, including the Ports and Waterways 
Safety Act of 1972; the Port and Tanker Safety of 1972; the Act to 
Prevent

[[Page 203]]

Pollution from Ships of 1980 (implements Annexes I, II, and V of MARPOL 
73/78); and the Oil Pollution Act of 1990. Annex I, II, and V of MARPOL 
73/78 prescribe procedures for the prevention of pollution by oil, 
noxious liquid substances, and garbage, respectively. Offerors must also 
ensure that vessels used to transport SPR oil comply with all applicable 
regulations, including the following:

------------------------------------------------------------------------
        CFR citation                  Title                Purpose
------------------------------------------------------------------------
33 CFR 151..................  Vessels Carrying      Implements the Act
                               Oil, Noxious Liquid   to Prevent
                               Substances,           Pollution from
                               Garbage, Municipal    Ships, as amended
                               or Commercial         and Annexes I, II,
                               Waste, and Ballast    and V of the
                               Water.                International
                                                     Convention for the
                                                     Prevention of
                                                     Pollution from
                                                     Ships, as modified
                                                     by MARPOL 73/78.
33 CFR 153..................  Control of Pollution  Prescribes
                               by Oil and            regulations
                               Hazardous             concerning
                               Substances,           notification of the
                               Discharge Removal.    discharge of oil
                                                     and hazardous
                                                     substances,
                                                     procedures for
                                                     removing discharges
                                                     of oil, and the
                                                     costs associated
                                                     with removing
                                                     discharges of oil.
33 CFR 155..................  Oil or Hazardous      Establishes
                               Material Pollution    regulations
                               Prevention            concerning vessel
                               Regulations for       equipment and
                               Vessels.              transfer
                                                     procedures,
                                                     including
                                                     personnel,
                                                     equipment, and
                                                     records.
33 CFR 157..................  Rules for the         Establishes
                               Protection of the     regulations
                               Marine Environment    governing the
                               Relating to Tank      design and
                               Vessels Carrying      installation of
                               Oil in Bulk.          equipment for
                                                     vessels and the
                                                     operation of
                                                     vessels.
33 CFR 159..................  Marine Sanitation     Prescribes
                               Devices.              regulations
                                                     governing the
                                                     design and
                                                     construction of
                                                     marine sanitation
                                                     devices and
                                                     procedures for
                                                     certifying that
                                                     marine sanitation
                                                     devices are
                                                     consistent with EPA
                                                     regulations
                                                     promulgated under
                                                     section 312 of
                                                     FWPCA, to eliminate
                                                     the discharge of
                                                     untreated sewage
                                                     from vessels.
46 CFR Chapter I, Subchapter  Tank Vessels........  Sets out design,
 D.                                                  equipment, and
                                                     operations
                                                     requirements
                                                     relating to
                                                     pollution
                                                     prevention from
                                                     tank vessels.
------------------------------------------------------------------------

    (b) To transport SPR oil, a purchaser or the purchaser's 
subcontractors must use only those tankships for which the vessel's 
owner, operator, or demise charter has made a showing of financial 
responsibility under 33 CFR part 138, Financial Responsibility for Water 
Pollution (Vessels).
    (c) Failure of the purchaser or the purchaser's subcontractors to 
comply with all applicable statutes and regulations in the 
transportation of SPR petroleum will be considered a failure to comply 
with the terms of any contract containing these SSPs, and may result in 
termination for default, unless, in accordance with Provision No. C.25, 
such failure was beyond the control and without the fault or negligence 
of the purchaser, its affiliates, or subcontractors.

               C.5  Delivery and Transportation Scheduling

    (a) Unless otherwise instructed in the notification of ASO, each 
purchaser shall submit a proposed vessel lifting program and/or pipeline 
delivery schedule to the SPR/PMO by hand-delivery, express mail, or 
electronic transfer, no later than the fifteenth day prior to the 
earliest delivery date offered by the NS. The vessel lifting program 
shall specify the requested three-day loading window for each tanker and 
the quantity to be lifted. The pipeline schedule will specify the five 
day shipment ranges (i.e., day 1-5, 6-10, 11-15, etc.) for which 
deliveries are to be tendered to the pipeline and the quantity to be 
tendered for each date. In the event conflicting requests are received, 
preference will be given to such requests in descending order, the 
highest offered price first. The SPR/PMO will respond to each purchaser 
no later than the tenth day prior to the start of deliveries, either 
confirming the schedule as originally submitted or proposing 
alterations. The purchaser is deemed to have received a notice by hand 
delivery, express mail, or electronic transfer on the day after 
dispatch. The purchaser shall be deemed to have agreed to those 
alterations unless the purchaser requests the SPR/PMO to reconsider 
within two days after receipt of such alterations. The SPR/PMO will use 
its best efforts to accommodate such requests, but its decision 
following any such reconsideration shall be final and binding.
    (b) Electronic transfer information, as well as the address to which 
express mailed and hand-carried proposed schedules should be delivered, 
will be provided in the notification of ASO.
    (c) In order to expedite the scheduling process, at the time of 
submission of each vessel lifting program or pipeline delivery schedule, 
each purchaser shall provide the DOE Contracting Officer's 
Representative with a written notice of the intended destination for 
each cargo scheduled, if such

[[Page 204]]

destination is known at that time. For pipeline deliveries, the 
purchaser shall also include, if known, the name of each pipeline in the 
routing to the final destination.
    (d) Notwithstanding paragraph (a) of this provision, ASOs and 
purchasers may request early deliveries, i.e., deliveries commencing 
prior to the contractual delivery period. DOE will use its best efforts 
to honor such requests, unless unacceptable costs might be incurred or 
SPR schedules might be adversely affected or other circumstances make it 
unreasonable to honor such requests. DOE's decision following any such 
consideration for a change shall be final and binding. Requests accepted 
by DOE will be handled on a first-come, first-served basis, except that 
where conflicting requests are received on the same day, the highest-
priced offer will be given preference. Requests that include both a 
change in delivery method and an early delivery date may also be 
accommodated subject to Provision No. C.6. DOE may not be able to 
confirm requests for early deliveries until 24 hours prior to the 
delivery date.
    (e) Not withstanding paragraphs (a) and (d) of this provision, in no 
event will schedules be confirmed prior to award of contracts.

        C.6  Contract Modification--Alternate Delivery Line Items

    (a) A purchaser may request a change in delivery method after the 
issuance of the NA. Such requests may be made either orally (to be 
confirmed in writing within 24 hours) or in writing, but will require 
written modification of the contract by the Contracting Officer. Such 
modification shall be permitted by DOE, provided, in the sole judgement 
of DOE, the change is viewed as reasonable and would not interfere with 
the delivery plans of other purchasers, and further provided that the 
purchaser agrees to pay all increased costs incurred by DOE because of 
such modification. The NS shall establish per barrel rates for such 
increased costs.
    (b) Changes in delivery method will only be considered after the 
initial confirmation of schedules described in Provision C.5(a).

     C.7  Application Procedures for ``Jones Act'' and Construction 
                      Differential Subsidy Waivers

    (a) Unless otherwise specified in the Notice of Sale, an ASO or 
purchaser seeking a waiver of the ``Jones Act'' should submit a request 
by letter, telegram or electronic means to: U.S. Customs Service, Chief, 
Carrier Rulings Branch, 1300 Pennsylvania Avenue, NW, Washington, D.C. 
20229, Telephone: (202) 927-2320, Facsimile: (202) 927-1873.
    (b) A purchaser seeking a waiver to use a vessel built with a 
Construction Differential Subsidy (and, if applicable, operated with an 
Operating Differential Subsidy) should have the vessel owner submit a 
waiver request by letter, telegram, or electronic means to: Associate 
Administrator for Ship Financial Assistance and Cargo Preference, 
Maritime Administration, U.S. Department of Transportation, 400 7th 
Street, SW, Washington, D.C. 20590, Fax: (202) 366-7901.
    For speed and brevity, the request may incorporate by reference 
appropriate contents of any earlier ``Jones Act'' waiver request by the 
purchaser. Under 46 U.S.C. App. 1223, a hearing is also required for any 
intervenor, and a waiver may not be approved if it will result in unfair 
competition to any person, firm, or corporation operating exclusively in 
the coastwise or intercoastal service.
    (c) Copies of the Jones Act, CDS, or ODS requests should also be 
sent, as appropriate, to:

(1) Associate Administrator for Port, Intermodal and Environmental 
Activities, Maritime Administration, U.S. Department of Transportation, 
400 7th Street, S.W., Washington, D.C. 20590, Fax: (202) 366-7901.
(2) U.S. Department of Energy, ATTN: Deputy Assistant Secretary for 
Strategic Petroleum Reserve, FE-40, 1000 Independence Avenue, SW, 
Washington, D.C. 20585, Fax: (202) 586-7919.
(3) Contracting Officer, FE-4451, Strategic Petroleum Reserve Project 
Management Office, Acquisition and Sales Division, 900 Commerce Road 
East, New Orleans, LA 70123, Fax: (504) 734-4947.

    (d) In addition to the addresses in paragraph (c) of this provision, 
copies of the ``Jones Act'' request should also be sent to: Assistant 
Secretary of Defense (Acquisition and Logistics), U.S. Department of 
Defense, Washington, DC 20301-8000.
    (e) Any request for waiver should include the following information:
    (1) Name, address and telephone number of requestor;
    (2) Purpose for which waiver is sought, e.g., to take delivery of so 
many barrels of SPR crude oil, with reference to the SPR NS number and 
the provisional or assigned contract number;
    (3) Name and flag of registry of vessel for which waiver is sought, 
if known at the time of waiver request, and either the scheduled 3-day 
delivery window(s), if available, or 10-day delivery period applicable 
to the contract;
    (4) The intended number of voyages, including the ports for loading 
and discharging;
    (5) Estimated period of time for which vessel will be employed; and
    (6) Reason for not using qualified U.S.-flag vessel, including 
documentary evidence of good faith effort to obtain suitable U.S.-flag 
vessel and responses received from that effort. Such evidence would 
include copies of correspondence and telephone conversation summaries. 
Use of commercial brokers and

[[Page 205]]

the Transportation News Ticker (TNT) is suggested for maximum market 
coverage. Requests for waivers by electronic transmittals may reference 
such documentary evidence, with copies to be provided by mail, 
postmarked no more than one business day after the transmission 
requesting the waiver.
    (7) For waivers to use Construction Differential Subsidy vessels, 
the request must also contain a specific agreement for Construction 
Differential Subsidies payback pursuant to Section 506 of the Merchant 
Marine Act of 1936 and must be signed by an official of the vessel owner 
authorized to make a payback commitment.
    (f) If there are shown to be ``Jones Act'' vessels available and in 
a position to meet the loading dates required, no waivers may be 
approved.
    (g) The names of any vessel(s) to be employed under a ``Jones Act'' 
waiver must be provided to the U.S. Customs Service no later than 3 days 
prior to the beginning of the 3-day loading window scheduled in 
accordance with Provision No. C.5.

                     C.8  Vessel Loading Procedures

    (a) After notification of ASO, each ASO shall provide the SPR/PMO a 
proposed schedule of vessel loading windows in accordance with Provision 
No. C.5.
    (b) The length of the scheduled loading window shall be 3 days. If 
the purchaser schedules more than one window, the average quantity to be 
lifted during any single loading window will be no less than DOE's 
minimum contract quantity.
    (c) Tankships, ITBs, and self-propelled barges shall be capable of 
sustaining a minimum average load rate commensurate with receiving an 
entire full cargo within twenty-four (24) hours pumping time. Barges 
with a load rate of not less than 4,000 BPH shall be permitted at the 
Sun Terminal barge docks. With the consent of the SPR/PMO, lower loading 
rates and the use of barges at the Sun and Phillips Terminals' suitably 
equipped tankship docks may be permitted if such do not interfere with 
DOE's obligations to other parties.
    (d) At least 7 days in advance of the beginning of the scheduled 
loading window, the purchaser shall furnish the SPR/PMO with vessel 
nominations specifying: (i) Name and size of vessel or advice that the 
vessel is ``To Be Nominated'' at a later date (such date to be no later 
than 3 days before commencement of the loading window); (ii) estimated 
date of arrival (to be narrowed to a firm date not later than 72 hours 
prior to the first day of the vessel's 3-day window, as provided in 
paragraph (f) of this provision); (iii) quantity to be loaded and 
contract number; and (iv) other relevant information requested by the 
SPR/PMO including but not limited to a copy of the crew list, ship's 
specifications, last three ports and cargoes, vessel owner/operator and 
flag, any known deficiencies, and on board quantities of cargo and 
slops. The listing of all required vessel information shall be provided 
in the Notice of Sale. DOE will advise the purchaser, in writing, of the 
acceptance or rejection of the nominated vessel within 24 hours of such 
nomination. If no advice is furnished within 24 hours, the nomination 
will be firm. Once established, changes in such nomination details may 
be made only by mutual agreement of the parties, to be confirmed by DOE 
in writing. The purchaser shall be entitled to substitute another vessel 
of similar size for any vessel so nominated, subject to DOE's approval. 
DOE must be given at least 3 days' notice prior to the first day of the 
3-day loading window of any such substitution. DOE shall make a 
reasonable effort to accept any nomination for which notice has not been 
given in strict accordance with this provision.
    (e) In the event the purchaser intends to use more than one vessel 
to take delivery of the contract quantity scheduled to be delivered 
during a loading window, the information in (d) and (f) of this 
provision shall be provided for each vessel.
    (f) The vessel or purchaser shall notify the SPR/PMO of the expected 
day of arrival 72 hours before the beginning of his scheduled 3-day 
loading window. This notice establishes the firm agreed-upon date of 
arrival which is the 1-day window for the purposes of vessel demurrage 
(see Provision No. C.9). If the purchaser fails to make notification of 
the expected day of arrival, the 1-day window will be deemed to be the 
middle day of the scheduled 3-day window. The vessel shall also notify 
the SPR/PMO of the expected hour of arrival 72, 48 and 24 hours in 
advance of arrival, and after the first notice, to advise of any 
variation of more than 4 hours. With the first notification of the hour 
of arrival, the Master shall advise the SPR/PMO: (i) quantity of oily 
bilge wastes or sludge requiring discharge ashore; (ii) cargo loading 
rate requested; (iii) number, size, and material of vessel's manifold 
connections; and (iv) defects in vessel or equipment affecting 
performance or maneuverability.
    (g) Notice of Readiness shall be tendered upon arrival at berth or 
at customary anchorage which is deemed to be any anchorage within 6 
hours vessel time to the SPR dock. The preferred anchorages are 
identified in Exhibit E. The Notice of Readiness shall be confirmed 
promptly in writing to the SPR/PMO and the terminal responsible for 
coordination of crude oil loading operations. Such notice shall be 
effective only if given during customary port operating hours. If notice 
is given after customary business hours of the port, it shall be 
effective as of the beginning of customary business hours on the next 
business day.

[[Page 206]]

    (h) DOE shall use its best efforts to berth the purchaser's vessel 
as soon as possible after receipt of the Notice of Readiness.
    (i) Standard hose and fittings (American Standard Association 
standard connections) for loading shall be provided by DOE. Purchasers 
must arrange for line handling, deballasting, tug boat and pilot 
services, both for arrival and departure, through the terminal or ship's 
agent, and bear all costs associated with such services.
    (j) Tankships, ITBs, and self-propelled barges shall be allowed 
berth time of 36 hours. Barges loading at Sun Terminal barge dock 
facilities shall be allowed berth time of three (3) hours plus the 
quotient determined by dividing the cargo size (gross standard volume 
barrels) by four thousand (4,000). Vessels loading cargo quantities in 
excess of 500,000 barrels shall be allowed berth time of 36 hours plus 1 
hour for each 20,000 barrels to be loaded in excess of 500,000 barrels. 
Conditions in this provision excepted, however, the vessel shall not 
remain at berth more than 6 hours after completion of cargo loading 
unless hampered by tide or weather.
    (1) Berth time shall commence with the vessel's first line ashore 
and shall continue until loading of the vessel, or vessels in case more 
than one vessel is loaded, is completed and the last line is off. In 
addition, allowable berth time will be increased by the amount of any 
delay occurring subsequent to the commencement of berth time and 
resulting from causes due to adverse weather, labor disputes, force 
majeure and the like, decisions made by port authorities affecting 
loading operations, actions of DOE, its contractors and agents resulting 
in delay of loading operations (providing this action does not arise 
through the fault of the purchaser or purchaser's agent), and customs 
and immigration clearance. The time required by the vessel to discharge 
oily wastes or to moor multiple vessels sequentially into berth shall 
count as used berth time.
    (2) For all hours of berth time used by the vessel in excess of 
allowable berth time provided in this provision, the purchaser shall be 
liable for dock demurrage and also shall be subject to the conditions of 
Provision No. C.11.

                    C.9  Vessel Laytime and Demurrage

    (a) The laytime allowed DOE for handling of the purchaser's vessel 
shall be 36 running hours. For vessels with cargo quantities in excess 
of 500,000 barrels, laytime shall be 36 running hours plus 1 hour for 
each 20,000 barrels of cargo to be loaded in excess of 500,000 barrels. 
Vessel laytime shall commence when the vessel is moored alongside (all 
fast) the loading berth or 6 hours after receipt of a Notice of 
Readiness, whichever occurs first. It shall continue 24 hours per day, 
seven days per week without interruption from its commencement until 
loading of the vessel is completed and cargo hoses or loading arms are 
disconnected. Any delay to the vessel in reaching berth caused by the 
fault or negligence of the vessel or purchaser, delay due to breakdown 
or inability of the vessel's facilities to load, decisions made by 
vessel owners or operators or by port authorities affecting loading 
operations, discharge of ballast or slops, customs and immigration 
clearance, weather, labor disputes, force majeure and the like shall not 
count as used laytime. In addition, movement in roads shall not count as 
used laytime.
    (b) If the vessel is tendered for loading on a date earlier than the 
firm agreed-upon arrival date, established in accordance with Provision 
No. C.8, and other vessels are loading or have already been scheduled 
for loading prior to the purchaser's vessel, the purchaser's vessel 
shall await its turn and vessel laytime shall not commence until the 
vessel moors alongside (all fast), or at 0600 hours local time on the 
firm agreed-upon date of arrival, whichever occurs first. If the vessel 
is tendered for loading later than 2400 hours on the firm agreed-upon 
date of arrival, DOE will use its best efforts to have the vessel loaded 
as soon as possible in its proper turn with other scheduled vessels, 
under the circumstances prevailing at the time. In such instances, 
vessel laytime shall commence when the vessel moors alongside (all 
fast).
    (c) For all hours or any part thereof of vessel laytime that elapse 
in excess of the allowed vessel laytime for loading provided in this 
provision, demurrage shall be paid by DOE, for U.S.-flag vessels, at the 
lesser of the demurrage rate in the tanker voyage or charter party 
agreement, or the most recently available United States Freight Rate 
Average (USFRA) for a hypothetical tanker with a deadweight in long tons 
equal to the weight in long tons of the petroleum loaded, multiplied by 
the most recent edition of the American Tanker Rate Schedule rate for 
such hypothetical tanker. For foreign flag vessels, demurrage shall be 
as determined in this provision, except that the London Tanker Brokers' 
Panel Average Freight Rate Assessment (AFRA) and most recent edition of 
the New Worldwide Tanker Nominal Freight Scale ``Worldscale'' shall be 
used as appropriate, if less than the charter party rate. For all 
foreign flag vessel loadings that commence during a particular calendar 
month, the applicable AFRA shall be the one that is determined on the 
basis of freight assessments for the period ended on the 15th day of the 
preceding month. The demurrage rate for barges will be the hourly rate 
contained in the charter of a chartered barge, or if it is not a 
chartered barge, at a rate determined by DOE as a fair rate under 
prevailing conditions. If demurrage is incurred because of breakdown of 
machinery or equipment of

[[Page 207]]

DOE or its contractors (other than the purchaser), the rate of demurrage 
shall be reduced to one-half the rate stipulated herein per running hour 
and pro rata of such reduced rate for part of an hour for demurrage so 
incurred. Demurrage payable by DOE, however, shall in no event exceed 
the actual demurrage expense incurred by the purchaser as the result of 
the delay.
    (d) In the event the purchaser is using more than one vessel to load 
the contract quantity scheduled to be delivered during a single loading 
window, the terms of this provision and the Government's liability for 
demurrage apply only to the first vessel presenting its Notice of 
Readiness in accordance with (a) of this provision.
    (e) The primary source document and official record for demurrage 
calculations is the SPRCODR (see Provision No. C.19).

                 C.10  Vessel Loading Expedition Options

    (a) Notwithstanding Provision No. C.8(j)(1), in order to avoid 
disruption in the SPR distribution process, the Government may limit 
berthing time for any vessel receiving SPR petroleum to that period 
required for loading operations and the physical berthing/unberthing of 
the vessel. At the direction of the Government, activities not 
associated with the physical loading of the vessel (e.g., preparing 
documentation, gauging, sampling, etc.) may be required to be 
accomplished away from the berth. Time consumed by these activities will 
not be for the Government's account. If berthing time is to be 
restricted, the Government will so advise the vessel prior to berthing 
of the vessel.
    (b) In addition to (a) of this provision, the Government may limit 
vessels calling at SPR terminals to a total of 24 hours for petroleum 
transfer operations. In such an event, the loading will be considered 
completed if the vessel has loaded 95 percent or more of the nominated 
quantity within a total of 24 hours. If the vessel has loaded less than 
95 percent of its nominated quantity, then Provision C.11 shall apply.

           C.11  Purchaser Liability for Excessive Berth Time

    The Government reserves the right to direct a vessel loading SPR 
petroleum at a delivery point specified in the NS, to vacate its SPR 
berth, and absorb all costs associated with this movement, should such 
vessel, through its operational inability to receive oil at the average 
rates provided for in Provision No. C.8, cause the berth to be 
unavailable for an already scheduled follow-on vessel. Furthermore, 
should a breakdown of the vessel's propulsion system prevent its getting 
under way on its own power, the Government may cause the vessel to be 
removed from the berth with all costs to be borne by the purchaser.

                   C.12  Pipeline Delivery Procedures

    (a) The purchaser shall nominate his delivery requirements to the 
pipeline carrier, to include the total quantity to be moved and his 
preferred five-day shipment range(s) as specified in C.5. The purchaser 
shall provide confirmation of the carrier's acceptance of the nominated 
quantity [in thousands of barrels per day] and shipment ranges to the 
SPR/PMO no later than the last day of the month preceding the month of 
delivery. The purchaser shall also furnish the SPR/PMO with the name and 
telephone number of the pipeline point of contact with whom the SPR/PMO 
should coordinate the petroleum delivery.
    (b) The SPR/PMO will ensure oil is made available to the carrier 
within the shipment date range(s) established in accordance with 
Provision C.5. Once established, the pipeline delivery schedule can only 
be changed with SPR/PMO's prior written consent. Should the schedule 
established in accordance with (a) of this provision vary from the 
original schedule established in accordance with Provision No. C.5, the 
Government will provide its best efforts to accommodate this revised 
schedule but will incur no liability for failure to provide delivery on 
the dates requested.
    (c) Three days prior to the beginning of any five-day shipping range 
in which the purchaser is to receive delivery, the purchaser shall 
furnish the SPR/PMO the firm date within that range on which the 
movement is to commence, the quantity to be moved, and the contract 
number.
    (d) The date of delivery, which will be recorded on the CODR (see 
Provision No. C.19), is the date delivery commenced to the custody 
transfer point, as identified in the NS.
    (e) The purchaser shall receive pipeline deliveries at a minimum 
average rate of 100,000 barrels per day. The purchaser is solely 
responsible for making the necessary arrangements with pipeline 
carriers, including storage, to achieve the stated minimum.

                      C.13  Title and Risk of Loss

    Unless otherwise provided in the NS, title to and risk of loss for 
SPR petroleum will pass to the purchaser at the delivery point as 
follows:
    (a) For vessel shipment--when the petroleum passes from the dock 
loading equipment connections to the vessel's permanent hose connection.
    (b) For pipeline shipment--as identified in the NS.
    (c) For in-transit shipments--when the petroleum passes the 
permanent flange of the discharging vessel manifold upon discharge into 
the purchaser's designated marine terminal facility or vessel.

[[Page 208]]

                      C.14  Acceptance of Crude Oil

    (a) When practical, the NS shall update the SPR crude oil stream 
characteristics shown in Exhibit D, SPR Crude Oil Comprehensive 
Analysis. However, the purchaser shall accept the crude oil delivered 
regardless of characteristics. Except as provided in this provision, DOE 
assumes no responsibility for deviations in quality.
    (b) In the event that the crude oil stream delivered both has a 
total sulfur content (by weight) in excess of 3.5 percent if Bryan Mound 
Maya, 2.0 percent if any other sour crude oil stream, or 0.50 percent if 
a sweet crude oil stream, and, in addition, has an API gravity less than 
20 deg.API if Bryan Mound Maya, 28 deg.API if any other sour crude oil 
stream, or 32 deg.API if a sweet crude oil stream, the purchaser shall 
accept the crude oil delivered and either pay the contract price 
adjusted in accordance with Provision No. C.16, or request negotiation 
of the contract price. Unless the purchaser submits a written request 
for negotiation of the contract price to the Contracting Officer within 
10 days from the date of delivery, the purchaser shall be deemed to have 
accepted the adjustment of the price in accordance with Provision No. 
C.16. Should the purchaser request a negotiation of the price and the 
parties be unable to agree as to that price, the dispute shall be 
settled in accordance with Provision No. C.32.

               C.15  Delivery Acceptance and Verification

    (a) The purchaser shall provide written confirmation to SPR/PMO, no 
later than 72 hours prior to the scheduled date of the first delivery 
under the contract, the name(s) of the authorized agent(s) given 
signature authority to sign/endorse the delivery documentation (CODR, 
etc.) on the purchaser's behalf. Any changes to this listing of names 
must be provided to the SPR/PMO in writing no later than 72 hours before 
the first delivery to which such change applies. In the event that an 
independent surveyor (separate from the authorized signatory agent) is 
appointed by the purchaser to witness the delivery operation (gauging, 
sampling, testing, etc.), written notification must be provided to SPR/
PMO, no later than 72 hours prior to the scheduled date of each 
applicable cargo delivery.
    (b) Absence of the provision of the name(s) of bona fide agent(s) 
and the signature of such agent on the delivery documentation 
constitutes acceptance of the delivery quantity and quality as 
determined by DOE and/or its agents.

            C.16  Price Adjustments for Quality Differentials

    (a) The NS will specify quality price adjustments applicable to the 
crude oil streams offered for sale. Unless otherwise specified by the 
NS, quality price adjustments will be applied only to the amount of 
variation by which the API gravity of the crude oil delivered differs by 
more than plus or minus five-tenths of one degree API (+/-0.5 deg.API) 
from the API gravity of the crude oil stream contracted for as published 
in the NS.
    (b) Price adjustments for SPR crude oil are expected to be similar 
to one or more commercial crude oil postings for equivalent quality 
crude oil. The contract price per barrel shall be increased by that 
amount if the API gravity of the crude oil delivered exceeds the 
published API gravity by more than 0.5 deg.API and decreased by that 
amount if the API gravity of the crude oil delivered falls below the 
published API gravity by more than 0.5 deg.API.

                     C.17  Determination of Quality

    (a) The quality of the crude oil delivered to the purchaser will be 
determined from samples taken from the delivery tanks in accordance with 
API Manual of Petroleum Measurement Standards, Chapter 8.1, Manual 
Sampling of Petroleum and Petroleum Products (ASTM D4057), latest 
edition; or from a representative sample collected by an automatic 
sampler whose performance has been proven in accordance with the API 
Manual of Petroleum Measurement Standards, Chapter 8.2, Automatic 
Sampling of Petroleum and Petroleum Products (ASTM D4177), latest 
edition. Preference will be given to samples collected by means of an 
automatic sampler when such a system is available and operational. Tests 
to be performed by DOE or its authorized contractor are:

                         (1) Sediment and Water

    Primary methods: API Manual of Petroleum Measurement Standards, 
Chapter 10.1, Determination of Sediment in Crude Oils and Fuel Oils by 
the Extraction Method (ASTM D473) (IP53), latest edition; or API Manual 
of Petroleum Measurement Standards, Chapter 10.8, Sediment in Crude Oil 
by Membrane Filtration (ASTM D4807), latest edition; and API Manual of 
Petroleum Measurement Standards, Chapter 10.2, Determination of Water in 
Crude Oil by Distillation (ASTM D4006) (IP358), latest edition; or API 
Manual of Petroleum Measurement Standards, Chapter 10.9, Water in Crude 
Oil by Coulometric Karl Fischer Titration (ASTM D4928) (IP 386), latest 
edition.
    Alternate method: API Manual of Petroleum Measurement Standards, 
Chapter 10.3, Determination of Water and Sediment in Crude Oil by the 
Centrifuge Method (Laboratory Procedure) (ASTM D4007) (IP 359), latest 
edition.

[[Page 209]]

                               (2) Sulfur

    Primary method: ASTM D1552, Sulfur in Petroleum Products (High 
Temperature Method), latest edition.
    Alternate method: ASTM D4294, Sulfur in Petroleum Products by 
Energy-Dispersive X-ray Fluorescence Spectrometry, latest edition.

                             (3) API Gravity

    Primary methods: API Manual of Petroleum Measurement Standards, 
Chapter 9.1, Density, Relative Density (Specific Gravity), or API 
Gravity of Crude Petroleum and Liquid Petroleum Products by Hydrometer 
Method (ASTM D1298) (IP 160), latest edition; or Density and Relative 
Density of Crude Oils by Digital Density Analyzer (ASTM D5002), latest 
edition.
    Alternate method: API Gravity of Crude Petroleum and Petroleum 
Products (Hydrometer Method) (ASTM D287), latest edition.
    To the maximum extent practicable, the primary methods will be used 
for determination of SPR crude oil quality characteristics. However, 
because of conditions prevailing at the time of delivery, it may be 
necessary to use alternate methods of test for one or more of the 
quality characteristics. The Government's test results will be binding 
in any dispute over quality characteristics of SPR petroleum.
    (b) The purchaser or his representative may arrange to witness and 
verify testing simultaneously with the Government Quality Assurance 
Representatives. Such services, however, will be for the account of the 
purchaser. Any disputes will be settled in accordance with Provision No. 
C.32. Should the purchaser opt not to witness the testing, then the 
Government findings will be binding on the purchaser.

                     C.18  Determination of Quantity

    (a) The quantity of crude oil delivered to the purchaser will be 
determined by opening and closing tank gauges with adjustment for 
opening and closing free water and sediment and water as determined from 
shore tank samples where an automatic sampler is not available, or 
delivery meter reports. All volumetric measurements will be corrected to 
net standard volume in barrels at 60 deg.F, using the API Manual of 
Petroleum Measurement Standards, Chapter 11.1, Volume 1, Volume 
Correction Factors (ASTM D1250) (IP 200); Table 5A-Generalized Crude 
Oils, Correction of Observed API Gravity to API Gravity at 60 deg.F; 
Table 6A-Generalized Crude Oils, Correction of Volume to 60 deg.F 
Against API Gravity at 60 deg.F, latest edition, and by deducting the 
tanks' free water, and the entrained sediment and water as determined by 
the testing of composite all-levels samples taken from the delivery 
tanks; or by deducting the sediment and water as determined by testing a 
representative portion of the sample collected by a certified automatic 
sampler, and also corrected by the applicable pressure correction factor 
and meter factor.
    (b) The quantity measurements shall be performed and certified by 
the DOE contractor responsible for delivery operations, and witnessed by 
the Government Quality Assurance Representative at the delivery point. 
The purchaser shall have the right to have representatives present at 
the gauging/metering, sampling, and testing. Should the purchaser 
arrange for additional inspection services, such services will be for 
the account of the purchaser. Any disputes shall be settled in 
accordance with Provision No. C.32. Should the purchaser not arrange for 
additional services, then DOE's quantity determination shall be binding 
on the purchaser.

                      C.19  Delivery Documentation

    The quantity and quality determination shall be documented on the 
SPR/PMO Crude Oil Delivery Report (SPRCODR), SPRPMO-F-6110.2-14b (Rev 8/
91) (see Exhibit H for copy of this form). The SPRCODR will be signed by 
the purchaser's agent to acknowledge receipt of the quantity and quality 
of crude oil indicated. In addition, for vessel deliveries, the time 
statement on the SPRCODR will be signed by the vessel's Master when 
loading is complete. Copies of the completed SPRCODR, with applicable 
supporting documentation (i.e., metering or tank gauging tickets and 
appropriate calculation worksheets), will be furnished to the purchaser 
and/or the purchaser's authorized representative after completion of 
delivery. They will serve as the basis for invoicing and/or 
reconciliation invoicing for the sale of petroleum as well as for any 
associated services that may be provided.

                         C.20  Contract Amounts

    The contract quantities and dollar value stated in the NA are 
estimates. The per barrel unit price is subject to adjustment due to 
variation in the API gravity from the published characteristics, changes 
in delivery mode and price index values, if applicable. In addition, due 
to conditions of vessel loading and shipping or pipeline transmission, 
the quantity actually delivered may vary by +/-10 percent for each 
shipment. However, a purchaser is not required to engage additional 
transportation capacity if sufficient capacity to take delivery of at 
least 90 percent of the contract quantity has been engaged.

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             C.21  Payment and Performance Letter of Credit

    (a) Within five business days of receipt of notification of 
Apparently Successful Offeror, the Purchaser must provide to the 
Contracting Officer an ``Irrevocable Standby Letter of Credit'' 
established in favor of the United States Department of Energy equal to 
100 percent of the contract awarded value and containing the substantive 
provisions set out in Exhibit G. The purchaser must furnish an 
acceptable letter of credit before DOE will execute the NA. The letter 
of credit MUST NOT VARY IN SUBSTANCE from the sample at Exhibit G. If 
the letter of credit contains any provisions at variance with Exhibit G 
or fails to include any provisions contained in Exhibit G, nonconforming 
provisions must be deleted and missing substantive provisions must be 
added or the letter of credit will not be accepted. The letter of credit 
must be effective on or before the first delivery under the contract and 
remain in effect for a period of 120 days, must permit multiple partial 
drawings, and must contain the contract number. The original of the 
letter of credit must be sent to the Contracting Officer.
    (b) The letter of credit must be issued by a depository institution 
located in and authorized to do business in any state of the United 
States or the District of Columbia, and authorized to issue letters of 
credit by the banking laws of the United States or any state of the 
United States or the District of Columbia. The issuing bank must provide 
documentation indicating that the person signing the letter of credit is 
authorized to do so, in the form of corporate minutes, the Authorized 
Signature List, or the General Resolution of Signature Authority.
    (c) All wire deposit electronic funds transfer and letter of credit 
costs will be borne by the purchaser.
    (d) The letter of credit must be maintained at 100 percent of the 
contract value of the petroleum remaining to be delivered, plus any 
other charges owed to the Government under the contract. In the event 
the letter of credit falls below the level specified, or at the 
discretion of the Contracting Officer must be increased because of the 
effect of the price indexing mechanism provided for in Provision B.2, 
DOE reserves the right to demand the purchaser modify the letter of 
credit to a level deemed sufficient by the Contracting Officer. The 
purchaser shall make such modification within two business days of being 
notified by the Contracting Officer by express mail or electronic means. 
The purchaser is deemed to have received such notification the next 
business day after its dispatch. If such modification is not made within 
two days after purchaser is deemed to have received the notice, the 
Contracting Officer may, on the 3rd business day, without prior notice 
to the purchaser, withhold deliveries in whole or in part under the 
contract and/or terminate the contract in whole or in part under 
Provision C.25.
    (e) Within 30 calendar days after final payment under the contract, 
the Contracting Officer shall authorize the cancellation of the letter 
of credit and shall return it to the bank or financial institution 
issuing the letter of credit. A copy of the notice of cancellation will 
be provided to the purchaser.

                        C.22  Billing and Payment

    (a) The Government will invoice the Purchaser at the conclusion of 
each delivery.
    (b) Payment is due in full on the 20th of the month following each 
delivery month. Should the 20th of the month fall on a Saturday, Sunday, 
or Federal holiday, payment will be due and payable in full on the last 
business day preceding the 20th of the month.
    (c) If an invoice is not paid in full, the Government may provide 
the Purchaser oral or written notification that Purchaser is delinquent 
in its payments; draw against the letter of credit for all quantities 
for which unpaid invoices are outstanding; withhold all or any part of 
future deliveries under the contract; and/or terminate the contract, in 
whole or in part, in accordance with Provision C.25.
    (d) In the event that the bank refuses to honor the draft against 
the letter of credit, the purchaser shall be responsible for paying the 
principal and any interest due (see Provision No. C.24) from the due 
date.

                        C.23  Method of Payments

    (a) All amounts payable by the purchaser shall be paid by either:
    (1) Deposit to the account of the U.S. Treasury by wire transfer of 
funds over the Fedwire Deposit System Network. The information to be 
included in each wire transfer will be provided in the NS.
    (2) Electronic funds transfer through the Automated Clearing House 
(ACH) network, using the Federal Remittance Express Program. The 
information to be included in each transfer will be provided in the NS.
    (b) If the purchaser disagrees with the amounts invoiced by the 
Government, the purchaser shall immediately pay the amount invoiced, and 
notify the Contracting Officer of the basis for its disagreement. The 
Contracting Officer will receive and act upon any such objection. 
Failure to agree to any adjustment shall be a dispute, and a purchaser 
shall file a claim promptly in accordance with Provision C.32.
    (c) DOE may designate another place, different timing, or another 
method of payment after reasonable written notice to the purchaser.

[[Page 211]]

    (d) Notwithstanding any other contract provision, DOE may via a 
draft message request a wire transfer of funds against the standby 
letter of credit at any time for payment of monies due under the 
contract and remaining unpaid in violation of the terms of the contract. 
These would include but not be limited to interest, liquidated damages, 
demurrage, amounts owing for any services provided under the contract, 
and the difference between the contract price and price received on the 
resale of undelivered petroleum as defined in Provision No. C.25. If the 
invoice is for delinquent payments, interest shall accrue from the 
payment due date.
    (e) No payment due DOE hereunder shall be subject to reduction or 
set-off for any claim of any kind against the United States arising 
independently of the contract.

                             C.24  Interest

    (a) Amounts due and payable by the purchaser or its bank that are 
not paid in accordance with the provisions governing such payments shall 
bear interest from the date due until the date payment is received by 
the Government.
    (b) Interest shall be computed on a daily basis. The interest rate 
shall be in accordance with the Current Value of Funds rate as 
established by the Department of the Treasury in accordance with the 
Debt Collection Improvement Act of 1997 and published periodically in 
Bulletins to the Treasury Fiscal Requirements Manual and in the Federal 
Register.

                            C.25  Termination

                        (a) Immediate Termination

    (1) The Contracting Officer may terminate this contract in whole or 
in part, without liability of DOE, by written notice to the purchaser 
effective upon its being deposited in the U.S. Postal System addressed 
to the purchaser as provided in Provision No. C.31 in the event that the 
purchaser either notifies the Contracting Officer that it will not be 
able to accept, or fails to accept, any delivery line item in accordance 
with the terms of the contract. Such notice shall invite the purchaser 
to submit information to the Contracting Officer as to the reasons for 
the failure to accept the delivery line item in accordance with the 
terms of the contract.
    (2) Within 10 business days after the issuance of the notice of 
termination, the Contracting Officer may determine that such termination 
was a termination for default under paragraph (b)(l)(ii) of this 
provision. In the absence of information which persuades the Contracting 
Officer that the purchaser's failure to accept the delivery line item 
was excusable, the fact of such failure may be the basis for the 
Contracting Officer determining the purchaser to be in default, without 
first determining under paragraphs (b)(2) and (b)(3) whether such 
failure was excusable under the terms of the contract. The Contracting 
Officer shall promptly give the purchaser written notice of such 
determination.
    (3) Any immediate termination other than one determined to be a 
termination for default in accordance with paragraph (a)(2) and 
paragraph (b) of this provision shall be a termination for the 
convenience of DOE without liability of the Government.

                       (b) Termination for Default

    (1) Subject to the provisions of paragraphs (b)(2) and (b)(3), the 
Contracting Officer may terminate the contract in whole or in part for 
purchaser default, without liability of DOE, by written notice to the 
purchaser, effective upon its being deposited in the U.S. Postal System, 
addressed to the purchaser as provided in Provision No. C.31 in the 
event that:
    (i) The Government does not receive payment in accordance with any 
payment provision of the contract;
    (ii) The purchaser fails to accept delivery of petroleum in 
accordance with the terms of the contract; or
    (iii) The purchaser fails to comply with any other term or condition 
of the contract within 5 business days after the purchaser is deemed to 
have received written notice of such failure from the Contracting 
Officer.
    (2) Except with respect to defaults of subcontractors, the purchaser 
shall not be determined to be in default or be charged with any 
liability to DOE under circumstances which prevent the purchaser's 
acceptance of delivery hereunder due to causes beyond the control and 
without the fault or negligence of the purchaser as determined by the 
Contracting Officer. Such causes shall include but are not limited to:
    (i) Acts of God or the public enemy;
    (ii) Acts of the Government acting in its sovereign or contractual 
capacity;
    (iii) Fires, floods, earthquakes, explosions, unusually severe 
weather, or other catastrophes; or
    (iv) Strikes.
    (3) If the failure to perform is caused by the default of a 
subcontractor, the purchaser shall not be determined to be in default or 
to be liable for any excess costs for failure to perform, unless the 
supplies or services to be furnished by the subcontractor were 
obtainable from other sources in sufficient time to permit the purchaser 
to meet the delivery schedule, if:
    (i) Such default arises out of causes beyond the control of the 
purchaser and its subcontractor, and without the fault or negligence of 
either of them; or
    (ii) Such default arises out of causes within the control of a 
transportation subcontractor, not an affiliate of the purchaser, hired 
to transport the purchaser's petroleum

[[Page 212]]

by vessel or pipeline, and such causes are beyond the purchaser's 
control, without the fault or negligence of the purchaser, and 
notwithstanding the best efforts of the purchaser to avoid default.
    (4) In the event that the contract is terminated in whole or in part 
for default, the purchaser shall be liable to DOE for:
    (i) The difference between the contract price on the contract 
termination date and any lesser price the Contracting Officer obtained 
upon resale of the petroleum; and
    (ii) Liquidated damages as specified in Provision No. C.27 as fixed, 
agreed, liquidated damages for each day of delay until the petroleum is 
delivered to a purchaser under either a resolicitation for the sale of 
the quantities of oil defaulted on, or an NS issued after the date of 
default that specifies that it is for the sale of quantities of oil 
defaulted on. In no event shall liquidated damages be assessed for more 
than 30 days.
    (5) In the event that the Government exercises its right of 
termination for default, and it is later determined that the purchaser's 
failure to perform was excused in accordance with paragraphs (b)(2) and 
(3) of this provision, the rights and obligations of the parties shall 
be the same as if such termination was a termination for convenience 
without liability of the Government under paragraph (c) of this 
provision.

                     (c) Termination for Convenience

    (1) In addition to any other right or remedy provided for in the 
contract, the Government may terminate this contract at any time in 
whole or in part whenever the Contracting Officer shall determine that 
such termination is in the best interest of the Government. Such 
termination shall be without liability of the Government if such 
termination arises out of causes specified in (a)(l) or (b)(l) of this 
provision, acts of the Government in its sovereign capacity, or causes 
beyond the control and without the fault or negligence of the 
Government, its contractors (other than the purchaser of SPR crude oil 
under this contract) and agents. For any other termination for 
convenience, the Government shall be liable for such reasonable costs 
incurred by the purchaser in preparing to perform the contract, but 
under no circumstances shall the Government be liable for consequential 
damages or lost profits as the result of such termination.
    (2) The purchaser will be given immediate written notice of any 
decrease of petroleum deliveries greater than 10 percent, or of 
termination, under this paragraph (c). The termination or reduction 
shall be effective upon its notice being deposited in the U.S. Postal 
System unless otherwise specified in the notice. The purchaser is deemed 
to have received a mailed notice on the second day after its dispatch 
and an electronic or express mail notice on the day after dispatch.
    (3) Termination for the convenience of the Government shall not 
excuse the purchaser from liquidated damages accruing prior to the 
effective date of the termination.
    (d) Nothing herein contained shall limit the Government in the 
enforcement of any legal or equitable remedy that it might otherwise 
have, and a waiver of any particular cause for termination shall not 
prevent termination for the same cause occurring at any other time or 
for any other cause.
    (e) In the event that the Government exercises its right of 
termination, as provided in paragraphs (a), (b), or (c)(1) of this 
provision, the Contracting Officer may sell any undelivered petroleum 
under such terms and conditions as he deems appropriate.
    (f) DOE's ability to deliver petroleum on the date on which the 
defaulted purchaser was scheduled to accept delivery, under another 
contract awarded prior to the date of the contractor's default, shall 
not excuse a purchaser that has been terminated for default from either 
liquidated damages or the difference between the contract price and any 
lesser price obtained on resale.
    (g) Any disagreement with respect to the amount due the Government 
for either resale costs or liquidated damages shall be deemed to be a 
dispute and will be decided by the Contracting Officer pursuant to 
Provision No. C.32.
    (h) The term ``subcontractor'' or ``subcontractors'' includes 
subcontractors at any tier.

                     C.26  Other Government Remedies

    (a) The Government's rights under this provision are in addition to 
any other right or remedy available to it by law or by virtue of this 
contract.
    (b) The Government may, without liability on its part, withhold 
deliveries of petroleum under this contract or any other contract the 
purchaser may have with DOE if payment is not made in accordance with 
this contract.
    (c) If the purchaser fails to take delivery of petroleum in 
accordance with the delivery schedule developed under the terms of the 
contract, and such tardiness is not excused under the terms of Provision 
No. C.25, but the Government does not elect to terminate that item for 
default, the purchaser nonetheless shall be liable to the Government for 
liquidated damages in the amount established by Provision No. C.27 for 
each calendar day of delay or fraction thereof until such time as it 
accepts delivery of the petroleum. In no event shall such damages be 
assessed for longer than 30 days. No purchaser that fails to perform in 
accordance with the terms of the contract shall be excused from 
liability for liquidated damages by virtue of the fact that DOE is able 
to deliver petroleum on the

[[Page 213]]

date on which the non-performing purchaser was scheduled to accept 
delivery, under another contract awarded prior to the date of default.

                        C.27  Liquidated Damages

    (a) In case of failure on the part of the purchaser to perform 
within the time fixed in the contract or any extension thereof, the 
purchaser shall pay to the Government liquidated damages in the amount 
of 1 percent of the contract price of the undelivered petroleum per 
calendar day of delay or fraction thereof in accordance with paragraph 
(b) of Provision No. C.25 and paragraph (c) of Provision No. C.26.
    (b) As provided in (a) of this provision, liquidated damages will be 
assessed for each day or fraction thereof a purchaser is late in 
accepting delivery of petroleum in accordance with this contract, unless 
such tardiness is excused under Provision No. C.25. For petroleum to be 
lifted by vessel, damages will be assessed in the event that the vessel 
has not commenced loading by 11:59 p.m. on the second day following the 
last day of the 3-day delivery window established under Provision No. 
C.5, unless the vessel has arrived in roads and its Master has presented 
a notice of readiness to the Government or its agents. Liquidated 
damages shall continue until the vessel presents its notice of 
readiness. For petroleum to be moved by pipeline, if delivery 
arrangements have not been made by the last day of the month prior to 
delivery, liquidated damages shall commence on the 3rd day of the 
delivery month until such delivery arrangements are completed; if 
delivery arrangements have been made, then liquidated damages shall 
begin on the 3rd day after the scheduled delivery date if delivery is 
not commenced and shall continue until delivery is commenced.
    (c) Any disagreement with respect to the amount of liquidated 
damages due the Government will be deemed to be a dispute and will be 
decided by the Contracting Officer pursuant to Provision No. C.32.

              C.28  Failure To Perform Under SPR Contracts

    In addition to the usual debarment procedures, 10 CFR Section 625.3 
provides procedures to make purchasers that fail to perform in 
accordance with these provisions ineligible for future SPR contracts.

    C.29  Government Options in Case of Impossibility of Performance

    (a) In the event that DOE is unable to deliver petroleum contracted 
for to the purchaser due either to events beyond the control of the 
Government, including actions of the purchaser, or to acts of the 
Government, its agents, its contractors or subcontractors at any tier, 
the Government at its option may do either of the following:
    (1) Terminate for the convenience of the Government under Provision 
No. C.25; or
    (2) Offer different SPR crude oil streams or delivery times to the 
purchaser in substitution for those specified in the contract.
    (b) In the event that a different SPR crude oil stream than 
originally contracted for is offered to the purchaser, the contract 
price will be negotiated between the parties. In no event shall the 
negotiated price be less than the minimum acceptable price, if 
established for the same or similar crude oil streams in the most recent 
NS or determined after the opening of offers.
    (c) DOE's obligation in such circumstances is to use its best 
efforts, and DOE under no circumstances shall be liable to the purchaser 
for damages arising from DOE's failure to offer alternate SPR crude oil 
streams or delivery times.
    (d) If the parties are unable to reach agreement as to price, crude 
oil streams or delivery times, DOE may terminate the contract for the 
convenience of the Government under Provision No. C.25.

                C.30  Limitation of Government Liability

    DOE's obligation under these SSPs and any resultant contract is to 
use its best efforts to perform in accordance therewith. The Government 
under no circumstances shall be liable thereunder to the purchaser for 
the conduct of the Government's contractors or subcontractors or for 
indirect, consequential, or special damages arising from its conduct, 
except as provided herein; neither shall the Government be liable 
thereunder to the purchaser for any damages due in whole or in part to 
causes beyond the control and without the fault or negligence of the 
Government, including but not restricted to, acts of God or public 
enemy, acts of the Government acting in its sovereign capacity, fires, 
floods, earthquakes, explosions, unusually severe weather, other 
catastrophes, or strikes.

                              C.31  Notices

    (a) Any notices required to be given by one party to the contract to 
the other in writing shall be forwarded to the addressee, prepaid, by 
U.S. registered, return receipt requested mail, express mail, telegram, 
or electronic means as provided in the NS. Parties shall give each other 
written notice of address changes.
    (b) Notices to the purchaser shall be forwarded to the purchaser's 
address as it appears in the offer and in the contract.
    (c) Notices to the Contracting Officer shall be forwarded to the 
following address: U.S. Department of Energy, Strategic Petroleum 
Reserve, Project Management Office, Acquisition and Sales Division, Mail 
Stop FE-4451, 900 Commerce Road East, New Orleans, Louisiana 70123.

[[Page 214]]

                             C.32  Disputes

    (a) This contract is subject to the Contract Disputes Act of 1978 
(41 U.S.C. Section 601 et seq.). If a dispute arises relating to the 
contract, the purchaser may submit a claim to the Contracting Officer, 
who shall issue a written decision on the dispute in the manner 
specified in 48 CFR 1-33.211.
    (b) ``Claim'' means:
    (1) A written request submitted to the Contracting Officer;
    (2) For payment of money, adjustment of contract terms, or other 
relief;
    (3) Which is in dispute or remains unresolved after a reasonable 
time for its review and disposition by the Government; and (4) For which 
a Contracting Officer's decision is demanded.
    (c) In the case of dispute requests or amendments to such requests 
for payment exceeding $50,000, the purchaser shall certify at the time 
of submission as a claim, as follows:
    I certify that the claim is made in good faith, that the supporting 
data are current, accurate and complete to the best of my knowledge and 
belief and that the amount requested accurately reflects the contract 
adjustment for which the purchaser believes the Government is liable.

Purchaser's Name

Signature

Title

    (d) The Government shall pay to the purchaser interest on the amount 
found due to the purchaser on claims submitted under this provision at 
the rate established by the Department of the Treasury from the date the 
amount is due until the Government makes payment. The Contract Disputes 
Act of 1978 and the Prompt Payment Act adopt the interest rate 
established by the Secretary of the Treasury under the Renegotiation Act 
as the basis for computing interest on money owed by the Government. 
This rate is published semi-annually in the Federal Register.
    (e) The purchaser shall pay to DOE, interest on the amount found due 
to the Government and unpaid on claims submitted under this provision at 
the rate specified in Provision No. C.24 from the date the amount is due 
until the purchaser makes payment.
    (f) The decision of the Contracting Officer shall be final and 
conclusive and shall not be subject to review by any forum, tribunal, or 
Government agency unless an appeal or action is commenced within the 
times specified by the Contract Disputes Act of 1978.
    (g) The purchaser shall comply with any decision of the Contracting 
Officer and at the direction of the Contracting Officer shall proceed 
diligently with performance of this contract pending final resolution of 
any request for relief, claim, appeal, or action related to this 
contract.

                            C.33  Assignment

    The purchaser shall not make or attempt to make any assignment of a 
contract that incorporates these SSPs or any interest therein contrary 
to the provisions of Federal law, including the Anti-Assignment Act (4l 
U.S.C. 15), which provides:
    No contract or order, or any interest therein, shall be transferred 
by the party to whom such contract or order is given to any other party, 
and any such transfer shall cause the annulment of the contract or order 
transferred, so far as the United States are concerned. All rights of 
action, however, for any breach of such contract by the contracting 
parties, are reserved to the United States.

                        C.34  Order of Precedence

    In the event of an inconsistency between the terms of the various 
parts of this contract, the inconsistency shall be resolved by giving 
precedence in the following order:
    (a) The NA and written modifications thereto;
    (b) The NS;
    (c) Those provisions of the SSPs (as published in the Federal 
Register) made applicable to the contract by the NS;
    (d) The instructions to the SPR Sales Offer Form; and
    (e) The successful offer.

                            C.35  Gratuities

    (a) The Government, by written notice to the purchaser, may 
terminate the right of the purchaser to proceed under this contract if 
it is found, after notice and hearing, by the Secretary of Energy or his 
duly authorized representative, that gratuities (in the form of 
entertainment, gifts, or otherwise) were offered by or given by the 
purchaser, or any agent or representative of the purchaser, to any 
officer or employee of the Government with a view toward securing a 
contract or securing favorable treatment with respect to the awarding, 
amending, or making of any determinations with respect to the performing 
of such contract; provided, that the existence of the facts upon which 
the Secretary of Energy or his duly authorized representative makes such 
findings shall be in issue and may be reviewed in any competent court.
    (b) In the event that this contract is terminated as provided in 
paragraph (a) hereof, the Government shall be entitled (l) to pursue the 
same remedies against the purchaser as it could pursue in the event of a 
breach of the contract by purchaser, and (2) as a penalty in addition to 
any other damages to which it may be entitled by law, to exemplary 
damages in an amount (as determined

[[Page 215]]

by the Secretary of Energy or his duly authorized representative) which 
shall not be less than three nor more than 10 times the cost incurred by 
the purchaser in providing any such gratuities to any such officer or 
employee.
    (c) The rights and remedies of the Government provided in this 
clause shall not be exclusive and are in addition to any other rights 
and remedies provided by law or under this contract.

                                EXHIBITS

A--SPR Sales Offer Form
B--Sample Notice of Sale
C--SPRPMO Form 33S
D--SPR Crude Oil Comprehensive Analysis
E--SPR Delivery Point Data
F--Offer Standby Letter of Credit
G--Payment and Performance Letter of Credit
H--Strategic Petroleum Reserve Crude Oil Delivery Report--SPRPMO-F-
6110.2-14b 1/87 REV. 8/91
I--Instruction Guide for Return of Offer Guarantees by Electronic 
Transfer or Treasury Check
J--Offer Guarantee Calculation Worksheet

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[63 FR 54198, Oct. 8, 1998]

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                    CHAPTER III--DEPARTMENT OF ENERGY




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

Part                                                                Page
706             Security policies and practices relating to 
                    labor-management relations..............         257
707             Workplace substance abuse programs at DOE 
                    sites...................................         259
708             DOE contractor employee protection program..         269
709             Polygraph examination regulations...........         280
710             Criteria and procedures for determining 
                    eligibility for access to classified 
                    matter or special nuclear material......         288
711             Personnel Assurance Program (PAP)...........         309
715             Definition of nonrecourse project-financed..         323
725             Permits for access to restricted data.......         324
745             Protection of human subjects................         334
760             Domestic Uranium Program....................         344
765             Reimbursement for costs of remedial action 
                    at active uranium and thorium processing 
                    sites...................................         347
766             Uranium enrichment decontamination and 
                    decommissioning fund; procedures for 
                    special assessment of domestic utilities         356
780             Patent Compensation Board regulations.......         359
781             DOE patent licensing regulations............         367
782             Claims for patent and copyright infringement         377
783             Waiver of patent rights.....................         379
784             Patent waiver regulation....................         380
800             Loans for bid or proposal preparation by 
                    minority business enterprises seeking 
                    DOE contracts and assistance............         391
810             Assistance to foreign atomic energy 
                    activities..............................         400
820             Procedural rules for DOE nuclear activities.         406
830             Nuclear safety management...................         432
835             Occupational radiation protection...........         436
840             Extraordinary nuclear occurrences...........         471
850             Chronic beryllium disease prevention program         475
860             Trespassing on Department of Energy property         490
861             Control of traffic at Nevada Test Site......         491
862             Restrictions on aircraft landing and air 
                    delivery at Department of Energy nuclear 
                    sites...................................         493
871             Air transportation of plutonium.............         495

[[Page 256]]

903             Power and transmission rates................         496
904             General regulations for the charges for the 
                    sale of power from the Boulder Canyon 
                    Project.................................         502
905             Energy Planning and Management Program......         508
960             General guidelines for the recommendation of 
                    sites for nuclear waste repositories....         518
961             Standard contract for disposal of spent 
                    nuclear fuel and/or high-level 
                    radioactive waste.......................         550
962             Byproduct material..........................         569

[[Page 257]]



PART 706--SECURITY POLICIES AND PRACTICES RELATING TO LABOR-MANAGEMENT RELATIONS--Table of Contents




                                 General

Sec.
706.1  Purpose.
706.2  Basis and scope.

   Security Policies and Procedures in National Labor Relations Board 
                               Proceedings

706.10  Policy.
706.11  Consent elections.
706.12  Administrative Law Judges.
706.13  Clearance of counsel.
706.14  DOE's role in proceedings.

                         Loyalty of Participants

706.20  Policy.

                 Contract Negotiation and Administration

706.30  Clearance of certain local union representatives.
706.31  Clearance of conciliators and arbitrators.
706.32  Security indoctrination of non-employee representatives.
706.40  Final responsibility of DOE in security matters.

    Authority: Sec. 161, 68 Stat. 948, as amended; 42 U.S.C. 2201.

    Source: 41 FR 56776, Dec. 30, 1976, unless otherwise noted.

                                 General



Sec. 706.1  Purpose.

    The purpose of this part is to set forth Department of Energy, 
hereinafter ``DOE,'' security policies and practices in the area of 
labor-management relations.



Sec. 706.2  Basis and scope.

    The specific policies contained in this part are worked out within 
the framework of DOE's general objectives for labor-management relations 
in the DOE program, namely:
    (a) Wholehearted acceptance by contractors and by labor and its 
representatives of the moral responsibility inherent in participation in 
the DOE program;
    (b) Development of procedures to assure (1) that all participants in 
the program are loyal to the United States including those whose 
participation involves the exercise of negotiating and disciplinary 
authority over bargaining units, and (2) that determination of unit, 
jurisdiction, and similar questions will not breach security;
    (c) Continuity of production at vital DOE installations;
    (d) Consistent with DOE's responsibility under the law, the least 
possible governmental interference with the efficient management 
expected from DOE contractors;
    (e) Minimum interference with the traditional rights and privileges 
of American labor.

   Security Policies and Procedures in National Labor Relations Board 
                               Proceedings



Sec. 706.10  Policy.

    It is policy of DOE that NLRB cases falling within the scope of the 
Labor Management Relations Act at the various DOE installations should 
be conducted in normal fashion whereever possible, on the basis of open 
hearings, unclassified records and published decisions. This policy does 
not preclude adoption of special arrangements which may be required for 
reasons of program security at any stage of the proceedings in 
particular areas.



Sec. 706.11  Consent elections.

    In accordance with the recommendation of the President's Commission 
on Labor Relations in the Atomic Energy Installations, it is the policy 
of DOE to encourage every effort by management and labor at DOE 
installations to determine bargaining units and representatives by 
agreement and consent elections in preference to contested proceedings 
before the National Labor Relations Board.



Sec. 706.12  Administrative Law Judges.

    By agreement with the National Labor Relations Board, a panel of 
cleared NLRB administrative law judges is maintained to facilitate 
resolution of questions as to the materiality of classified information 
in NLRB hearings and to facilitate preparation of an unclassified 
record. The assignment of individual administrative law judges to DOE 
cases remains a matter within the discretion of the National Labor 
Relations Board.

[[Page 258]]



Sec. 706.13  Clearance of counsel.

    It is recognized that clearance of counsel for the parties is 
sometimes desirable for proper preparation of a case even though the 
record is to be unclassified. Clearance of counsel makes possible their 
participation in any closed discussions needed preparatory to making an 
unclassified record. Each party is responsible for requesting clearance 
of its counsel well in advance so that clearance requirements will not 
delay the proceeding. The clearance of temporary special counsel will be 
terminated on completion of the proceeding.



Sec. 706.14  DOE's role in proceedings.

    If controversies within the scope of the Labor Management Relations 
Act arise which cannot be adjusted by mutual agreement, and contested 
proceedings before NLRB result, each party to such proceedings will 
present his own position and the evidence in support thereof with due 
regard for existing security rules. DOE will be continuously informed of 
the progress of such proceedings and will act as may appear desirable 
(a) to assure the protection of classified information; (b) to assure 
that material and relevant information is not withheld from the record 
on grounds of security if such information can be supplied in 
unclassified form; and (c) to assist in determining appropriate action 
where a decision may turn on data which can be expressed only in 
classified form.

                         Loyalty of Participants



Sec. 706.20  Policy.

    Loyalty to the United States is a paramount factor applicable to all 
participants in DOE program including those whose participation 
(although not requiring access to restricted data) involves the exercise 
of administrative, negotiating and disciplinary authority over 
bargaining units composed of employees engaged on classified work. 
Individuals involved in questions of loyalty will be given full 
opportunity to explore the questions with DOE. DOE will take such 
further steps as may be appropriate in the circumstances.

                 Contract Negotiation and Administration



Sec. 706.30  Clearance of certain local union representatives.

    It is recognized that security clearance of certain union 
representatives may be necessary to assure opportunity for effective 
representation of employees in collective bargaining relationships with 
DOE contractors. Accordingly, DOE managers may authorize investigation 
for ``Q'' clearance of union officials whose functions as 
representatives of employees may reasonably be expected to require 
access to Restricted Data under NLRB and other procedures according to 
applicable law (LMRA, 1947); to effectively perform their representation 
functions in the resolution of grievances and in other collective 
bargaining relationships with contractors; to effectuate the 
recommendation of the President's Commission on Labor Relations in the 
Atomic Energy Installations in respect to integration of the union into 
the plant organization ``as to two-way channel of communication and a 
medium of understanding between management and workers''.
    (a) In the pre-contract stage of union-management relations, the 
requirements of the Labor Management Relations Act normally will be the 
applicable criteria for determining which bargaining representatives, if 
any, will need access to classified material in the exercise of their 
functions as employee representatives.
    (b) After a bargaining relationship has been established between the 
contractor and the representatives of its employees the nature of this 
relationship and the procedures followed in it normally will be the 
controlling criteria for determination of the access to be granted to 
particular persons in carrying out their functions as employee 
representatives. For example, many contract grievance procedures 
designate by title certain union and management officials who are to 
have definite roles in the resolution of grievances under the procedure. 
Investigation for ``Q'' clearance will normally be

[[Page 259]]

in order for such officials, both company and union, employee, and non-
employee. In addition, persons not so designated may be investigated for 
clearance where the company and the union advise DOE manager that their 
established relationships contemplate access for such persons.



Sec. 706.31  Clearance of conciliators and arbitrators.

    Conciliators and arbitrators who are regularly assigned to DOE cases 
may be processed for ``Q'' clearance at the discretion of the local DOE 
manager, either on the manager's initiative or at the request of a 
contractor.



Sec. 706.32  Security indoctrination of non-employee representatives.

    All collective bargaining representatives, company and union, who 
are to have access to Restricted Data, will be given appropriate 
security indoctrination.



Sec. 706.40  Final responsibility of DOE in security matters.

    On all matters of security at all Government-owned, privately 
operated DOE installations, DOE retains absolute and final authority, 
and neither the security rules nor their administration are matters for 
collective bargaining between management and labor, insofar as DOE 
security regulations affect the collective bargaining process, the 
security policies and regulations will be made known to both parties. To 
the fullest extent feasible DOE will consult with representatives of 
management and labor in formulating security rules and regulations that 
affect the collective bargaining process.



PART 707--WORKPLACE SUBSTANCE ABUSE PROGRAMS AT DOE SITES--Table of Contents




                      Subpart A--General Provisions

Sec.
707.1  Purpose.
707.2  Scope.
707.3  Policy.
707.4  Definitions.

                          Subpart B--Procedures

707.5  Submission, approval, and implementation of a baseline workplace 
          substance abuse program.
707.6  Employee assistance, education, and training.
707.7  Random drug testing requirements and identification of testing 
          designated positions.
707.8  Applicant drug testing.
707.9  Drug testing as a result of an occurrence.
707.10  Drug testing for reasonable suspicion of illegal drug use.
707.11  Drugs for which testing is performed.
707.12  Specimen collection, handling, and laboratory analysis for drug 
          testing.
707.13  Medical review of results of tests for illegal drug use.
707.14  Action pursuant to a determination of illegal drug use.
707.15  Collective bargaining.
707.16  Records.
707.17  Permissible actions in the event of contractor noncompliance.

    Authority: 41 U.S.C. 701 et seq.; 42 U.S.C. 2012, 2013, 2051, 2061, 
2165, 2201b, 2201i, and 2201p; 42 U.S.C. 5814 and 5815; 42 U.S.C. 7151, 
7251, 7254, and 7256.

    Source: 57 FR 32656, July 22, 1992, unless otherwise noted.



                      Subpart A--General Provisions



Sec. 707.1  Purpose.

    The Department of Energy (DOE) promulgates this part in order to 
protect the environment, maintain public health and safety, and 
safeguard the national security. This part establishes policies, 
criteria, and procedures for developing and implementing programs that 
help to maintain a workplace free from the use of illegal drugs. It 
applies to DOE contractors and subcontractors performing work at sites 
owned or controlled by DOE and operated under the authority of the 
Atomic Energy Act of 1954, as amended, and to individuals with 
unescorted access to the control areas of certain DOE reactors. The 
procedures include detection of the use of illegal drugs by current or 
prospective contractor employees in testing designated positions.



Sec. 707.2  Scope.

    (a) This part applies to the following contracts with DOE, at sites 
owned or controlled by DOE which are operated

[[Page 260]]

under the authority of the Atomic Energy Act of 1954, as amended:
    (1) Management and operating contracts; and
    (2) Other contracts or subcontracts with a value of $25,000 or more, 
and which have been determined by DOE to involve:
    (i) Access to or handling of classified information or special 
nuclear materials;
    (ii) High risk of danger to life, the environment, public health and 
safety, or national security; or
    (iii) Transportation of hazardous materials to or from a DOE site.
    (b) Individuals described in Sec. 707.7 (b) and (c) will be subject 
to random drug testing; to drug testing as a result of an occurrence, as 
described in Sec. 707.9; and to drug testing on the basis of reasonable 
suspicion, as described in Sec. 707.10.
    (c) Applicants for employment in testing designated positions will 
be tested in accordance with Sec. 707.8.



Sec. 707.3  Policy.

    It is the policy of DOE to conduct its programs so as to protect the 
environment, maintain public health and safety, and safeguard the 
national security. This policy is advanced in this rule by requiring 
contractors and subcontractors within its scope to adopt procedures 
consistent with the baseline requirements of this part, and to impose 
significant sanctions on individuals in testing designated positions or 
with unescorted access to the control areas of certain DOE reactors, who 
use or are involved with illegal drugs.



Sec. 707.4  Definitions.

    For the purposes of this part, the following definitions apply:
    Collection Site Person means a technician or other person trained 
and qualified to take urine samples and to secure urine samples for 
later laboratory analysis.
    Confirmed Positive Test means, for drugs, a finding based on a 
positive initial or screening test result, confirmed by another positive 
test on the same sample. The confirmatory test must be by the gas 
chromatography/mass spectrometry method.
    Counseling means assistance provided by qualified professionals to 
employees, especially, but not limited to those employees whose job 
performance is, or might be, impaired as a result of illegal drug use or 
a medical-behavioral problem; such assistance may include short-term 
counseling and assessment, crisis intervention, referral to outside 
treatment facilities, and follow-up services to the individual after 
completion of treatment and return to work.
    Drug Certification means a written assurance signed by an individual 
with known past illegal drug involvement, as a condition for obtaining 
or retaining a DOE access authorization, stating that the individual 
will refrain from using or being involved with illegal drugs while 
employed in a position requiring DOE access authorization (security 
clearance).
    Employee Assistance means a program of counseling, referral, and 
educational services concerning illegal drug use and other medical, 
mental, emotional, or personal problems of employees, particularly those 
which adversely affect behavior and job performance.
    Hazardous Material means any material subject to the placarding 
requirements of 49 CFR 172.504, table 1, and materials presenting a 
poison-inhalation hazard that must be placarded under the provisions of 
49 CFR 172.505.
    Illegal Drug means a controlled substance, as specified in Schedules 
I through V of the Controlled Substances Act, 21 U.S.C. 811, 812. The 
term ``illegal drugs'' does not apply to the use of a controlled 
substance in accordance with terms of a valid prescription, or other 
uses authorized by law.
    Management and Operating Contract means an agreement for the 
operation, maintenance, or support, on behalf of the Government, of a 
Government-owned or controlled research, development, special 
production, or testing establishment wholly or principally devoted to 
one or more major programs of DOE.
    Medical Review Officer (MRO) means a licensed physician, approved by 
DOE to perform certain functions under this part. The MRO is responsible 
for receiving laboratory results generated by an employer's drug testing 
program, has knowledge of illegal drug use and

[[Page 261]]

other substance abuse disorders, and has appropriate medical training to 
interpret and evaluate an individual's positive test result, together 
with that person's medical history and any other relevant biomedical 
information. For purposes of this part a physician from the site 
occupational medical department may be the MRO.
    Occurrence means any event or incident that is a deviation from the 
planned or expected behavior or course of events in connection with any 
Department of Energy or Department of Energy-controlled operation, if 
the deviation has environmental, public health and safety, or national 
security protection significance. Incidents having such significance 
include the following, or incidents of a similar nature:
    (1) Injury or fatality to any person involving actions of a 
Department of Energy contractor employee.
    (2) Involvement of nuclear explosives under Department of Energy 
jurisdiction which results in an explosion, fire, the spread of 
radioactive material, personal injury or death, or significant damage to 
property.
    (3) Accidental release of pollutants which results or could result 
in a significant effect on the public or environment.
    (4) Accidental release of radioactive material above regulatory 
limits.
    Random Testing means the unscheduled, unannounced urine drug testing 
of randomly selected individuals in testing designated positions, by a 
process designed to ensure that selections are made in a non-
discriminatory manner.
    Reasonable Suspicion means a suspicion based on an articulable 
belief that an employee uses illegal drugs, drawn from particularized 
facts and reasonable inferences from those facts, as detailed further in 
Sec. 707.10.
    Referral means the direction of an individual toward an employee 
assistance program or to an outside treatment facility by the employee 
assistance program professional, for assistance with prevention of 
illegal drug use, treatment, or rehabilitation from illegal drug use or 
other problems. Referrals to an employee assistance program can be made 
by the individual (self-referral), by contractor supervisors or 
managers, or by a bargaining unit representative.
    Rehabilitation means a formal treatment process aimed at the 
resolution of behavioral-medical problems, including illegal drug use, 
and resulting in such resolution.
    Special Nuclear Material has the same meaning as in section 11aa of 
the Atomic Energy Act of 1954 (42 U.S.C. 2014(aa)).
    Specimen Chain of Custody Form is a form used to document the 
security of the specimen from time of collection until receipt by the 
laboratory. This form, at a minimum, shall include specimen identifying 
information, date and location of collection, name and signature of 
collector, name of testing laboratory, and the names and signatures of 
all individuals who had custody of the specimen from time of collection 
until the specimen was prepared for shipment to the laboratory.
    Testing Designated Position names a position whose incumbents are 
subject to drug testing under this part.



                          Subpart B--Procedures



Sec. 707.5  Submission, approval, and implementation of a baseline workplace substance abuse program.

    (a) Each contractor subject to this part shall develop a written 
program consistent with the requirements of this part and the guidelines 
of the Department of Health and Human Services and subsequent amendments 
to those guidelines (``Mandatory Guidelines for Federal Workplace Drug 
Testing Programs,'' 53 FR 11970, April 11, 1988; hereinafter ``HHS 
Mandatory Guidelines''), and applicable to appropriate DOE sites. Such a 
program shall be submitted to DOE for review and approval, and shall 
include at least the following baseline elements:
    (1) Prohibition of the use; possession, sale, distribution, or 
manufacture of illegal drugs at sites owned or controlled by DOE;

[[Page 262]]

    (2) Plans for instruction of supervisors and employees concerning 
problems of substance abuse, including illegal drug use, and the 
availability of assistance through the employee assistance program and 
referrals to other resources, and the penalties that may be imposed upon 
employees for drug-related violations occurring on the DOE owned or 
controlled site;
    (3) Provision for distribution to all employees engaged in 
performance of the contract on the DOE owned or controlled site of a 
statement which sets forth the contractor's policies prohibiting the 
possession, sale, distribution, or manufacture of illegal drugs at the 
DOE owned or controlled site. The statement shall include notification 
to all employees that as a condition of employment under the contract, 
the employee will:
    (i) Abide by the terms of the statement; and
    (ii) Notify the employer in writing of the employee's conviction 
under a criminal drug statute for a violation occurring on the DOE owned 
or controlled site no later than 10 calendar days after such conviction;
    (4) Provision for written notification to the DOE contracting 
officer within 10 calendar days after receiving notice under paragraph 
(a)(3)(ii) of this section, from an employee or otherwise receiving 
actual notice of an employee's conviction of a drug-related offense;
    (5) Provision for imposing one of the following actions, with 
respect to any employee who is convicted of a drug-related violation 
occurring in the workplace, within 30 calendar days after receiving such 
notice of conviction under paragraph (a)(4) of this section;
    (i) Taking appropriate personnel action against such employee, up to 
and including termination; or
    (ii) Offering such employee, consistent with the contractor's 
policies, an opportunity to participate satisfactorily in a drug abuse 
assistance or rehabilitation program approved for such purposes by a 
Federal, State, or local health, law enforcement, or other appropriate 
agency. If the employee does not participate in such a rehabilitation 
program, the contractor must take appropriate personnel action, up to 
and including termination, in accordance with the contractor's policies.
    (6) Commitment to make a good faith effort to maintain a workplace 
free of substance abuse through implementation of paragraphs (a)(1) 
through (a)(5) of this section.
    (b) In addition, the following baseline elements must be included in 
programs developed by contractors that have identified testing 
designated positions (see Sec. 707.7(b));
    (1) Notification to DOE of the positions subject to drug testing;
    (2) Prohibition of individuals in testing designated positions who 
are not free from the use of illegal drugs from working in those 
positions;
    (3) Sanctions for individuals in testing designated positions who 
violate the prohibitions of paragraphs (a)(1) or (b)(2) of this section;
    (4) Provision for:
    (i) Notification, at least 60 days in advance of initiating testing, 
to those individuals subject to drug testing, unless the contractor is 
currently conducting a testing program.
    (ii) Urine drug analysis of applicants for testing designated 
positions before final selection for employment or assignment;
    (iii) Random urine drug analysis for employees in testing designated 
positions;
    (iv) Urine drug analysis for employees in testing designated 
positions on the basis of reasonable suspicion, as a result of an 
occurrence, or as a follow-up to rehabilitation; and
    (v) Random urine drug analysis and urine drug analysis on the basis 
of reasonable suspicion or as the result of an occurrence, for any 
individual with unescorted access to the control areas of certain DOE 
reactors (see Sec. 707.7(c)).
    (vi) Written notice to the contractor by an employee in a testing 
designated position of a drug-related arrest or conviction, or receipt 
of a positive drug test result regarding that employee, as soon as 
possible but within 10 calendar days of such arrest, conviction, or 
receipt; and
    (vii) Appropriate action, if any, to be taken regarding an employee 
who:
    (A) is arrested for or convicted of a drug-related offense; or

[[Page 263]]

    (B) has a positive drug test result (consistent with Sec. 707.14).
    (5) Provision to employees of the opportunity for rehabilitation, 
consistent with the contractor's policies, under circumstances as 
provided in this part (see Sec. 707.14(b));
    (6) Immediate notification to DOE security officials whenever the 
circumstances in connection with procedures under this part raise a 
security concern as provided in DOE Orders, rules and regulations; such 
circumstances including, but are not necessarily limited to, a 
determination that an individual holding a DOE access authorization has 
used an illegal drug.
    (c) Each contractor's written policy and procedures under this part 
shall comply with the requirements of 10 CFR part 710, ``Criteria and 
Procedures for Determining Eligibility for Access to Classified Matter 
or Significant Quantities of Special Nuclear Material.''
    (d) Contractors are required to submit all subcontracts they believe 
to be within the scope of this part to DOE for a determination as to 
whether the subcontract falls within the scope of this part. 
Subcontractors so determined to be within the scope of this part shall 
be required to agree to comply with its requirements, as a condition of 
eligibility for performing the subcontract work. Each subcontractor 
subject to this part shall submit its plan to the appropriate prime 
contractor for approval; the contractor shall be responsible for 
periodically monitoring the implementation of the subcontractor's 
program for effectiveness and compliance with this part.
    (e) In reviewing each proposed workplace substance abuse plan, DOE 
shall decide whether the program meets the applicable baseline 
requirements established by this part. The responsible DOE official will 
reject proposed workplace substance abuse plans that are deemed not to 
meet the baseline requirements. DOE shall provide the contractor with a 
written notification regarding the decision as to the acceptability of 
the plan. Nothing in this rule is intended to prohibit any contractor 
subject to this part from implementing workplace substance abuse 
requirements additional to those of the baseline, including drug testing 
employees and applicants for employment in any position and testing for 
any illegal drugs. However, the contractor shall inform DOE of such 
additional requirements at least 30 days prior to implementation.
    (f) DOE shall periodically review and evaluate each contractor's 
program, including the contractor's oversight of the covered 
subcontractors, to assure effectiveness and compliance with this part.
    (g) Contractors or proposers will submit their program to DOE for 
review within 30 days of notification by DOE that the contract or 
proposed contract falls within the scope of this part. Workplace 
substance abuse programs, as provided in this part, shall be implemented 
within 30 days of approval by DOE. DOE may grant an extension to the 
notification or implementation period, as warranted by local conditions. 
Implementation may require changes to collective bargaining agreements 
as discussed in Sec. 707.15 of this part.
    (h) To assure consistency of application, DOE shall periodically 
review designated contracts and testing designated positions included in 
the workplace substance abuse plans approved by DOE. DOE will also 
periodically review implementation of programs conducted by prime 
contractors, to assure consistency of application among prime contracts 
(and subcontracts where appropriate) throughout DOE.
    (i) This part preempts any State or local law, rule, regulation, 
order, or standard to the extent that:
    (1) compliance with both the State or local requirement and any 
requirements in this part is not possible; or
    (2) compliance with the State or local requirement is an obstacle to 
the accomplishments and execution of any requirement in this part.



Sec. 707.6  Employee assistance, education, and training.

    Contractor programs shall include the following or appropriate 
alternatives:
    (a) Employee assistance programs emphasizing preventive services, 
education, short-term counseling, coordination and referral to outside 
agencies,

[[Page 264]]

and follow-up. These services shall be available to all contractor on-
site employees involved in the DOE contract. The contractor has no 
obligation to pay the costs of any individual's counseling, treatment, 
or rehabilitation beyond those services provided by the contractor's 
employee assistance program, except as provided for in the contractor's 
benefits programs. DOE undertakes no obligation to pay for any 
individual's counseling, rehabilitation, or treatment, unless 
specifically provided for by contract.
    (b) Education and training programs for on-site employees on a 
periodic basis, which will include, at a minimum, the following 
subjects:
    (1) For all on-site employees: Health aspects of substance abuse, 
especially illegal drug use; safety, security, and other workplace-
related problems caused by substance abuse, especially illegal drug use; 
the provisions of this rule; the employer's policy; and available 
employee assistance services.
    (2) For managers and supervisors:
    (i) The subjects listed in paragraph (b)(1) of this section;
    (ii) Recognition of deteriorating job performance or judgment, or 
observation of unusual conduct which may be the result of possible 
illegal drug use;
    (iii) Responsibility to intervene when there is deterioration in 
performance, or observed unusual conduct, and to offer alternative 
courses of action that can assist the employee in returning to 
satisfactory performance, judgment, or conduct, including seeking help 
from the employee assistance program;
    (iv) Appropriate handling and referral of employees with possible 
substance abuse problems, especially illegal drug use; and
    (v) Employer policies and practices for giving maximum consideration 
to the privacy interests of employees and applicants.



Sec. 707.7  Random drug testing requirements and identification of testing designated positions.

    (a)(1) Each workplace substance abuse program will provide for 
random testing for evidence of the use of illegal drugs of employees in 
testing designated positions identified in this section.
    (2) Programs developed under this part for positions identified in 
paragraph (b)(3) of this section shall provide for random tests at a 
rate equal to 50 percent of the total number of employees in testing 
designated positions for each 12 month period. Employees in the 
positions identified in paragraphs (b)(1), (b)(2), and (c) of this 
section will be subject to random testing at a rate equal to 100 percent 
of the total number of employees identified, and those identified in 
paragraphs (b)(1) and (b)(2) of this section may be subject to 
additional drug tests.
    (b) The testing designated positions subject to random drug testing 
are:
    (1) Positions determined to be covered by the Personnel Security 
Assurance Program (PSAP), codified at 10 CFR part 710. PSAP employees 
will be subject to the drug testing standards of this part and any 
additional requirements of the PSAP rule.
    (2) Positions which entail critical duties that require an employee 
to perform work which affords both technical knowledge of and access to 
nuclear explosives sufficient to enable the individual to cause a 
detonation (high explosive or nuclear), in what is commonly known as the 
Personnel Assurance Program (PAP). PAP employees will be subject to the 
drug testing standards of this part and any additional requirements of 
the PAP program.
    (3) Positions identified by the contractor which entail duties where 
failure of an employee adequately to discharge his or her position could 
significantly harm the environment, public health or safety, or national 
security, such as:
    (i) Pilots;
    (ii) Firefighters;
    (iii) Protective force personnel, exclusive of those covered in 
paragraphs (b)(1) or (b)(2) of this section, in positions involving use 
of firearms where the duties also require potential contact with, or 
proximity to, the public at large;
    (iv) Personnel directly engaged in construction, maintenance, or 
operation of nuclear reactors; or
    (v) Personnel directly engaged in production, use, storage, 
transportation,

[[Page 265]]

or disposal of hazardous materials sufficient to cause significant harm 
to the environment or public health and safety.
    (4) Other positions determined by the DOE, after consultation with 
the contractor, to have the potential to significantly affect the 
environment, public health and safety, or national security.
    (c) Each contractor shall require random testing of any individual, 
whether or not an employee, who is allowed unescorted access to the 
control areas of the following DOE reactors: Advanced Test Reactor 
(ATR); C Production Reactor (C); Experimental Breeder Reactor II (EBR-
II); Fast Flux Test Facility (FFTF); High Flux Beam Reactor (HFBR); High 
Flux Isotope Reactor (HFIR); K Production Reactor (K); L Production 
Reactor (L); N Production Reactor (N); Oak Ridge Research Reactor (ORR); 
and P Production Reactor (P). A confirmed positive test shall result in 
such an individual being denied unescorted access. If such an individual 
is not an employee of the contractor, that individual may be granted 
unescorted access only after the individual meets the conditions 
established in Sec. 707.14(d) of this part. If, after restoration of 
unescorted access, such an individual is determined to have used illegal 
drugs for a second time, unescorted access shall be denied for a period 
of not less than three (3) years. Such an individual thereafter shall be 
granted unescorted access only upon a determination by DOE that a grant 
of unescorted access to the individual presents no unacceptable safety 
or security risk. If such an individual is an employee, that individual 
is subject to the other requirements of this part, including appropriate 
disciplinary measures.
    (d) A position otherwise subject to testing under this part may be 
exempted from such testing if it is within the scope of another 
comparable Federal drug testing program, as determined by DOE, after 
consultation with the contractor, to avoid unnecessary multiple tests.



Sec. 707.8  Applicant drug testing.

    An applicant for a testing designated position will be tested for 
the use of illegal drugs before final selection for employment or 
assignment to such a position. Provisions of this part do not prohibit 
contractors from conducting drug testing on applicants for employment in 
any position.



Sec. 707.9  Drug testing as a result of an occurrence.

    When there is an occurrence which is required to be reported to DOE 
by the contractor, under contract provisions incorporating applicable 
DOE Orders, rules, and regulations, it may be necessary to test 
individuals in testing designated positions, or individuals with 
unescorted access to the control areas of the DOE reactors listed in 
Sec. 707.7(c), for the use of illegal drugs, if such individuals could 
have caused or contributed to the conditions which caused the 
occurrence. For an occurrence requiring immediate notification or 
reporting as required by applicable DOE Orders, rules, and regulations, 
the contractor will require testing as soon as possible after the 
occurrence but within 24 hours of the occurrence, unless DOE determines 
that it is not feasible to do so. For other occurrences requiring 
notifications to DOE as required by applicable DOE Orders, rules, and 
regulations, the contractor may require testing.



Sec. 707.10  Drug testing for reasonable suspicion of illegal drug use.

    (a)(1) It may be necessary to test any employee in a testing 
designated position, or individuals with unescorted access to the 
control areas of the DOE reactors listed in Sec. 707.7(c), for the use 
of illegal drugs, if the behavior of such an individual creates the 
basis for reasonable suspicion of the use of illegal drugs. Two or more 
supervisory or management officials, at least one of whom is in the 
direct chain of supervision of the employee, or is a physician from the 
site occupational medical department, must agree that such testing is 
appropriate. Reasonable suspicion must be based on an articulable belief 
that an employee uses illegal drugs, drawn from particularized facts and 
reasonable inferences from those facts.
    (2) Such a belief may be based upon, among other things:

[[Page 266]]

    (i) Observable phenomena, such as direct observation of:
    (A) The use or possession of illegal drugs; or
    (B) The physical symptoms of being under the influence of drugs;
    (ii) A pattern of abnormal conduct or erratic behavior;
    (iii) Arrest for a conviction of a drug related offense, or the 
identification of the individual as the focus of a criminal 
investigation into illegal drug possession use, or trafficking;
    (iv) Information that is either provided by a reliable and credible 
source or is independently corroborated;
    (v) Evidence that an employee has tampered with a drug test; or
    (vi) Temperature of the urine specimen is outside the range of 32.5-
37.7 degrees centigrade or 90.5-99.8 degrees Fahrenheit.
    (b) The fact that an employee had a confirmed positive test for the 
use for the use of illegal drugs at some prior time, or has undergone a 
period of rehabilitation or treatment, will not, in and of itself, be 
grounds for testing on the basis of reasonable suspicion.
    (c) The requirements of this part relating to the testing for the 
use of illegal drugs are not intended to prohibit the contractor from 
pursuing other existing disciplinary procedures or from requiring 
medical evaluation of any employee exhibiting aberrant or unusual 
behavior.



Sec. 707.11  Drugs for which testing is performed.

    Where testing is performed under this part, at a minimum, 
contractors will be required to test for the use of the following drugs 
or classes of drugs: marijuana; cocaine; opiates; phencyclidine; and 
amphetamines. However, when conducting reasonable suspicion or 
occurrence testing, the contractor may test for any drug listed in 
Schedules I or II of the Controlled Substances Act.



Sec. 707.12  Specimen collection, handling and laboratory analysis for drug testing.

    (a) Procedures for providing urine specimens must allow individual 
privacy, unless there is reason to believe that a particular individual 
may alter or substitute the specimen to be provided. Contractors shall 
utilize a chain of custody procedure for maintaining control and 
accountability from point of collection to final disposition of 
specimens, and testing laboratories shall use appropriate cutoff levels 
in screening specimens to determine whether they are negative or 
positive for a specific drug, consistent with the HHS Mandatory 
Guidelines (see Sec. 707.5(a)). The contractor shall ensure that only 
testing laboratories certified by the Department of Health and Human 
Services, under subpart C of the HHS Mandatory Guidelines are utilized.
    (b)(1) If the individual refuses to cooperate with the urine 
collection (e.g., refusal to provide a specimen, or to complete 
paperwork), then the collection site person shall inform the MRO and 
shall document the non-cooperation on the specimen chain of custody 
form. The MRO shall report the failure to cooperate to the appropriate 
management authority, who shall report to DOE if the individual holds an 
access authorization. Individuals so failing to cooperate shall be 
treated in all respects as if they had been tested and had been 
determined to have used an illegal drug. The contractor may apply 
additional sanctions consistent with its disciplinary policy.
    (2) The collection site person shall ascertain that there is a 
sufficient amount of urine to conduct an initial test, a confirmatory 
test, and a retest, in accordance with the HHS Mandatory Guidelines. If 
there is not a sufficient amount of urine, additional urine will be 
collected in a separate container. The individual may be given 
reasonable amounts of liquid and a reasonable amount of time in which to 
provide the specimen required. The individual and the collection site 
person must keep the specimen in view at all times. When collection is 
complete, the partial specimens will be combined in a single container. 
In the event that the individual fails to provide a sufficient amount of 
urine, the amount collected will be noted on the ``Urine Sample Custody 
Document.'' In this case, the collection site person will telephone the 
individual's supervisor who will determine the next appropriate action.

[[Page 267]]

This may include deciding to reschedule the individual for testing, to 
return the individual to his or her work site and initiate disciplinary 
action, or both.



Sec. 707.13  Medical review of results of tests for illegal drug use.

    (a) All test results shall be submitted for medical review by the 
MRO. A confirmed positive test for drugs shall consist of an initial 
test performed by the immunoassay method, with positive results on that 
initial test confirmed by another test, performed by the gas 
chromatography/mass spectrometry method (GC/MS). This procedure is 
described in paragraphs 2.4 (e) and (f) of the HHS Mandatory Guidelines.
    (b) The Medical Review Officer will consider the medical history of 
the employee or applicant, as well as any other relevant biomedical 
information. When there is a confirmed positive test result, the 
employee or applicant will be given an opportunity to report to the MRO 
the use of any prescription or over-the-counter medication. If the MRO 
determines that there is a legitimate medical explanation for a 
confirmed positive test result, consistent with legal and non-abusive 
drug use, the MRO will certify that the test results do not meet the 
conditions for a determination of use of illegal drugs. If no such 
certification can be made, the MRO will make a determination of use of 
illegal drugs. Determinations of use of illegal drugs will be made in 
accordance with the criteria provided in the Medical Review Officer 
Manual issued by the Department of Health and Human Services [DHHS 
Publication No. (ADM) 88-1526].



Sec. 707.14  Action pursuant to a determination of illegal drug use.

    (a) When an applicant for employment has been tested and determined 
to have used an illegal drug, processing for employment will be 
terminated and the applicant will be so notified.
    (b)(1) When an employee who is in a testing designated position has 
been tested and determined to have used an illegal drug, the contractor 
shall immediately remove that employee from the testing designated 
position; if such employee also holds, or is an applicant for, an access 
authorization, then the contractor shall immediately notify DOE security 
officials for appropriate adjudication. If this is the first 
determination of use of illegal drugs by that employee (for example, the 
employee has not previously signed a DOE drug certification, and has not 
previously tested positive for use of illegal drugs), the employee may 
be offered a reasonable opportunity for rehabilitation, consistent with 
the contractor's policies. If rehabilitation is offered, the employee 
will be placed in a non-testing designated position, which does not 
require a security clearance, provided there is such an acceptable 
position in which the individual can be placed during rehabilitation; if 
there is no acceptable non-testing designated position, the employee 
will be placed on sick, annual, or other leave status, for a reasonable 
period sufficient to permit rehabilitation. However, the employee will 
not be protected from disciplinary action which may result from 
violations of work rules other than a positive test result for illegal 
drugs.
    (2) Following a determination by the site occupational medical 
department, after counseling or rehabilitation, that the employee can 
safely return to duty, the contractor may offer the employee 
reinstatement, in the same or a comparable position to the one held 
prior to the removal, consistent with the contractor's policies and the 
requirements of 10 CFR part 710. Failure to take the opportunity for 
rehabilitation, if it has been made available, for the use of illegal 
drugs, will require significant disciplinary action up to and including 
removal from employment under the DOE contract, in accordance with the 
contractor's policies. Any employee who is twice determined to have used 
illegal drugs shall in all cases be removed from employment under the 
DOE contract. Also, if an employee who has signed a DOE drug 
certification violates the terms of the certification, DOE shall conduct 
a timely review of the circumstances of such violation, and the 
individual's continued eligibility for a DOE access authorization shall 
be determined under the provisions of 10 CFR part 710,

[[Page 268]]

``Criteria and Procedures for Determining Eligibility for Access to 
Classified Matter or Significant Quantities of Special Nuclear 
Material.''
    (c) An employee who has been removed from a testing designated 
position because of the use of illegal drugs may not be returned to such 
position until that employee has:
    (1) Successfully completed counseling or a program of 
rehabilitation;
    (2) Undergone a urine drug test with a negative result; and
    (3) Been evaluated by the site occupational medical department, 
which has determined that the individual is capable of safely returning 
to duty.
    (d) An individual who is not an employee of a contractor who has 
been denied unescorted access because of the use of illegal drugs may 
not have the unescorted access reinstated until that individual has:
    (1) Provided evidence of successful completion of counseling or a 
program of rehabilitation;
    (2) Undergone a urine drug test with a negative result; and
    (3) Been evaluated by the site occupational medical department, 
which has determined that the individual is capable of being permitted 
unescorted access to a reactor control area.
    (e) If a DOE access authorization is involved, DOE must be notified 
of a contractor's intent to return to a testing designated position an 
employee removed from such duty for use of illegal drugs. Positions 
identified in Sec. 707.7(b)(1) and (2) will require DOE approval prior 
to return to a testing designated position.
    (f) An individual who has been notified of a positive test result 
may request a retest of the same sample at the same or another certified 
laboratory. The individual shall bear the costs of transportation and/or 
testing of the specimen. The contractor will inform employees of their 
right to request a retest under the provisions of this paragraph.
    (g) After an employee determined to have used illegal drugs has been 
returned to duty, the employee shall be subject to unannounced drug 
testing, at intervals, for a period of 12 months.



Sec. 707.15  Collective bargaining.

    When establishing drug testing programs, contractors who are parties 
to collective bargaining agreements will negotiate with employee 
representatives, as appropriate, under labor relations laws or 
negotiated agreements. Such negotiation, however, cannot change or alter 
the requirements of this rule because DOE security requirements 
themselves are non-negotiable under the security provisions of DOE 
contracts. Employees covered under collective bargaining agreements will 
not be subject to the provisions of this rule until those agreements 
have been modified, as necessary; provided, however, that if one year 
after commencement of negotiation the parties have failed to reach 
agreement, an impasse will be determined to have been reached and the 
contractor will unilaterally implement the requirements of this rule.



Sec. 707.16  Records.

    (a) Confirmed positive test results shall be provided to the Medical 
Review Officer and other contractor and DOE officials with a need to 
know. Any other disclosure may be made only with the written consent of 
the individual.
    (b) Contractors shall maintain maximum confidentiality of records 
related to illegal drug use, to the extent required by applicable 
statutes and regulations (including, but not limited to, 42 U.S.C. 
290dd-3, 42 U.S.C. 290ee-3, and 42 CFR part 2). If such records are 
sought from the contractor for criminal investigations, or to resolve a 
question or concern relating to the Personnel Assurance Program 
certification or access authorization under 10 CFR part 710, any 
applicable procedures in statute or regulation for disclosure of such 
information shall be followed. Moreover, owing to DOE's express 
environmental, public health and safety, and national security 
interests, and the need to exercise proper contractor oversight, DOE 
must be kept fully apprised of all aspects of the contractor's program, 
including such information as incidents involving reasonable suspicion, 
occurrences, and

[[Page 269]]

confirmed test results, as well as information concerning test results 
in the aggregate.
    (c) Unless otherwise approved by DOE, the contractors shall ensure 
that all laboratory records relating to positive drug test results, 
including initial test records and chromatographic tracings, shall be 
retained by the laboratory in such a manner as to allow retrieval of all 
information pertaining to the individual urine specimens for a minimum 
period of five years after completion of testing of any given specimen, 
or longer if so instructed by DOE or by the contractor. In addition, a 
frozen sample of all positive urine specimens shall be retained by the 
laboratory for at least six months, or longer if so instructed by DOE.
    (d) The contractor shall maintain as part of its medical records 
copies of specimen chain of custody forms.
    (e) The specimen chain of custody form will contain the following 
information:
    (1) Date of collection;
    (2) Tested person's name;
    (3) Tested employee/applicant's social security number or other 
identification number unique to the individual;
    (4) Specimen number;
    (5) Type of test (random, applicant, occurrence, reasonable 
suspicion, follow-up, or other);
    (6) Temperature range of specimen;
    (7) Remarks regarding unusual behavior or conditions;
    (8) Collector's signature; and
    (9) Certification signature of specimen provider certifying that 
specimen identified is in fact the specimen the individual provided.



Sec. 707.17  Permissible actions in the event of contractor noncompliance.

    Actions available to DOE in the event of contractor noncompliance 
with the provisions of this part or otherwise performing in a manner 
inconsistent with its approved program include, but are not limited to, 
suspension or debarment, contract termination, or reduction in fee in 
accordance with the contract terms.



PART 708--DOE CONTRACTOR EMPLOYEE PROTECTION PROGRAM--Table of Contents




                      Subpart A--General Provisions

Sec.
708.1  What is the purpose of this part?
708.2  What are the definitions of terms used in this part?
708.3  What employee complaints are covered?
708.4  What employee complaints are not covered?
708.5  What employee conduct is protected from retaliation by an 
          employer?
708.6  What constitutes ``a reasonable fear of serious injury?''
708.7  What must an employee do before filing a complaint based on 
          retaliation for refusal to participate?
708.8  Does this part apply to pending cases?
708.9  When is a complaint or other document considered to be ``filed'' 
          under this part?

            Subpart B--Employee Complaint Resolution Process

708.10  Where does an employee file a complaint?
708.11  Will an employee's identity be kept confidential if the employee 
          so requests?
708.12  What information must an employee include in a complaint?
708.13  What must an employee do to show that all grievance-arbitration 
          procedures have been exhausted?
708.14  How much time does an employee have to file a complaint?
708.15  What happens if an employee files a complaint under this part 
          and also pursues a remedy under State or other law?
708.16  Will a contractor or a labor organization that represents an 
          employee be notified of an employee's complaint and be given 
          an opportunity to respond with information?
708.17  When may DOE dismiss a complaint for lack of jurisdiction or 
          other good cause?
708.18  How can an employee appeal dismissal of a complaint for lack of 
          jurisdiction or other good cause?
708.19  How can a party obtain review by the Secretary of Energy of a 
          decision on appeal of a dismissal?
708.20  Will DOE encourage the parties to resolve the complaint 
          informally?

         Subpart C--Investigation, Hearing and Decision Process

708.21  What are the employee's options if the complaint cannot be 
          resolved informally?

[[Page 270]]

708.22  What process does the Office of Hearings and Appeals use to 
          conduct an investigation of the complaint?
708.23  How does the Office of Hearings and Appeals issue a report of 
          investigation?
708.24  Will there always be a hearing after a report of investigation 
          is issued?
708.25  Who will conduct the hearing?
708.26  When and where will the hearing be held?
708.27  May the Hearing Officer recommend mediation to the parties?
708.28  What procedures govern a hearing conducted by the Office of 
          Hearings and Appeals?
708.29  What must the parties to a complaint prove?
708.30  What process does the Hearing Officer follow to issue an initial 
          agency decision?
708.31  If no hearing is conducted, what is the process for issuing an 
          initial agency decision?
708.32  Can a dissatisfied party appeal an initial agency decision?
708.33  What is the procedure for an appeal?
708.34  What is the process for issuing an appeal decision?
708.35  How can a party obtain review by the Secretary of Energy of an 
          appeal decision?
708.36  What remedies for retaliation may be ordered in initial and 
          final agency decisions?
708.37  Will an employee whose complaint is denied by a final agency 
          decision be reimbursed for costs and expenses incurred in 
          pursuing the complaint?
708.38  How is a final agency decision implemented?
708.39  Is a decision and order implemented under this regulation 
          considered a claim by the government against a contractor or a 
          decision by the contracting officer under sections 6 and 7 of 
          the Contract Disputes Act?
708.40  Are contractors required to inform their employees about this 
          program?
708.41  Will DOE ever refer a complaint filed under this part to another 
          agency for investigation and a decision?
708.42  May the deadlines established by this part be extended by any 
          DOE official?

    Authority: 42 U.S.C. 2201(b), 2201(c), 2201(i), and 2201(p); 42 
U.S.C. 5814 and 5815; 42 U.S.C. 7251, 7254, 7255, and 7256; and 5 U.S.C. 
Appendix 3.

    Source: 64 FR 12870, Mar. 15, 1999, unless otherwise noted.



                      Subpart A--General Provisions



Sec. 708.1  What is the purpose of this part?

    This part provides procedures for processing complaints by employees 
of DOE contractors alleging retaliation by their employers for 
disclosure of information concerning danger to public or worker health 
or safety, substantial violations of law, or gross mismanagement; for 
participation in Congressional proceedings; or for refusal to 
participate in dangerous activities.



Sec. 708.2  What are the definitions of terms used in this part?

    For purposes of this part:
    Contractor means a seller of goods or services who is a party to:
    (1) A management and operating contract or other type of contract 
with DOE to perform work directly related to activities at DOE-owned or 
-leased facilities, or
    (2) A subcontract under a contract of the type described in 
paragraph (1) of this definition, but only with respect to work related 
to activities at DOE-owned or -leased facilities.
    Day means a calendar day.
    Discovery means a process used to enable the parties to learn about 
each other's evidence before a hearing takes place, including oral 
depositions, written interrogatories, requests for admissions, 
inspection of property and requests for production of documents.
    DOE Official means any officer or employee of DOE whose duties 
include program management or the investigation or enforcement of any 
law, rule, or regulation relating to Government contractors or the 
subject matter of a contract.
    EC Director means the Director of the Office of Employee Concerns at 
DOE Headquarters, or any official to whom the Director delegates his or 
her functions under this part.
    Employee means a person employed by a contractor, and any person 
previously employed by a contractor if that person's complaint alleges 
that employment was terminated for conduct described in Sec. 708.5 of 
this subpart.

[[Page 271]]

    Field element means a DOE field-based office that is responsible for 
the management, coordination, and administration of operations at a DOE 
facility.
    Head of Field Element means the manager or head of a DOE operations 
office or field office, or any official to whom those individuals 
delegate their functions under this part.
    Hearing Officer means an individual appointed by the OHA Director to 
conduct a hearing on a complaint filed under this part.
    Management and operating contract means an agreement under which DOE 
contracts for the operation, maintenance, or support of a Government-
owned or -leased research, development, special production, or testing 
establishment that is wholly or principally devoted to one or more of 
the programs of DOE.
    Mediation means an informal, confidential process in which a neutral 
third person assists the parties in reaching a mutually acceptable 
resolution of their dispute; the neutral third person does not render a 
decision.
    OHA Director means the Director of the Office of Hearings and 
Appeals, or any official to whom the Director delegates his or her 
functions under this part.
    Party means an employee, contractor, or other party named in a 
proceeding under this part.
    Retaliation means an action (including intimidation, threats, 
restraint, coercion or similar action) taken by a contractor against an 
employee with respect to employment (e.g., discharge, demotion, or other 
negative action with respect to the employee's compensation, terms, 
conditions or privileges of employment) as a result of the employee's 
disclosure of information, participation in proceedings, or refusal to 
participate in activities described in Sec. 708.5 of this subpart.
    You means the employee who files a complaint under this part, or the 
complainant.



Sec. 708.3  What employee complaints are covered?

    This part applies to a complaint of retaliation filed by an employee 
of a contractor that performs work on behalf of DOE, directly related to 
activities at a DOE-owned or -leased site, if the complaint stems from a 
disclosure, participation, or refusal described in Sec. 708.5.



Sec. 708.4  What employee complaints are not covered?

    If you are an employee of a contractor, you may not file a complaint 
against your employer under this part if:
    (a) The complaint is based on race, color, religion, sex, age, 
national origin, or other similar basis; or
    (b) The complaint involves misconduct that you, acting without 
direction from your employer, deliberately caused, or in which you 
knowingly participated; or
    (c) Except as provided in Sec. 708.15(a), the complaint is based on 
the same facts for which you have chosen to pursue a remedy available 
under:
    (1) Department of Labor regulations at 29 CFR part 24, ``Procedures 
for the Handling of Discrimination Complaints under Federal Employee 
Protection Statutes;''
    (2) Federal Acquisition Regulations, 48 CFR part 3, ``Federal 
Acquisition Regulation; Whistleblower Protection for Contractor 
Employees (Ethics);'' or
    (3) State or other applicable law, including final and binding 
grievance-arbitration, as described in Sec. 708.15 of subpart B; or
    (d) The complaint is based on the same facts in which you, in the 
course of a covered disclosure or participation, improperly disclosed 
Restricted Data, national security information, or any other classified 
or sensitive information in violation of any Executive Order, statute, 
or regulation. This part does not override any provision or requirement 
of any regulation pertaining to Restricted Data, national security 
information, or any other classified or sensitive information; or
    (e) The complaint deals with ``terms and conditions of employment'' 
within the meaning of the National Labor Relations Act, except as 
provided in Sec. 708.5.

[[Page 272]]



Sec. 708.5  What employee conduct is protected from retaliation by an employer?

    If you are an employee of a contractor, you may file a complaint 
against your employer alleging that you have been subject to retaliation 
for:
    (a) Disclosing to a DOE official, a member of Congress, any other 
government official who has responsibility for the oversight of the 
conduct of operations at a DOE site, your employer, or any higher tier 
contractor, information that you reasonably and in good faith believe 
reveals--
    (1) A substantial violation of a law, rule, or regulation;
    (2) A substantial and specific danger to employees or to public 
health or safety; or
    (3) Fraud, gross mismanagement, gross waste of funds, or abuse of 
authority; or
    (b) Participating in a Congressional proceeding or an administrative 
proceeding conducted under this part; or
    (c) Subject to Sec. 708.7 of this subpart, refusing to participate 
in an activity, policy, or practice if you believe participation would--
    (1) Constitute a violation of a federal health or safety law; or
    (2) Cause you to have a reasonable fear of serious injury to 
yourself, other employees, or members of the public.



Sec. 708.6  What constitutes ``a reasonable fear of serious injury?''

    Participation in an activity, policy, or practice may cause an 
employee to have a reasonable fear of serious injury that justifies a 
refusal to participate if:
    (a) A reasonable person, under the circumstances that confronted the 
employee, would in good faith conclude there is a substantial risk of a 
serious accident, injury, or impairment of health or safety resulting 
from participation in the activity, policy, or practice; or
    (b) An employee, because of the nature of his or her employment 
responsibilities, does not have the training or skills needed to 
participate safely in the activity or practice.



Sec. 708.7  What must an employee do before filing a complaint based on retaliation for refusal to participate?

    You may file a complaint for retaliation for refusing to participate 
in an activity, policy, or practice only if:
    (a) Before refusing to participate in the activity, policy, or 
practice, you asked your employer to correct the violation or remove the 
danger, and your employer refused to take such action; and
    (b) By the 30th day after you refused to participate, you reported 
the violation or dangerous activity, policy, or practice to a DOE 
official, a member of Congress, another government official with 
responsibility for the oversight of the conduct of operations at the DOE 
site, your employer, or any higher tier contractor, and stated your 
reasons for refusing to participate.



Sec. 708.8  Does this part apply to pending cases?

    The procedures in this part apply prospectively in any complaint 
proceeding pending on the effective date of this part.



Sec. 708.9  When is a complaint or other document considered to be ``filed'' under this part?

    Under this part, a complaint or other document is considered 
``filed'' on the date it is mailed or on the date it is personally 
delivered to the specified official or office.



            Subpart B--Employee Complaint Resolution Process



Sec. 708.10  Where does an employee file a complaint?

    (a) If you were employed by a contractor whose contract is handled 
by a contracting officer located in DOE Headquarters when the alleged 
retaliation occurred, you must file two copies of your written complaint 
with the EC Director.
    (b) If you were employed by a contractor at a DOE field facility or 
site when the alleged retaliation occurred, you must file two copies of 
your written complaint with the Head of Field Element at the DOE field 
element with jurisdiction over the contract.

[[Page 273]]



Sec. 708.11  Will an employee's identity be kept confidential if the employee so requests?

    No. The identity of an employee who files a complaint under this 
part appears on the complaint. A copy of the complaint is provided to 
the contractor and it becomes a public document.



Sec. 708.12  What information must an employee include in a complaint?

    Your complaint does not need to be in any specific form but must be 
signed by you and contain the following:
    (a) A statement specifically describing
    (1) The alleged retaliation taken against you and
    (2) The disclosure, participation, or refusal that you believe gave 
rise to the retaliation;
    (b) A statement that you are not currently pursuing a remedy under 
State or other applicable law, as described in Sec. 708.15 of this 
subpart;
    (c) A statement that all of the facts that you have included in your 
complaint are true and correct to the best of your knowledge and belief; 
and
    (d) An affirmation, as described in Sec. 708.13 of this subpart, 
that you have exhausted (completed) all applicable grievance or 
arbitration procedures.



Sec. 708.13  What must an employee do to show that all grievance-arbitration procedures have been exhausted?

    (a) To show that you have exhausted all applicable grievance-
arbitration procedures, you must:
    (1) State that all available opportunities for resolution through an 
applicable grievance-arbitration procedure have been exhausted, and 
provide the date on which the grievance-arbitration procedure was 
terminated and the reasons for termination; or
    (2) State that you filed a grievance under applicable grievance-
arbitration procedures, but more than 150 days have passed and a final 
decision on it has not been issued, and provide the date that you filed 
your grievance; or
    (3) State that your employer has established no grievance-
arbitration procedures.
    (b) If you do not provide the information specified in 
Sec. 708.13(a), your complaint may be dismissed for lack of jurisdiction 
as provided in Sec. 708.17 of this subpart.



Sec. 708.14  How much time does an employee have to file a complaint?

    (a) You must file your complaint by the 90th day after the date you 
knew, or reasonably should have known, of the alleged retaliation.
    (b) The period for filing a complaint does not include time spent 
attempting to resolve the dispute through an internal company grievance-
arbitration procedure. The time period for filing stops running on the 
day the internal grievance is filed and begins to run again on the 
earlier of:
    (1) The day after such dispute resolution efforts end; or
    (2) 150 days after the internal grievance was filed if a final 
decision on the grievance has not been issued.
    (c) The period for filing a complaint does not include time spent 
resolving jurisdictional issues related to a complaint you file under 
State or other applicable law. The time period for filing stops running 
on the date the complaint under State or other applicable law is filed 
and begins to run again the day after a final decision on the 
jurisdictional issues is issued.
    (d) If you do not file your complaint during the 90-day period, the 
Head of Field Element or EC Director (as applicable) will give you an 
opportunity to show any good reason you may have for not filing within 
that period, and that official may, in his or her discretion, accept 
your complaint for processing.



Sec. 708.15  What happens if an employee files a complaint under this part and also pursues a remedy under State or other law?

    (a) You may not file a complaint under this part if, with respect to 
the same facts, you choose to pursue a remedy under State or other 
applicable law, including final and binding grievance-arbitration 
procedures, unless:
    (1) Your complaint under State or other applicable law is dismissed 
for lack of jurisdiction;
    (2) Your complaint was filed under 48 CFR part 3, Subpart 3.9 and 
the Inspector General, after conducting an initial inquiry, determines 
not to pursue it; or

[[Page 274]]

    (3) You have exhausted grievance-arbitration procedures pursuant to 
Sec. 708.13, and issues related to alleged retaliation for conduct 
protected under Sec. 708.5 remain.
    (b) Pursuing a remedy other than final and binding grievance-
arbitration procedures does not prevent you from filing a complaint 
under this part.
    (c) You are considered to have filed a complaint under State or 
other applicable law if you file a complaint, or other pleading, with 
respect to the same facts in a proceeding established or mandated by 
State or other applicable law, whether you file such complaint before, 
concurrently with, or after you file a complaint under this part.
    (d) If you file a complaint under State or other applicable law 
after filing a complaint under this part, your complaint under this 
regulation will be dismissed under Sec. 708.17(c)(2).



Sec. 708.16  Will a contractor or a labor organization that represents an employee be notified of an employee's complaint and be given an opportunity to respond 
          with information?

    (a) By the 15th day after receiving your complaint, the Head of 
Field Element or EC Director (as applicable) will provide your employer 
a copy of your complaint. Your employer has 10 days from receipt of your 
complaint to submit any comments it wishes to make regarding the 
allegations in the complaint.
    (b) If you are part of a bargaining unit represented for purposes of 
collective bargaining by a labor organization, the Head of Field Element 
or EC Director (as applicable) will provide your representative a copy 
of your complaint by the 15th day after receiving it. The labor 
organization will be advised that it has 10 days from the receipt of 
your complaint to submit any comments it wishes to make regarding the 
allegations in the complaint.



Sec. 708.17  When may DOE dismiss a complaint for lack of jurisdiction or other good cause?

    (a) The Head of Field Element or EC Director (as applicable) may 
dismiss your complaint for lack of jurisdiction or for other good cause 
after receiving your complaint, either on his or her own initiative or 
at the request of a party named in your complaint. Such decisions are 
generally issued by the 15th day after the receipt of your employer's 
comments.
    (b) The Head of Field Element or EC Director (as applicable) will 
notify you by certified mail, return receipt requested, if your 
complaint is dismissed for lack of jurisdiction or other good cause, and 
give you specific reasons for the dismissal, and will notify other 
parties of the dismissal.
    (c) Dismissal for lack of jurisdiction or other good cause is 
appropriate if:
    (1) Your complaint is untimely; or
    (2) The facts, as alleged in your complaint, do not present issues 
for which relief can be granted under this part; or
    (3) You filed a complaint under State or other applicable law with 
respect to the same facts as alleged in a complaint under this part; or
    (4) Your complaint is frivolous or without merit on its face; or
    (5) The issues presented in your complaint have been rendered moot 
by subsequent events or substantially resolved; or
    (6) Your employer has made a formal offer to provide the remedy that 
you request in your complaint or a remedy that DOE considers to be 
equivalent to what could be provided as a remedy under this part.



Sec. 708.18  How can an employee appeal dismissal of a complaint for lack of jurisdiction or other good cause?

    (a) If your complaint is dismissed by the Head of Field Element or 
EC Director, the administrative process is terminated unless you appeal 
the dismissal to the OHA Director by the 10th day after you receive the 
notice of dismissal as evidenced by a receipt for delivery of certified 
mail.
    (b) If you appeal a dismissal to the OHA Director, you must send 
copies of your appeal to the Head of Field Element or EC Director (as 
applicable) and all parties. Your appeal must include a copy of the 
notice of dismissal, and state the reasons why you think the dismissal 
was erroneous.
    (c) The OHA Director will issue a decision on your appeal and notify 
the parties of the decision by the 30th day after it is received.

[[Page 275]]

    (d) The OHA Director's decision, either upholding the dismissal by 
the Head of Field Element or EC Director or ordering further processing 
of your complaint, is the final decision on your appeal, unless a party 
files a petition for Secretarial review by the 30th day after receiving 
the appeal decision.



Sec. 708.19  How can a party obtain review by the Secretary of Energy of a decision on appeal of a dismissal?

    (a) By the 30th day after receiving a decision on an appeal under 
Sec. 708.18 from the OHA Director, any party may file a petition for 
Secretarial review of a dismissal with the Office of Hearings and 
Appeals.
    (b) By the 15th day after filing the petition for Secretarial 
review, a party must file a statement setting forth the arguments in 
support of its position. A copy of the statement must be served on the 
other parties, who may file a response by the 20th day after receipt of 
the statement. Any response must also be served on the other parties.
    (c) All submissions permitted under this section must be filed with 
the Office of Hearings and Appeals.
    (d) After a petition for Secretarial review is filed, the Secretary 
(or his or her delegee) will issue the final agency decision on 
jurisdiction over the complaint. The Secretary will reverse or revise an 
appeal decision by the OHA Director only under extraordinary 
circumstances. In the event he or she determines that a revision in the 
appeal decision is appropriate, the Secretary will direct the OHA 
Director to issue an order either upholding the dismissal by the Head of 
Field Element or EC Director or ordering further processing of your 
complaint.



Sec. 708.20  Will DOE encourage the parties to resolve the complaint informally?

    (a) Yes. The Head of Field Element or EC Director (as applicable) 
may recommend that the parties attempt to resolve the complaint 
informally, for example, through mediation.
    (b) The period for attempting informal resolution of the complaint 
may not exceed 30 days from the date you filed your complaint, unless 
the parties agree to extend the time.
    (c) The 30-day period permitted for informal resolution of the 
complaint stops running when a request to dismiss your complaint on 
jurisdictional grounds is filed with the Head of Field Element or EC 
Director, and begins to run again on the date the OHA Director returns 
the complaint to the Head of Field Element or EC Director for further 
processing.
    (d) If the parties resolve the complaint informally, the Head of 
Field Element or EC Director (as applicable) must be given a copy of the 
settlement agreement or a written statement from you withdrawing the 
complaint.



         Subpart C--Investigation, Hearing and Decision Process



Sec. 708.21  What are the employee's options if the complaint cannot be resolved informally?

    (a) If the attempt at informal resolution is not successful, the 
Head of Field Element or EC Director (as applicable) will notify you in 
writing that you have the following options:
    (1) Request that your complaint be referred to the Office of 
Hearings and Appeals for a hearing without an investigation; or
    (2) Request that your complaint be referred to the Office of 
Hearings and Appeals for an investigation followed by a hearing.
    (b) You must notify the Head of Field Element or EC Director (as 
applicable), in writing, by the 20th day after receiving notice of your 
options, whether you request referral of your complaint to the Office of 
Hearings and Appeals for a hearing without an investigation, or an 
investigation followed by a hearing.
    (c) If the Head of Field Element or EC Director does not receive 
your response to the notice of options by the 20th day after your 
receipt of that notice, DOE will consider your complaint withdrawn.
    (d) If you timely request referral to the Office of Hearings and 
Appeals, the Head of Field Element or EC Director (as applicable) will 
forward your complaint to the OHA Director by the 5th day after receipt 
of your request.
    (e) The Head of the Field Element or EC Director (as applicable) 
will notify all parties that the complaint has been

[[Page 276]]

referred to the Office of Hearings and Appeals, and state whether you 
have requested a hearing without an investigation or requested an 
investigation followed by a hearing.



Sec. 708.22  What process does the Office of Hearings and Appeals use to conduct an investigation of the complaint?

    (a) If you request a hearing without an investigation, the OHA 
Director will not initiate an investigation even if another party 
requests one.
    (b) If you request an investigation followed by a hearing, the OHA 
Director will appoint a person from the Office of Hearings and Appeals 
to conduct the investigation. The investigator may not participate or 
advise in the initial or final agency decision on your complaint.
    (c) The investigator will determine the appropriate scope of 
investigation based on the circumstances of the complaint. The 
investigator may enter and inspect places and records; make copies of 
records; interview persons alleged to have been involved in retaliation 
and other employees of the charged contractor who may have relevant 
information; take sworn statements; and require the production of any 
documents or other evidence.
    (d) A contractor must cooperate fully with the investigator by 
making employees and all pertinent evidence available upon request.
    (e) A person being interviewed in an investigation has the right to 
be represented by a person of his or her choosing.
    (f) Parties to the complaint are not entitled to be present at 
interviews conducted by an investigator.
    (g) If a person other than the complainant requests that his or her 
identity be kept confidential, the investigator may grant 
confidentiality, but must advise such person that confidentiality means 
that the Office of Hearings and Appeals will not identify the person as 
a source of information to anyone outside the Office of Hearings and 
Appeals, except as required by statute or other law, or as determined by 
the OHA Director to be unavoidable.



Sec. 708.23  How does the Office of Hearings and Appeals issue a report of investigation?

    (a) The investigator will complete the investigation and issue a 
report of investigation by the 60th day after the complaint is received 
by the Office of Hearings and Appeals, unless the OHA Director, for good 
cause, extends the investigation for no more than 30 days.
    (b) The investigator will provide copies of the report of 
investigation to the parties. The investigation will not be reopened 
after the report of investigation is issued.
    (c) If the parties informally resolve the complaint (e.g., through 
mediation) after an investigation is started, you must notify the OHA 
Director in writing of your decision to withdraw the complaint.



Sec. 708.24  Will there always be a hearing after a report of investigation is issued?

    (a) No. An employee may withdraw a hearing request after the report 
of investigation is issued. However, the hearing may be canceled only if 
all parties agree that they do not want a hearing.
    (b) If the hearing is canceled, the Hearing Officer will issue an 
initial agency decision pursuant to Sec. 708.31 of this subpart.



Sec. 708.25  Who will conduct the hearing?

    (a) The OHA Director will appoint a Hearing Officer from the Office 
of Hearings and Appeals to conduct a hearing.
    (b) The Hearing Officer may not be subject to the supervision or 
direction of the investigator.



Sec. 708.26  When and where will the hearing be held?

    (a) The Hearing Officer will schedule a hearing to be held by the 
90th day after receipt of the complaint, or issuance of the report of 
investigation, whichever is later. Any extension of the hearing date 
must be approved by the OHA Director.
    (b) The Hearing Officer will schedule the hearing for a location 
near the site where the alleged retaliation occurred

[[Page 277]]

or your place of employment, or at another location that is appropriate 
considering the circumstances of a particular case.



Sec. 708.27  May the Hearing Officer recommend mediation to the parties?

    The Hearing Officer may recommend, but may not require, that the 
parties attempt to resolve the complaint through mediation or other 
informal means at any time before issuance of an initial agency decision 
on the complaint.



Sec. 708.28  What procedures govern a hearing conducted by the Office of Hearings and Appeals?

    (a) In all hearings under this part:
    (1) The parties have the right to be represented by a person of 
their choosing or to proceed without representation. The parties are 
responsible for producing witnesses in their behalf, including 
requesting the issuance of subpoenas, if necessary;
    (2) Testimony of witnesses is given under oath or affirmation, and 
witnesses must be advised of the applicability of 18 U.S.C. 1001 and 
1621, dealing with the criminal penalties associated with false 
statements and perjury;
    (3) Witnesses are subject to cross-examination;
    (4) Formal rules of evidence do not apply, but OHA may use the 
Federal Rules of Evidence as a guide; and
    (5) A court reporter will make a transcript of the hearing.
    (b) The Hearing Officer has all powers necessary to regulate the 
conduct of proceedings:
    (1) The Hearing Officer may order discovery at the request of a 
party, based on a showing that the requested discovery is designed to 
produce evidence regarding a matter, not privileged, that is relevant to 
the subject matter of the complaint;
    (2) The Hearing Officer may permit parties to obtain discovery by 
any appropriate method, including deposition upon oral examination or 
written questions; written interrogatories; production of documents or 
things; permission to enter upon land or other property for inspection 
and other purposes; and requests for admission;
    (3) The Hearing Officer may issue subpoenas for the appearance of 
witnesses on behalf of either party, or for the production of specific 
documents or other physical evidence;
    (4) The Hearing Officer may rule on objections to the presentation 
of evidence; exclude evidence that is immaterial, irrelevant, or unduly 
repetitious; require the advance submission of documents offered as 
evidence; dispose of procedural requests; grant extensions of time; 
determine the format of the hearing; direct that written motions, 
documents, or briefs be filed with respect to issues raised during the 
course of the hearing; ask questions of witnesses; direct that 
documentary evidence be served upon other parties (under protective 
order if such evidence is deemed confidential); and otherwise regulate 
the conduct of the hearing;
    (5) The Hearing Officer may, at the request of a party or on his or 
her own initiative, dismiss a claim, defense, or party and make adverse 
findings upon the failure of a party or the party's representative to 
comply with a lawful order of the Hearing Officer, or, without good 
cause, to attend a hearing;
    (6) The Hearing Officer, upon request of a party, may allow the 
parties a reasonable time to file pre-hearing briefs or written 
statements with respect to material issues of fact or law. Any pre-
hearing submission must be limited to the issues specified and filed 
within the time prescribed by the Hearing Officer.
    (7) The parties are entitled to make oral closing arguments, but 
post-hearing submissions are only permitted by direction of the Hearing 
Officer.
    (8) Parties allowed to file written submissions must serve copies 
upon the other parties within the time prescribed by the Hearing 
Officer.
    (9) The Hearing Officer is prohibited, beginning with his or her 
appointment and until a final agency decision is issued, from initiating 
or otherwise engaging in ex parte (private) discussions with any party 
on the merits of the complaint.

[[Page 278]]



Sec. 708.29  What must the parties to a complaint prove?

    The employee who files a complaint has the burden of establishing by 
a preponderance of the evidence that he or she made a disclosure, 
participated in a proceeding, or refused to participate, as described 
under Sec. 708.5, and that such act was a contributing factor in one or 
more alleged acts of retaliation against the employee by the contractor. 
Once the employee has met this burden, the burden shifts to the 
contractor to prove by clear and convincing evidence that it would have 
taken the same action without the employee's disclosure, participation, 
or refusal.



Sec. 708.30  What process does the Hearing Officer follow to issue an initial agency decision?

    (a) The Hearing Officer will issue an initial agency decision on 
your complaint by the 60th day after the later of:
    (1) The date the Hearing Officer approves the parties' agreement to 
cancel the hearing;
    (2) The date the Hearing Officer receives the transcript of the 
hearing; or
    (3) The date the Hearing Officer receives post-hearing submissions 
permitted under Sec. 708.28(b)(7) of this subpart.
    (b) The Hearing Officer will serve the initial agency decision on 
all parties.
    (c) An initial agency decision issued by the Hearing Officer will 
contain appropriate findings, conclusions, an order, and the factual 
basis for each finding, whether or not a hearing has been held on the 
complaint. In making such findings, the Hearing Officer may rely upon, 
but is not bound by, the report of investigation.
    (d) If the Hearing Officer determines that an act of retaliation has 
occurred, the initial agency decision will include an order for any form 
of relief permitted under Sec. 708.36.
    (e) If the Hearing Officer determines that an act of retaliation has 
not occurred, the initial agency decision will state that the complaint 
is denied.



Sec. 708.31  If no hearing is conducted, what is the process for issuing an initial agency decision?

    (a) If no party wants a hearing after the issuance of a report of 
investigation, the Hearing Officer will issue an initial agency decision 
by the 60th day after the hearing is canceled pursuant to Sec. 708.24. 
The standards in Sec. 708.30, governing the issuance of an initial 
agency decision, apply whether or not a hearing has been held on the 
complaint.
    (b) The Hearing Officer will serve the initial agency decision on 
all parties.



Sec. 708.32  Can a dissatisfied party appeal an initial agency decision?

    (a) Yes. By the 15th day after receiving an initial agency decision 
from the Hearing Officer, any party may file a notice of appeal with the 
OHA Director requesting review of the initial agency decision.
    (b) A party who appeals an initial agency decision (the appellant) 
must serve a copy of the notice of appeal on all other parties.
    (c) A party who receives an initial agency decision by a Hearing 
Officer has not exhausted its administrative remedies until an appeal 
has been filed with the OHA Director and a decision granting or denying 
the appeal has been issued.



Sec. 708.33  What is the procedure for an appeal?

    (a) By the 15th day after filing a notice of appeal under 
Sec. 708.32, the appellant must file a statement identifying the issues 
that it wishes the OHA Director to review. A copy of the statement must 
be served on the other parties, who may file a response by the 20th day 
after receipt of the statement. Any response must also be served on the 
other parties.
    (b) In considering the appeal, the OHA Director:
    (1) May initiate an investigation of any statement contained in the 
request for review and utilize any relevant facts obtained by such 
investigation in conducting the review of the initial agency decision;

[[Page 279]]

    (2) May solicit and accept submissions from any party that are 
relevant to the review. The OHA Director may establish appropriate times 
to allow for such submissions;
    (3) May consider any other source of information that will advance 
the evaluation, provided that all parties are given an opportunity to 
respond to all third person submissions; and
    (4) Will close the record on appeal after receiving the last 
submission permitted under this section.



Sec. 708.34  What is the process for issuing an appeal decision?

    (a) If there is no appeal of an initial agency decision, and the 
time for filing an appeal has passed, the initial agency decision 
becomes the final agency decision.
    (b) If there is an appeal of an initial agency decision, the OHA 
Director will issue an appeal decision based on the record of 
proceedings by the 60th day after the record is closed.
    (1) An appeal decision issued by the OHA Director will contain 
appropriate findings, conclusions, an order, and the factual basis for 
each finding, whether or not a hearing has been held on the complaint. 
In making such findings, the OHA Director may rely upon, but is not 
bound by, the report of investigation and the initial agency decision.
    (2) If the OHA Director determines that an act of retaliation has 
occurred, the appeal decision will include an order for any form of 
relief permitted under Sec. 708.36.
    (3) If the OHA Director determines that the contractor charged has 
not committed an act of retaliation, the appeal decision will deny the 
complaint.
    (c) The OHA Director will send an appeal decision to all parties and 
to the Head of Field Element or EC Director having jurisdiction over the 
contract under which you were employed when the alleged retaliation 
occurred.
    (d) The appeal decision issued by the OHA Director is the final 
agency decision unless a party files a petition for Secretarial review 
by the 30th day after receiving the appeal decision.



Sec. 708.35  How can a party obtain review by the Secretary of Energy of an appeal decision?

    (a) By the 30th day after receiving an appeal decision from the OHA 
Director, any party may file a petition for Secretarial review with the 
Office of Hearings and Appeals.
    (b) By the 15th day after filing a petition for Secretarial review, 
the petitioner must file a statement identifying the issues that it 
wishes the Secretary to consider. A copy of the statement must be served 
on the other parties, who may file a response by the 20th day after 
receipt of the statement. Any response must also be served on the other 
parties.
    (c) All submissions permitted under this section must be filed with 
the Office of Hearings and Appeals.
    (d) After a petition for Secretarial review is filed, the Secretary 
(or his or her delegee) will issue the final agency decision on the 
complaint. The Secretary will reverse or revise an appeal decision by 
the OHA Director only under extraordinary circumstances. In the event 
the Secretary determines that a revision in the appeal decision is 
appropriate, the Secretary will direct the OHA Director to issue a 
revised decision which is the final agency action on the complaint.



Sec. 708.36  What remedies for retaliation may be ordered in initial and final agency decisions?

    (a) General remedies. If the initial or final agency decision 
determines that an act of retaliation has occurred, it may order:
    (1) Reinstatement;
    (2) Transfer preference;
    (3) Back pay;
    (4) Reimbursement of your reasonable costs and expenses, including 
attorney and expert-witness fees reasonably incurred to prepare for and 
participate in proceedings leading to the initial or final agency 
decision; or
    (5) Such other remedies as are deemed necessary to abate the 
violation and provide you with relief.
    (b) Interim relief. If an initial agency decision contains a 
determination that

[[Page 280]]

an act of retaliation occurred, the decision may order the contractor to 
provide you with appropriate interim relief (including reinstatement) 
pending the outcome of any request for review of the decision by the OHA 
Director. Such interim relief will not include payment of any money.



Sec. 708.37  Will an employee whose complaint is denied by a final agency decision be reimbursed for costs and expenses incurred in pursuing the complaint?

    No. If your complaint is denied by a final agency decision, you may 
not be reimbursed for the costs and expenses you incurred in pursuing 
the complaint.



Sec. 708.38  How is a final agency decision implemented?

    (a) The Head of Field Element having jurisdiction over the contract 
under which you were employed when the alleged retaliation occurred, or 
EC Director, will implement a final agency decision by forwarding the 
decision and order to the contractor, or subcontractor, involved.
    (b) A contractor's failure or refusal to comply with a final agency 
decision and order under this regulation may result in a contracting 
officer's decision to disallow certain costs or terminate the contract 
for default. In the event of a contracting officer's decision to 
disallow costs or terminate a contract for default, the contractor may 
file a claim under the disputes procedures of the contract.



Sec. 708.39  Is a decision and order implemented under this regulation considered a claim by the government against a contractor or a decision by the 
          contracting officer under sections 6 and 7 of the Contract 
          Disputes Act?

    No. A final agency decision and order issued pursuant to this 
regulation is not considered a claim by the government against a 
contractor or ``a decision by the contracting officer'' under sections 6 
and 7 of the Contract Disputes Act (41 U.S.C. 605 and 606).



Sec. 708.40  Are contractors required to inform their employees about this program?

    Yes. Contractors who are covered by this part must inform their 
employees about these regulations by posting notices in conspicuous 
places at the work site. These notices must include the name and address 
of the DOE office where you can file a complaint under this part.

[64 FR 37397, July 12, 1999]



Sec. 708.41  Will DOE ever refer a complaint filed under this part to another agency for investigation and a decision?

    Notwithstanding the provisions of this part, the Secretary of Energy 
retains the right to request that a complaint filed under this part be 
accepted by another Federal agency for investigation and factual 
determinations.

[64 FR 37397, July 12, 1999]



Sec. 708.42  May the deadlines established by this part be extended by any DOE official?

    Yes. The Secretary of Energy (or the Secretary's designee) may 
approve the extension of any deadline established by this part, and the 
OHA Director may approve the extension of any deadline under Sec. 708.22 
through Sec. 708.34 of this subpart (relating to the investigation, 
hearing, and OHA appeal process).

[64 FR 37397, July 12, 1999]



PART 709--POLYGRAPH EXAMINATION REGULATIONS--Table of Contents



                      Subpart A--General Provisions

Sec.
709.1  What is the purpose of this part?
709.2  What is the scope of this part?
709.3  What are the definitions of the terms used in this part?
709.4  To whom does the polygraph examination requirement under this 
          part apply?
709.5  How will an individual know if his or her position will be 
          eligible for a polygraph examination?
709.6  How often will an individual be subject to polygraph examination?

[[Page 281]]



 Subpart B--Polygraph Examination Protocols and Protection of National 
                                Security

709.11  What types of topics are within the scope of a polygraph 
          examination?
709.12  How does DOE determine the wording of questions?
709.13  May an individual refuse to take a polygraph examination?
709.14  What are the consequences of a refusal to take a polygraph 
          examination?
709.15  How does DOE use polygraph examination results?



           Subpart C--Safeguarding Privacy and Employee Rights

709.21  When is an individual notified that a polygraph examination is 
          scheduled?
709.22  What rights to counsel or other representation does an 
          individual have?
709.23  How does DOE obtain an individual's consent to a polygraph 
          examination?
709.24  What other information is provided to the individual prior to a 
          polygraph examination?
709.25  Are there limits on use of polygraph examination results that 
          reflect ``deception indicated'' or ``no opinion''?
709.26  How does DOE protect the confidentiality of polygraph 
          examination records?



         Subpart D--Polygraph Examination and Examiner Standards

709.31  What are the DOE standards for polygraph examinations and 
          polygraph examiners?
709.32  What are the training requirements for polygraph examiners?

    Authority: 42 U.S.C. 2011, et seq., 42 U.S.C. 7101, et seq., 42 
U.S.C. 7383h.

    Source: 64 FR 70975, Dec. 17, 1999, unless otherwise noted.

    Effective Date Note: At 64 FR 70975, Dec. 17, 1999, part 709 was 
added, effective Jan. 18, 2000.



                      Subpart A--General Provisions



Sec. 709.1  What is the purpose of this part?

    This part:
    (a) Describes the categories of individuals who are eligible for 
counterintelligence-scope polygraph testing; and
    (b) Provides guidelines for the use of counterintelligence-scope 
polygraph examinations and for the use of exculpatory polygraph 
examinations, upon the request of an individual, in order to resolve 
counterintelligence investigations and personnel security issues; and
    (c) Provides guidelines for protecting the rights of individual DOE, 
and DOE contractor, and employees subject to this rule.



Sec. 709.2  What is the scope of this part?

    This part includes:
    (a) A description of the conditions under which DOE may administer 
and use polygraph examinations;
    (b) A description of the positions which DOE may subject to 
polygraph examination;
    (c) Controls on the use of polygraph examinations; and
    (d) Safeguards to prevent unwarranted intrusion into the privacy of 
individuals.



Sec. 709.3  What are the definitions of the terms used in this part?

    For purposes of this part:
    Accelerated Access Authorization Program or AAAP means the program 
for granting interim access to classified matter and special nuclear 
material based on a drug test, a National Agency Check, a psychological 
assessment, and a counterintelligence-scope polygraph examination 
consistent with this part.
    Access means the admission of DOE and contractor employees and 
applicants for employment, and other individuals assigned or detailed to 
Federal positions at DOE to the eight categories of positions identified 
in Sec. 709.4(a)(1)-(8).
    Access authorization means an administrative determination that an 
individual is eligible for access to classified matter or is eligible 
for access to, or control over, special nuclear material.
    Adverse personnel action means
    (1) With regard to a DOE employee, the removal, suspension for more 
than 14 days, reduction in grade or pay, or a furlough of 30 days or 
less as described in 5 U.S.C. Chapter 75; or
    (2) With regard to a contractor employee, the discharge, discipline, 
or denial of employment or promotion, or any other discrimination in 
regard to

[[Page 282]]

hire or tenure of employment or any term or condition of employment.
    Contractor means a DOE contractor or a subcontractor at any tier.
    Control questions means questions used during a polygraph 
examination that are designed to produce a physiological response, which 
may be compared to the physiological responses to the relevant 
questions.
    Counterintelligence means information gathered and activities 
conducted to protect against espionage, other intelligence activities, 
sabotage, or assassinations conducted by or on behalf of foreign 
governments or elements thereof, foreign organizations, or foreign 
persons, or international terrorist activities.
    Deception indicated means an opinion that indicates that an analysis 
of the polygraph charts reveal physiological responses to the relevant 
questions that were indicative of evasion.
    DOE means the Department of Energy.
    Eligibility evaluation means the process employed by the Office of 
Counterintelligence to determine whether DOE and contractor employees 
and applicants for employment, and other individuals assigned or 
detailed to Federal positions at DOE will be recommended for access or 
continued access to the eight categories of positions identified in 
Sec. 709.4(a)(1)-(8).
    Intelligence means information relating to the capabilities, 
intentions, or activities of foreign governments or elements thereof, 
foreign organizations or foreign persons.
    Local commuting area means the geographic area that usually 
constitutes one area for employment purposes. It includes any population 
center (or two or more neighboring ones) and the surrounding localities 
in which people live and can reasonably be expected to travel back and 
forth daily to their usual employment.
    No deception indicated means an opinion that indicates that an 
analysis of the polygraph charts revealed the physiological responses to 
the relevant questions were not indicative of evasion.
    No opinion refers to an evaluation of a polygraph test in which the 
polygraph examiner cannot render an opinion based upon the physiological 
data on the polygraph charts.
    Personnel Assurance Program or PAP means the human reliability 
program set forth under 10 CFR part 711 designed to ensure that 
individuals assigned to nuclear explosive duties do not have emotional, 
mental or physical incapacities that could result in a threat to nuclear 
explosive safety.
    Personnel Security Assurance Program or PSAP means the program in 
subpart B of 10 CFR part 710.
    Personnel security clearance means an administrative determination 
that an individual is eligible for access to classified matter or is 
eligible for access to, or control over, special nuclear material.
    Polygraph means an instrument that
    (1) Records continuously, visually, permanently, and simultaneously 
changes in cardiovascular, respiratory, and electrodermal patterns as 
minimum instrumentation standards; and
    (2) Is used, or the results of which are used, for the purpose of 
rendering a diagnostic opinion regarding the honesty or dishonesty of an 
individual.
    Polygraph examination means a process that encompasses all 
activities that take place between a polygraph examiner and individual 
during a specific series of interactions, including the pretest 
interview, the use of the polygraph instrument to collect physiological 
data from the individual while the polygraph examiner is presenting a 
series of tests, the test data analysis phase, and the post-test phase.
    Polygraph examination records means all records of the polygraph 
examination, including the polygraph report, audio-video recording, and 
the polygraph consent form.
    Polygraph report refers to a polygraph document that may contain 
identifying data of the individual, a synopsis of the basis for which 
the examination was conducted, the relevant questions utilized and the 
polygraph examiner's conclusions.
    Polygraph test means that portion of the polygraph examination 
during which the polygraph instrument collects physiological data based 
upon the individual's responses to test questions from the examiner.

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    Relevant questions are those questions used during the polygraph 
examination that pertain directly to the issues for which the 
examination is being conducted.
    Special Access Program or SAP means a program established under 
Executive Order 12958 for a specific class of classified information 
that imposes safeguarding and access requirements that exceed those 
normally required for information at the same classification level.
    Unresolved issues refers to an opinion which indicates that the 
analysis of the polygraph charts revealed consistent, significant, 
timely physiological responses to the relevant questions in personnel 
screening.



Sec. 709.4  To whom does the polygraph examination requirement under this part apply?

    (a) Except as provided in paragraph (b) of this section, this part 
applies to DOE and contractor employees and applicants for employment, 
and other individuals assigned or detailed to Federal positions at DOE, 
who are in:
    (1) Positions that DOE has determined include counterintelligence 
activities or access to counterintelligence sources and methods;
    (2) Positions that DOE has determined include intelligence 
activities or access to intelligence sources and methods;
    (3) Positions requiring access to information that is protected 
within a non-intelligence special access program (SAP) designated by the 
Secretary of Energy;
    (4) Positions that are subject to the Personnel Security Assurance 
Program (PSAP);
    (5) Positions that are subject to the Personnel Assurance Program 
(PAP);
    (6) Positions that DOE has determined have a need-to-know or access 
to information specifically designated by the Secretary regarding the 
design and operation of nuclear weapons and associated use control 
features;
    (7) Positions within the Office of Independent Oversight and 
Performance Assurance, or any successor thereto, involved in inspection 
and assessment of safeguards and security functions, including cyber 
security, of the Department;
    (8) Positions within the Office of Security and Emergency 
Operations, or any successor thereto;
    (9) The Accelerated Access Authorization Program (AAAP); and
    (10) Positions where the applicant or incumbent has requested a 
polygraph examination in order to respond to questions that have arisen 
in the context of counterintelligence investigations or personnel 
security issues. These examinations are referred to in this part as 
exculpatory polygraph examinations.
    (b) This part does not apply to:
    (1) Any individual for whom the Director of the Office of 
Counterintelligence (D/OCI), gives a waiver, based upon certification 
from another Federal agency that the individual has successfully 
completed a full scope or counterintelligence-scope polygraph 
examination administered within the last five years;
    (2) Any individual who is being treated for a medical or 
psychological condition or is taking medication that, based upon 
consultation with the individual, the DOE Test Center determines would 
preclude the individual from being tested; or
    (3) Any individual for whom the Secretary of Energy gives a written 
waiver in the interest of national security.
    (c) The Program Manager responsible for each program with positions 
identified in paragraphs (a)(1)-(8) of this section identifies in the 
first instance, in order of priority, those specific positions that will 
be polygraphed.
    (d) The Program Manager submits positions identified under paragraph 
(c) of this section to the D/OCI for review and concurrence. The D/OCI 
forwards the positions, with suggested additions or deletions, to the 
Secretary for approval.



Sec. 709.5  How will an individual know if his or her position will be eligible for a polygraph examination?

    (a) All positions in the programs described in Sec. 709.4(a)(1)-(8) 
are eligible for polygraph examination. When a polygraph examination is 
scheduled, DOE must notify the individual, in accordance with 
Sec. 709.21.

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    (b) Any job announcement or posting with respect to any position in 
those programs must indicate that the selection of an individual for the 
position may be conditioned upon his or her successful completion of a 
counterintelligence-scope polygraph examination.



Sec. 709.6  How often will an individual be subject to polygraph examination?

    Positions identified in Sec. 709.4(a)(1)-(8) are subject to a five 
year periodic, as well as an aperiodic, reinvestigation polygraph.



 Subpart B--Polygraph Examination Protocols and Protection of National 
                                Security



Sec. 709.11  What types of topics are within the scope of a polygraph examination?

    (a) DOE may ask questions that are appropriate to a 
counterintelligence-scope examination or that are relevant to the matter 
at issue in an exculpatory examination.
    (b) A counterintelligence-scope polygraph examination is limited to 
topics concerning the individual's involvement in espionage, sabotage, 
terrorism, unauthorized disclosure of classified information, 
unauthorized foreign contacts, and deliberate damage to or malicious 
misuse of a U.S. government information or defense system.
    (c) DOE may not ask questions that:
    (1) Probe a person's thoughts or beliefs;
    (2) Concern conduct that has no counterintelligence implication; or
    (3) concern conduct that has no direct relevance to an 
investigation.



Sec. 709.12  How does DOE determine the wording of questions?

    The examiner determines the exact wording of the polygraph questions 
based on the examiner's pretest interview of the individual, the 
individual's understanding of the questions, and other input from the 
individual.



Sec. 709.13  May an individual refuse to take a polygraph examination?

    (a) Yes. An individual may refuse to take a counterintelligence-
scope or exculpatory polygraph examination, and an individual being 
examined may terminate the examination at any time.
    (b) If an individual terminates a counterintelligence-scope or 
exculpatory polygraph examination prior to the completion of the 
examination, DOE may treat that termination as a refusal to take a 
polygraph examination under Sec. 709.14.



Sec. 709.14  What are the consequences of a refusal to take a polygraph examination?

    (a) If an individual is an applicant for employment, assignment, or 
detail to one of the positions described in Sec. 709.4(a)(1)-(8), and 
the individual refuses to take a counterintelligence polygraph 
examination required by statute as an initial condition of access, DOE 
and its contractors must refuse to employ, assign, or detail the 
individual to the identified position.
    (b) If the individual is an applicant for employment, assignment, or 
detail to one of the positions described in Sec. 709.4(a)(1)-(8) and the 
individual refuses to take a counterintelligence polygraph examination 
otherwise required by this part, DOE and its contractors may refuse to 
employ, assign, or detail the individual to the identified position.
    (c) If an individual is an incumbent in a position described in 
Sec. 709.4(a)(1)-(8) and the individual refuses to take a 
counterintelligence polygraph examination required by statute as a 
condition of continued access, DOE and its contractors must deny the 
individual access to the information or involvement in the activities 
that justified conducting the examination, consistent with Sec. 709.15. 
If the individual is a DOE employee, DOE may reassign or realign the 
individual's duties, within the local commuting area, or take other 
action, consistent with that denial of access.
    (d) If the individual is an incumbent in a position described in 
Sec. 709.4(a)(1)-(8), and the individual refuses to take a 
counterintelligence polygraph examination as required by this part, DOE 
and its contractors may deny that individual access to the information 
or involvement in the activities that justified conducting the 
examination, consistent with Sec. 709.15. If the individual is

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a DOE employee, DOE may reassign or realign the individual's duties, 
within the local commuting area, or take other action, consistent with 
that denial of access.
    (e) If the individual is a DOE employee whose current position does 
not require a counterintelligence polygraph examination and is an 
applicant for employment, assignment, or detail to one of the positions 
described in Sec. 709.4(a)(1)-(8), the individual's refusal to take a 
polygraph examination will not affect the individual's current 
employment status.
    (f) If an individual refuses to take a polygraph examination as part 
of the Accelerated Access Authorization Program, DOE must terminate the 
accelerated authorization process and the individual may continue to be 
processed for access authorization under the standard DOE personnel 
security process.
    (g) Since an exculpatory polygraph examination is administered at 
the request of an individual, DOE and its contractors may not take any 
adverse personnel action against an individual for refusing to request 
or take an exculpatory polygraph examination. DOE and its contractors 
may not record an individual's refusal to take an exculpatory polygraph 
examination in the individual's personnel security file, or any 
investigative file. DOE also may not record the fact of that refusal in 
a DOE employee's personnel file.
    (h) If a DOE employee refuses to take a counterintelligence 
polygraph examination, DOE may not record the fact of that refusal in 
the employee's personnel file.



Sec. 709.15  How does DOE use polygraph examination results?

    (a) If, following the completion of the polygraph test, there are 
any unresolved issues, the polygraph examiner must conduct an in-depth 
interview of the individual to address those unresolved issues.
    (b) If, after the polygraph examination, there are remaining 
unresolved issues that raise significant questions relevant to the 
individual's access to the information or involvement in the activities 
that justified the polygraph examination, DOE must so advise the 
individual and provide an opportunity for the individual to undergo an 
additional polygraph examination. If the additional polygraph 
examination is not sufficient to resolve the matter, DOE must undertake 
a comprehensive investigation of the individual, using the polygraph 
examination as an investigative lead.
    (c) The Office of Counterintelligence (OCI) will conduct an 
eligibility evaluation that considers examination results, the 
individual's personnel security file, and other pertinent information. 
If unresolved issues remain at the time of the eligibility evaluation, 
DOE will interview the individual if it is determined that a personal 
interview will assist in resolving the issue. No denial or revocation of 
access will occur until the eligibility evaluation is completed.
    (d) Following the eligibility evaluation, D/OCI must recommend, in 
writing, to the Program Manager responsible for the access that the 
individual's access be approved or retained, or denied or revoked.
    (1) If the Program Manager agrees with the recommendation, the 
Program Manager will notify the individual, in writing, that the 
individual's access has been approved or retained, or denied or revoked.
    (2) If the Program Manager disagrees with the D/OCI's recommendation 
the matter will be referred to the Secretary for a final decision.
    (3) If the Program Manager denies or revokes the individual's 
access, and the individual is a DOE employee, DOE may reassign the 
individual or realign the individual's duties within the local commuting 
area or take other actions consistent with the denial of access.
    (4) If the Program Manager denies the individual's access and the 
individual is an applicant for employment, assignment, or detail to one 
of the positions described in 709.4(a)(1)-(8), DOE and its contractors 
may refuse to employ, assign or detail the individual to the identified 
position.
    (5) If the Program Manager revokes the access of an individual 
assigned or detailed to DOE, DOE may remove the individual from access 
to the information that justified the polygraph examination and return 
the individual to the agency of origin.

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    (6) If the Program Manager denies or revokes the access for an 
individual applying for a DOE access authorization or already holding a 
DOE access authorization, DOE may initiate an administrative review of 
the individual's clearance eligibility under the DOE regulations 
governing eligibility for a security clearance at 10 CFR part 710.
    (7) For cases involving a question of loyalty to the United States, 
DOE may refer the matter to the FBI as required by section 145d of the 
AEA.
    (e) DOE and contractor employees, applicants for employment, and 
other individuals assigned or detailed to Federal positions within DOE 
whose access to the categories described in Sec. 709.4(a)(1)-(8) is 
denied or revoked may request reconsideration by the relevant head of 
the departmental element, as identified in the notice of denial or 
revocation. Individuals who decline to take the counterintelligence 
scope polygraph examination will not be afforded these reconsideration 
rights.
    (f) Utilizing the DOE security criteria used to grant or deny access 
to classified information, OCI will make a determination whether an 
individual completing a counterintelligence polygraph examination has 
made disclosures that warrant referral, as appropriate, to the Office of 
Security and Emergency Operations or the Manager of the applicable 
Operations Office. OCI will not report minor security infractions that 
do not create a serious question as to the individual's eligibility for 
a personnel security clearance.



           Subpart C--Safeguarding Privacy and Employee Rights



Sec. 709.21  When is an individual notified that a polygraph examination is scheduled?

    When a polygraph examination is scheduled, DOE must notify the 
individual, in writing, of the date, time, and place of the polygraph 
examination, and the individual's right to obtain and consult with legal 
counsel or to secure another representative prior to the examination. 
DOE must provide a copy of this part to the individual. The individual 
must receive the notification at least ten days, excluding weekend days 
and holidays, before the time of the examination except when good cause 
is shown or when the individual waives the advance notice provision.



Sec. 709.22  What rights to counsel or other representation does an individual have?

    (a) At the individual's own expense, an individual has the right to 
obtain and consult with legal counsel or another representative prior to 
the polygraph examination. The counsel or representative may not be 
present during the polygraph examination. No one other than the 
individual and the examiner may be present in the examination room 
during the polygraph examination.
    (b) At the individual's own expense, an individual has the right to 
obtain and consult with legal counsel or another representative at any 
time during an interview conducted in accordance with Sec. 709.15(c).



Sec. 709.23  How does DOE obtain an individual's consent to a polygraph examination?

    DOE may not administer a polygraph examination unless DOE has:
    (a) Notified the individual of the polygraph examination in writing 
in accordance with Sec. 709.21; and
    (b) Obtained written consent from the individual.



Sec. 709.24  What other information is provided to the individual prior to a polygraph examination?

    Before administering the polygraph examination, the examiner must:
    (a) Inform the individual of the use of audio and video recording 
devices and other observation devices, such as two-way mirrors and 
observation rooms;
    (b) Explain to the individual the characteristics and nature of the 
polygraph instrument and examination;
    (c) Explain the physical operation of the instrument and the 
procedures to be followed during the examination;
    (d) Review with the individual the control questions and relevant 
questions to be asked during the examination;
    (e) Advise the individual of the individual's privilege against 
self-incrimination; and

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    (f) Provide the individual with a pre-addressed envelope addressed 
to the D/OCI in Washington, D.C., which may be used to submit comments 
or complaints concerning the examination.



Sec. 709.25  Are there limits on use of polygraph examination results that reflect ``deception indicated'' or ``no opinion''?

    (a) DOE or its contractors may not:
    (1) Take an adverse personnel action against an individual solely on 
the basis of a polygraph examination result of ``deception indicated'' 
or ``no opinion''; or
    (2) Use a polygraph examination that reflects ``deception 
indicated'' or ``no opinion'' as a substitute for any other required 
investigation.
    (b) The Secretary or the D/OCI may suspend an individual's access 
based upon a written determination that the individual's admission of 
involvement in one or more of the activities covered by the 
counterintelligence polygraph, when considered in the context of the 
individual's access to one or more of the high risk programs identified 
in Sec. 709.4(a)(1)-(8), poses an unacceptable risk to national security 
or defense. In such cases, DOE will investigate the matter immediately 
and make a determination of whether to revoke the individual's access.



Sec. 709.26  How does DOE protect the confidentiality of polygraph examination records?

    (a) DOE owns all polygraph examination records and reports.
    (b) Except as provided in paragraph (c) of this section,