[Title 10 CFR ]
[Code of Federal Regulations (annual edition) - January 1, 2010 Edition]
[From the U.S. Government Printing Office]



[[Page i]]

          

          10


          Part 500 to End

          Revised as of January 1, 2010


          Energy
          



________________________

          Containing a codification of documents of general 
          applicability and future effect

          As of January 1, 2010
          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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                            Table of Contents



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

  Title 10:
          Chapter II--Department of Energy (Continued)               3
          Chapter III--Department of Energy                        323
          Chapter X--Department of Energy (General Provisions)     745
          Chapter XIII--Nuclear Waste Technical Review Board      1017
          Chapter XVII--Defense Nuclear Facilities Safety 
          Board                                                   1035
          Chapter XVIII--Northeast Interstate Low-Level 
          Radioactive Waste Commission                            1067
  Finding Aids:
      Table of CFR Titles and Chapters........................    1075
      Alphabetical List of Agencies Appearing in the CFR......    1095
      List of CFR Sections Affected...........................    1105

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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 
noticed (44 U.S.C. 1507). The Code of Federal Regulations is prima facie 
evidence of the text of the original documents (44 U.S.C. 1510).

HOW TO USE THE CODE OF FEDERAL REGULATIONS

    The Code of Federal Regulations is kept up to date by the individual 
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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 
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EFFECTIVE AND EXPIRATION DATES

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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.

[[Page vi]]

Many agencies have begun publishing numerous OMB control numbers as 
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OBSOLETE PROVISIONS

    Provisions that become obsolete before the revision date stated on 
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INCORPORATION BY REFERENCE

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This material, like any other properly issued regulation, has the force 
of law.
    What is a proper incorporation by reference? The Director of the 
Federal Register will approve an incorporation by reference only when 
the requirements of 1 CFR part 51 are met. Some of the elements on which 
approval is based are:
    (a) The incorporation will substantially reduce the volume of 
material published in the Federal Register.
    (b) The matter incorporated is in fact available to the extent 
necessary to afford fairness and uniformity in the administrative 
process.
    (c) The incorporating document is drafted and submitted for 
publication in accordance with 1 CFR part 51.
    What if the material incorporated by reference cannot be found? If 
you have any problem locating or obtaining a copy of material listed as 
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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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REPUBLICATION OF MATERIAL

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    Raymond A. Mosley,
    Director,
    Office of the Federal Register.
    January 1, 2010.







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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, chapter XIII--Nuclear Waste Technical 
Review Board, 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, 2010.

    For this volume, Michele Bugenhagen was Chief Editor. The Code of 
Federal Regulations publication program is under the direction of 
Michael L. White, assisted by Ann Worley.

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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 xiii--Nuclear Waste Technical Review Board..........        1303

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

chapter xviii--Northeast Interstate Low-level Radioactive 
  Waste Commission..........................................        1800

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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................         189
602             Epidemiology and other health studies 
                    financial assistance program............         200
603             Technology investment agreements............         208
605             The Office of Energy Research Financial 
                    Assistance Program......................         241
607             Governmentwide requirements for drug-free 
                    workplace (financial assistance)........         252
609             Loan guarantees for projects that employ 
                    innovative technologies.................         258
611             Advanced technology vehicles manufacturer 
                    assistance program......................         276
                     SUBCHAPTER I--SALES REGULATION
622             Contractual provisions......................         287
624             Contract clauses............................         287

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625             Price competitive sale of Strategic 
                    Petroleum Reserve petroleum.............         288
626             Procedures for acquisition of petroleum for 
                    the Strategic Petroleum Reserve.........         317

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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.)

[[Page 6]]

    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

[[Page 7]]

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

[[Page 8]]

(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. \1\ Under 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-products 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.



Sec. Sec. 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.

[54 FR 52891, Dec. 22, 1989]

[[Page 18]]

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 Sec. Sec. 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 
Sec. Sec. 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 Sec. Sec. 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 Sec. Sec. 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 Sec. Sec. 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 Sec. Sec. 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 Sec. Sec. 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]



Sec. Sec. 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 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]

[[Page 28]]



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 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.

[[Page 29]]

    (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 
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

[[Page 30]]

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 occurred during the interval between issuance of the order 
and the date of filing of the request under this subpart,

[[Page 31]]

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 to the petitioner than to other persons affected by the 
proceeding; and

[[Page 32]]

    (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 evaluation.

    (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 of the factual statements, and the 
requesting party may rely upon it only

[[Page 33]]

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]

    Effective Date Note: At 74 FR 66032, Dec. 14 2009, Sec. 501.181 was 
amended by revising paragraph (c)(1), effective January 13, 2010. For 
the convenience of the user, the revised text is set forth as follows:



Sec. 501.181  Sanctions.

                                * * * * *

    (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 $40,000 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 $20 
for each barrel of oil used in excess of that authorized in the 
exemption.

                                * * * * *



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,

[[Page 38]]

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.
    (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]


[[Page 39]]


    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 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

[[Page 40]]

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.
[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

[[Page 41]]

(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.
    (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 
capital;
    (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 2,996x10\9\ Btu/yr. (50,000 KWx7600 BTU/KWHRx.9x8760 
HR/YR) The oil and gas backed off the grid would be calculated to be 
.2070x10\9\ BTU/YR. (50,000 KWx5250 BTU/KWHRx.9x8760 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]



Sec. Sec. 503.39-503.44  [Reserved]



PART 504_EXISTING POWERPLANTS--Table of Contents




Sec.
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]]



Sec. Sec. 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 Sec. Sec. 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 Sec. Sec. 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 Sec. Sec. 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]



Sec. 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+BxRm

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, applied to preferred stock could be used to

[[Page 64]]

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 t can 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]



          Sec. 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.
    (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,

[[Page 65]]

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=APFxapxi

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 Sec. Sec. 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 Sec. Sec. 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 Sec. Sec. 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 Sec. Sec. 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 Funding Opportunity Announcement.
600.9 [Reserved]
600.10 Form and content of applications.
600.11-12 [Reserved]
600.13 Merit review.
600.14 [Reserved]
600.15 Authorized uses of information.
600.16 Legal authority and effect of an award.
600.17 Contents of Award.
600.18 [Reserved]
600.19 Notification to unsuccessful applicants.
600.20 Maximum DOE obligation.
600.21 Access to records.
600.22 Disputes and appeals.
600.23 [Reserved]
600.24 Noncompliance.
600.25 Suspension and termination.
600.26-28 [Reserved]
600.29 Fixed obligation awards.
600.30 Cost sharing.
600.31 Research misconduct.

Subpart B_Uniform Administrative Requirements for Grants and Cooperative 
 Agreements With Institutions of Higher Education, Hospitals, and Other 
                         Nonprofit 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 [Reserved]

                         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.
600.172 Subsequent adjustments and continuing responsibilities.

[[Page 83]]

600.173 Collection of amounts due.

                          Additional Provisions

Appendix A to Subpart B of 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 Sec. Sec. 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_Administrative Requirements for Grants and Cooperative 
                Agreements With For-Profit Organizations

                                 General

600.301 Purpose.
600.302 Definitions.
600.303 Deviations.
600.304 Special award conditions.
600.305 Debarment and suspension.
600.306 Metric system of measurement.

                         Post-Award Requirements

                    Financial and Program Management

600.310 Purpose of financial and program management.
600.311 Standards for financial management systems.
600.312 Payment.
600.313 Cost sharing or matching.
600.314 Program income.
600.315 Revision of budget and program plans.
600.316 Audits.
600.317 Allowable costs.
600.318 Fee and profit.

                           Property Standards

600.320 Purpose of property standards.
600.321 Real property and equipment.
600.322 Federally owned property.
600.323 Property management system.
600.324 Supplies.
600.325 Intellectual property.

                          Procurement Standards

600.330 Purpose of procurement standards.
600.331 Requirements.

                           Reports and Records

600.340 Purpose of reports and records.
600.341 Monitoring and reporting program and financial performance.
600.342 Retention and access requirements for records.

                       Termination and Enforcement

600.350 Purpose of termination and enforcement.
600.351 Termination.
600.352 Enforcement.
600.353 Disputes and appeals.

                      After-the-Award Requirements

600.360 Purpose.
600.361 Closeout procedures.
600.362 Subsequent adjustments and continuing responsibilities.
600.363 Collection of amounts due.

                          Additional Provisions

600.380 Purpose.

[[Page 84]]

600.381 Special provisions for Small Business Innovation Research 
          Grants.

Appendix A to Subpart D of Part 600--Patent and Data Provisions
Appendix B to Subpart D of Part 600--Contract Provisions

Subpart 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. 7101 et seq; 31 U.S.C. 6301-6308; 50 U.S.C. 
2401 et seq., 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 general policies and procedures applicable to 
the award and administration of grants, cooperative agreements, and 
technology investment agreements. The specific guidance for technology 
investment agreements is contained in part 603.

[61 FR 7166, Feb. 26, 1996, as amended at 70 FR 69253, Nov. 15, 2005]



Sec. 600.2  Applicability.

    (a) Except as otherwise provided by Federal statute or program rule, 
this part applies to applications, funding opportunity announcement, 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.
    (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.

[61 FR 7166, Feb. 26, 1996, as amended at 74 FR 44275, Aug. 28, 2009]



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.
    Cost sharing or matching means that portion of project or programs 
costs not borne by the Federal Government.
    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

[[Page 85]]

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 for patent matters set forth 
at Sec. Sec. 600.136 and 600.325).
    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 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.
    Total Project Cost means all allowable costs, as set forth in the 
applicable Federal cost principles, incurred in accomplishing the 
objective of the project during the project period, including the value 
of contributions made by third parties and costs incurred by Federally 
Funded Research and Development Centers.

[61 FR 7166, Feb. 26, 1996, as amended at 64 FR 56420, Oct. 20, 1999; 68 
FR 50650, Aug. 21, 2003; 74 FR 44275, Aug. 28, 2009]



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 Sec. Sec. 600.114, 
600.212, and 600.304 are not deviations. Awards to foreign entities

[[Page 86]]

and the waiver of the cost sharing requirements in Sec. 600.30 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.
    (ii) A class deviation may be authorized by the Director, 
Procurement and Assistance Management 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; 68 
FR 50650, Aug. 21, 2003; 74 FR 44275, Aug. 28, 2009]



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. 6301-6306. 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

[[Page 87]]

    (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 Sec. Sec. 600.162, 600.243 and 600.352 does 
not constitute intervention in the conduct or performance of project 
activities.

[61 FR 7166, Feb. 26, 1996, as amended at 74 FR 44275, Aug. 28, 2009]



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 funding opportunity announcement, 
program rule, or published notice.
    (1) If the aggregate amount of DOE funds available for award under a 
funding opportunity announcement or published notice is $1million or 
more, unless authorized by statute or program rule, such restriction of 
eligibility shall be:
    (i) Supported by a written determination initiated by the program 
office;
    (ii) Concurred in by legal counsel and the Contracting Officer; and
    (iii) Approved by an official no less than one level below the 
responsible program Assistant Secretary, Deputy Administrator, or other 
official of equivalent authority.
    (2) Where the amount of DOE funds is less than $1 million, the 
cognizant HCA and the Contracting Officer may approve the determination.
    (c) Noncompetitive financial assistance. DOE may award a grant or 
cooperative agreement or technology investment agreement on a 
noncompetitive basis only if the application satisfies one or more of 
the follow 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 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 that 
would not be eligible for financial assistance under a recent, current, 
or planned funding opportunity announcement, and if, as determined by 
DOE, a competitive funding opportunity announcement would not be 
appropriate.
    (8) The responsible program Assistant Secretary, Deputy 
Administrator, or other official of equivalent authority determines that 
a noncompetitive award is in the public interest. This authority may not 
be delegated.
    (d) Approval requirements. (1) Where the amount of DOE funds is $1 
million or greater, determinations of noncompetitive awards shall be:
    (i) Documented in writing;
    (ii) Concurred in by the responsible program technical official and 
local legal counsel; and

[[Page 88]]

    (iii) Approved, prior to award, by the responsible program Assistant 
Secretary, Deputy Administrator, or official of equivalent authority and 
the Contracting Officer. The approval authority may be delegated to one 
organizational level below the Assistant Secretary, Deputy 
Administrator, or official of equivalent authority.
    (2) Where the amount of DOE funds is less than $1 million, 
determinations of noncompetitive awards shall be:
    (i) Documented in writing;
    (ii) Concurred in by local legal counsel, unless for a particular 
award or class of awards of $1 million or less, review is waived by 
legal counsel; and
    (iii) Approved by the cognizant HCA and the Contracting Officer.

[74 FR 44275, Aug. 28, 2009, as amended at 74 FR 48850, Sept. 25, 2009]



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 
Sec. Sec. 600.144, 600.236 and 600.331, as applicable.

[61 FR 7166, Feb. 26, 1996, as amended at 74 FR 44276, Aug. 28, 2009]



Sec. 600.8  Funding Opportunity Announcement.

    (a) General. Funding Opportunity Announcements (FOA) include any 
issuance used to announce funding opportunities that would result in the 
award of a discretionary grant, cooperative agreement, or technology 
investment agreement, whether it is called a program announcement, 
program notice, solicitation, broad agency announcement, research 
announcement, notice of program interest, or something else.
    (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. 
FOAs may be issued by a DOE Contracting Officer or program office with 
prior concurrence of the contracting office.
    (2) DOE must post synopses of its FOAs and modifications to the 
announcements at the Grants.gov Internet site, using the standard data 
elements/format, except for:
    (i) Announcements of funding opportunities for awards less than 
$25,000 for which 100 percent of eligible applicants live outside of the 
United States.
    (ii) Single source announcements of funding opportunities which are 
specifically directed to a known recipient.
    (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) Announcement format. DOE must use the government-wide standard 
format to publish program announcements of funding opportunities.

[61 FR 7166, Feb. 26, 1996, as amended at 69 FR 7867, Feb. 20, 2004; 70 
FR 69254, Nov. 15, 2005; 74 FR 44276, Aug. 28, 2009]

[[Page 89]]



Sec. 600.9  [Reserved]



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 specified in a program 
rule, the program announcement, or these regulations. (See also 
Sec. Sec. 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;
    (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
    (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, DOE may request the submission of additional information 
only if the information is essential to evaluate the application.
    (f) Registration is required in the Central Contractor Registration 
(CCR) for all applications. Information on registration can be obtained 
at http://www.ccr.gov/Grantees.aspx.

[61 FR 7166, Feb. 26, 1996, as amended at 64 FR 56420, Oct. 20, 1999; 69 
FR 7867, Feb. 20, 2004; 74 FR 44276, Aug. 28, 2009]



Sec. Sec. 600.11-600.12  [Reserved]



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. 600.14  [Reserved]



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 90]]

           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 funding opportunity announcement 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.

[61 FR 7166, Feb. 26, 1996, as amended at 68 FR 50650, Aug. 21, 2003; 74 
FR 44276, Aug. 28, 2009]



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) Recipients are free to accept or reject the award. A request to 
draw down DOE funds constitutes acceptance; however, DOE may require 
formal acceptance of an award.
    (c) DOE funds awarded under a grant, cooperative agreement, or 
technology investment 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 Sec. Sec. 600.125(e), 600.230, 600.317(b), or 603.830 
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.

[61 FR 7166, Feb. 26, 1996, as amended at 70 FR 69254, Nov. 15, 2005; 74 
FR 44276, Aug. 28, 2009]



Sec. 600.17  Contents of Award.

    Each financial assistance award shall be made on a Notice of 
Financial Assistance Award (NFAA) which contains basic identifying and 
funding information. The NFAA provides the contents of the award 
including any special terms and conditions, program regulations, the 
National Policy Assurances, and any other provisions necessary to 
establish the respective rights, duties, obligations, and 
responsibilities of DOE and the recipient, consistent with the 
requirements of this part.

[74 FR 44276, Aug. 28, 2009]



Sec. 600.18  [Reserved]



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 explain why the 
application was not selected.

[61 FR 7166, Feb. 26, 1996, as amended at 74 FR 44276, Aug. 28, 2009]



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.

[[Page 91]]



Sec. 600.21  Access to records.

    (a) In addition to recipient and subrecipient responsibilities 
relative to access to records specified in Sec. Sec. 600.153, 600.242 
and 600.342, 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.

[61 FR 7166, Feb. 26, 1996, as amended at 74 FR 44276, Aug. 28, 2009]



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, 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. Except as provided in paragraph (f)(1) of this 
section, the final determination under paragraph (c) of this section may 
be appealed to the cognizant Senior Procurement Executive (SPE) for 
either DOE or the National Nuclear Security Administration (NNSA). The 
mailing address for the DOE SPE is Office of Procurement and Assistance 
Management, 1000 Independence Ave., SW, Washington, DC 20585. The 
mailing address for the NNSA SPE is Office of Acquisition and Supply 
Management, 1000 Independence Ave., SW., Washington, DC 20585.
    (e) Effect of appeal. The filing of an appeal with the SPE 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 SPE, or to 
preserve its ability to provide relief in the event the SPE decides in 
favor of the appellant.
    (f) Review on appeal. (1) The SPE 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 Sec. 600.114, Sec. 600.212, or Sec. 600.304;
    (ii) DOE denial of a request for a deviation under Sec. 600.4, 
Sec. 600.103, Sec. 600.205, or Sec. 600.303 of this part;
    (iii) DOE denial of a request for a budget revision or other change 
in the approved project under Sec. 600.125, Sec. 600.127, Sec. 
600.222, Sec. 600.230, Sec. 600.315, or Sec. 600.317 of this part or 
under another term or condition of the award;
    (iv) Any DOE action authorized under Sec. 600.162(a)(1), (2), (3) 
or (5), Sec. 600.243(a)(1), (a)(3), or Sec. 600.352(a)(1), (2), (3) or 
(5) for suspensions only; or Sec. 600.162(a)(4), Sec. 600.243(a)(4) or 
Sec. 600.352(a)(4) for actions disapproving renewal applications or 
other requests

[[Page 92]]

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, Sec. 600.236, or Sec. 600.331 of this part or 
under another term or condition of the award;
    (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.

[61 FR 7166, Feb. 26, 1996, as amended at 74 FR 44276, Aug. 28, 2009]



Sec. 600.23  [Reserved]



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 date of the notice) by which they must be taken.
    (3) Which of the actions authorized under Sec. 600.122(n), Sec. 
600.162(a) Sec. 600.243(a), Sec. 600.312(g), or Sec. 600.352(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), Sec. 600.243(a), Sec. 600.312(g), or Sec. 
600.352(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; 74 
FR 44277, Aug. 28, 2009]



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 Sec. 600.24, Sec. 
600.122(n), Sec. 600.162(a), Sec. 600.243(a) or Sec. 600.352(a); or
    (2) A suspension or debarment of the awardee under 2 CFR 180 and 
901.
    (b) Notification requirements. Except as provided in Sec. 600.24, 
Sec. 600.162(a), Sec. 600.243(a), or Sec. 600.352(a) before 
suspending or terminating an 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 Sec. 600.24(a) at least ten days 
prior to the effective date of the suspension or termination. Such 
notice shall include, as appropriate:

[[Page 93]]

    (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 Sec. Sec. 600.170 through 
600.173, Sec. Sec. 600.250 through 600.252 and Sec. Sec. 600.350 
through 600.353;
    (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 Sec. Sec. 600.24, 600.160 
through 600.162 Sec. Sec. 600.243 through 600.244 or Sec. Sec. 600.350 
through 600.353 is appropriate, either DOE or the awardee may initiate a 
termination of an award (or portion thereof) as described in this 
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 Sec. Sec. 600.24, 600.160 through 600.162 
Sec. Sec. 600.243 through 600.244 or Sec. Sec. 600.350 through 600.353 
for suspending and terminating subgrants.

[61 FR 7166, Feb. 26, 1996, as amended at 74 FR 44277, Aug. 28, 2009]



Sec. Sec. 600.26-600.28  [Reserved]



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.

[[Page 94]]

    (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 $250,000 nor 
exceed one year in length.
    (2) Programs which require mandatory cost sharing are not eligible.
    (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.

[61 FR 7166, Feb. 26, 1996, as amended at 74 FR 44277, Aug. 28, 2009]



Sec. 600.30  Cost sharing.

    In addition to the requirements of Sec. 600.123, Sec. 600.224, or 
Sec. 600.313, the following requirements apply to research, 
development, demonstration and commercial application activities 
projects:
    (a) Cost sharing is required for most financial assistance awards 
for research, development, demonstration and commercial applications 
activities initiated after the enactment of the Energy Policy Act of 
2005 on August 8, 2005. This requirement does not apply to:
    (1) An award under the small business innovation research program or 
the small business technology transfer program; or
    (2) A program with cost sharing requirements defined by other than 
Section 988 of the Energy Policy Act of 2005 including other sections of 
the 2005 Act and the Energy Policy Act of 1992.
    (b) A cost share of at least 20 percent of the cost of the activity 
is required for research and development except where:
    (1) A research or development activity of a basic or fundamental 
nature has been excluded by an appropriate officer of the Department, 
generally an Under Secretary; or
    (2) The Secretary has determined it is necessary and appropriate to 
reduce or eliminate the cost sharing requirement for a research and 
development activity of an applied nature.
    (c) A cost share of at least 50 percent of the cost of a 
demonstration or commercial application program or activity is required 
unless the Secretary has determined it is necessary and appropriate to 
reduce the cost sharing requirements, taking into consideration any 
technological risk relating to the activity.
    (d) Cost share shall be provided by non-Federal funds unless 
otherwise authorized by statute. In calculating the amount of the non-
Federal contribution:
    (1) Base the non-Federal contribution on total project costs, 
including the cost of work where funds are provided directly to a 
partner, consortium member or subrecipient, such as a Federally Funded 
Research and Development Center;
    (2) Include the following costs as allowable in accordance with the 
applicable cost principles:
    (i) Cash;
    (ii) Personnel costs;
    (iii) The value of a service, other resource, or third party in-kind 
contribution determined in accordance with the applicable circular of 
the Office of Management and Budget;
    (iv) Indirect costs or facilities and administrative costs; and/or
    (v) Any funds received under the power program of the Tennessee 
Valley Authority (except to the extent that such funds are made 
available under an annual appropriation Act);

[[Page 95]]

    (3) Exclude the following costs:
    (i) Revenues or royalties from the prospective operation of an 
activity beyond the time considered in the award;
    (ii) Proceeds from the prospective sale of an asset of an activity; 
or
    (iii) Other appropriated Federal funds.
    (iv) Repayment of the Federal share of a cost-shared activity under 
Section 988 of the Energy Policy Act of 2005 shall not be a condition of 
the award.

[74 FR 44277, Aug. 28, 2009]



Sec. 600.31  Research misconduct.

    (a) A recipient is responsible for maintaining the integrity of 
research of any kind under an award from DOE including the prevention, 
detection, and remediation of research misconduct, and the conduct of 
inquiries, investigations, and adjudication of allegations of research 
misconduct in accordance with the requirements of this section.
    (b) For purposes of this section, the following definitions are 
applicable:
    Adjudication means a formal review of a record of investigation of 
alleged research misconduct to determine whether and what corrective 
actions and sanctions should be taken.
    Fabrication means making up data or results and recording or 
reporting them.
    Falsification means manipulating research materials, equipment, or 
processes, or changing or omitting data or results such that the 
research is not accurately represented in the research record.
    Finding of Research Misconduct means a determination, based on a 
preponderance of the evidence, that research misconduct has occurred. 
Such a finding requires a conclusion that there has been a significant 
departure from accepted practices of the relevant research community and 
that it be knowingly, intentionally, or recklessly committed.
    Inquiry means information gathering and initial fact-finding to 
determine whether an allegation or apparent instance of misconduct 
warrants an investigation.
    Investigation means the formal examination and evaluation of the 
relevant facts.
    Plagiarism means the appropriation of another person's ideas, 
processes, results, or words without giving appropriate credit.
    Research means all basic, applied, and demonstration research in all 
fields of science, medicine, engineering, and mathematics, including, 
but not limited to, research in economics, education, linguistics, 
medicine, psychology, social sciences statistics, and research involving 
human subjects or animals.
    Research misconduct means fabrication, falsification, or plagiarism 
in proposing, performing, or reviewing research, or in reporting 
research results, but does not include honest error or differences of 
opinion.
    Research record means the record of all data or results that embody 
the facts resulting from scientists' inquiries, including, but not 
limited to, research proposals, laboratory records, both physical and 
electronic, progress reports, abstracts, theses, oral presentations, 
internal reports, and journal articles.
    (c) Unless otherwise instructed by the Contracting Officer, the 
recipient must conduct an initial inquiry into any allegation of 
research misconduct. If the recipient determines that there is 
sufficient evidence to proceed to an investigation, it must notify the 
Contracting Officer and, unless otherwise instructed, the recipient 
must:
    (1) Conduct an investigation to develop a complete factual record 
and an examination of such record leading to either a finding of 
research misconduct and an identification of appropriate remedies or a 
determination that no further action is warranted;
    (2) Inform the Contracting Officer if an initial inquiry supports an 
investigation and, if requested by the Contracting Officer thereafter, 
keep the Contracting Officer informed of the results of the 
investigation and any subsequent adjudication. When an investigation is 
complete, the recipient will forward to the Contracting Officer a copy 
of the evidentiary record, the investigative report, any recommendations 
made to the recipient's adjudicating official, and the adjudicating 
official's decision and notification of any corrective action taken or 
planned, and

[[Page 96]]

the subject's written response to the recommendations (if any).
    (3) If the investigation leads to a finding of research misconduct, 
conduct an adjudication by a responsible official who was not involved 
in the inquiry or investigation and is separated organizationally from 
the element which conducted the investigation. The adjudication must 
include a review of the investigative record and, as warranted, a 
determination of appropriate corrective actions and sanctions.
    (d) The Department may elect to act in lieu of the recipient in 
conducting an inquiry or investigation into an allegation of research 
misconduct if the Contracting Officer finds that:
    (1) The research organization is not prepared to handle the 
allegation in a manner consistent with this section;
    (2) The allegation involves an entity of sufficiently small size 
that it cannot reasonably conduct the inquiry;
    (3) DOE involvement is necessary to ensure the public health, 
safety, and security, or to prevent harm to the public interest; or,
    (4) The allegation involves possible criminal misconduct.
    (e) DOE reserves the right to pursue such remedies and other actions 
as it deems appropriate, consistent with the terms and conditions of the 
award instrument and applicable laws and regulations. However, the 
recipient's good faith administration of this section and the 
effectiveness of its remedial actions and sanctions shall be positive 
considerations and shall be taken into account as mitigating factors in 
assessing the need for such actions. If DOE pursues any such action, it 
will inform the subject of the action of the outcome and any applicable 
appeal procedures.
    (f) In conducting the activities in paragraph (c) of this section, 
the recipient and the Department, if it elects to conduct the inquiry or 
investigation, shall adhere to the following guidelines:
    (1) Safeguards for information and subjects of allegations. The 
recipient shall provide safeguards to ensure that individuals may bring 
allegations of research misconduct made in good faith to the attention 
of the recipient without suffering retribution. Safeguards include: 
protection against retaliation; fair and objective procedures for 
examining and resolving allegations; and diligence in protecting 
positions and reputations. The recipient shall also provide the subjects 
of allegations confidence that their rights are protected and that the 
mere filing of an allegation of research misconduct will not result in 
an adverse action. Safeguards include timely written notice regarding 
substantive allegations against them, a description of the allegation 
and reasonable access to any evidence submitted to support the 
allegation or developed in response to an allegation and notice of any 
findings of research misconduct.
    (2) Objectivity and expertise. The recipient shall select 
individual(s) to inquire, investigate, and adjudicate allegations of 
research misconduct who have appropriate expertise and have no 
unresolved conflict of interest. The individual(s) who conducts an 
adjudication must not be the same individual(s) who conducted the 
inquiry or investigation, and must be separate organizationally from the 
element that conducted the inquiry or investigation.
    (3) Timeliness. The recipient shall coordinate, inquire, investigate 
and adjudicate allegations of research misconduct promptly, but 
thoroughly. Generally, an investigation should be completed within 120 
days of initiation, and adjudication should be complete within 60 days 
of receipt of the record of investigation.
    (4) Confidentiality. To the extent possible, consistent with fair 
and thorough processing of allegations of research misconduct and 
applicable law and regulation, knowledge about the identity of the 
subjects of allegations and informants should be limited to those with a 
need to know.
    (5) Remediation and sanction. If the recipient finds that research 
misconduct has occurred, it shall assess the seriousness of the 
misconduct and its impact on the research completed or in process. The 
recipient must take all necessary corrective actions. Such action may 
include but are not limited to, correcting the research record and as 
appropriate imposing restrictions, controls, or other parameters on 
research in process or to be conducted in

[[Page 97]]

the future. The recipient must coordinate remedial actions with the 
Contracting Officer. The recipient must also consider whether personnel 
sanctions are appropriate. Any such sanction must be consistent with any 
applicable personnel laws, policies, and procedures, and must take into 
account the seriousness of the misconduct and its impact, whether it was 
done knowingly or intentionally, and whether it was an isolated event or 
pattern of conduct.
    (g) By executing this agreement, the recipient provides its 
assurance that it has established an administrative process for 
performing an inquiry, mediating if possible, investigating, and 
reporting allegations of research misconduct; and that it will comply 
with its own administrative process and the requirements and definitions 
of 10 CFR part 733 for performing an inquiry, possible mediation, 
investigation and reporting of allegations of research misconduct.
    (h) The recipient must insert or have inserted the substance of this 
section, including paragraph (g), in subawards at all tiers that involve 
research.

[70 FR 37013, June 28, 2005, as amended at 74 FR 44278, Aug. 28, 2009]



Subpart B_Uniform Administrative Requirements for Grants and Cooperative 
 Agreements With Institutions of Higher Education, Hospitals, and Other 
                         Nonprofit 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 
organizations. It also establishes rules governing subawards to 
institutions of higher education, hospitals, and non-profit 
organizations (including grants and cooperative agreements administered 
by State, local and Indian Tribal governments).

[59 FR 53266, Oct. 21, 1994, as amended at 68 FR 50650, Aug. 21, 2003]



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
    (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;

[[Page 98]]

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.
    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

[[Page 99]]

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 Sec. Sec. 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 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

[[Page 100]]

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.



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, or other non-profit 
organizations 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.'' For-profit subrecipients are subject to the provisions of 
10 CFR part 600, subpart D, Administrative Requirements for Grants and 
Cooperative Agreements with For-Profit Organizations.

[59 FR 53266, Oct. 21, 1994, as amended at 68 FR 50650, Aug. 21, 2003]

                         Pre-Award Requirements



Sec. 600.110  Purpose.

    Sections 600.111 through 600.117 prescribe forms and instructions 
and other

[[Page 101]]

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 or in the funding opportunity 
announcement. When a version of the Standard Form 424 is not used, DOE 
shall indicate whether the application is subject to review by the State 
under Executive Order 12372.
    (b) Budgetary information. DOE may request and the applicant shall 
submit the minimum budgetary information necessary to evaluate the costs 
of the proposed project.
    (c) DOE may, subsequent to receipt of an application, request 
additional information from an applicant when necessary for 
clarification or to make informed preaward determinations.
    (d) Continuation and renewal applications. DOE may require that an 
application for a continuation or renewal award be made in the format or 
on the forms authorized by paragraphs (a) and (b) of this section.

[74 FR 44278, Aug. 28, 2009]



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,'' 2 CFR 180 and 901. 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.

[59 FR 53266, Oct. 21, 1994, as amended at 74 FR 44278, Aug. 28, 2009]



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.

[[Page 102]]



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  [Reserved]

                         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

[[Page 103]]

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 
Sec. Sec. 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. 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

[[Page 104]]

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.
    (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.

[[Page 105]]

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.
    (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.

[[Page 106]]

    (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 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.

[[Page 107]]

    (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.
    (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 
Sec. Sec. 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

[[Page 108]]

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 
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

[[Page 109]]

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 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 organizations that are subrecipients are subject to 
the audit

[[Page 110]]

requirements specified in 10 CFR 600.316.

[59 FR 53266, Oct. 21, 1994, as amended at 62 FR 45939, 45940, Aug. 29, 
1997; 68 FR 50650, Aug. 21, 2003]



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 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. A fee or profit 
may be paid to a contractor providing goods or

[[Page 111]]

services under a contract with a recipient or subrecipient.

[59 FR 53266, Oct. 21, 1994, as amended at 68 FR 50650, Aug. 21, 2003]



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 Sec. Sec. 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 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

[[Page 112]]

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 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.

[[Page 113]]

    (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 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

[[Page 114]]

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 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 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.
    (b) Recipients are subject to applicable regulations governing 
patents and inventions, including government-wide regulations issued by 
the Department of Commerce at 37 CFR part 401, ``Rights to Inventions 
Made by Nonprofit Organizations and Small Business Firms Under 
Government Grants, Contracts and Cooperative Agreements.''
    (c) The DOE has the right to:
    (1) Obtain, reproduce, publish or otherwise use the data first 
produced under an award; and
    (2) Authorize others to receive, reproduce, publish, or otherwise 
use such data for Federal purposes.
    (d)(1) In addition, in response to a Freedom of Information Act 
(FOIA) request for research data relating to published research findings 
produced under an award that were used by the Federal Government in 
developing an agency action that has the force and effect of law, the 
DOE shall request, and the recipient shall provide, within a reasonable 
time, the research data so that they can be made available to the public 
through the procedures established under the FOIA. If the DOE obtains 
the research data solely in response to a FOIA request, the agency may 
charge the requester a reasonable fee equaling the full incremental cost 
of obtaining the research data. This fee should reflect costs incurred 
by the agency, the recipient, and applicable subrecipients. This fee is 
in addition to any fees the agency may assess under the FOIA (5 U.S.C. 
552(a)(4)(A)).
    (2) The following definitions apply for purposes of this paragraph 
(d):
    (i) Research data is defined as the recorded factual material 
commonly accepted in the scientific community as

[[Page 115]]

necessary to validate research findings, but not any of the following: 
preliminary analyses, drafts of scientific papers, plans for future 
research, peer reviews, or communications with colleagues. This 
``recorded'' material excludes physical objects (e.g., laboratory 
samples). Research data also do not include:
    (A) Trade secrets, commercial information, materials necessary to be 
held confidential by a researcher until they are published, or similar 
information which is protected under law; and
    (B) Personnel and medical information and similar information the 
disclosure of which would constitute a clearly unwarranted invasion of 
personal privacy, such as information that could be used to identify a 
particular person in a research study.
    (ii) Published is defined as either when:
    (A) Research findings are published in a peer-reviewed scientific or 
technical journal; or
    (B) A Federal agency publicly and officially cites the research 
findings in support of an agency action that has the force and effect of 
law.
    (iii) Used by the Federal Government in developing an agency action 
that has the force and effect of law is defined as when an agency 
publicly and officially cites the research findings in support of an 
agency action that has the force and effect of law.
    (e) 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).

[61 FR 7165, Feb. 26, 1996, as amended at 65 FR 14407, 14408, Mar. 16, 
2000; 68 FR 50650, Aug. 21, 2003]



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, 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

[[Page 116]]

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.
    (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.

[[Page 117]]

    (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 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,

[[Page 118]]

    (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 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.

[[Page 119]]



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 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

[[Page 120]]

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 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.

[[Page 121]]

    (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.
    (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

[[Page 122]]

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 suspension or 
after termination which are necessary and not reasonably avoidable are 
allowable if paragraph (c) (1) and (2) of this section apply.

[[Page 123]]

    (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 Sec. Sec. 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 Sec. Sec. 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.
    (1) Making an administrative offset against other requests for 
reimbursements.
    (2) Withholding advance payments otherwise due to the recipient.

[[Page 124]]

    (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. Appendix A to Subpart B of Part 600--Contract Provisions

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

[[Page 125]]

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 
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.

                                 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 Sec. Sec. 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.

[[Page 126]]

    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.
    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.

[[Page 127]]

    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.
    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

[[Page 128]]

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:
    (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]

[[Page 129]]



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]



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:

[[Page 130]]

    (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 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

[[Page 131]]

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.
    (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

[[Page 132]]

its actual cash disbursements. The working capital advance method of 
payment shall not be used by grantees or subgrantees if the reason for 
using 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.

[[Page 133]]

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


[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-

[[Page 134]]

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 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

[[Page 135]]

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 
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 Sec. Sec. 
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

[[Page 136]]

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.
    (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.

[[Page 137]]

    (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.
    (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.

[[Page 138]]

    (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.
    (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

[[Page 139]]

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 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.

[[Page 140]]



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
    (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

[[Page 141]]

use is feasible and reduces project costs.
    (7) Grantees and subgrantees are encouraged to use value engineering 
clauses in contracts for construction 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,

[[Page 142]]

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.
    (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

[[Page 143]]

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 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

[[Page 144]]

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 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

[[Page 145]]

awarding agency's right to survey the system. Under a self-certification 
procedure, awarding agencies may wish to rely on written assurances from 
the 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.

[[Page 146]]

    (10) Access by the grantee, the subgrantee, the Federal grantor 
agency, the Comptroller General of the United States, or any of their 
duly authorized 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

[[Page 147]]

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 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

[[Page 148]]

only with the approval of OMB. Federal agencies may shade out or 
instruct the grantee to disregard any line item that 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.)

[[Page 149]]

    (2) Reimbursements. Requests for reimbursement under nonconstruction 
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 150]]

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 151]]

    (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 152]]



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 Sec. Sec. 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_Administrative Requirements for Grants and Cooperative 
                Agreements With For-Profit Organizations

    Source: 68 FR 50650, Aug. 21, 2003, unless otherwise noted.

                                 General



Sec. 600.301  Purpose.

    (a) This subpart prescribes administrative requirements for awards 
to for-profit organizations.
    (b) Applicability to prime awards and subawards is as follows:
    (1) Prime awards: DOE contracting officers must apply the provisions 
of this part to awards to for-profit organizations. Contracting officers 
must not impose requirements that are in addition to, or inconsistent 
with, the requirements provided in this part, except:
    (i) In accordance with the deviation procedures or special award 
conditions in Sec. 600.303 or Sec. 600.304, respectively; or
    (ii) As required by Federal statute, Executive order, or Federal 
regulation implementing a statute or Executive order.
    (2) Subawards. (i) Any legal entity (including any State, local 
government, university or other nonprofit organization, as well as any 
for-profit entity) that receives an award from DOE must apply the 
provisions of this part to subawards with for-profit organizations.
    (ii) For-profit organizations that receive prime awards covered by 
this part must apply to each subaward the administrative requirements 
that are applicable to the particular type of subrecipient (e.g., 10 CFR 
part 600, subpart B, contains requirements for institutions of higher 
education, hospitals, or other nonprofit organizations and 10 CFR part 
600, subpart C, specifies requirements for subrecipients that are States 
or local governments).



Sec. 600.302  Definitions.

    In addition to the definitions used in subpart A of this part, the 
following are definitions of terms as used in this subpart:
    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.

[[Page 153]]

    Applied research means efforts that seek to determine and exploit 
the potential of scientific discoveries or improvements in technology, 
and is directed toward the development of new materials, devices, 
methods, and processes.
    Basic research means efforts directed solely toward increasing 
knowledge or understanding in science and engineering.
    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.
    Cost sharing or matching means that portion of project or program 
costs not borne by the Federal Government.
    Demonstration means a project designed to determine the technical 
feasibility and economic potential of a technology on either a pilot 
plant or a prototype scale.
    Development means efforts to create or advance new technology or 
demonstrate the viability of applying existing technology to new 
products and processes.
    Disallowed costs means those charges to an award that the DOE 
contracting officer determines to be unallowable, in accordance with the 
applicable Federal cost principles or other terms and conditions 
contained in the award.
    DOE means the Department of Energy, including the National Nuclear 
Security Administration (NNSA).
    Equipment means tangible, nonexpendable personal property charged 
directly to the award having a useful life of more than one year and an 
acquisition cost of $5,000 or more per unit.
    Excess property means property under the control of any DOE 
Headquarters or field office that, as determined by the head thereof, is 
no longer required for its needs or the discharge of its 
responsibilities.
    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.
    Federally owned property means property in the possession of, or 
directly acquired by, the Government and subsequently made available to 
the recipient.
    Funding period means the period of time when Federal funding is 
available for obligation by the recipient.
    Incremental funding means a method of funding a grant or cooperative 
agreement where the funds initially obligated to the award are less than 
the total amount of the award, and DOE anticipates making additional 
obligations of funds when appropriated funds become available.
    Obligations means the amount 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 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 for 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:
    (1) Tangible, having physical existence (i.e., equipment and 
supplies); or
    (2) Intangible, having no physical existence, such as patents, 
copyrights, data, and software.
    Prior approval means written or electronic approval by an authorized 
official evidencing prior consent.

[[Page 154]]

    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. 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 Federal funds is not program income. Except as 
otherwise provided in 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.
    Property means real property and personal property (equipment, 
supplies, and intellectual property), unless otherwise stated.
    Real property means land, including land improvements, structures 
and appurtenances thereto, but excludes movable machinery and equipment.
    Small award means an award not exceeding the simplified acquisition 
threshold fixed at 41 U.S.C. 403(11) (currently $100,000).
    Small business concern means a small business as defined at section 
2 of Pub. L. 85-536 (16 U.S.C. 632) and the implementing regulations of 
the Administrator of the Small Business Administration. The criteria and 
size standards for small business concerns are contained in 13 CFR part 
121.
    Subaward means financial assistance in the form of money, or 
property in lieu of money, provided 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 the term does 
not include procurement of goods and services or any form of assistance 
which is not included in the definition of ``award'' in this part.
    Subrecipient means the legal entity to which a subaward is made and 
which is accountable to the recipient for the use of the funds or 
property provided.
    Supplies means tangible, expendable personal property that is 
charged directly to the award and that has a useful life of less than 
one year or an acquisition cost of less than $5,000 per unit.
    Suspension means an action by DOE that temporarily withdraws Federal 
sponsorship under an award, pending corrective action by the recipient 
or pending a decision to terminate the award by DOE. Suspension of an 
award is a separate action from suspension of a recipient under 10 CFR 
part 1036.
    Termination means the cancellation of an award, in whole or in part, 
under an agreement at any time prior to either:
    (1) The date on which all work under an award is completed; or
    (2) The date on which Federal sponsorship ends, as provided in the 
award document or any supplement or amendment thereto.
    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.
    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.



Sec. 600.303  Deviations.

    (a) Individual deviations. Individual deviations affecting only one 
award are subject to the procedures stated in 10 CFR 600.4
    (b) Class deviations. Class deviations affecting more than one 
financial assistance transaction are subject to the procedures states in 
10 CFR 600.4.

[[Page 155]]



Sec. 600.304  Special award conditions.

    (a) Contracting officers may impose additional requirements as 
needed, over and above those provided in this subpart, if an applicant 
or recipient:
    (1) Has a history of poor performance;
    (2) Is not financially stable;
    (3) Has a management system that does not meet the standards 
prescribed in this subpart;
    (4) Has not conformed to the terms and conditions of a previous 
award; or
    (5) Is not otherwise responsible.
    (b) Before imposing additional requirements, DOE must notify the 
applicant or recipient in writing as to:
    (1) The nature of the additional requirements;
    (2) The reason why the additional requirements are being imposed;
    (3) The nature of the corrective action needed;
    (4) The time allowed for completing the corrective actions; and
    (5) The method for requesting reconsideration of the additional 
requirements imposed.
    (c) The contracting officer must remove any special conditions if 
the circumstances that prompted them have been corrected.



Sec. 600.305  Debarment and suspension.

    Recipients must comply with the nonprocurement debarment and 
suspension common rule implemented in 2 CFR 180 and 901. 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.

[68 FR 50650, Aug. 21, 2003, as amended at 74 FR 44278, Aug. 28, 2009]



Sec. 600.306  Metric system of measurement.

    (a) The Metric Conversion Act of 1975, as amended by the Omnibus 
Trade and Competitiveness Act of 1988 (15 U.S.C. 205) and implemented by 
Executive Order 12770, states that:
    (1) The metric system is the preferred measurement system for U.S. 
trade and commerce.
    (2) The metric system of measurement will be used, to the extent 
economically feasible, in Federal agencies' procurements, grants, and 
other business-related activities.
    (3) Metric implementation is not required if such use is likely to 
cause significant inefficiencies or loss of markets to United States 
firms.
    (b) Recipients are encouraged to use the metric system to the 
maximum extent practicable in measurement-sensitive activities and in 
measurement-sensitive outputs resulting from DOE funded programs.

                         Post-Award Requirements

                    Financial and Program Management



Sec. 600.310  Purpose of financial and program management.

    Sections 600.311 through 600.318 prescribe standards for financial 
management systems; methods for making payments; and rules for cost 
sharing and matching, program income, revisions to budgets and program 
plans, audits, allowable costs, and fee and profit.



Sec. 600.311  Standards for financial management systems.

    (a) Recipients are encouraged to use existing financial management 
systems to the extent that the systems comply with Generally Accepted 
Accounting Principles (GAAP) and the minimum standards in this section. 
At a minimum, a recipient's financial management system must provide:
    (1) Effective control of all funds. Control systems must be adequate 
to ensure that costs charged to Federal funds and those counted as the 
recipient's cost share or match are consistent with requirements for 
cost reasonableness, allowability, and allocability in the applicable 
cost principles (see Sec. 600.317) and in the terms and conditions of 
the award.
    (2) Accurate, current and complete records that document, for each 
project funded wholly or in part with Federal funds, the source and 
application of the Federal funds and the recipient's required cost share 
or match. These records must:
    (i) Contain information about receipts, authorizations, assets, 
expenditures, program income, and interest.
    (ii) Be adequate to make comparisons of outlays with amounts 
budgeted for

[[Page 156]]

each award (as required for programmatic and financial reporting under 
Sec. 600.341). Where appropriate, financial information should be 
related to performance and unit cost data.
    (3) To the extent that advance payments are authorized under Sec. 
600.312, procedures that minimize the time elapsing between the transfer 
of funds to the recipient from the Government and the recipient's 
disbursement of the funds for program purposes.
    (4) A system to support charges to Federal awards for salaries and 
wages, whether treated as direct or indirect costs. If employees work on 
multiple activities or cost objectives, a distribution of their salaries 
and wages must be supported by personnel activity reports which:
    (i) Reflect an after the fact distribution of the actual activity of 
each employee.
    (ii) Account for the total activity for which each employee is 
compensated.
    (iii) Are prepared at least monthly, and coincide with one or more 
pay periods.
    (b) If the Federal Government guarantees or insures the repayment of 
money borrowed by the recipient, DOE, at its 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.
    (c) DOE may require adequate fidelity bond coverage if the recipient 
lacks sufficient coverage to protect the Federal Government's interest.
    (d) If bonds are required in the situations described in paragraphs 
(b) and (c) of this section, the bonds must 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.''



Sec. 600.312  Payment.

    (a) Methods available. Payment methods for awards with for-profit 
organizations are:
    (1) Reimbursement. Under this method, the recipient requests 
reimbursement for costs incurred during a particular time period. In 
cases where the recipient submits requests for payment to the 
contracting officer, the DOE payment office reimburses the recipient by 
electronic funds transfer after approval of the request by the 
designated contracting officer.
    (2) Advance payments. Under this method, DOE makes a payment to a 
recipient based upon projections of the recipient's cash needs. The 
payment generally is made upon the recipient's request, although 
predetermined payment schedules may be used when the timing of the 
recipient's needs to disburse funds can be predicted in advance with 
sufficient accuracy to ensure compliance with paragraph (b)(2)(iii) of 
this section.
    (b) Selecting a method. (1) The preferred payment method is the 
reimbursement method, as described in paragraph (a)(1) of this section.
    (2) Advance payments, as described in paragraph (a)(2) of this 
section, may be used in exceptional circumstances, subject to the 
following conditions:
    (i) The contracting officer, in consultation with the program 
official, determines in writing that advance payments are necessary or 
will materially contribute to the probability of success of the project 
contemplated under the award (e.g., as startup funds for a project 
performed by a newly formed company).
    (ii) Cash advances must be limited to the minimum amounts needed to 
carry out the program.
    (iii) Recipients and DOE must maintain procedures to ensure that the 
timing of cash advances is as close as is administratively feasible to 
the recipients' disbursements of the funds for program purposes, 
including direct program or project costs and the proportionate share of 
any allowable indirect costs.
    (iv) Recipients must maintain advance payments of Federal funds in 
interest-bearing accounts, and remit annually the interest earned to the 
contracting officer for return to the Department of Treasury's 
miscellaneous receipts account, unless one of the following applies:
    (A) The recipient receives less than $120,000 in Federal awards per 
year.

[[Page 157]]

    (B) The best reasonably available interest bearing account would not 
be expected to earn interest in excess of $250 per year on Federal cash 
balances.
    (C) The depository would require an average or minimum balance so 
high that establishing an interest bearing account would not be 
feasible, given the expected Federal and non-Federal cash resources.
    (c) Frequency of payments. For either reimbursements or advance 
payments, recipients may submit requests for payment monthly, or more 
often if authorized by the contracting officer.
    (d) Forms for requesting payment. DOE may authorize recipients to 
use the SF-270, ``Request for Advance or Reimbursement;'' the SF-271, 
``Outlay Report and Request for Reimbursement for Construction 
Programs;'' or prescribe other forms or formats as necessary.
    (e) Timeliness of payments. Payments normally will be made within 30 
calendar days of the receipt of a recipient's request for reimbursement 
or advance by the office designated to receive the request, unless the 
billing is improper.
    (f) Precedence of other available funds. Recipients must disburse 
funds available from program income, rebates, refunds, contract 
settlements, audit recoveries, credits, discounts, and interest earned 
on such funds before requesting additional cash payments.
    (g) Withholding of payments. Unless otherwise required by statute, 
contracting officers may not withhold payments for proper charges made 
by recipients during the project period for reasons other than the 
following:
    (1) A recipient failed to comply with project objectives, the terms 
and conditions of the award, or Federal reporting requirements, in which 
case the contracting officer may suspend payments in accordance with 
Sec. 600.352.
    (2) The recipient is delinquent on a debt to the United States (see 
definitions of ``debt'' and ``delinquent debt'' in 32 CFR 22.105). In 
that case, the contracting officer may, upon reasonable notice, withhold 
payments to the recipient until the debt owed is resolved.



Sec. 600.313  Cost sharing or matching.

    (a) Acceptable contributions. All contributions, including cash 
contributions and third party in-kind contributions, must be accepted as 
part of the recipient's cost sharing or matching if such contributions 
meet all of the following criteria:
    (1) They are verifiable from the recipient's records.
    (2) They are not included as contributions for any other federally-
assisted project or program.
    (3) They are necessary and reasonable for proper and efficient 
accomplishment of project or program objectives.
    (4) They are allowable under Sec. 600.317.
    (5) They are not paid by the Federal Government under another award 
unless authorized by Federal statute to be used for cost sharing or 
matching.
    (6) They are provided for in the approved budget.
    (7) They conform to other provisions of this part, as applicable.
    (b) Valuing and documenting contributions--(1) Valuing recipient's 
property or services of recipient's employees. Values are established in 
accordance with the applicable cost principles in Sec. 600.317, which 
means that amounts chargeable to the project are determined on the basis 
of costs incurred. For real property or equipment used on the project, 
the cost principles authorize depreciation or use charges. The full 
value of the item may be applied when the item will be consumed in the 
performance of the award or fully depreciated by the end of the award. 
In cases where the full value of a donated capital asset is to be 
applied as cost sharing or matching, that full value must be the lesser 
or the following:
    (i) The certified value of the remaining life of the property 
recorded in the recipient's accounting records at the time of donation; 
or
    (ii) The current fair market value. If there is sufficient 
justification, the contracting officer 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. The 
contracting officer may accept the use of any reasonable basis for 
determining the fair market value of the property.

[[Page 158]]

    (2) Valuing services of others' employees. If an employer other than 
the recipient furnishes the services of an employee, those services are 
valued at the employee's regular rate of pay plus an amount of fringe 
benefits and overhead (at an overhead rate appropriate for the location 
where the services are performed), provided these services are in the 
same skill for which the employee is normally paid.
    (3) Valuing volunteer services. 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 must be consistent with those paid 
for similar work in the recipient's organization. In those markets in 
which the required skills are not found in the recipient organization, 
rates must 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.
    (4) Valuing property donated by third parties. (i) Donated supplies 
may include such items as office supplies or laboratory supplies. Value 
assessed to donated supplies included in the cost sharing or matching 
share must be reasonable and must not exceed the fair market value of 
the property at the time of the donation.
    (ii) Normally only depreciation or use charges for equipment and 
buildings may be applied. However, the fair rental charges for land and 
the full value of equipment or other capital assets may be allowed, when 
they will be consumed in the performance of the award or fully 
depreciated by the end of the award, provided that the contracting 
officer has approved the charges. When use charges are applied, values 
must be determined in accordance with the usual accounting policies of 
the recipient, with the following qualifications:
    (A) The value of donated space must 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.
    (B) The value of loaned equipment must not exceed its fair rental 
value.
    (5) Documentation. The following requirements pertain to the 
recipient's supporting records for in-kind contributions from third 
parties:
    (i) Volunteer services must be documented and, to the extent 
feasible, supported by the same methods used by the recipient for its 
own employees.
    (ii) The basis for determining the valuation for personal services 
and property must be documented.



Sec. 600.314  Program income.

    (a) DOE must apply the standards in this section to the disposition 
of program income from projects financed in whole or in part with 
Federal funds.
    (b) Unless program regulations or the terms and conditions of the 
award provide otherwise, recipients, without any further accounting to 
DOE, may retain program income earned:
    (1) From license fees and royalties for copyrighted material, 
patents, patent applications, trademarks, and inventions produced under 
an award.
    (2) After the end of the project period.
    (c) Unless program regulations or the terms and conditions of the 
award provide otherwise, costs incident to the generation of program 
income for which there is some obligation to the Government may be 
deducted from gross income to determine program income, provided these 
costs have not been charged to the award.
    (d) Other than any program income excluded pursuant to paragraph (b) 
and (c) of this section, program income earned during the project period 
must be retained by the recipient and used in one or more of the 
following ways, as specified in program regulations or the terms and 
conditions of the award:
    (1) Added to funds committed to the project by DOE and recipient and 
used to further eligible project or program objectives.
    (2) Used to finance the non-Federal share of the project or program.
    (3) Deducted from the total project or program allowable cost in 
determining the net allowable costs on which the Federal share of costs 
is based.

[[Page 159]]

    (e) If the program regulation or terms and conditions of an award 
authorize the disposition of program income as described in paragraph 
(d)(1) or (d)(2) of this section, and stipulate a limit on the amounts 
that may be used in those ways, program income in excess of the 
stipulated limits must be used in accordance with paragraph (d)(3) of 
this section.
    (f) In the event that the program regulation or terms and conditions 
of the award do not specify how program income is to be used, paragraph 
(d)(3) of this section applies automatically to all projects or programs 
except research. For awards that support basic or applied research, 
paragraph (d)(1) of this section applies automatically unless the terms 
and conditions specify another alternative or the recipient is subject 
to special award conditions, as indicated in Sec. 600.304.
    (g) Proceeds from the sale of property that is acquired, rather than 
fabricated, under an award are not program income and must be handled in 
accordance with the requirements of Sec. Sec. 600.320 through 600.325 
of this part.



Sec. 600.315  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 shares when there are cost sharing requirements. 
The budget plan must be related to performance for program evaluation 
purposes, whenever appropriate.
    (b) The recipient must obtain the contracting officer's prior 
approval if a revision is necessary for either of the following two 
reasons:
    (1) A 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) A need for additional Federal funding.
    (c) The recipient must obtain the contracting officer's prior 
approval if a revision is necessary for any of the following six 
reasons, unless the requirement for prior approval is specifically 
waived in the program regulation or terms and conditions of the award:
    (1) A change in the approved project director, principal 
investigator, or other key person specified in the application or award 
document.
    (2) 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.
    (3) The inclusion of any additional costs that require prior 
approval in accordance with the applicable costs principles for Federal 
funds and the requirements applicable to the recipient's cost share or 
match, as provided in Sec. 600.313 and Sec. 600.317, respectively.
    (4) The inclusion of pre-award costs for periods greater than the 90 
calendar days immediately preceding the effective date of the award.
    (5) A ``no-cost'' extension of the project period.
    (6) Any subaward, transfer, or contracting out of substantive 
program performance under an award, unless described in the application 
and funded in the approved awards.
    (d) If specifically required in the program regulation or the terms 
and conditions of the award, the recipient must obtain the contracting 
officer's prior approval for the following revisions:
    (1) The transfer of funds among direct cost categories, functions, 
and activities for awards in which the Federal 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.
    (2) For awards that provide support for both construction and 
nonconstruction work, any fund or budget transfers between the two types 
of work supported.
    (e) Within 30 calendar days from the date of receipt of the 
recipient's request for budget revisions, the contracting officer must 
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, the contracting officer must inform the 
recipient in writing of the date when the recipient may expect the 
decision.

[[Page 160]]



Sec. 600.316  Audits.

    (a) Any recipient that expends $500,000 or more in a year under 
Federal awards must have an audit made for that year by an independent 
auditor, in accordance with paragraph (b) of this section. If a 
recipient is currently performing under a Federal award that requires an 
audit by its Federal cognizant agency, that auditor must perform the 
independent audit. The audit generally should be made a part of the 
regularly scheduled, annual audit of the recipient's financial 
statements. However, it may be more economical in some cases to have 
Federal awards separately audited, and a recipient may elect to do so, 
unless that option is precluded by award terms and conditions or by 
Federal laws or regulations applicable to the program(s) under which the 
awards were made.
    (b) The auditor must determine and report on whether:
    (1) The recipient has an internal control structure that provides 
reasonable assurance that it is managing Federal awards in compliance 
with Federal laws and regulations and the terms and conditions of the 
awards.
    (2) Based on a sampling of Federal award expenditures, the recipient 
has complied with laws, regulations, and award terms that may have a 
direct and material effect on Federal awards.
    (c) The recipient must make the auditor's report available to the 
DOE contracting officers whose awards are affected.
    (d) Before requesting an audit in addition to the independent audit, 
the contracting officer must:
    (1) Consider whether the independent audit satisfies his or her 
requirements;
    (2) Limit the scope of such additional audit to areas not adequately 
addressed by the independent audit; and
    (3) If DOE is not the Federal agency with the predominant fiscal 
interest in the recipient, coordinate with the agency that has the 
predominant fiscal interest.
    (e) The recipient and its Federal cognizant agency for audit should 
develop a coordinated audit approach to minimize duplication of audit 
work.
    (f) Audit costs (including a reasonable allocation of the costs of 
the audit of the recipient's financial statement, based on the relative 
benefit to the Government and the recipient) are allowable costs of DOE 
awards.



Sec. 600.317  Allowable costs.

    (a) DOE determines allowability of costs in accordance with the cost 
principles applicable to the type of entity incurring the cost as 
follows:
    (1) For-profit organizations. Allowability of costs incurred by for-
profit organizations and those nonprofit organizations listed in 
Attachment C to OMB Circular A-122 is determined in accordance with the 
for-profit costs principles in 48 CFR part 31 in the Federal Acquisition 
Regulation, except that patent prosecution costs are not allowable 
unless specifically authorized in the award document.
    (2) Other types of organizations. Allowability of costs incurred by 
other types of organizations that may be subrecipients under a prime 
award to a for-profit organization is determined as follows:
    (i) Institutions of higher education. Allowability is determined in 
accordance with OMB Circular A-21, ``Cost Principles for Educational 
Institutions.''
    (ii) Other nonprofit organizations. Allowability is determined in 
accordance with OMB Circular A-122, ``Cost Principles for Nonprofit 
Organizations.''
    (iii) Hospitals. Allowability is determined in accordance with the 
provisions of 45 CFR part 74, Appendix E, ``Principles for Determining 
Costs Applicable to Research and Development Under Grants and Contracts 
with Hospitals.''
    (iv) Governmental organizations. Allowability for State, local, or 
federally recognized Indian tribal government is determined in 
accordance with OMB Circular A-87, ``Cost Principles for State and Local 
Governments.''
    (b) Pre-award costs. If a recipient incurs pre-award costs without 
the prior approval of the contracting officer, DOE may pay those costs 
incurred within the ninety calendar day period immediately preceding the 
effective date of the award, if such costs are:
    (1) Necessary for the effective and economical conduct of the 
project;
    (2) Otherwise allowable in accordance with the applicable cost 
principles; and

[[Page 161]]

    (3) Less than the total value of the award.



Sec. 600.318  Fee and profit.

    (a) Grants and cooperative agreements may not provide for the 
payment of fee or profit to recipients or subrecipients, except for 
awards made pursuant to the Small Business Innovation Research or Small 
Business Technology Transfer Research programs.
    (b) A recipient or subrecipient may pay a fee or profit to a 
contractor providing goods or services under a contract.

                           Property Standards



Sec. 600.320  Purpose of property standards.

    Sections 600.321 through 600.325 set forth uniform standards for 
management, use, and disposition of property. DOE encourages recipients 
to use existing property-management systems to the extent that the 
systems meet these minimum requirements.



Sec. 600.321  Real property and equipment.

    (a) Prior approvals for acquisition with Federal funds. Recipients 
may purchase real property or equipment in whole or in part with Federal 
funds under an award only with the prior approval of the contracting 
officer.
    (b) Title. Unless a statute specifically authorizes and the award 
specifies that title to property vests unconditionally in the recipient, 
title to real property or equipment vests in the recipient subject to 
the conditions that the recipient:
    (1) Use the real property or equipment for the authorized purposes 
of the project until funding for the project ceases, or until the 
property is no longer needed for the purposes of the project;
    (2) Not encumber the property without approval of the contracting 
officer; and
    (3) Use and dispose of the property in accordance with paragraphs 
(d) and (e) of this section.
    (c) Federal interest in real property or equipment offered as cost-
share. A recipient may offer the full value of real property or 
equipment that is purchased with recipient's funds or that is donated by 
a third party to meet a portion of any required cost sharing or 
matching, subject to the requirements in Sec. 600.313. If a resulting 
award includes such property as a portion of the recipient's cost share, 
the Government has a financial interest in the property, (i.e., a share 
of the property value equal to the Federal participation in the 
project). The property is considered as if it had been acquired in part 
with Federal funds, and is subject to the provisions of paragraphs 
(b)(1), (b)(2), and (b)(3) of this section and to the provisions of 
Sec. 600.323.
    (d) Insurance. Recipients must, at a minimum, provide the equivalent 
insurance coverage for real property and equipment acquired with DOE 
funds as provided to property owned by the recipient.
    (e) Use. If real property or equipment is acquired in whole or in 
part with Federal funds under an award and the award does not specify 
that title vests unconditionally in the recipient, the real property or 
equipment is subject to the following:
    (1) During the time that the real property or equipment is used on 
the project or program for which it was acquired, the recipient must 
make it available for use on other projects or programs, if such other 
use does not interfere with the work on the project or program for which 
the real property or equipment was originally acquired. Use of the real 
property or equipment on other projects is subject to the following 
order of priority:
    (i) Activities sponsored by DOE grants, cooperative agreements, or 
other assistance awards;
    (ii) Activities sponsored by other Federal agencies' grants, 
cooperative agreements, or other assistance awards;
    (iii) Activities under Federal procurement contracts or activities 
not sponsored by any Federal agency. If so used, use charges must be 
assessed to those activities. For real property or equipment, the use 
charges must be at rates equivalent to those for which comparable real 
property or equipment may be leased.
    (2) After Federal funding for the project ceases or if the real 
property or

[[Page 162]]

equipment is no longer needed for the purposes of the project, the 
recipient may use the real property or equipment for other projects, 
insofar as:
    (i) There are Federally sponsored projects for which the real 
property or equipment may be used. If the only use for the real property 
or equipment is for projects that have no Federal sponsorship, the 
receipt must proceed with disposition of the real property or equipment, 
in accordance with paragraph (f) of this section.
    (ii) The recipient obtains written approval from the contracting 
officer to do so. The contracting officer must ensure that there is a 
formal change of accountability for the real property or equipment to a 
currently funded, Federal award.
    (iii) The recipient's use of the real property or equipment for 
other projects is in the same order of priority as described in 
paragraph (e)(1) of this section.
    (f) Disposition. (1) If an item of real property or equipment is no 
longer needed for Federally sponsored projects, the recipient has the 
following options:
    (i) If the property is equipment with a current per unit fair market 
value of less than $5,000, it may be retained, sold, or otherwise 
disposed of with no further obligation to DOE.
    (ii) If the property that is no longer needed is equipment (rather 
than real property), the recipient may wish to replace it with an item 
that is needed currently for the project by trading in or selling to 
offset the costs of the replacement equipment, subject to the approval 
of the contracting officer.
    (iii) The recipient may elect to retain title, without further 
obligation to the Federal Government, by compensating the Federal 
Government for that percentage of the current fair market value of the 
real property or equipment that is attributable to the Federal 
participation in the project.
    (iv) If the recipient does not elect to retain title to real 
property or equipment or does not request approval to use equipment as 
trade-in or offset for replacement equipment, the recipient must request 
disposition instructions from the responsible agency.
    (2) If a recipient requests disposition instructions, the 
contracting officer must:
    (i) For equipment (but not real property), consult with the DOE 
Project Director to determine whether the condition and nature of the 
equipment warrant excess screening within DOE. If screening is 
warranted, the equipment will be made available for reutilization within 
DOE through the Energy Asset Disposal System (EADS). If no DOE 
requirement is identified within a 30-day period, EADS automatically 
reports the availability of the equipment to the General Services 
Administration, to determine whether a requirement for the equipment 
exists in other Federal agencies.
    (ii) For either real property or equipment, issue instructions to 
the recipient for disposition of the property no later than 120 calendar 
days after the recipient's request. The contracting officer's options 
for disposition are to direct the recipient to:
    (A) Transfer title to the real property or equipment to the Federal 
Government or to an eligible third party provided that, in such cases, 
the recipient is entitled to compensation for its attributable 
percentage of the current fair market value of the real property or 
equipment, plus any reasonable shipping or interim storage costs 
incurred.
    (B) Sell the real property or equipment and pay the Federal 
Government for that percentage of the current fair market value of the 
property that is attributable to the Federal participation in the 
project (after deducting actual and reasonable selling and fix-up 
expenses, if any, from the sale proceeds). If the recipient is 
authorized or required to sell the real property or equipment, the 
recipient must use competitive procedures that result in the highest 
practicable return.
    (3) If the responsible agency fails to issue disposition 
instructions within 120 calendar days of the recipient's request, the 
recipient must dispose of the real property or equipment through the 
option described in paragraph (f)(2)(ii)(B) of this section.

[[Page 163]]



Sec. 600.322  Federally owned property.

    (a) Annual inventory. The recipient must submit annually to the 
contracting officer an inventory listing of all Federally owned property 
in its custody, i.e., property furnished by the Federal Government, 
rather than acquired by the recipient with Federal funds under the 
award.
    (b) Insurance. The recipient may not insure Federally owned property 
unless required by the terms and conditions of the award.
    (c) Use on other activities. (1) Use of federally owned property on 
other activities is permissible, if authorized by the contracting 
officer responsible for administering the award to which the property 
currently is charged.
    (2) Use on other activities must be in the following order of 
priority:
    (i) Activities sponsored by DOE grants, cooperative agreements, or 
other assistance awards;
    (ii) Activities sponsored by other Federal agencies' grants, 
cooperative agreements, or other assistance awards;
    (iii) Activities under Federal procurement contracts or activities 
not sponsored by any Federal agency. If so used, use charges must be 
assessed to those activities. For real property or equipment, the use 
charges must be at rates equivalent to those for which comparable real 
property or equipment may be leased.
    (d) Disposition or property. Upon completion of the award, the 
recipient must submit to the contracting officer a final inventory of 
Federal owned property. DOE may:
    (1) Use the property to meet another Federal Government need (e.g., 
by transferring accountability for the property to another Federal award 
to the same recipient, or by directing the recipient to transfer the 
property to a Federal agency that needs the property or to another 
recipient with a currently funded award).
    (2) Declare the property to be excess property and either:
    (i) Report the property to the General Services Administration 
through EADS, in accordance with the Federal Property and Administrative 
Services Act of 1949 (40 U.S.C. 483(b)(2)), as implemented by General 
Services Administration regulations at 41 CFR 101-47.202; or
    (ii) Dispose of the property by alternative methods, if there is 
authority under law, such as 15 U.S.C. 3710(i).



Sec. 600.323  Property management system.

    The recipient's property management system must include the 
following:
    (a) Property records must be maintained, to include the following 
information for property that is Federally owned, equipment that is 
acquired in whole or in part with Federal funds, or property or 
equipment that is used as cost sharing or matching:
    (1) A description of the property.
    (2) Manufacturer's serial number, model number, Federal stock 
number, national stock number, or any other identification number.
    (3) Source of the property, including the award number.
    (4) Whether title vests in the recipient or the Federal Government.
    (5) Acquisition date (or date received, if the property was 
furnished by the Federal Government) and cost.
    (6) Information from which one can calculate the percentage of 
Federal participation in the cost of the property (not applicable to 
property furnished by the Federal Government).
    (7) The location and condition of the property and the date the 
information was reported.
    (8) Ultimate disposition data, including data of disposal and sales 
price or the method used to determine current fair market value where a 
recipient compensates the Federal Government for its share.
    (b) Federal owned equipment must be marked to indicate Federal 
ownership.
    (c) A physical inventory must be taken and the results reconciled 
with the property records at least once every two years. Any differences 
between quantities determined by the physical inspection and those shown 
in the accounting records must be investigated to determine the causes 
of the difference. The recipient must, in connection with the inventory, 
verify the existence, current utilization, and continued need for the 
property.
    (d) A control system must be in effect to insure adequate safeguards 
to

[[Page 164]]

prevent loss, damage, or theft of the property. Any loss, damage, or 
theft of property must be investigated and fully documented. If the 
property is owned by the Federal Government, the recipient must promptly 
notify the Federal agency responsible for administering the property.
    (e) Adequate maintenance procedures must be implemented to keep the 
property in good condition.



Sec. 600.324  Supplies.

    (a) Title vests in the recipient upon acquisition of supplies 
acquired with Federal funds under an award.
    (b) Upon termination or completion of the project or program, the 
recipient may retain any unused supplies. If the inventory of unused 
supplies exceeds $5,000 in total aggregate value and the items are not 
needed for any other Federally sponsored project or program, the 
recipient may retain the items for use on non-Federal sponsored 
activities or sell them, but must, in either case, compensate the 
Federal Government for its share.



Sec. 600.325  Intellectual property.

    (a) Scope. This section sets forth the policies with regard to 
disposition of rights to data and to inventions conceived or first 
actually reduced to practice in the course of, or under, a grant or 
cooperative agreement with DOE.
    (b) Patents right--small business concerns. In accordance with 35 
U.S.C. 202, if the recipient is a small business concern and receives a 
grant, cooperative agreement, subaward, or contract for research, 
developmental, or demonstration activities, then, unless there are 
``exceptional circumstances'' as described in 35 U.S.C. 202(e), the 
award must contain the standard clause in appendix A to this subpart, 
entitled ``Patents Rights (Small Business Firms and Nonprofit 
Organizations'' which provides to the recipient the right to elect 
ownership of inventions made under the award.
    (c) Patent rights--other than small business concerns, e.g., large 
businesses--(1) No Patent Waiver. Except as provided by paragraph (c)(2) 
of this section, if the recipient is a for-profit organization other 
than a small business concern, as defined in 35 U.S.C. 201(h) and 
receives an award or a subaward for research, development, and 
demonstration activities, then, pursuant to statute, the award must 
contain the standard clause in appendix A to this subpart, entitled 
``Patent Rights (Large Business Firms)--No Waiver'' which provides that 
DOE owns the patent rights to inventions made under the award.
    (2) Patent Waiver Granted. Paragraph (c)(1) of this section does not 
apply if:
    (i) DOE grants a class waiver for a particular program under 10 CFR 
part 784;
    (ii) The applicant requests and receives an advance patent waiver 
under 10 CFR part 784; or
    (iii) A subaward is covered by a waiver granted under the prime 
award.
    (3) Special Provision. Normally, an award will not include a 
background patent and data provision. However, under special 
circumstances, in order to provide heightened assurance of 
commercialization, a provision providing for a right to require 
licensing of third parties to background inventions, limited rights data 
and/or restricted computer software, may be included. Inclusion of a 
background patent and/or a data provision to assure commercialization 
will be done only with the written concurrence of the DOE program 
official setting forth the need for such assurance. An award may include 
the right to license the Government and third party contractors for 
special Government purposes when future availability of the technology 
would also benefit the government, e.g., clean-up of DOE facilities. The 
scope of any such background patent and/or data licensing provision is 
subject to negotiation.
    (d) Rights in data--general rule. (1) Subject to paragraphs (d)(2) 
and (3) of this section, and except as otherwise provided by paragraphs 
(e) and (f) of this section or other law, any award under this subpart 
must contain the standard clause in appendix A to this subpart, entitled 
``Rights in Data--General''.
    (2) Normally, an award will not require the delivery of limited 
rights data or restricted computer software. However, if the contracting 
officer, in

[[Page 165]]

consultation with DOE patent counsel and the DOE program official, 
determines that delivery of limited rights data or restricted computer 
software is necessary, the contracting officer, after negotiation with 
the applicant, may insert in the award the standard clause as modified 
by Alternates I and/or II set forth in appendix A to this subpart.
    (3) If software is specified for delivery to DOE, or if other 
special circumstances exist, e.g., DOE specifying ``open-source'' 
treatment of software, then the contracting officer, after negotiation 
with the recipient, may include in the award special provisions 
requiring the recipient to obtain written approval of the contracting 
officer prior to asserting copyright in the software, modifying the 
retained Government license, and/or otherwise altering the copyright 
provisions.
    (e) Rights in data--programs covered under special protected data 
statutes. (1) If a statute, other than those providing for the Small 
Business Innovation Research (SBIR) and Small Business Technology 
Transfer Research (STTR) programs, provides for a period of time, 
typically up to five years, during which data produced under an award 
for research, development, and demonstration may be protected from 
public disclosure, then the contracting officer must insert in the award 
the standard clause in appendix A to this subpart entitled ``Rights in 
Data--Programs Covered Under Special Protected Data Statutes'' or, as 
determined in consultation with DOE patent counsel and the DOE program 
official, a modified version of such clause which may identify data or 
categories of data that the recipient must make available to the public.
    (2) An award under paragraph (e)(1) of this section is subject to 
the provisions of paragraphs (d)(2) and (3) of this section.
    (f) Rights in data--SBIR/STTR programs. (1) If an applicant receives 
an award under the SBIR or STTR program, then the contracting officer 
must insert in the award the standard data clause in the General Terms 
and Conditions for SBIR Grants, entitled ``Rights in Data--SBIR 
Program''.
    (2) The data rights provisions for SBIR/STTR grants are contained in 
the award terms and conditions for SBIR grants located at http://e-
center.doe.gov on the Professionals Homepage under Financial Assistance, 
Regulations and Guidance.
    (g) Authorization and consent. (1) Work performed by a recipient 
under a grant is not subject to authorization and consent to the use of 
a patented invention, and the Government assumes no liability for patent 
infringement by the recipient under 28 U.S.C. 1498.
    (2) Work performed by a recipient under a cooperative agreement is 
subject to authorization and consent to the use of a patented invention 
consistent with the principles set forth in 48 CFR 27.201-1.
    (3) The contracting officer, in consultation with patent counsel, 
may also include clauses in the cooperative agreement addressing other 
patent matters related to authorization and consent, such as patent 
indemnification of the Government by recipient and notice and assistance 
regarding patent and copyright infringement. The policies and clauses 
for these other patent matters will be the same or consistent with those 
in 48 CFR part 927.

                          Procurement Standards



Sec. 600.330  Purpose of procurement standards.

    Section 600.331 sets forth requirements necessary to ensure:
    (a) Recipients' procurements that use Federal funds comply with 
applicable Federal statutes, regulations, and executive orders.
    (b) Proper stewardship of Federal funds used in recipients' 
procurements.



Sec. 600.331  Requirements.

    The following requirements pertain to recipients' procurements 
funded in whole or in part with Federal funds or with recipients' cost-
share or match:
    (a) Reasonable cost. Recipients' procurement procedures must use 
best commercial practices to ensure reasonable cost for procured goods 
and services. Recipients are encouraged to buy commercial items, if 
practicable.

[[Page 166]]

    (b) Pre-award review of certain procurements. If the contracting 
officer determines that there is a compelling need to perform a pre-
award review of a specific transaction and the terms of the award 
identify the specific transaction and provide for such a review, then 
the recipient must obtain the contracting officer's approval prior to 
awarding the transaction and must provide the contracting officer the 
following documents to review:
    (1) Request for proposals or invitation to bid, if any;
    (2) Cost estimate;
    (3) Proposal/bid;
    (4) Proposed award document; and
    (5) Summary of negotiations or justification for award.
    (c) Contract provisions. (1) Contracts in excess of the simplified 
acquisition threshold must 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.
    (2) All contracts in excess of the simplified acquisition threshold 
must contain suitable provisions for termination for default by the 
recipient and for termination due to circumstances beyond the control of 
the contractor.
    (3) All negotiated contracts in excess of the simplified acquisition 
threshold must include a provision permitting access of DOE, the 
Inspector General, the Comptroller General of the United States, or any 
of their duly authorized representatives, to any books, documents, 
papers, and records of the contractor that are directly pertinent to a 
specific programs, for the purpose of making audits, examinations, 
excerpts, transcriptions, and copies of such documents.
    (4) All contracts, including those for amounts less than the 
simplified acquisition threshold, awarded by recipients and their 
contractors must contain the procurement provisions of Appendix B to 
this subpart, as applicable.
    (d) Recipient responsibilities. 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. This includes 
disputes, claims, protests of award, source evaluation or other matters 
of a contractual nature. The recipient should refer matters concerning 
violations of statutes to such Federal, State or local authority as may 
have proper jurisdiction.

                           Reports and Records



Sec. 600.340  Purpose of reports and records.

    Sections 600.341 and 600.342 prescribe requirements for monitoring 
and reporting financial and program performance and for records 
retention.



Sec. 600.341  Monitoring and reporting program and financial performance.

    (a) The terms and conditions of the award prescribe the reporting 
requirements, the frequency, and the due dates for reports. At a 
minimum, requirements must include:
    (1) Periodic progress reports (at least annually, but no more 
frequently than quarterly) addressing both program status and business 
status, as follows:
    (i) The program portions of the reports must address progress toward 
achieving program performance goals and milestones, including current 
issues, problems, or developments.
    (ii) The business portions of the reports must provide summarized 
details on the status of resources (Federal funds and non-Federal cost 
sharing or matching), including an accounting of expenditures for the 
period covered by the report. The report should compare the resource 
status with any payment and expenditure schedules or plans provided in 
the original award, explain any major deviations from those schedules, 
and discuss actions that will be taken to address the deviations.
    (2) A final technical report if the award is for research and 
development.
    (b) If the contracting officer previously authorized advance 
payments, pursuant to Sec. 600.312(a)(2), he/she should consult with 
the DOE project director and consider whether program progress reported 
in the periodic progress report, in relation to reported expenditures, 
is sufficient to justify continued authorization of advance payments.

[[Page 167]]



Sec. 600.342  Retention and access requirements for records.

    (a) This section sets forth requirements for records retention and 
access to records for awards to recipients and subrecipients.
    (b) Financial records, supporting documents, statistical records, 
and all other records pertinent to an award must be retained for a 
period of three years from the date of submission of the final 
expenditure report. 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 must 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 must be retained for 3 years after final disposition.
    (3) If 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 allocation plans, and related 
records must be retained in accordance with the requirements specified 
in paragraph (g) of this section.
    (c) Copies of original records may be substituted for the original 
records if authorized by the contracting officer.
    (d) The contracting officer may request that recipients transfer 
certain records to DOE custody if he or she determines that the records 
possess long term retention value. However, in order to avoid duplicate 
recordkeeping, a contracting officer 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 must last as long as 
records are retained.
    (f) Unless required by statute, DOE must not place 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 would be kept confidential and would be exempt from disclosure 
pursuant to the Freedom of Information Act (5 U.S.C. 552) if the records 
belonged to DOE.
    (g) Indirect cost proposals, cost allocation plans, and other cost 
accounting documents (such as documents related to computer usage 
chargeback rates), along with their supporting records, must be retained 
for a 3-year period, as follows:
    (1) If the recipient or the subrecipient is required to submit an 
indirect-cost proposal, cost allocation plan, or other computation to 
the cognizant Federal agency for purposes of negotiating an indirect 
cost rate or other rates, the 3-year retention period starts on the date 
of the submission.
    (2) If the recipient or the subrecipient is not required to submit 
the documents or supporting records for negotiating an indirect cost 
rate or other rates, the 3-year retention period for the documents and 
records starts at the end of the fiscal year (or other accounting 
period) covered by the proposal, plan, or other computation.
    (h) If the information described in this section is maintained on a 
computer, recipients must retain the computer data on a reliable medium 
for the time periods prescribed. Recipients may transfer computer data 
in machine readable form from one reliable computer medium to another. 
Recipients' computer data retention and transfer procedures must 
maintain the integrity, reliability, and security of the original 
computer data. Recipients must also maintain an audit trail describing 
the data transfer. For the record retention time periods prescribed in 
this section, recipients must not destroy, discard, delete, or write 
over such computer data.

[[Page 168]]

                       Termination and Enforcement



Sec. 600.350  Purpose of termination and enforcement.

    Sections 600.351 through 600.353 set forth uniform procedures for 
suspension, termination, enforcement, and disputes.



Sec. 600.351  Termination.

    (a) Awards may be terminated in whole or in part only in accordance 
with one of the following:
    (1) By the contracting officer, if a recipient materially fails to 
comply with the terms and conditions of an award.
    (2) By the contracting officer with the consent of the recipient, in 
which case the two parties must 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 the contracting officer written 
notification setting forth the reasons for such termination, the 
effective date, and, in the case of partial termination, the portion to 
be terminated. The recipient must provide such notice at least 30 
calendar days prior to the effective date of the termination. However, 
if the contracting officer 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, he or she may terminate the 
award in its entirety.
    (b) If the recipient incurred allowable costs prior to the 
termination, the responsibilities of the recipient referred to in Sec. 
600.361(b), including those related to property, apply to the 
termination of the award, and provision must be made for continuing 
responsibilities of the recipient after termination, as appropriate.



Sec. 600.352  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, 
the contracting officer may, in addition to imposing any of the special 
conditions outlined in Sec. 600.304, take one or more of the following 
actions, as appropriate:
    (1) Temporarily withhold cash payments pending correction of the 
deficiency by the recipient or more severe enforcement action by the 
contracting officer.
    (2) Disallow (that is, deny both the 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) Apply other remedies that may be legally available.
    (b) Hearings and appeals. In taking an enforcement action, DOE must 
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 resulting from 
obligations incurred by the recipient during a suspension or after 
termination of an award are not allowable, unless the contracting 
officer expressly authorizes them in the notice of suspension or 
termination or subsequently authorizes such costs. Other recipient costs 
during suspension or after termination, which are necessary and not 
reasonably avoidable, are allowable if the costs:
    (1) 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; and
    (2) Would be allowable if the award expired normally at the end of 
the funding period.
    (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.



Sec. 600.353  Disputes and appeals.

    Consistent with 10 CFR 600.22 and part 1024, recipients have the 
right to appeal certain decisions by contracting officers.

[[Page 169]]

                      After-the-Award Requirements



Sec. 600.360  Purpose.

    Sections 600.361 through 600.363 contain procedures for closeout and 
for subsequent disallowances and adjustments.



Sec. 600.361  Closeout procedures.

    (a) Recipients must submit, within 90 calendar days after the date 
of completion of the award, all reports required by the terms and 
conditions of the award. DOE may approve extensions when requested by 
the recipient.
    (b) The following provisions must apply to the closeout:
    (1) Unless DOE authorizes an extension, a recipient must liquidate 
all obligations incurred under the award not later than 90 calendar days 
after the funding period or the date of completion of the award as 
specified in the terms and conditions of the award or in agency 
implementing instructions.
    (2) DOE must make prompt, final payments to a recipient for 
allowable reimbursable costs under the award being closed out.
    (3) The recipient must promptly refund any unobligated balances of 
cash that DOE has advanced or paid and that are not authorized to be 
retained by the recipient for use in other projects. OMB Circular A-129 
governs unreturned amounts that become delinquent debts.
    (4) When authorized by the terms and conditions of the award, the 
contracting officer must make a settlement for any upward or downward 
adjustments to the Federal share of costs after closeout reports are 
received.
    (5) The recipient must account for any real property and equipment 
acquired with Federal funds or received from the Federal Government in 
accordance with Sec. Sec. 600.321 through 600.325.
    (6) If a final audit is required and has not been performed prior to 
the closeout of an award, DOE retains the right to recover an 
appropriate amount after fully considering the recommendations on 
disallowed costs resulting from the final audit.



Sec. 600.362  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. 600.316.
    (4) Property management requirements in Sec. Sec. 600.321 through 
600.325.
    (5) Records retention requirements in Sec. 600.342.
    (b) After closeout of an award, the continuing responsibilities 
under an award may be modified or ended in whole or in part with the 
consent of the contracting officer and the recipient, provided property 
management requirements are considered and provisions made for the 
continuing responsibilities of the recipient, as appropriate.



Sec. 600.363  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 30 days after the demand for payment, DOE may reduce the 
debt in accordance with the procedures and techniques described in 10 
CFR part 1015 and OMB Circular A-129, including:
    (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 or regulation.
    (b) Except as otherwise provided by law, DOE may charge interest and 
administrative fees on an overdue debt in accordance with 31 CFR Chapter 
IX, parts 900-904, ``Federal Claims Collection Standards.''

                          Additional Provisions



Sec. 600.380  Purpose.

    The purpose of ``Additional Provisions'' is to provide alternative 
requirements for recipients otherwise

[[Page 170]]

covered by this subpart D, when they are performing under Small Business 
Innovation Research grants.



Sec. 600.381  Special provisions for Small Business Innovation Research Grants.

    (a) General. This section contains provisions applicable to the 
Small Business Innovation Reserach (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 review under 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 
any variation from the requirement that no more than one-third of Phase 
I work can be done by subcontractors 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. 600.312), 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 
contain a condition that requires 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 recipeint 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. 600.341;
    (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 fee or profit may be paid to SBIR recipients.



  Sec. Appendix A to Subpart D of Part 600--Patent and Data Provisions

1. Patent Rights (Small Business Firms and Nonprofit Organizations)
2. Patent Rights (Large Business Firms)--No Waiver
3. Rights in Data--General
4. Rights in Data--Programs Covered Under Special Protected Data 
Statutes

    Patent Rights (Small Business Firms and Nonprofit Organizations)

                             (a) Definitions

    Invention means any invention or discovery which is or may be 
patentable or otherwise protectable under title 35 of the United States 
Code, or any novel variety of plant which is or may be protected under 
the Plant Variety Protection Act (7 U.S.C. 2321 et seq.).
    Made when used in relation to any invention means the conception or 
first actual reduction to practice of such invention.
    Nonprofit organization means a university or other institution of 
higher education or an organization of the type described in section 
501(c)(3) of the Internal Revenue Code of 1954 (26 U.S.C. 501(c)) and 
exempt from taxation under section 501(a) of the Internal Revenue Code 
(26 U.S.C. 501(a)) or any nonprofit scientific or educational 
organization qualified under a State nonprofit organization statute.
    Practical application means to manufacture in the case of a 
composition or product, to practice in the case of a process or method, 
or to operate in the case of a machine or system; and, in each case, 
under such conditions as to establish that the invention is being

[[Page 171]]

utilized and that its benefits are to the extent permitted by law or 
Government regulations available to the public on reasonable terms.
    Small business firm means a small business concern as defined at 
section 2 of Public Law 85-536 (16 U.S.C. 632) and implementing 
regulations of the Administrator of the Small Business Administration. 
For the purpose of this clause, the size standards for small business 
concerns involved in Government procurement and subcontracting at 13 CFR 
121.3 through 121.8 and 13 CFR 121.3 through 121.12, respectively, will 
be used.
    Subject invention means any invention of the Recipient conceived or 
first actually reduced to practice in the performance of work under this 
award, provided that in the case of a variety of plant, the date of 
determination (as defined in section 41(d) of the Plant Variety 
Protection Act, 7 U.S.C. 2401(d) must also occur during the period of 
award performance.

                   (b) Allocation of Principal Rights

    The Recipient may retain the entire right, title, and interest 
throughout the world to each subject invention subject to the provisions 
of this Patent Rights clause and 35 U.S.C. 203. With respect to any 
subject invention in which the Recipient retains title, the Federal 
Government shall have a non-exclusive, nontransferable, irrevocable, 
paid-up license to practice or have practiced for or on behalf of the 
U.S. the subject invention throughout the world.

    (c) Invention Disclosure, Election of Title and Filing of Patent 
                        Applications by Recipient

    (1) The Recipient will disclose each subject invention to DOE within 
two months after the inventor discloses it in writing to Recipient 
personnel responsible for the administration of patent matters. The 
disclosure to DOE shall be in the form of a written report and shall 
identify the award under which the invention was made and the 
inventor(s). It shall be sufficiently complete in technical detail to 
convey a clear understanding to the extent known at the time of 
disclosure, of the nature, purpose, operation, and the physical, 
chemical, biological or electrical characteristics of the invention. The 
disclosure shall also identify any publication, on sale or public use of 
the invention and whether a manuscript describing the invention has been 
submitted for publication and, if so, whether it has been accepted for 
publication at the time of disclosure. In addition, after disclosure to 
DOE, the Recipient will promptly notify DOE of the acceptance of any 
manuscript describing the invention for publication or of any on sale or 
public use planned by the Recipient.
    (2) The Recipient will elect in writing whether or not to retain 
title to any such invention by notifying DOE within two years of 
disclosure to DOE. However, in any case where publication, on sale, or 
public use has initiated the one-year statutory period wherein valid 
patent protection can still be obtained in the U.S., the period for 
election of title may be shortened by the agency to a date that is no 
more than 60 days prior to the end of the statutory period.
    (3) The Recipient will file its initial patent application on an 
invention to which it elects to retain title within one year after 
election of title or, if earlier, prior to the end of any statutory 
period wherein valid patent protection can be obtained in the U.S. after 
a publication, on sale, or public use. The Recipient will file patent 
applications in additional countries or international patent offices 
within either ten months of the corresponding initial patent 
application, or six months from the date when permission is granted by 
the Commissioner of Patents and Trademarks to file foreign patent 
applications when such filing has been prohibited by a Secrecy Order.
    (4) Requests for extension of the time for disclosure to DOE, 
election, and filing under subparagraphs (c)(1), (2), and (3) of this 
clause may, at the discretion of DOE, be granted.

           (d) Conditions When the Government May Obtain Title

    The Recipient will convey to DOE, upon written request, title to any 
subject invention:
    (1) If the Recipient fails to disclose or elect the subject 
invention within the times specified in paragraph (c) of this patent 
rights clause, or elects not to retain title; provided that DOE may only 
request title within 60 days after learning of the failure of the 
Recipient to disclose or elect within the specified times;
    (2) In those countries in which the Recipient fails to file patent 
applications within the times specified in paragraph (c) of this Patent 
Rights clause; provided, however, that if the Recipient has filed a 
patent application in a country after the times specified in paragraph 
(c) of this Patent Rights clause, but prior to its receipt of the 
written request of DOE, the Recipient shall continue to retain title in 
that country; or
    (3) In any country in which the Recipient decides not to continue 
the prosecution of any application for, to pay the maintenance fees on, 
or defend in a reexamination or opposition proceeding on, a patent on a 
subject invention.

[[Page 172]]

(e) Minimum Rights to Recipient and Protection of the Recipient Right To 
                                  File

    (1) The Recipient will retain a non-exclusive royalty-free license 
throughout the world in each subject invention to which the Government 
obtains title, except if the Recipient fails to disclose the subject 
invention within the times specified in paragraph (c) of this Patent 
Rights clause. The Recipient's license extends to its domestic 
subsidiaries and affiliates, if any, within the corporate structure of 
which the Recipient is a party and includes the right to grant 
sublicenses of the same scope of the extent the Recipient was legally 
obligated to do so at the time the award was awarded. The license is 
transferable only with the approval of DOE except when transferred to 
the successor of that part of the Recipient's business to which the 
invention pertains.
    (2) The Recipient's domestic license may be revoked or modified by 
DOE to the extent necessary to achieve expeditious practical application 
of the subject invention pursuant to an application for an exclusive 
license submitted in accordance with applicable provisions at 37 CFR 
part 404 and the agency's licensing regulation, if any. This license 
will not be revoked in that field of use or the geographical areas in 
which the Recipient has achieved practical application and continues to 
make the benefits of the invention reasonably accessible to the public. 
The license in any foreign country may be revoked or modified at 
discretion of the funding Federal agency to the extent the Recipient, 
its licensees, or its domestic subsidiaries or affiliates have failed to 
achieve practical application in that foreign country.
    (3) Before revocation or modification of the license, the funding 
Federal agency will furnish the Recipient a written notice of its 
intention to revoke or modify the license, and the Recipient will be 
allowed thirty days (or such other time as may be authorized by DOE for 
good cause shown by the Recipient) after the notice to show cause why 
the license should not be revoked or modified. The Recipient has the 
right to appeal, in accordance with applicable regulations in 37 CFR 
part 404 and the agency's licensing regulations, if any, concerning the 
licensing of Government-owned inventions, any decision concerning the 
revocation or modification of its license.

          (f) Recipient Action To Protect Government's Interest

    (1) The Recipient agrees to execute or to have executed and promptly 
deliver to DOE all instruments necessary to:
    (i) Establish or confirm the rights the Government has throughout 
the world in those subject inventions for which the Recipient retains 
title; and
    (ii) Convey title to DOE when requested under paragraph (d) of this 
Patent Rights clause, and to enable the government to obtain patent 
protection throughout the world in that subject invention.
    (2) The Recipient agrees to require, by written agreement, its 
employees, other than clerical and non-technical employees, to disclose 
promptly in writing to personnel identified as responsible for the 
administration of patent matters and in a format suggested by the 
Recipient each subject invention made under this award in order that the 
Recipient can comply with the disclosure provisions of paragraph (c) of 
this Patent Rights clause, and to execute all papers necessary to file 
patent applications on subject inventions and to establish the 
Government's rights in the subject inventions. The disclosure format 
should require, as a minimum, the information requested by paragraph 
(c)(1) of this Patent Rights clause. The Recipient shall instruct such 
employees through the employee agreements or other suitable educational 
programs on the importance of reporting inventions in sufficient time to 
permit the filing of patent applications prior to U.S. or foreign 
statutory bars.
    (3) The Recipient will notify DOE of any decision not to continue 
prosecution of a patent application, pay maintenance fees, or defend in 
a reexamination or opposition proceeding on a patent, in any country, 
not less than 30 days before the expiration of the response period 
required by the relevant patent office.
    (4) The Recipient agrees to include, within the specification of any 
U.S. patent application and any patent issuing thereon covering a 
subject invention, the following statement: ``This invention was made 
with Government support under (identify the award) awarded by (identify 
DOE). The Government has certain rights in this invention.''

                          (g) Subaward/Contract

    (1) The Recipient will include this Patent Rights clause, suitably 
modified to identify the parties, in all subawards/contracts, regardless 
of tier, for experimental, developmental or research work to be 
performed by a small business firm or nonprofit organization. The 
subrecipient/contractor will retain all rights provided for the 
Recipient in this Patent Rights clause, and the Recipient will not, as 
part of the consideration for awarding the subcontract, obtain rights in 
the subcontractors' subject inventions.
    (2) The Recipient will include in all other subawards/contracts, 
regardless of tier, for experimental, developmental or research work, 
the patent rights clause required by 10 CFR 600.325(c).
    (3) In the case of subawards/contracts at any tier, DOE, the 
Recipient, and the subrecipient/contractor agree that the mutual 
obligations of the parties created by this

[[Page 173]]

clause constitute a contract between the subrecipient/contractor and DOE 
with respect to those matters covered by the clause.

           (h) Reporting on Utilization of Subject Inventions

    The Recipient agrees to submit on request periodic reports no more 
frequently than annually on the utilization of a subject invention or on 
efforts at obtaining such utilization that are being made by the 
Recipient or its licensees or assignees. Such reports shall include 
information regarding the status of development, date of first 
commercial sale or use, gross royalties received by the Recipient and 
such other data and information as DOE may reasonably specify. The 
Recipient also agrees to provide additional reports in connection with 
any march-in proceeding undertaken by DOE in accordance with paragraph 
(j) of this Patent Rights clause. As required by 35 U.S.C. 202(c)(5), 
DOE agrees it will not disclose such information to persons outside the 
Government without the permission of the Recipient.

               (i) Preference for United States Industry.

    Notwithstanding any other provision of this Patent Rights clause, 
the Recipient agrees that neither it nor any assignee will grant to any 
person the exclusive right to use or sell any subject invention in the 
U.S. unless such person agrees that any products embodying the subject 
invention or produced through the use of the subject invention will be 
manufactured substantially in the U.S. However, in individual cases, the 
requirement for such an agreement may be waived by DOE upon a showing by 
the Recipient or its assignee that reasonable but unsuccessful efforts 
have been made to grant licenses on similar terms to potential licensees 
that would be likely to manufacture substantially in the U.S. or that 
under the circumstances domestic manufacture is not commercially 
feasible.

                           (j) March-in-Rights

    The Recipient agrees that with respect to any subject invention in 
which it has acquired title, DOE has the right in accordance with 
procedures at 37 CFR 401.6 and any supplemental regulations of the 
Agency to require the Recipient, an assignee or exclusive licensee of a 
subject invention to grant a non-exclusive, partially exclusive, or 
exclusive license in any field of use to a responsible applicant or 
applicants, upon terms that are reasonable under the circumstances and 
if the Recipient, assignee, or exclusive licensee refuses such a 
request, DOE has the right to grant such a license itself if DOE 
determines that:
    (1) Such action is necessary because the Recipient or assignee has 
not taken or is not expected to take within a reasonable time, effective 
steps to achieve practical application of the subject invention in such 
field of use;
    (2) Such action is necessary to alleviate health or safety needs 
which are not reasonably satisfied by the Recipient, assignee, or their 
licensees;
    (3) Such action is necessary to meet requirements for public use 
specified by Federal regulations and such requirements are not 
reasonably satisfied by the Recipient, assignee, or licensee; or
    (4) Such action is necessary because the agreement required by 
paragraph (i) of this Patent Rights clause has not been obtained or 
waived or because a licensee of the exclusive right to use or sell any 
subject invention in the U.S. is in breach of such agreement.

     (k) Special Provisions for Awards With Nonprofit Organizations

    If the Recipient is a nonprofit organization, it agrees that:
    (1) Rights to a subject invention in the U.S. may not be assigned 
without the approval of DOE, except where such assignment is made to an 
organization which has as one of its primary functions the management of 
inventions, provided that such assignee will be subject to the same 
provisions as the Recipient;
    (2) The Recipient will share royalties collected on a subject 
invention with the inventor, including Federal employee co-inventors 
(when DOE deems it appropriate) when the subject invention is assigned 
in accordance with 35 U.S.C. 202(e) and 37 CFR 401.10;
    (3) The balance of any royalties or income earned by the Recipient 
with respect to subject inventions, after payment of expenses (including 
payments to inventors) incidental to the administration of subject 
inventions, will be utilized for the support of scientific or 
engineering research or education; and
    (4) It will make efforts that are reasonable under the circumstances 
to attract licensees of subject inventions that are small business firms 
and that it will give preference to a small business firm if the 
Recipient determines that the small business firm has a plan or proposal 
for marketing the invention which, if executed, is equally likely to 
bring the invention to practical application as any plans or proposals 
from applicants that are not small business firms; provided that the 
Recipient is also satisfied that the small business firm has the 
capability and resources to carry out its plan or proposal. The decision 
whether to give a preference in any specific case will be at the 
discretion of the Recipient. However, the Recipient agrees that the 
Secretary of Commerce may review the Recipient's licensing program and 
decisions regarding small business applicants, and the Recipient will 
negotiate changes to its licensing policies, procedures or practices

[[Page 174]]

with the Secretary when the Secretary's review discloses that the 
Recipient could take reasonable steps to implement more effectively the 
requirements of this paragraph (k)(4).

                           (l) Communications

    All communications required by this Patent Rights clause should be 
sent to the DOE Patent Counsel address listed in the Award Document.

                          (m) Electronic Filing

    Unless otherwise Specified in the award, the information identified 
in paragraphs (f)(2) and (f)(3) may be electronically filed.

                             (End of clause)

             Patent Rights (Large Business Firms)--No Waiver

                             (a) Definitions

    DOE patent waiver regulations, as used in this clause, means the 
Department of Energy patent waiver regulations in effect on the date of 
award. See 10 CFR part 784.
    Invention, as used in this clause, means any invention or discovery 
which is or may be patentable of otherwise protectable under title 35 of 
the United States Code or any novel variety of plant that is or may be 
protectable under the Plant Variety Protection Act (7 U.S.C. 2321, et 
seq.).
    Patent Counsel, as used in this clause, means the Department of 
Energy Patent Counsel assisting the awarding activity.
    Subject invention, as used in this clause, means any invention of 
the Recipient conceived or first actually reduced to practice in the 
course of or under this agreement.

                   (b) Allocations of Principal Rights

    (1) Assignment to the Government. The Recipient agrees to assign to 
the Government the entire right, title, and interest throughout the 
world in and to each subject invention, except to the extent that rights 
are retained by the Recipient under subparagraph (b)(2) and paragraph 
(d) of this clause.
    (2) Greater rights determinations. The Recipient, or an employee-
inventor after consultation with the Recipient, may request greater 
rights than the nonexclusive license and the foreign patent rights 
provided in paragraph (d) of this clause on identified inventions in 
accordance with the DOE patent waiver regulation. Each determination of 
greater rights under this agreement shall be subject to paragraph (c) of 
this clause, unless otherwise provided in the greater rights 
determination, and to the reservations and conditions deemed to be 
appropriate by the Secretary of Energy or designee.

              (c) Minimum Rights Acquired by the Government

    With respect to each subject invention to which the Department of 
Energy grants the Recipient principal or exclusive rights, the Recipient 
agrees to grant to the Government: A nonexclusive, nontransferable, 
irrevocable, paid-up license to practice or have practiced each subject 
invention throughout the world by or on behalf of the Government of the 
United States (including any Government agency); ``march-in rights'' as 
set forth in 37 CFR 401.14(a)(J)); preference for U.S. industry as set 
forth in 37 CFR 401.14(a)(I); periodic reports upon request, no more 
frequently than annually, on the utilization or intent of utilization of 
a subject invention in a manner consistent with 35 U.S.C. 202(c)(50; and 
such Government rights in any instrument transferring rights in a 
subject invention.

                   (d) Minimum Rights to the Recipient

    (1) The Recipient is hereby granted a revocable, nonexclusive, 
royalty-free license in each patent application filed in any country on 
a subject invention and any resulting patent in which the Government 
obtains title, unless the Recipient fails to disclose the subject 
invention within the times specified in subparagraph (e)(2) of this 
clause. The Recipient's license extends to its domestic subsidiaries and 
affiliates, if any, within the corporate structure of which the 
Recipient is a part and includes the right to grant sublicenses of the 
same scope to the extent the Recipient was legally obligated to do so at 
the time the agreement was awarded. The license is transferable only 
with the approval of DOE except when transferred to the successor of 
that part of the Recipient's business to which the invention pertains.
    (2) The Recipient may request the right to acquire patent rights to 
a subject invention in any foreign country where the Government has 
elected not to secure such rights, subject to the minimum rights 
acquired by the Government similar to paragraph (c) of this clause. Such 
request must be made in writhing to the Patent Counsel as part of the 
disclosure required by subparagraph (e)(2) of this clause, with a copy 
to the DOE Contracting Officer. DOE approval, if given, will be based on 
a determination that this would best serve the national interest.

         (e) Invention Identification, Disclosures, and Reports

    (1) The Recipient shall establish and maintain active and effective 
procedures to assure that subject inventions are promptly identified and 
disclosed to Recipient personnel responsible for patent matters within 6 
months of conception and/or first actual reduction to practice, 
whichever occurs first in

[[Page 175]]

the performance of work under this agreement. These procedures shall 
include the maintenance of laboratory notebooks or equivalent records 
and other records as are reasonably necessary to document the conception 
and/or the first actual reduction to practice of subject inventions, and 
records that show that the procedures for identifying and disclosing the 
inventions are followed. Upon request, the Recipient shall furnish the 
Contracting Officer a description of such procedures for evaluation and 
for determination as to their effectiveness.
    (2) The Recipient shall disclose each subject invention to the DOE 
Patent Counsel with a copy to the Contracting Officer within 2 months 
after the inventor discloses it in writing to Recipient personnel 
responsible for patent matters or, if earlier, within 6 months after the 
Recipient becomes aware that a subject invention has been made, but in 
any event before any on sale, public use, or publication of such 
invention known to the Recipient. The disclosure to DOE shall be in the 
form of a written report and shall identify the agreement under which 
the invention was made and the inventor(s). It shall be sufficiently 
complete in technical detail to convey a clear understanding, to the 
extent known at the time of the disclosure, of the nature, purpose, 
operation, and physical, chemical, biological, or electrical 
characteristics of the invention. The disclosure shall also identify any 
publication, on sale, or public use of the invention and whether a 
manuscript describing the invention has been submitted for publication 
and, if so, whether it has been accepted for publication at the time of 
disclosure. In addition, after disclosure to DOE, the Recipient shall 
promptly notify Patent Counsel of the acceptance of any manuscript 
describing the invention for publication or of any on sale or public use 
planned by the Recipient. The report should also include any request for 
a greater rights determination in accordance with subparagraph (b)(2) of 
this clause. When an invention is disclosed to DOE under this paragraph, 
it shall be deemed to have been made in the manner specified in Sections 
(a)(1) and (a)(2) of 42 U.S.C. 5908, unless the Recipient contends in 
writing at the time the invention is disclosed that it was not so made.
    (3) The Recipient shall furnish the Contracting Officer a final 
report, within 3 months after completion of the work listing all subject 
inventions or containing a statement that there were no such inventions, 
and listing all subawards/contracts at any tier containing a patent 
rights clause or containing a statement that there were no such 
subawards/contracts.
    (4) The Recipient agrees to require, by written agreement, its 
employees, other than clerical and nontechnical employees, to disclose 
promptly in writing to personnel identified as responsible for the 
administration of patent matters and in a format suggested by the 
Recipient each subject invention made under subaward/contract in order 
that the Recipient can comply with the disclosure provisions of 
paragraph (c) of this clause, and to execute all papers necessary to 
file patent applications on subject inventions and to establish the 
Government's rights in the subject inventions. This disclosure format 
should require, as a minimum, the information required by subparagraph 
(e)(2) of this clause.
    (5) The Recipient agrees, subject to FAR 27.302(j), that the 
Government may duplicate and disclose subject invention disclosures and 
all other reports and papers furnished or required to be furnished 
pursuant to this clause.

            (f) Examination of Records Relating to Inventions

    (1) The Contracting Officer or any authorized representative shall, 
until 3 years after final payment under this agreement, have the right 
to examine any books (including laboratory notebooks), records, and 
documents of the Recipient relating to the conception or first actual 
reduction to practice of inventions in the same field of technology as 
the work under this agreement to determine whether--
    (i) Any such inventions are subject inventions;
    (ii) The Recipient has established and maintains the procedures 
required by subparagraphs (e)(1) and (4) of this clause;
    (iii) The Recipient and its inventors have complied with the 
procedures.
    (2) If the Contracting Officer learns of an unreported Recipient 
invention which the Contracting Officer believes may be a subject 
invention, the Recipient may be required to disclose the invention to 
DOE for a determination of ownership rights.
    (3) Any examination of records under this paragraph will be subject 
to appropriate conditions to protect the confidentiality of the 
information involved.

                          (g) Subaward/Contract

    (1) The recipient shall include the clause PATENT RIGHTS (SMALL 
BUSINESS FIRMS AND NONPROFIT ORGANIZATIONS) (suitably modified to 
identify the parties) in all subawards/contracts, regardless of tier, 
for experimental, developmental, demonstration, or research work to be 
performed by a small business firm or domestic nonprofit organization, 
except where the work of the subaward/contract is subject to an 
Exceptional Circumstances Determination by DOE. In all other subawards/
contracts, regardless of tier, for experimental, developmental, 
demonstration, or research work, the Recipient shall include this clause

[[Page 176]]

(suitably modified to identify the parties), or an alternate clause as 
directed by the contracting officer. The Recipient shall not, as part of 
the consideration for awarding the subaward/contract, obtain rights in 
the subrecipient's/contractor's subject inventions.
    (2) In the event of a refusal by a prospective subrecipient/
contractor to accept such a clause the Recipient:
    (i) Shall promptly submit a written notice to the Contracting 
Officer setting forth the subrecipient/contractor's reasons for such 
refusal and other pertinent information that may expedite disposition of 
the matter; and
    (ii) Shall not proceed with such subaward/contract without the 
written authorization of the Contracting Officer.
    (3) In the case of subawards/contracts at any tier, DOE, the 
subrecipient/contractor, and Recipient agree that the mutual obligations 
of the parties created by this clause constitute a contract between the 
subrecipient/contractor and DOE with respect to those matters covered by 
this clause.
    (4) The Recipient shall promptly notify the Contracting Officer in 
writing upon the award of any subaward/contract at any tier containing a 
patent rights clause by identifying the subrecipient/contractor, the 
applicable patent rights clause, the work to be performed under the 
subaward/contract, and the dates of award and estimated completion. Upon 
request of the Contracting Officer, the Recipient shall furnish a copy 
of such subaward/contract, and, no more frequently than annually, a 
listing of the subawards/contracts that have been awarded.
    (5) The Recipient shall identify all subject inventions of a 
subrecipient/contractor of which it acquires knowledge in the 
performance of this agreement and shall notify the Patent Counsel, with 
a copy to the contracting officer, promptly upon identification of the 
inventions.

                            (h) Atomic Energy

    (1) No claim for pecuniary award of compensation under the 
provisions of the Atomic Energy Act of 1954, as amended, shall be 
asserted with respect to any invention or discovery made or conceived in 
the course of or under this agreement.
    (2) Except as otherwise authorized in writing by the Contracting 
Officer, the Recipient will obtain patent agreements to effectuate the 
provisions of subparagraph (h)(1) of this clause from all persons who 
perform any part of the work under this agreement, except nontechnical 
personnel, such as clerical employees and manual laborers.

                             (i) Publication

    It is recognized that during the course of the work under this 
agreement, the Recipient or its employees may from time to time desire 
to release or publish information regarding scientific or technical 
developments conceived or first actually reduced to practice in the 
course of or under this agreement. In order that public disclosure of 
such information will not adversely affect the patent interests of DOE 
or the Recipient, patent approval for release of publication shall be 
secured from Patent Counsel prior to any such release or publication.

        (j) Forfeiture of Rights in Unreported Subject Inventions

    (1) The Recipient shall forfeit and assign to the Government, at the 
request of the Secretary of Energy or designee, all rights in any 
subject invention which the Recipient fails to report to Patent Counsel 
within six months after the time the Recipient:
    (i) Files or causes to be filed a United States or foreign patent 
application thereon; or
    (ii) Submits the final report required by subparagraph (e)(3) of 
this clause, whichever is later.
    (2) However, the Recipient shall not forfeit rights in a subject 
invention if, within the time specified in subparagraph (e)(2) of this 
clause, the Recipient:
    (i) Prepares a written decision based upon a review of the record 
that the invention was neither conceived nor first actually reduced to 
practice in the course of or under the agreement and delivers the 
decision to Patent Counsel, with a copy to the Contracting Officer, or
    (ii) Contending that the invention is not a subject invention, the 
Recipient nevertheless discloses the invention and all facts pertinent 
to this contention to the Patent Counsel, with a copy of the Contracting 
Officer; or
    (iii) Establishes that the failure to disclose did not result from 
the Recipient's fault or negligence.
    (3) Pending written assignment of the patent application and patents 
on a subject invention determined by the Secretary of Energy or designee 
to be forfeited (such determination to be a final decision under the 
Disputes clause of this agreement), the Recipient shall be deemed to 
hold the invention and the patent applications and patents pertaining 
thereto in trust for the Government. The forfeiture provision of this 
paragraph (j) shall be in addition to and shall not supersede other 
rights and remedies which the Government may have with respect to 
subject inventions.

                             (End of clause)

                         Rights in Data--General

                             (a) Definitions

    Computer Data Bases, as used in this clause, means a collection of 
data in a form capable of, and for the purpose of, being stored in,

[[Page 177]]

processed, and operated on by a computer. The term does not include 
computer software.
    Computer software, as used in this clause, means (i) computer 
programs which are data comprising a series of instructions, rules, 
routines or statements, regardless of the media in which recorded, that 
allow or cause a computer to perform a specific operation or series of 
operations and (ii) data comprising source code listings, design 
details, algorithms, processes, flow charts, formulae, and related 
material that would enable the computer program to be produced, created 
or compiled. The term does not include computer data bases.
    Data, as used in this clause, means recorded information, regardless 
of form or the media on which it may be recorded. The term includes 
technical data and computer software. The term does not include 
information incidental to administration, such as financial, 
administrative, cost or pricing, or management information.
    Form, fit, and function data, as used in this clause, means data 
relating to items, components, or processes that are sufficient to 
enable physical and functional interchangeability, as well as data 
identifying source, size, configuration, mating, and attachment 
characteristics, functional characteristics, and performance 
requirements; except that for computer software it means data 
identifying source, functional characteristics, and performance 
requirements but specifically excludes the source code, algorithm, 
process, formulae, and flow charts of the software.
    Limited rights, as used in this clause, means the rights of the 
Government in limited rights data as set forth in the Limited Rights 
Notice of subparagraph (g)(2) if included in this clause.
    Limited rights data, as used in this clause, means data (other than 
computer software) developed at private expense that embody trade 
secrets or are commercial or financial and confidential or privileged.
    Restricted computer software, as used in this clause, means computer 
software developed at private expense and that is a trade secret; is 
commercial or financial and is confidential or privileged; or is 
published copyrighted computer software; including minor modifications 
of such computer software.
    Restricted rights, as used in this clause, means the rights of the 
Government in restricted computer software, as set forth in a Restricted 
Rights Notice of subparagraph (g)(3) if included in this clause, or as 
otherwise may be provided in a collateral agreement incorporated in and 
made part of this contract, including minor modifications of such 
computer software.
    Technical data, as used in this clause, means data (other than 
computer software) which are of a scientific or technical nature. 
Technical data does not include computer software, but does include 
manuals and instructional materials and technical data formatted as a 
computer data base.
    Unlimited rights, as used in this clause, means the right of the 
Government to use, disclose, reproduce, prepare derivative works, 
distribute copies to the public, and perform publicly and display 
publicly, in any manner and for any purpose, and to have or permit 
others to do so.

                        (b) Allocations of Rights

    (1) Except as provided in paragraph (c) of this clause regarding 
copyright, the Government shall have unlimited rights in--
    (i) Data first produced in the performance of this agreement;
    (ii) Form, fit, and function data delivered under this agreement;
    (iii) Data delivered under this agreement (except for restricted 
computer software) that constitute manuals or instructional and training 
material for installation, operation, or routine maintenance and repair 
of items, components, or processes delivered or furnished for use under 
this agreement; and
    (iv) All other data delivered under this agreement unless provided 
otherwise for limited rights data or restricted computer software in 
accordance with paragraph (g) of this clause.
    (2) The Recipient shall have the right to--
    (i) Use, release to others, reproduce, distribute, or publish any 
data first produced or specifically used by the Recipient in the 
performance of this agreement, unless provided otherwise in paragraph 
(d) of this clause;
    (ii) Protect from unauthorized disclosure and use those data which 
are limited rights data or restricted computer software to the extent 
provided in paragraph (g) of this clause;
    (iii) Substantiate use of, add or correct limited rights, restricted 
rights, or copyright notices and to take over appropriate action, in 
accordance with paragraphs (e) and (f) of this clause; and
    (iv) Establish claim to copyright subsisting in data first produced 
in the performance of this agreement to the extent provided in 
subparagraph (c)(1) of this clause.

                              (c) Copyright

    (1) Data first produced in the performance of this agreement. Unless 
provided otherwise in paragraph (d) of this clause, the Recipient may 
establish, without prior approval of the Contracting Officer, claim to 
copyright subsisting in data first produced in the performance of this 
agreement. When claim to copyright is made, the Recipient shall affix 
the applicable copyright notices of 17 U.S.C. 401 or 402 and 
acknowledgement of Government sponsorship (including agreement number) 
to the data when such data are delivered to the Government, as well as 
when the data

[[Page 178]]

are published or deposited for registration as a published work in the 
U.S. Copyright Office. For such copyrighted data, including computer 
software, the Recipient grants to the Government, and others acting on 
its behalf, a paid-up nonexclusive, irrevocable worldwide license in 
such copyrighted data to reproduce, prepare derivative works, distribute 
copies to the public, and perform publicly and display publicly, by or 
on behalf of the Government.
    (2) Data not first produced in the performance of this agreement. 
The Recipient shall not, without prior written permission of the 
Contracting Officer, incorporate in data delivered under this agreement 
any data not first produced in the performance of this agreement and 
which contains the copyright notice of 17 U.S.C. 401 or 402, unless the 
Recipient identifies such data and grants to the Government, or acquires 
on its behalf, a license of the same scope as set forth in subparagraph 
(c)(1) of this clause; provided, however, that if such data are computer 
software the Government shall acquire a copyright license as set forth 
in subparagraph (g)(3) of this clause if included in this agreement or 
as otherwise may be provided in a collateral agreement incorporated in 
or made part of this agreement.
    (3) Removal of copyright notices. The Government agrees not to 
remove any copyright notices placed on data pursuant to this paragraph 
(c), and to include such notices on all reproductions of the data.

                (d) Release, Publication and Use of Data

    (1) The Recipient shall have the right to use, release to others, 
reproduce, distribute, or publish any data first produced or 
specifically used by the Recipient in the performance of this agreement, 
except to the extent such data may be subject to the Federal export 
control or national security laws or regulations, or unless otherwise 
provided in this paragraph of this clause or expressly set forth in this 
agreement.
    (2) The Recipient agrees that to the extent it receives or is given 
access to data necessary for the performance of this award, which 
contain restrictive markings, the Recipient shall treat the data in 
accordance with such markings unless otherwise specifically authorized 
in writing by the contracting officer.

                    (e) Unauthorized Marking of Data

    (1) Notwithstanding any other provisions of this agreement 
concerning inspection or acceptance, if any data delivered under this 
agreement are marked with the notices specified in subparagraph (g)(2) 
or (g)(3) of this clause and use of such is not authorized by this 
clause, or if such data bears any other restrictive or limiting markings 
not authorized by this agreement, the Contracting Officer may at any 
time either return the data to the Recipient or cancel or ignore the 
markings. However, the following procedures shall apply prior to 
canceling or ignoring the markings.
    (i) The Contracting Officer shall make written inquiry to the 
Recipient affording the Recipient 30 days from receipt of the inquiry to 
provide written justification to substantiate the propriety of the 
markings;
    (ii) If the Recipient fails to respond or fails to provide written 
justification to substantiate the propriety of the markings within the 
30-day period (or a longer time not exceeding 90 days approved in 
writing by the Contracting Officer for good cause shown), the Government 
shall have the right to cancel or ignore the markings at any time after 
said period and the data will no longer be made subject to any 
disclosure prohibitions.
    (iii) If the Recipient provides written justification to 
substantiate the propriety of the markings within the period set in 
subparagraph (e)(1)(i) of this clause, the Contracting Officer shall 
consider such written justification and determine whether or not the 
markings are to be cancelled or ignored. If the Contracting Officer 
determines that the markings are authorized, the Recipient shall be so 
notified in writing. If the Contracting Officer determines, with 
concurrence of the head of the contracting activity, that the markings 
are not authorized, the Contracting Officer shall furnish the Recipient 
a written determination, which determination shall become the final 
agency decision regarding the appropriateness of the markings unless the 
Recipient files suit in a court of competent jurisdiction within 90 days 
of receipt of the Contracting Officer's decision. The Government shall 
continue to abide by the markings under this subparagraph (e)(1)(iii) 
until final resolution of the matter either by the Contracting Officer's 
determination becoming final (in which instance the Government shall 
thereafter have the right to cancel or ignore the markings at any time 
and the data will no longer be made subject to any disclosure 
prohibitions), or by final disposition of the matter by court decision 
if suit is filed.
    (2) The time limits in the procedures set forth in subparagraph 
(e)(1) of this clause may be modified in accordance with agency 
regulations implementing the Freedom of Information Act (5 U.S.C. 552) 
if necessary to respond to a request thereunder.

                    (f) Omitted or Incorrect Markings

    (1) Data delivered to the Government without either the limited 
rights or restricted rights notice as authorized by paragraph (g) of 
this clause, or the copyright notice required by paragraph (c) of this 
clause, shall be deemed to have been furnished with unlimited rights, 
and the Government assumes

[[Page 179]]

no liability for the disclosure, use, or reproduction of such data. 
However, to the extent the data has not been disclosed without 
restriction outside the Government, the Recipient may request, within 6 
months (or a longer time approved by the Contracting Officer for good 
cause shown) after delivery or such data, permission to have notices 
placed on qualifying data at the Recipient's expense, and the 
Contracting Officer may agree to do so if the Recipient:
    (i) Identifies the data to which the omitted notice is to be 
applied;
    (ii) Demonstrates that the omission of the notice was inadvertent;
    (iii) Establishes that the use of the proposed notice is authorized; 
and
    (iv) Acknowledges that the Government has no liability with respect 
to the disclosure, use, or reproduction of any such data made prior to 
the addition of the notice or resulting from the omission of the notice.
    (2) The Contracting Officer may also:
    (i) Permit correction at the Recipient's expense of incorrect 
notices if the Recipient identifies the data on which correction of the 
notice is to be made, and demonstrates that the correct notice is 
authorized, or
    (ii) Correct any incorrect notices.

 (g) Protection of Limited Rights Data and Restricted Computer Software

    When data other than that listed in subparagraphs (b)(1)(i), (ii), 
and (iii) of this clause are specified to be delivered under this 
agreement and qualify as either limited rights data or restricted 
computer software, if the Recipient desires to continue protection of 
such data, the Recipient shall withhold such data and not furnish them 
to the Government under this agreement. As a condition to this 
withholding, the Recipient shall identify the data being withheld and 
furnish form, fit, and function data in lieu thereof. Limited rights 
data that are formatted as a computer data base for delivery to the 
Government are to be treated as limited rights data and not restricted 
computer software.

                          (h) Subaward/Contract

    The Recipient has the responsibility to obtain from its 
subrecipients/contractors all data and rights therein necessary to 
fulfill the Recipient's obligations to the Government under this 
agreement. If a subrecipient/contractor refuses to accept terms 
affording the Government such rights, the Recipient shall promptly bring 
such refusal to the attention of the Contracting Officer and not proceed 
with the subaward/contract award without further authorization.

                    (i) Additional Data Requirements

    In addition to the data specified elsewhere in this agreement to be 
delivered, the Contracting Officer may, at anytime during agreement 
performance or within a period of 3 years after acceptance of all items 
to be delivered under this agreement, order any data first produced or 
specifically used in the performance of this agreement. This clause is 
applicable to all data ordered under this subparagraph. Nothing 
contained in this subparagraph shall require the Recipient to deliver 
any data the withholding of which is authorized by this clause, or data 
which are specifically identified in this agreement as not subject to 
this clause. When data are to be delivered under this subparagraph, the 
Recipient will be compensated for converting the data into the 
prescribed form, for reproduction, and for delivery.
    (j) The recipient agrees, except as may be otherwise specified in 
this award for specific data items listed as not subject to this 
paragraph, that the Contracting Officer or an authorized representative 
may, up to three years after acceptance of all items to be delivered 
under this award, inspect at the Recipient's facility any data withheld 
pursuant to paragraph (g) of this clause, for purposes of verifying the 
Recipient's assertion pertaining to the limited rights or restricted 
rights status of the data or for evaluating work performance. Where the 
Recipient whose data are to be inspected demonstrates to the Contracting 
Officer that there would be a possible conflict of interest if the 
inspection were made by a particular representative, the Contracting 
Officer shall designate an alternate inspector.
    As prescribed in 600.325(d)(1), the following Alternate I and/or II 
may be inserted in the clause in the award instrument.

Alternate I:
    (g)(2) Notwithstanding subparagraph (g)(1) of this clause, the 
agreement may identify and specify the delivery of limited rights data, 
or the Contracting Officer may require by written request the delivery 
of limited rights data that has been withheld or would otherwise be 
withholdable. If delivery of such data is so required, the Recipient may 
affix the following ``Limited Rights Notice'' to the data and the 
Government will thereafter treat the data, in accordance with such 
Notice:

                          LIMITED RIGHTS NOTICE

    (a) These data are submitted with limited rights under Government 
agreement No. -------- (and subaward/contract No. --------, if 
appropriate). These data may be reproduced and used by the Government 
with the express limitation that they will not, without written 
permission of the Recipient, be used for purposes of manufacture nor 
disclosed outside the Government; except that the Government may 
disclose these data outside the Government for the following purposes, 
if any, provided that the Government

[[Page 180]]

makes such disclosure subject to prohibition against further use and 
disclosure:
    (1) Use (except for manufacture) by Federal support services 
contractors within the scope of their contracts;
    (2) This ``limited rights data'' may be disclosed for evaluation 
purposes under the restriction that the ``limited rights data'' be 
retained in confidence and not be further disclosed;
    (3) This ``limited rights data'' may be disclosed to other 
contractors participating in the Government's program of which this 
Recipient is a part for information or use (except for manufacture) in 
connection with the work performed under their awards and under the 
restriction that the ``limited rights data'' be retained in confidence 
and not be further disclosed;
    (4) This ``limited rights data'' may be used by the Government or 
others on its behalf for emergency repair or overhaul work under the 
restriction that the ``limited rights data'' be retained in confidence 
and not be further disclosed; and
    (5) Release to a foreign government, or instrumentality thereof, as 
the interests of the United States Government may require, for 
information or evaluation, or for emergency repair or overhaul work by 
such government. This Notice shall be marked on any reproduction of this 
data in whole or in part.
    (b) This Notice shall be marked on any reproduction of these data, 
in whole or in part.

                             (End of notice)

Alternate II:
    (g)(3)(i) Notwithstanding subparagraph (g)(1) of this clause, the 
agreement may identify and specify the delivery of restricted computer 
software, or the Contracting Officer may require by written request the 
delivery of restricted computer software that has been withheld or would 
otherwise be withholdable. If delivery of such computer software is so 
required, the Recipient may affix the following ``Restricted Rights 
Notice'' to the computer software and the Government will thereafter 
treat the computer software, subject to paragraphs (e) and (f) of this 
clause, in accordance with the Notice.

                        RESTRICTED RIGHTS NOTICE

    (a) This computer software is submitted with restricted rights under 
Government Agreement No. -------- (and subaward/contract --------, if 
appropriate). It may not be used, reproduced, or disclosed by the 
Government except as provided in paragraph (b) of this Notice or as 
otherwise expressly stated in the agreement.
    (b) This computer software may be--
    (1) Used or copies for use in or with the computer or computers for 
which it was acquired, including use at any Government installation to 
which such computer or computers may be transferred;
    (2) Used or copied for use in a backup computer if any computer for 
which it was acquired is inoperative;
    (3) Reproduced for safekeeping (archiv3es) or backup purposes;
    (4) Modified, adapted, or combined with other computer software, 
provided that the modified, combined, or adapted portions of the 
derivative software are made subject to the same restricted rights;
    (5) Disclosed to and reproduced for use by support service 
Recipients in accordance with subparagraph (b)(1) through (4) of this 
clause, provided the Government makes such disclosure or reproduction 
subject to these restricted rights; and
    (6) Used or copied for use in or transferred to a replacement 
computer.
    (c) Notwithstanding the foregoing, if this computer software is 
published copyrighted computer software, it is licensed to the 
Government, without disclosure prohibitions, with the minimum rights set 
forth in paragraph (b) of this clause.
    (d) Any other rights or limitations regarding the use, duplication, 
or disclosure of this computer software are to be expressly stated, in, 
or incorporated in, the agreement.
    (e) This Notice shall be marked on any reproduction of this computer 
software, in whole or in part.

                             (End of notice)

    (ii) Where it is impractical to include the Restricted Rights Notice 
on restricted computer software, the following short-form Notice may be 
used in lieu thereof:

                        RESTRICTED RIGHTS NOTICE

    Use, reproduction, or disclosure is subject to restrictions set 
forth in agreement No. -------- (and subaward/contract --------, If 
appropriate) with -------- (name of Recipient and subrecipient/
contractor).

                             (End of notice)

    (iii) If restricted computer software is delivered with the 
copyright notice of 17 U.S.C. 401, it will be presumed to be published 
copyrighted computer software licensed to the government without 
disclosure prohibitions, with the minimum rights set forth in paragraph 
(b) of this clause, unless the Recipient includes the following 
statement with such copyright notice: ``Unpublished--rights reserved 
under the Copyright Laws of the United States.''

[[Page 181]]

                             (End of clause)

      Rights in Data--Programs Covered Under Special Data Statutes

                             (a) Definitions

    Computer Data Bases, as used in this clause, means a collection of 
data in a form capable of, and for the purpose of, being stored in, 
processed, and operated on by a computer. The term does not include 
computer software.
    Computer software, as used in this clause, means (i) computer 
programs which are data comprising a series of instructions, rules, 
routines, or statements, regardless of the media in which recorded, that 
allow or cause a computer to perform a specific operation or series of 
operations and (ii) data comprising source code listings, design 
details, algorithms, processes, flow charts, formulae and related 
material that would enable the computer program to be produced, created 
or compiled. The term does not include computer data bases.
    Data, as used in this clause, means recorded information, regardless 
of form or the media on which it may be recorded. The term includes 
technical data and computer software. The term does not include 
information incidental to administration, such as financial, 
administrative, cost or pricing or management information.
    Form, fit, and function data, as used in this clause, means data 
relating to items, components, or processes that are sufficient to 
enable physical and functional interchangeability as well as data 
identifying source, size, configuration, mating and attachment 
characteristics, functional characteristics, and performance 
requirements except that for computer software it means data identifying 
source, functional characteristics, and performance requirements but 
specifically excludes the source code, algorithm, process, formulae, and 
flow charts of the software.
    Limited rights data, as used in this clause, means data (other than 
computer software) developed at private expense that embody trade 
secrets or are commercial or financial and confidential or privileged.
    Restricted computer software, as used in this clause, means computer 
software developed at private expense and that is a trade secret; is 
commercial or financial and confidential or privileged; or is published 
copyrighted computer software; including modifications of such computer 
software.
    Protected data, as used in this clause, means technical data or 
commercial or financial data first produced in the performance of the 
award which, if it had been obtained from and first produced by a non-
federal party, would be a trade secret or commercial or financial 
information that is privileged or confidential under the meaning of 5 
U.S.C. 552(b)(4) and which data is marked as being protected data by a 
party to the award.
    Protected rights, as used in this clause, mean the rights in 
protected data set forth in the Protected Rights Notice of paragraph (g) 
of this clause.
    Technical data, as used in this clause, means that data which are of 
a scientific or technical nature. Technical data does not include 
computer software, but does include manuals and instructional materials 
and technical data formatted as a computer data base.
    Unlimited rights, as used in this clause, means the right of the 
Government to use, disclose, reproduce, prepare derivative works, 
distribute copies to the public, and perform publicly and display 
publicly, in any manner and for any purpose whatsoever, and to have or 
permit others to do so.

                        (b) Allocation of Rights

    (1) Except as provided in paragraph (c) of this clause regarding 
copyright, the Government shall have unlimited rights in--
    (i) Data specifically identified in this agreement as data to be 
delivered without restriction;
    (ii) Form, fit, and function data delivered under this agreement;
    (iii) Data delivered under this agreement (except for restricted 
computer software) that constitute manuals or instructional and training 
material for installation, operation, or routine maintenance and repair 
of items, components, or processes delivered or furnished for use under 
this agreement; and
    (iv) All other data delivered under this agreement unless provided 
otherwise for protected data in accordance with paragraph (g) of this 
clause or for limited rights data or restricted computer software in 
accordance with paragraph (h) of this clause.
    (2) The Recipient shall have the right to--
    (i) Protect rights in protected data delivered under this agreement 
in the manner and to the extent provided in paragraph (g) of this 
clause;
    (ii) Withhold from delivery those data which are limited rights data 
or restricted computer software to the extent provided in paragraph (h) 
of this clause;
    (iii) Substantiate use of, add, or correct protected rights or 
copyrights notices and to take other appropriate action, in accordance 
with paragraph (e) of this clause; and
    (iv) Establish claim to copyright subsisting in data first produced 
in the performance of this agreement to the extent provided in 
subparagraph (c)(1) of this clause.

[[Page 182]]

                              (c) Copyright

    (1) Data first produced in the performance of this agreement. Except 
as otherwise specifically provided in this agreement, the Recipient may 
establish, without the prior approval of the Contracting Officer, claim 
to copyright subsisting in any data first produced in the performance of 
this agreement. If claim to copyright is made, the Recipient shall affix 
the applicable copyright notice of 17 U.S.C. 401 or 402 and 
acknowledgment of Government sponsorship (including agreement 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. For such copyrighted data, including 
computer software, the Recipient grants to the Government, and others 
acting on its behalf, a paid-up nonexclusive, irrevocable, worldwide 
license to reproduce, prepare derivative works, distribute copies to the 
public, and perform publicly and display publicly, by or on behalf of 
the Government, for all such data.
    (2) Data not first produced in the performance of this agreement. 
The Recipient shall not, without prior written permission of the 
Contracting Officer, incorporate in data delivered under this agreement 
any data that are not first produced in the performance of this 
agreement and that contain the copyright notice of 17 U.S.C. 401 or 402, 
unless the Recipient identifies such data and grants to the Government, 
or acquires on its behalf, a license of the same scope as set forth in 
subparagraph (c)(1) of this clause; provided, however, that if such data 
are computer software, the Government shall acquire a copyright license 
as set forth in subparagraph (h)(3) of this clause if included in this 
agreement or as otherwise may be provided in a collateral agreement 
incorporated or made a part of this agreeement.
    (3) Removal of copyright notices. The Government agrees not to 
remove any copyright notices placed on data pursuant to this paragraph 
(c), and to include such notices on all reproductions of the data.

                (d) Release, Publication and Use of Data

    (1) The Receipt shall have the right to use, release to others, 
reproduce, distribute, or publish any data first produced or 
specifically used by the Recipient in the performance of this contract, 
except to the extent such data may be subject to the Federal export 
control or national security laws or regulations, or unless otherwise 
provided in this paragraph of this clause or expressly set forth in this 
contract.
    (2) The Recipient agrees that to the extent it receives or is given 
access to data necessary for the performance of this agreement which 
contain restrictive markings, the Recipient shall treat the data in 
accordance with such markings unless otherwise specifically authorized 
in writing by the Contracting Officer.

                    (e) Unauthorized Marking of Data

    (1) Notwithstanding any other provisions of this agreement 
concerning inspection or acceptance, if any data delivered under this 
agreement are marked with the notices specified in subparagraph (g)(2) 
or (g)(3) of this clause and use of such is not authorized by this 
clause, or if such data bears any other restrictive or limiting markings 
not authorized by this agreement, the Contracting Officer may at any 
time either return the data to the Recipient or cancel or ignore the 
markings. However, the following procedures shall apply prior to 
canceling or ignoring the markings.
    (i) The Contracting Officer shall make written inquiry to the 
Recipient affording the Recipient 30 days from receipt of the inquiry to 
provide written justification to substantiate the propriety of the 
markings;
    (ii) If the Recipient fails to respond or fails to provide written 
justification to substantiate the propriety of the markings within the 
30-day period (or a longer time not exceeding 90 days approved in 
writing by the Contracting Officer for good cause shown), the Government 
shall have the right to cancel or ignore the markings at any time after 
said period and the data will no longer be made subject to any 
disclosure prohibitions.
    (iii) If the Recipient provides written justification to 
substantiate the propriety of the markings within the period set in 
subdivision (e)(1)(i) of this clause, the Contracting Officer shall 
consider such written justification and determine whether or not the 
markings are to be cancelled or ignored. If the Contracting Officer 
determines that the markings are authorized, the Recipient shall be so 
notified in writing. If the Contracting Officer determines, with 
concurrence of the head of the contracting activity, that the markings 
are not authorized, the Contracting Officer shall furnish the Recipient 
a written determination, which determination shall become the final 
agency decision regarding the appropriateness of the markings unless the 
Recipient files suit in a court of competent jurisdiction within 90 days 
of receipt of the Contracting Officer's decision. The Government shall 
continue to abide by the markings under this subdivision (e)(1)(iii) 
until final resolution of the matter either by the Contracting Officer's 
determination become final (in which instance the Government shall 
thereafter have the right to cancel or ignore the markings at any time 
and the data will no longer be made subject to any disclosure 
prohibitions), or by final disposition of the matter by court decision 
if suit is filed.
    (2) The time limits in the procedures set forth in subparagraph 
(e)(1) of this clause

[[Page 183]]

may be modified in accordance with agency regulations implementing the 
Freedom of Information Act (5 U.S.C. 552) if necessary to respond to a 
request thereunder.

                    (f) Omitted or Incorrect Markings

    (1) Data delivered to the Government without either the limited 
rights or restricted rights notice as authorized by paragraph (g) of 
this clause, or the copyright notice required by paragraph (c) of this 
clause, shall be deemed to have been furnished with unlimited rights, 
and the Government assumes no liability for the disclosure, use, or 
reproduction of such data. However, to the extent the data has not been 
disclosed without restriction outside the Government, the Recipient may 
request, within 6 months (or a longer time approved by the Contracting 
Officer for good cause shown) after delivery of such data, permission to 
have notices placed on qualifying data at the Recipient's expense, and 
the Contracting Officer may agree to do so if the Recipient--
    (i) Identifies the data to which the omitted notice is to be 
applied;
    (ii) Demonstrates that the omission of the notice was inadvertent;
    (iii) Establishes that the use of the proposed notice is authorized; 
and
    (iv) Acknowledges that the Government has no liability with respect 
to the disclosure, use, or reproduction of any such data made prior to 
the addition of the notice or resulting from the omission of the notice.
    (2) The Contracting Officer may also:
    (i) Permit correction at the Recipient's expense of incorrect 
notices if the Recipient identifies the data on which correction of the 
notice is to be made, and demonstrates that the correct notice is 
authorized; or
    (ii) Correct any incorrect notices.

                      (g) Rights to Protected Data

    (1) The Recipient may, with the concurrence of DOE, claim and mark 
as protected data, any data first produced in the performance of this 
award that would have been treated as a trade secret if developed at 
private expense. Any such claimed ``protected data'' will be clearly 
marked with the following Protected Rights Notice, and will be treated 
in accordance with such Notice, subject to the provisions of paragraphs 
(e) and (f) of this clause.

                         PROTECTED RIGHTS NOTICE

    These protected data were produced under agreement no. ------ with 
the U.S. Department of Energy and may not be published, disseminated, or 
disclosed to others outside the Government until (Note:) The period of 
protection of such data is fully negotiable, but cannot exceed the 
applicable statutorily authorized maximum), unless express written 
authorization is obtained from the recipient. Upon expiration of the 
period of protection set forth in this Notice, the Government shall have 
unlimited rights in this data. This Notice shall be marked on any 
reproduction of this data, in whole or in part.

                             (End of notice)

    (2) Any such marked Protected Data may be disclosed under 
obligations of confidentiality for the following purposes:
    (a) For evaluation purposes under the restriction that the 
``Protected Data'' be retained in confidence and not be further 
disclosed; or
    (b) To subcontractors or other team members performing work under 
the Government's (insert name of program or other applicable activity) 
program of which this award is a part, for information or use in 
connection with the work performed under their activity, and under the 
restriction that the Protected Data be retained in confidence and not be 
further disclosed.
    (3) The obligations of confidentiality and restrictions on 
publication and dissemination shall end for any Protected Data.
    (a) At the end of the protected period;
    (b) If the data becomes publicly known or available from other 
sources without a breach of the obligation of confidentiality with 
respect to the Protected Data;
    (c) If the same data is independently developed by someone who did 
not have access to the Protected Data and such data is made available 
without obligations of confidentiality; or
    (d) If the Recipient disseminates or authorizes another to 
disseminate such data without obligations of confidentiality.
    (4) However, the Recipient agrees that the following types of data 
are not considered to be protected and shall be provided to the 
Government when required by this award without any claim that the data 
are Protected Data. The parties agree that notwithstanding the following 
lists of types of data, nothing precludes the Government from seeking 
delivery of additional data in accordance with this award, or from 
making publicly available additional non-protected data, nor does the 
following list constitute any admission by the Government that technical 
data not on the list is Protected Data. (Note: It is expected that this 
paragraph will specify certain types of mutually agreed upon data that 
will be available to the public and will not be asserted by the 
recipient/contractor as limited rights or protected data).
    (5) The Government's sole obligation with respect to any protected 
data shall be as set forth in this paragraph (g).

                  (h) Protection of Limited Rights Data

    When data other than that listed in subparagraphs (b)(1)(i), (ii), 
and (iii) of this clause are specified to be delivered under

[[Page 184]]

this agreement and such data qualify as either limited rights data or 
restricted computer software, the Recipient, if the Recipient desires to 
continue protection of such data, shall withhold such data and not 
furnish them to the Government under this agreement. As a condition to 
this withholding the Recipient shall identify the data being withheld 
and furnish form, fit, and function data in lieu thereof.

                          (i) Subaward/Contract

    The Recipient has the responsibility to obtain from its 
subrecipients/contractors all data and rights therein necessary to 
fulfill the Recipient's obligations to the Government under this 
agreement. If a subrecipient/contractor refuses to accept terms 
affording the Government such rights, the Recipient shall promptly bring 
such refusal to the attention of the Contracting Officer and not proceed 
with subaward/contract award without further authorization.

                    (j) Additional Data Requirements

    In addition to the data specified elsewhere in this agreement to be 
delivered, the Contracting Officer may, at anytime during agreement 
performance or within a period of 3 years after acceptance of all items 
to be delivered under this agreement, order any data first produced or 
specifically used in the performance of this agreement. This clause is 
applicable to all data ordered under this subparagraph. Nothing 
contained in this subparagraph shall require the Recipient to deliver 
any data the withholding of which is authorized by this clause or data 
which are specifically identified in this agreement as not subject to 
this clause. When data are to be delivered under this subparagraph, the 
Recipient will be compensated for converting the data into the 
prescribed form, for reproduction, and for delivery.
    (k) The Recipient agrees, except as may be otherwise specified in 
this agreement for specific data items listed as not subject to this 
paragraph, that the Contracting Officer or an authorized representative 
may, up to three years after acceptance of all items to be delivered 
under this contract, inspect at the Recipient's facility any data 
withheld pursuant to paragraph (h) of this clause, for purposes of 
verifying the Recipient's assertion pertaining to the limited rights or 
restricted rights status of the data or for evaluating work performance. 
Where the Recipient whose data are to be inspected demonstrates to the 
Contracting Officer that there would be a possible conflict of interest 
if the inspection were made by a particular representative, the 
Contracting Officer shall designate an alternate inspector.
    As prescribed in 600.325(e)(2), the following Alternate I and/or II 
may be inserted in the clause in the award instrument.

Alternate I:
    (h)(2) Notwithstanding subparagraph (h)(1) of this clause, the 
agreement may identify and specify the delivery of limited rights data, 
or the Contracting Officer may require by written request the delivery 
of limited rights data that has been withheld or would otherwise be 
withholdable. If delivery of such data is so required, the Recipient may 
affix the following ``Limited Rights Notice'' to the data and the 
Government will thereafter treat the data, in accordance with such 
Notice:

                          LIMITED RIGHTS NOTICE

    (a) These data are submitted with limited rights under Government 
agreement No. -------- (and subaward/contract No. --------, if 
appropriate). These data may be reproduced and used by the Government 
with the express limitation that they will not, without written 
permission of the Recipient, be used for purposes of manufacture nor 
disclosed outside the Government; except that the Government may 
disclose these data outside the Government for the following purposes, 
if any, provided that the Government makes such disclosure subject to 
prohibition against further use and disclosure:
    (1) Use (except for manufacture) by Federal support services 
contractors within the scope of their contracts;
    (2) This ``limited rights data'' may be disclosed for evaluation 
purposes under the restriction that the ``limited rights data'' be 
retained in confidence and not be further disclosed;
    (3) This ``limited rights data'' may be disclosed to other 
contractors participating in the Government's program of which this 
Recipient is a part for information or use (except for manufacture) in 
connection with the work performed under their awards and under the 
restriction that the ``limited rights data'' be retained in confidence 
and not be further disclosed;
    (4) This ``limited rights data'' may be used by the Government or 
others on its behalf for emergency repair or overhaul work under the 
restriction that the ``limited rights data'' be retained in confidence 
and not be further disclosed; and
    (5) Release to a foreign government, or instrumentality thereof, as 
the interests of the United States Government may require, for 
information or evaluation, or for emergency repair or overhaul work by 
such government. This Notice shall be marked on any reproduction of this 
data in whole or in part.
    (b) This Notice shall be marked on any reproduction of these data, 
in whole or in part.

                             (End of notice)

Alternate II:
    (h)(3)(i) Notwithstanding subparagraph (h)(1) of this clause, the 
agreement may

[[Page 185]]

identify and specify the delivery of restricted computer software, or 
the Contracting Officer may require by written request the delivery of 
restricted computer software that has been withheld or would otherwise 
be withholdable. If delivery of such computer software is so required, 
the Recipient may affix the following ``Restricted Rights Notice'' to 
the computer software and the Government will thereafter treat the 
computer software, subject to paragraphs (d) and (e) of this clause, in 
accordance with the Notice:

                        RESTRICTED RIGHTS NOTICE

    (a) This computer software is submitted with restricted rights under 
Government Agreement No. -------- (and subaward/contract --------, if 
appropriate). It may not be used, reproduced, or disclosed by the 
Government except as provided in paragraph (c) of this Notice or as 
otherwise expressly stated in the agreement.
    (b) This computer software may be--
    (1) Used or copied for use in or with the computer or computers for 
which it was acquired, including use at any Government installation to 
which such computer or computers may be transferred;
    (2) Used or copies for use in a backup computer if any computer for 
which it was acquired is inoperative;
    (3) Reproduced for safekeeping (archives) or backup purposes;
    (4) Modified, adapted, or combined with other computer software, 
provided that the modified, combined, or adapted portions of the 
derivative software are made subject to the same restricted rights;
    (5) Disclosed to and reproduced for use by Federal support service 
Contractors in accordance with subparagraphs (b)(1) through (4) of this 
clause, provided the Government makes such disclosure or reproduction 
subject to these restricted rights; and
    (6) Used or copies for use in or transferred to a replacement 
computer.
    (c) Notwithstanding the foregoing, if this computer software is 
published copyrighted computer software, it is licensed to the 
Government, without disclosure prohibitions, with the minimum rights set 
forth in paragraph (b) of this clause.
    (d) Any other rights or limitations regarding the use, duplication, 
or disclosure of this computer software are to be expressly stated in, 
or incorporated in, the agreement.
    (e) This Notice shall be marked on any reproduction of this computer 
software, in whole or in part.

                             (End of notice)

    (ii) Where it is impractical to include the Restricted Rights Notice 
on restricted computer software, the following short-form Notice may be 
used in lieu thereof:

                        RESTRICTED RIGHTS NOTICE

    Use, reproduction, or disclosure is subject to restrictions set 
forth in Agreement No. -------- (and subaward/contract --------, if 
appropriate) with -------- (name of Recipient and subrecipient/
contractor).

                             (End of notice)

    (iii) If restricted computer software is delivered with the 
copyright notice of 17 U.S.C. 401, it will be presumed to be published 
copyrighted computer software licensed to the Government without 
disclosure prohibitions, with the minimum rights set forth in paragraph 
(b) of this clause, unless the Recipient includes the following 
statement with such copyright notice: ``Unpublished--rights reserved 
under the Copyright Laws of the United States.''

                             (End of clause)



      Sec. Appendix B to Subpart D of Part 600--Contract Provisions

    All contracts awarded by a recipient, including those for amounts 
less than the simplified acquisition threshold, must contain the 
following provisions as applicable:
    1. Equal Employment Opportunity--All contracts must contain a 
provision requiring compliance with E.O. 11246 (3 CFR, 1964-1965 Comp., 
p. 339), ``Equal Employment Opportunity,'' as amended by E.O. 11375 (3 
CFR, 1966-1970 Comp., p. 684), ``Amending Executive Order 11246 Relating 
to Equal Employment Opportunity,'' and as supplemented by regulations at 
41 CFR chapter 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 subawards in excess of $2,000 for construction 
or repair awarded by recipients and subrecipients must 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 must 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 
must report all suspected or reported violations to the responsible DOE 
contracting officer.
    3. Contact Work Hours and Safety Standards Act (40 U.S.C. 327-333)--
Where applicable, all contracts awarded by recipients in excess of 
$100,000 for construction and other purposes that involve the employment 
of mechanics

[[Page 186]]

or laborers must 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 is 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 
is 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.
    4. Rights to Inventions and Data Made Under a Contract or 
Agreement--Contracts or agreements for the performance of experimental, 
development, or research work must provide for the rights of the Federal 
Government and the recipient in any resulting invention in accordance 
with 10 CFR 600.325 and Appendix A--Patent and Data Rights to Subpart D, 
Part 600.
    5. 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 subawards of amounts in excess of $100,000 must 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 
(41 U.S.C. 7401 et seq.) and the Federal Water Pollution control act as 
amended (33 U.S.C. 1251 et seq.). Violations must be reported to the 
responsible DOE contracting officer and the Regional Office of the 
Environmental Protection Agency (EPA).
    6. Byrd Anti-Lobbying Amendment (31 U.S.C. 1352)--Contractors who 
apply or bid for an award of $100,000 or more must 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 must also disclose any lobbing 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.
    7. Debarment and Suspension (E.O.s 12549 and 12689--Contract awards 
that exceed the simplified acquisition threshold and certain other 
contract awards must not be made to parties listed on nonprocurement 
portion of the General Services Administration's Lists of Parties 
Excluded from Federal Procurement and Nonprocurement Programs in 
accordance with E.O.s 12549 (3 CFR, 1986 Comp., p. 189) and 12689 (3 
CFR, 1989 Comp., p. 235),``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 must provide the required 
certification regarding its exclusion status and that of its principals.
    8. Davis-Bacon Act (40 U.S.C. 276a)--As a general rule, it is 
unlikely that the Davis-Bacon Act, which among other things requires 
payment of prevailing wages on projects for the construction of public 
works, would apply to financial assistance awards. However, the presence 
of certain factors (e.g., requirement of particular program statues; 
title to a construction facility resting in the Government) might 
necessitate a closer analysis of the award, to determine if the Davis-
Bacon Act would apply in the particular factual situation presented.

Subpart 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.

[[Page 187]]

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



Sec. 600.502  What must DOE determine.

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



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

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



Sec. 600.504  Information an applicant must submit.

    (a) Any applicant for financial assistance under a covered program 
shall submit with the application for financial assistance, or at such 
later time as may be specified by DOE, evidence for DOE to consider in 
making findings required under Sec. 600.502(a) and findings concerning 
ownership status under Sec. 600.502(b).

[[Page 188]]

    (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;
    (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.



     Sec. 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).

[[Page 189]]

    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]



         Sec. Appendix B to Part 600--Audit Report Distributees

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

[[Page 190]]

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 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

[[Page 191]]

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,
    (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.

[[Page 192]]

    (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
    (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.

[[Page 193]]

    (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,
    (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.

[[Page 194]]

    (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 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.

[[Page 195]]

    (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 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]

    Effective Date Note: At 74 FR 66032, Dec. 14, 2009, Sec. 601.400 
was amended by revising paragraphs (a), (b), and (e), effective January 
13, 2010. For the convenience of the user, the revised text is set forth 
as follows:



Sec. 601.400  Penalties.

    (a) Any person who makes an expenditure prohibited herein shall be 
subject to a civil penalty of not less than $15,000 and not more than 
$150,000 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 $15,000 and not more than $150,000 
for each such failure.

                                * * * * *

    (e) First offenders under paragraphs (a) or (b) of this section 
shall be subject to a civil penalty of $15,000, absent aggravating 
circumstances. Second and subsequent offenses by persons shall be 
subject to an appropriate civil penalty between $15,000 and $150,000, as 
determined by the agency head or his or her designee.

                                * * * * *



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

[[Page 196]]

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 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.



     Sec. 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

[[Page 197]]

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]

    Effective Date Note: At 74 FR 66032, Dec. 14, 2009, appendix a to 
part 601 was amended by revising the last sentence, second undesignated 
paragraph, in paragraph (3) of the section entitled, ``Certification for 
Contracts, Grants, Loans, and Cooperative Agreements'' and revising the 
last sentence, second undesignated paragraph, in the section entitled, 
``Statement for Loan Guarantees and Loan Insurance.'', effective January 
13, 2010. For the convenience of the user, the revised text is set forth 
as follows:



      Sec. Appendix A to Part 601--Certification Regarding Lobbying

 Certification for Contracts, Grants, Loans, and Cooperative Agreements

                                * * * * *

    (3) * * *
    * * * Any person who fails to file the required certification shall 
be subject to a civil penalty of not less than $15,000 and not more than 
$150,000 for each such failure.

            Statement for Loan Guarantees and Loan Insurance

                                * * * * *

    * * * Any person who fails to file the required statement shall be 
subject to a civil penalty of not less than $15,000 and not more than 
$150,000 for each such failure.

[[Page 198]]

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


[[Page 199]]


[GRAPHIC] [TIFF OMITTED] TC01OC91.010


[[Page 200]]


[GRAPHIC] [TIFF OMITTED] TC01OC91.011



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.

[[Page 201]]

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 Health, Safety and Security or any office to 
which its functions are subsequently redelegated) for health related 
research, education/training, conferences, communication, and related 
activities.

[60 FR 5841, Jan. 31, 1995, as amended at 71 FR 68729, Nov. 28, 2006]



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 DOE Chief Health, Safety and Security Officer, 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 with the procedures prescribed in that part.

[60 FR 5841, Jan. 31, 1995, as amended at 71 FR 68729, Nov. 28, 2006]



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

[[Page 202]]

Health, Safety and Security 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.

[60 FR 5841, Jan. 31, 1995, as amended at 71 FR 68729, Nov. 28, 2006]



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 Illness and Injury 
Prevention Programs, HS-13/Germantown Building, U.S. Department of 
Energy, 1000 Independence Avenue, SW., Washington, DC 20585-1290, 301-
903-4501, 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.

[60 FR 5841, Jan. 31, 1995, as amended at 71 FR 68729, Nov. 28, 2006]



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

[[Page 203]]

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.



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

[[Page 204]]

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 Health, Safety and Security 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 Health, Safety and Security Merit Review 
System), the importance and relevance of the proposal to the Office of 
Health, Safety and Security'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.

[60 FR 5841, Jan. 31, 1995, as amended at 71 FR 68729, Nov. 28, 2006]



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 Illness 
and Injury Prevention Programs, HS-13/Germantown Building, U.S. 
Department of Energy, 1000 Independence Avenue, SW., Washington, DC 
20585-1290).
    (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 of Agriculture at 9 CFR chapter I, subchapter A, 
pertaining to the care, handling, and treatment of warm-blooded

[[Page 205]]

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 Illness and Injury Prevention Programs, HS-
13/Germantown Building, U.S. Department of Energy, 1000 Independence 
Avenue, SW., Washington, DC 20585-1290).

[60 FR 5841, Jan. 31, 1995, as amended at 71 FR 68730, Nov. 28, 2006]



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,

[[Page 206]]

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.



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, Office 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 that includes the specific 
information in question shall be sent by registered mail to the U.S. 
Department of Energy, Attn: Director of Classification, HS-90, P.O. Box 
A, Germantown, MD 20875. 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 Security Operations for Headquarters 
awards or from the cognizant field office 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.

[60 FR 5841, Jan. 31, 1995, as amended at 71 FR 68730, Nov. 28, 2006]



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 Health, 
Safety and Security 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

[[Page 207]]

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 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.

[60 FR 5841, Jan. 31, 1995, as amended at 71 FR 68730, Nov. 28, 2006]



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

[[Page 208]]

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.



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.



   Sec. 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 603_TECHNOLOGY INVESTMENT AGREEMENTS--Table of Contents




                            Subpart A_General

Sec.
603.100 Purpose.
603.105 Description.
603.110 Use of TIAs.
603.115 Approval requirements.
603.120 Contracting officer warrant requirements.
603.125 Applicability of other parts of the DOE Assistance Regulations.

      Subpart B_Appropriate Use of Technology Investment Agreements

603.200 Contracting officer responsibilities.
603.205 Nature of the project.
603.210 Recipients.
603.215 Recipient's commitment and cost sharing.
603.220 Government participation.
603.225 Benefits of using a TIA.

[[Page 209]]

603.230 Fee or profit.

     Subpart C_Requirements for Expenditure-Based and Fixed-Support 
                    Technology Investment Agreements

603.300 Difference between an expenditure-based and a fixed-support TIA.
603.305 Use of a fixed-support TIA.
603.310 Use of an expenditure-based TIA.
603.315 Advantages of a fixed-support TIA.

                       Subpart D_Competition Phase

603.400 Competitive procedures.
603.405 Announcement format.
603.410 Announcement content.
603.415 Cost sharing.
603.420 Disclosure of information.

                 Subpart E_Pre-Award Business Evaluation

603.500 Pre-award business evaluation.
603.505 Program resources.

                         Recipient Qualification

603.510 Recipient qualifications.
603.515 Qualification of a consortium.

                              Total Funding

603.520 Reasonableness of total project funding.

                              Cost Sharing

603.525 Value and reasonableness of the recipient's cost sharing 
          contribution.
603.530 Acceptable cost sharing.
603.535 Value of proposed real property or equipment.
603.540 Acceptability of fully depreciated real property or equipment.
603.545 Acceptability of costs of prior RD&D.
603.550 Acceptability of intellectual property.
603.555 Value of other contributions.

               Fixed-Support or Expenditure-Based Approach

603.560 Estimate of project expenditures.
603.565 Use of a hybrid instrument.

               Accounting, Payments, and Recovery of Funds

603.570 Determining milestone payment amounts.
603.575 Repayment of Federal cost share.

 Subpart F_Award Terms Affecting Participants' Financial, Property, and 
                           Purchasing Systems

603.600 Administrative matters.
603.605 General policy.
603.610 Flow down requirements.

                            Financial Matters

603.615 Financial management standards for for-profit firms.
603.620 Financial management standards for nonprofit participants.
603.625 Cost principles or standards applicable to for-profit 
          participants.
603.630 Use of Federally-approved indirect cost rates for for-profit 
          firms.
603.635 Cost principles for nonprofit participants.
603.640 Audits of for-profit participants.
603.645 Periodic audits and award-specific audits of for-profit 
          participants.
603.650 Designation of auditor for for-profit participants.
603.655 Frequency of periodic audits of for-profit participants.
603.660 Other audit requirements.
603.665 Periodic audits of nonprofit participants.
603.670 Flow down audit requirements to subrecipients.
603.675 Reporting use of IPA for subawards.

                                Property

603.680 Purchase of real property and equipment by for-profit firms.
603.685 Management of real property and equipment by nonprofit 
          participants.
603.690 Requirements for Federally-owned property.
603.695 Requirements for supplies.

                               Purchasing

603.700 Standards for purchasing systems of for-profit firms.
603.705 Standards for purchasing systems of nonprofit organizations.

      Subpart G_Award Terms Related to Other Administrative Matters

603.800 Scope.

                                Payments

603.805 Payment methods.
603.810 Method and frequency of payment requests.
603.815 Withholding payments.
603.820 Interest on advance payments.

                  Revision of Budget and Program Plans

603.825 Government approval of changes in plans.
603.830 Pre-award costs.

                             Program Income

603.835 Program income requirements.

                          Intellectual Property

603.840 Negotiating data and patent rights.
603.845 Data rights requirements.
603.850 Marking of data.
603.855 Protected data.

[[Page 210]]

603.860 Rights to inventions.
603.865 March-in rights.
603.870 Marking of documents related to inventions.
603.875 Foreign access to technology and U.S. competitiveness 
          provisions.

                  Financial and Programmatic Reporting

603.880 Reports requirements.
603.885 Updated program plans and budgets.
603.890 Final performance report.
603.895 Protection of information in programmatic reports.
603.900 Receipt of final performance report.

                Records Retention and Access Requirements

603.905 Record retention requirements.
603.910 Access to a for-profit participant's records.
603.915 Access to a nonprofit participant's records.

                       Termination and Enforcement

603.920 Termination and enforcement requirements.

                      Subpart H_Executing the Award

603.1000 Contracting officer's responsibilities at time of award.

                           The Award Document

603.1005 General responsibilities.
603.1010 Substantive issues.
603.1015 Execution.

                  Reporting Information About the Award

603.1020 File documents.

                   Subpart I_Post-Award Administration

603.1100 Contracting officer's post-award responsibilities.
603.1105 Advance payments or payable milestones.
603.1110 Other payment responsibilities.
603.1115 Single audits.
603.1120 Award-specific audits.

            Subpart J_Definitions of Terms Used in This Part

603.1200 Definitions.
603.1205 Advance.
603.1210 Articles of collaboration.
603.1215 Assistance.
603.1220 Award-specific audit.
603.1225 Cash contributions.
603.1230 Commercial firm.
603.1235 Consortium.
603.1240 Cooperative agreement.
603.1245 Cost sharing.
603.1250 Data.
603.1255 Equipment.
603.1260 Expenditure-based award.
603.1265 Expenditures or outlays.
603.1270 Grant.
603.1275 In-kind contributions.
603.1280 Institution of higher education.
603.1285 Intellectual property.
603.1290 Participant.
603.1295 Periodic audit.
603.1300 Procurement contract.
603.1305 Program income.
603.1310 Program official.
603.1315 Property.
603.1320 Real property.
603.1325 Recipient.
603.1330 Supplies.
603.1335 Termination.
603.1340 Technology investment agreement.

Appendix A to Part 603--Applicable Federal Statutes, Executive Orders, 
          and Government-wide Regulations
Appendix B to Part 603--Flow Down Requirements for Purchases of Goods 
          and Services

    Authority: 42 U.S.C. 7101 et seq.; 31 U.S.C. 6301-6308; 50 U.S.C. 
2401 et seq., unless otherwise noted.

    Source: 71 FR 27161, May 9, 2006, unless otherwise noted.



                            Subpart A_General



Sec. 603.100  Purpose.

    This part establishes uniform policies and procedures for the 
implementation of DOE's ``other transactions'' authority and for award 
and administration of a technology investment agreement (TIA).



Sec. 603.105  Description.

    (a) A TIA is a special type of assistance instrument used to 
increase involvement of commercial firms in the Department of Energy's 
(DOE) research, development and demonstration (RD&D) programs. A TIA, 
like a cooperative agreement, requires substantial Federal involvement 
in the technical or management aspects of the project. A TIA may be 
either a type of cooperative agreement or a type of assistance 
transaction other than a cooperative agreement, depending on the 
intellectual property provisions. A TIA is either:
    (1) A type of cooperative agreement with more flexible provisions 
tailored for commercial firms (as distinct from a cooperative agreement 
subject to all of the requirements in 10 CFR 600), but with intellectual 
property provisions in

[[Page 211]]

full compliance with the DOE intellectual property statutes (i.e., Bayh-
Dole statute and 42 U.S.C. 2182 and 5908, as implemented in 10 CFR 
600.325). The authority to award this type of TIA is 42 U.S.C. 7256(a), 
as well as any program-specific statute that provides authority to award 
cooperative agreements; or
    (2) An assistance transaction other than a cooperative agreement, if 
its intellectual property provisions vary from the Bayh-Dole statute and 
42 U.S.C. 2182 and 5908, which require the Government to retain certain 
intellectual property rights and require differing treatment between 
large businesses and nonprofit organizations or small businesses. The 
authority to award this type of TIA is 42 U.S.C. 7256(g), as well as any 
program-specific statute that provides authority to award assistance 
agreements.
    (b) The two types of TIAs have similar requirements, except for the 
intellectual property requirements. If the contracting officer 
determines there is a unique, exceptional need to vary from the standard 
intellectual property requirements in 10 CFR 600.325, the TIA becomes an 
assistance transaction other than a cooperative agreement.



Sec. 603.110  Use of TIAs.

    The ultimate goal for using a TIA is to broaden the technology base 
available to meet DOE mission requirements and foster within the 
technology base new relationships and practices to advance the national 
economic and energy security of the United States, to promote scientific 
and technological innovation in support of that mission, and to ensure 
the environmental cleanup of the national nuclear weapons complex. A TIA 
therefore is designed to:
    (a) Reduce barriers to participation in RD&D programs by commercial 
firms that deal primarily in the commercial marketplace. A TIA allows 
contracting officers to tailor Government requirements and lower or 
remove barriers if it can be done with proper stewardship of Federal 
funds.
    (b) Promote new relationships among performers in the technology 
base. Collaborations among commercial firms that deal primarily in the 
commercial marketplace, firms that regularly perform on the DOE RD&D 
programs and nonprofit organizations can enhance overall quality and 
productivity.
    (c) Stimulate performers to develop and use new business practices 
and disseminate best practices throughout the technology base.



Sec. 603.115  Approval requirements.

    An officer of the Department who has been appointed by the President 
by and with the advice and consent of the Senate and who has been 
delegated the authority from the Secretary must approve the award of a 
TIA and may perform other functions of the Secretary as set forth in 42 
U.S.C. 7256(g). This authority may not be re-delegated. The DOE or 
National Nuclear Security Administration (NNSA) Senior Procurement 
Executive also must concur in the award of a TIA.



Sec. 603.120  Contracting officer warrant requirements.

    A contracting officer may award or administer a TIA only if the 
contracting officer's warrant authorizes the award or administration of 
a TIA.



Sec. 603.125  Applicability of other parts of the DOE Assistance
Regulations.

    (a) TIAs are explicitly covered in this part and 10 CFR part 600, 
subpart A--General. 10 CFR part 600, subpart A, addresses general 
matters that relate to assistance instruments.
    (b) Three additional parts of the DOE Assistance Regulations apply 
to TIAs, although they do not mention a TIA explicitly. They are:
    (1) 10 CFR part 601--lobbying restrictions apply by law (31 U.S.C. 
1352) to a TIA that is a cooperative agreement and as a matter of DOE 
policy to a TIA that is an assistance transaction other than a 
cooperative agreement.
    (2) 10 CFR part 606--debarment and suspension requirements apply 
because they cover nonprocurement instruments in general; and
    (3) 10 CFR part 607--drug-free work-place (financial assistance) 
requirements apply because they cover all assistance instruments.
    (c) Other portions of 10 CFR part 600 apply to a TIA as referenced 
in part 603.

[[Page 212]]



      Subpart B_Appropriate Use of Technology Investment Agreements



Sec. 603.200  Contracting officer responsibilities.

    Contracting officers may use a TIA only in appropriate situations. 
To do so, the use of a TIA must be justified based on:
    (a) The nature of the project, as discussed in Sec. 603.205;
    (b) The type of recipient, addressed in Sec. 603.210;
    (c) The recipient's commitment and cost sharing, as described in 
Sec. 603.215;
    (d) The degree of involvement of the Government program official, as 
discussed in Sec. 603.220; and
    (e) The contracting officer's judgment that the use of a TIA could 
benefit the RD&D objectives in ways that likely would not happen if 
another type of instrument were used (i.e., a contract, grant or 
cooperative agreement is not feasible or appropriate). Answers to the 
four questions in Sec. 603.225 form the basis for the contracting 
officer's judgment.



Sec. 603.205  Nature of the project.

    Judgments relating to the nature of the project include:
    (a) The principal purpose of the project is to carry out a public 
purpose of support or stimulation of RD&D (i.e., assistance), rather 
than acquiring goods or services for the benefit of the Government 
(i.e., acquisition);
    (b) To the maximum extent practicable, the TIA does not support RD&D 
that duplicates other RD&D being conducted under existing programs 
carried out by the DOE; and
    (c) The use of a standard contract, grant or cooperative agreement 
for the project is not feasible or appropriate (see questions in Sec. 
603.225).



Sec. 603.210  Recipients.

    (a) A TIA requires one or more for-profit firms, not acting in their 
capacity as the contractor of a FFRDC, to be involved either in the:
    (1) Performance of the RD&D project; or
    (2) The commercial application of the results.
    (i) In those cases where there is only a non-profit performer or a 
consortium of non-profit performers or non-profit performers and FFRDC 
contractors, if and as authorized, the performers must have at least a 
tentative agreement with a specific for-profit partner or partners who 
plan on being involved in the commercial application of the results.
    (ii) In consultation with legal counsel, the contracting officer 
should review the agreement between the performers and their for-profit 
partner to ensure that the for-profit partner is committed to being 
involved in the commercial application of the results.
    (b) A TIA may be particularly useful for awards to consortia (a 
consortium may include one or more for-profit firms, as well as State or 
local government agencies, institutions of higher education, other 
nonprofit organizations, or FFRDC contractors, if and as authorized) 
because:
    (1) If multiple performers are participating as a consortium, they 
may be more equal partners in the performance of the project than 
usually is the case with a prime recipient and subrecipients. All of the 
performers are more likely to be directly involved in developing and 
revising plans for the RD&D effort, reviewing technical progress, and 
overseeing financial and other business matters. That feature makes 
consortia well suited to building new relationships among performers in 
the technology base, a principal objective for the use of a TIA.
    (2) In addition, interactions among the participants within a 
consortium potentially provide a self-governance mechanism. The 
potential for additional self-governance is particularly good when a 
consortium includes multiple for-profit participants that normally are 
competitors within an industry.
    (c) A TIA may be used for carrying out RD&D performed by single 
firms or multiple performers (e.g., a teaming arrangement) in prime 
award-subaward relationships. In awarding a TIA in those cases, however, 
consideration should be given to providing for greater involvement of 
the program official or a way to increase self-governance (e.g., a prime 
award with multiple subawards

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arranged so as to give the subrecipients more insight into and authority 
and responsibility for the programmatic and business aspects of the 
overall project than they usually have).



Sec. 603.215  Recipient's commitment and cost sharing.

    (a) The contracting officer should evaluate whether the recipient 
has a strong commitment to and self-interest in the success of the 
project and incorporating the technology into products and processes for 
the commercial marketplace. Evidence of that commitment and interest 
should be found in the proposal, in the recipient's management plan, or 
through other means.
    (b) The contracting officer must seek cost sharing. The purpose of 
cost sharing is to ensure that the recipient incurs real risk that gives 
it a vested interest in the project's success; the willingness to commit 
to meaningful cost sharing is a good indicator of a recipient's self-
interest. The requirements are that:
    (1) To the maximum extent practicable, the non-Federal parties 
carrying out a RD&D project under a TIA are to provide at least half of 
the costs of the project; and
    (2) The parties must provide the cost sharing from non-Federal 
resources unless otherwise provided by law.
    (c) The contracting officer may consider whether cost sharing is 
impracticable in a given case, unless there is a statutory requirement 
for cost sharing that applies to the particular program under which the 
award is to be made. Before deciding that cost sharing is impracticable, 
the contracting officer should carefully consider if there are other 
factors that demonstrate the recipient's self-interest in the success of 
the current project.



Sec. 603.220  Government participation.

    A TIA is used to carry out cooperative relationships between the 
Federal Government and the recipient(s) which require substantial 
involvement of the Government in the execution of the RD&D. For example, 
program officials will participate in recipients' periodic reviews of 
progress and may be substantially involved with the recipients in the 
resulting revisions of plans for future effort.



Sec. 603.225  Benefits of using a TIA.

    Before deciding that a TIA is appropriate, the contracting officer 
also must judge that using a TIA could benefit the RD&D objectives in 
ways that likely would not happen if another type of assistance 
instrument were used (e.g., a cooperative agreement subject to all of 
the requirements of 10 CFR part 600). The contracting officer, in 
conjunction with Government program officials, must consider the 
questions in paragraphs (a) through (d) of this section, to help 
identify the benefits that may justify using a TIA and reducing some of 
the usual requirements. The contracting officer must report the answers 
to these questions to help the DOE measure the benefits of using a TIA. 
Note full concise answers are required only to questions that relate to 
the benefits perceived for using the TIA, rather than another type of 
funding instrument, for the particular project. A simple ``no'' or ``not 
applicable'' is a sufficient response for other questions. The questions 
are:
    (a) Will the use of a TIA permit the involvement of any commercial 
firms or business units of firms that would not otherwise participate in 
the project? If so:
    (1) What are the expected benefits of those firms' or divisions' 
participation (e.g., is there a specific technology that could be 
better, more readily available, or less expensive)?
    (2) Why would they not participate if an instrument other than a TIA 
were used? The contracting officer should identify specific provisions 
of the TIA or features of the TIA award process that enable their 
participation. For example, if the RD&D effort is based substantially on 
a for-profit firm's privately developed technology and the Government 
may be a major user of any commercial product developed as a result of 
the award, a for-profit firm may not participate unless the Government's 
intellectual property rights in the technology are modified.
    (b) Will the use of a TIA allow the creation of new relationships 
among participants in a consortium, at the prime or subtier levels, 
among business

[[Page 214]]

units of the same firm, or between non-Federal participants and the 
Federal Government that will foster better technology? If so:
    (1) Why do these new relationships have the potential for fostering 
technology that is better, more affordable, or more readily available?
    (2) Are there provisions of the TIA or features of the TIA award 
process that enable these relationships to form? If so, the contracting 
officer should be able to identify specifically what they are. If not, 
the contracting officer should be able to explain specifically why the 
relationships could not be created if another type of assistance 
instrument were used. For example, a large business firm may not be 
willing to participate in a consortium or teaming arrangement with small 
business firms and nonprofit firms under a standard cooperative 
agreement because those entities have invention rights under the Bayh-
Dole statute that are not available to large businesses. A large 
business firm may be willing to participate in a consortium or teaming 
arrangement only if all partners are substantially equal with regard to 
the allocation of intellectual property rights.
    (c) Will the use of a TIA allow firms or business units of firms 
that traditionally accept Government awards to use new business 
practices in the execution of the RD&D project that will foster better 
technology, new technology more quickly or less expensively, or 
facilitate partnering with commercial firms? If so:
    (1) What specific benefits result from the use of these new 
practices? The contracting officer should be able to explain 
specifically the potential for those benefits.
    (2) Are there provisions of the TIA or features of the TIA award 
process that enable the use of the new practices? If so, the contracting 
officer should be able to identify those provisions or features and 
explain why the practices could not be used if the award were made using 
another type of assistance instrument.
    (d) Are there any other benefits of the use of a TIA that could help 
DOE meet its objectives in carrying out the project? If so, the 
contracting officer should be able to identify specifically what they 
are, how they can help meet the objectives, what features of the TIA or 
award process enable DOE to realize them, and why the benefits likely 
would not be realized if an assistance instrument other than a TIA were 
used.



Sec. 603.230  Fee or profit.

    The contracting officer may not use a TIA if any participant is to 
receive fee or profit. Note that this policy extends to all performers 
of the project, including any subawards for substantive program 
performance, but it does not preclude participants' or subrecipients' 
payment of reasonable fee or profit when making purchases from suppliers 
of goods (e.g., supplies and equipment) or services needed to carry out 
the RD&D.



     Subpart C_Requirements for Expenditure-Based and Fixed-Support 
                    Technology Investment Agreements



Sec. 603.300  Difference between an expenditure-based and a 
fixed-support TIA.

    The contracting officer may negotiate expenditure-based or fixed-
support award terms for either types of TIA subject to the requirements 
in this subpart. The fundamental difference between an expenditure-based 
and a fixed-support TIA is:
    (a) For an expenditure-based TIA, the amounts of interim payments or 
the total amount ultimately paid to the recipient are based on the 
amounts the recipient expends on project costs. If a recipient completes 
the project specified at the time of award before it expends all of the 
agreed-upon Federal funding and recipient cost sharing, the Federal 
Government may recover its share of the unexpended balance of funds or, 
by mutual agreement with the recipient, amend the agreement to expand 
the scope of the RD&D project. An expenditure-based TIA, therefore, is 
analogous to a cost-type procurement contract or grant.
    (b) For a fixed-support TIA, the amount of assistance is established 
at the time of award and is not meant to be adjusted later. In that 
sense, a fixed-

[[Page 215]]

support TIA is somewhat analogous to a fixed-price procurement contract.



Sec. 603.305  Use of a fixed-support TIA.

    The contracting officer may use a fixed-support TIA if:
    (a) The agreement is to support or stimulate RD&D with outcomes that 
are well defined, observable, and verifiable;
    (b) The resources required to achieve the outcomes can be estimated 
well enough to ensure the desired level of cost sharing (see example in 
Sec. 603.560(b)); and
    (c) The agreement does not require a specific amount or percentage 
of recipient cost sharing. In cases where the agreement does require a 
specific amount or percentage of cost sharing, a fixed-support TIA is 
not practicable because the agreement has to specify cost principles or 
standards for costs that may be charged to the project; require the 
recipient to track the costs of the project; and provide access for 
audit to allow verification of the recipient's compliance with the 
mandatory cost sharing. A fixed-support TIA may not be used if there is:
    (1) A requirement (e.g., in statute or policy determination) for a 
specific amount or percentage of recipient cost sharing; or
    (2) The contracting officer, in consultation with the program 
official, otherwise elects to include in the TIA a requirement for a 
specific amount or percentage of cost sharing.



Sec. 603.310  Use of an expenditure-based TIA.

    In general, the contracting officer must use an expenditure-based 
TIA under conditions other than those described in Sec. 603.305. 
Reasons for any exceptions to this general rule must be documented in 
the award file and must be consistent with the policy in Sec. 603.230 
that precludes payment of fee or profit to participants.



Sec. 603.315  Advantages of a fixed-support TIA.

    In situations where the use of a fixed-support TIA is permissible 
(see Sec. Sec. 603.305 and 603.310), its use may encourage some 
commercial firms' participation in the RD&D. With a fixed-support TIA, 
the contracting officer can eliminate or reduce some post-award 
requirements that sometimes are cited as disincentives for those firms 
to participate. For example, a fixed-support TIA need not:
    (a) Specify minimum standards for the recipient's financial 
management system;
    (b) Specify cost principles or standards stating the types of costs 
the recipient may charge to the project;
    (c) Provide for financial audits by Federal auditors or independent 
public accountants of the recipient's books and records;
    (d) Set minimum standards for the recipient's purchasing system; or
    (e) Require the recipient to prepare financial reports for 
submission to the Federal Government.



                       Subpart D_Competition Phase



Sec. 603.400  Competitive procedures.

    DOE policy is to award a TIA using competitive procedures and a 
merit-based selection process, as described in 10 CFR 600.6 and 600.13, 
respectively:
    (a) In every case where required by statute; and
    (b) To the maximum extent feasible, in all other cases. If it is not 
feasible to use competitive procedures, the contracting officer must 
comply with the requirements in 10 CFR 600.6(c).



Sec. 603.405  Announcement format.

    If the contracting officer, in consultation with the program 
official, decides that a TIA is among the types of instruments that may 
be awarded, the additional elements described in Sec. Sec. 603.410 
through 603.420 should be included in the announcement.



Sec. 603.410  Announcement content.

    Once the contracting officer, in consultation with the program 
official, considers the factors described in Subpart B of this part and 
decides that a TIA is among the types of instruments that may be awarded 
pursuant to a program announcement, it is important to state that fact 
in the announcement. The announcement also should state that a TIA is 
more flexible than a traditional financial assistance agreement and that 
requirements are negotiable

[[Page 216]]

in areas such as audits and intellectual property rights that may cause 
concern for commercial firms. Doing so should increase the likelihood 
that commercial firms will be willing to submit proposals.



Sec. 603.415  Cost sharing.

    To help ensure a competitive process that is fair and equitable to 
all potential proposers, the announcement should state clearly:
    (a) That, to the maximum extent practicable, the non-Federal parties 
carrying out a RD&D project under a TIA are to provide at least half of 
the costs of the project (see Sec. 603.215(b));
    (b) The types of cost sharing that are acceptable;
    (c) How any in-kind contributions will be valued, in accordance with 
Sec. Sec. 603.530 through 603.555; and
    (d) Whether any consideration will be given to alternative 
approaches a proposer may offer to demonstrate its strong commitment to 
and self-interest in the project's success, in accordance with Sec. 
603.215.



Sec. 603.420  Disclosure of information.

    The announcement should tell potential proposers that:
    (a) For all TIAs, information described in paragraph (b) of this 
section is exempt from disclosure requirements of the Freedom of 
Information Act (FOIA)(codified at 5 U.S.C. 552) for a period of five 
years after the date on which the DOE receives the information from 
them; and
    (b) As provided in 42 U.S.C. 7256(g) incorporating certain 
provisions of 10 U.S.C. 2371, disclosure is not required, and may not be 
compelled, under FOIA during that period if:
    (1) A proposer submits the information in a competitive or 
noncompetitive process that could result in the award of a TIA; and
    (2) The type of information is among the following types that are 
exempt:
    (i) Proposals, proposal abstracts, and supporting documents; and
    (ii) Business plans and technical information submitted on a 
confidential basis.
    (c) If proposers desire to protect business plans and technical 
information for five years from FOIA disclosure requirements, they must 
mark them with a legend identifying them as documents submitted on a 
confidential basis. After the five-year period, information may be 
protected for longer periods if it meets any of the criteria in 5 U.S.C. 
552(b) (as implemented by the DOE in 10 CFR part 1004) for exemption 
from FOIA disclosure requirements.



                 Subpart E_Pre-Award Business Evaluation



Sec. 603.500  Pre-award business evaluation.

    (a) The contracting officer must determine the qualification of the 
recipient, as described in Sec. Sec. 603.510 and 603.515.
    (b) As the business expert working with the program official, the 
contracting officer also must address the financial aspects of the 
proposed agreement. The contracting officer must:
    (1) Determine that the total amount of funding for the proposed 
effort is reasonable, as addressed in Sec. 603.520.
    (2) Assess the value and determine the reasonableness of the 
recipient's proposed cost sharing contribution, as discussed in 
Sec. Sec. 603.525 through 603.555.
    (3) If contemplating the use of a fixed-support rather than 
expenditure-based TIA, ensure that its use is justified, as explained in 
Sec. Sec. 603.560 and 603.565.
    (4) Determine amounts for milestone payments, if used, as discussed 
in Sec. 603.570.



Sec. 603.505  Program resources.

    Program officials can be a source of information for determining the 
reasonableness of proposed funding (e.g., on labor rates, as discussed 
in Sec. 603.520) or establishing observable and verifiable technical 
milestones for payments (see Sec. 603.570).

                         Recipient Qualification



Sec. 603.510  Recipient qualifications.

    Prior to award of a TIA, the contracting officer's responsibilities 
for determining that the recipient is qualified are the same as those 
for awarding a grant or cooperative agreement. If the recipient is a 
consortium that is

[[Page 217]]

not formally incorporated, the contracting officer has the additional 
responsibility described in Sec. 603.515.



Sec. 603.515  Qualification of a consortium.

    (a) A consortium that is not formally incorporated must provide a 
collaboration agreement, commonly referred to as the articles of 
collaboration, which sets out the rights and responsibilities of each 
consortium member. This agreement binds the individual consortium 
members together and should discuss, among other things, the 
consortium's
    (1) Management structure;
    (2) Method of making payments to consortium members;
    (3) Means of ensuring and overseeing members' efforts on the 
project;
    (4) Provisions for members' cost sharing contributions; and
    (5) Provisions for ownership and rights in intellectual property 
developed previously or under the agreement.
    (b) If the prospective recipient of a TIA is a consortium that is 
not formally incorporated, the contracting officer must, in consultation 
with legal counsel, review the management plan in the consortium's 
collaboration agreement to ensure that the management plan is sound and 
that it adequately addresses the elements necessary for an effective 
working relationship among the consortium members. An effective working 
relationship is essential to increase the project's chances of success.

                              Total Funding



Sec. 603.520  Reasonableness of total project funding.

    In cooperation with the program official, the contracting officer 
must assess the reasonableness of the total estimated budget to perform 
the RD&D that will be supported by the agreement.
    (a) Labor. Much of the budget likely will involve direct labor and 
associated indirect costs, which may be represented together as a 
``loaded'' labor rate. The program official is an essential advisor on 
reasonableness of the overall level of effort and its composition by 
labor category. The contracting officer also may rely on experience with 
other awards as the basis for determining reasonableness.
    (b) Real property and equipment. In almost all cases, the project 
costs should normally include only depreciation or use charges for real 
property and equipment of for-profit participants, in accordance with 
Sec. 603.680. Remember that the budget for an expenditure-based TIA may 
not include depreciation of a participant's property as a direct cost of 
the project if that participant's practice is to charge the depreciation 
of that type of property as an indirect cost, as many organizations do.

                              Cost Sharing



Sec. 603.525  Value and reasonableness of the recipient's cost sharing
contribution.

    The contracting officer must:
    (a) Determine that the recipient's cost sharing contributions meet 
the criteria for cost sharing and determine values for them, in 
accordance with Sec. Sec. 603.530 through 603.555. In doing so, the 
contracting officer must:
    (1) Ensure that there are affirmative statements from any third 
parties identified as sources of cash contributions, and
    (2) Include in the award file an evaluation that documents how the 
values of the recipient's contributions to the funding of the project 
were determined.
    (b) Judge that the recipient's cost sharing contribution, as a 
percentage of the total budget, is reasonable. To the maximum extent 
practicable, the recipient must provide at least half of the costs of 
the project, in accordance with Sec. 603.215.



Sec. 603.530  Acceptable cost sharing.

    The contracting officer may accept any cash or in-kind contributions 
that meet all of the following criteria.
    (a) In the contracting officer's judgment, they represent meaningful 
cost sharing that demonstrates the recipient's commitment to the success 
of the RD&D project. Cash contributions clearly demonstrate commitment 
and they are strongly preferred over in-kind contributions.

[[Page 218]]

    (b) They are necessary and reasonable for accomplishment of the RD&D 
project's objectives.
    (c) They are costs that may be charged to the project under Sec. 
603.625 and Sec. 603.635, as applicable to the participant making the 
contribution.
    (d) They are verifiable from the recipient's records.
    (e) They are not included as cost sharing contributions for any 
other Federal award.
    (f) They are not paid by the Federal Government under another award, 
except:
    (1) Costs that are authorized by Federal statute to be used for cost 
sharing.
    (2) Independent research and development (IR&D) costs, as described 
in 48 CFR part 31.208-18, that meet all of the criteria in paragraphs 
(a) through (e) of this section. IR&D is acceptable as cost sharing, 
even though it may be reimbursed by the Government through other awards. 
It is standard business practice for all for-profit firms, including 
commercial firms, to recover their IR&D costs through prices charged to 
their customers. Thus, the cost principles at 48 CFR part 31 allow a 
for-profit firm that has expenditure-based, Federal procurement 
contracts to recover through those procurement contracts the allocable 
portion of its research and development costs associated with a 
technology investment agreement. Contracting officers should note that 
in accordance with section 603.545, they may not count participant's 
costs of prior research, including IR&D, as a cost sharing contribution.



Sec. 603.535  Value of proposed real property or equipment.

    The contracting officer rarely should accept values for cost sharing 
contributions of real property or equipment that are in excess of 
depreciation or reasonable use charges, as discussed in Sec. 603.680 
for for-profit participants. The contracting officer may accept the full 
value of a donated capital asset if the real property or equipment is to 
be dedicated to the project and the contracting officer expects that it 
will have a fair market value that is less than $5,000 at the project's 
end. In those cases, the contracting officer should value the donation 
at the lesser of:
    (a) The value of the property as shown in the recipient's accounting 
records (i.e., purchase price less accumulated depreciation); and
    (b) The current fair market value. The contracting officer may 
accept the use of any reasonable basis for determining the fair market 
value of the property. If there is a justification to do so, the 
contracting officer may accept the current fair market value even if it 
exceeds the value in the recipient's records.



Sec. 603.540  Acceptability of fully depreciated real property or equipment.

    The contracting officer should limit the value of any contribution 
of a fully depreciated asset to a reasonable use charge. In determining 
what is reasonable, the contracting officer must consider:
    (a) The original cost of the asset;
    (b) Its estimated remaining useful life at the time of the 
negotiations;
    (c) The effect of any increased maintenance charges or decreased 
performance due to age; and
    (d) The amount of depreciation that the participant previously 
charged to Federal awards.



Sec. 603.545  Acceptability of costs of prior RD&D.

    The contracting officer may not count any participant's costs of 
prior RD&D as a cost sharing contribution. Only the additional resources 
that the recipient will provide to carry out the current project (which 
may include pre-award costs for the current project, as described in 
Sec. 603.830) are to be counted.



Sec. 603.550  Acceptability of intellectual property.

    (a) In most instances, the contracting officer should not count 
costs of patents and other intellectual property (e.g., copyrighted 
material, including software) as cost sharing because:
    (1) It is difficult to assign values to these intangible 
contributions;
    (2) Their value usually is a manifestation of prior research costs, 
which are not allowed as cost share under Sec. 603.545; and

[[Page 219]]

    (3) Contributions of intellectual property rights generally do not 
represent the same cost of lost opportunity to a recipient as 
contributions of cash or tangible assets. The purpose of cost share is 
to ensure that the recipient incurs real risk that gives it a vested 
interest in the project's success.
    (b) The contracting officer may include costs associated with 
intellectual property if the costs are based on sound estimates of 
market value of the contribution. For example, a for-profit firm may 
offer the use of commercially available software for which there is an 
established license fee for use of the product. The costs of the 
development of the software would not be a reasonable basis for valuing 
its use.



Sec. 603.555  Value of other contributions.

    For types of participant contributions other than those addressed in 
Sec. Sec. 603.535 through 603.550, the general rule is that the 
contracting officer is to value each contribution consistently with the 
cost principles or standards in Sec. 603.625 and Sec. 603.635 that 
apply to the participant making the contribution. When valuing services 
and property donated by parties other than the participants, the 
contracting officer may use as guidance the provisions of 10 CFR 
600.313(b)(2) through (b)(5).

               Fixed-Support or Expenditure-Based Approach



Sec. 603.560  Estimate of project expenditures.

    (a) To use a fixed-support TIA, rather than an expenditure-based 
TIA, the contracting officer must have confidence in the estimate of the 
expenditures required to achieve well-defined outcomes. Therefore, the 
contracting officer must work carefully with program officials to select 
outcomes that, when the recipient achieves them, are reliable indicators 
of the amount of effort the recipient expended. However, the estimate of 
the required expenditures need not be a precise dollar amount, as 
illustrated by the example in paragraph (b) of this section, if:
    (1) The recipient is contributing a substantial share of the costs 
of achieving the outcomes, which must meet the criteria in Sec. 
603.305(a); and
    (2) The contracting officer is confident that the costs of achieving 
the outcomes will be at least a minimum amount that can be specified and 
the recipient is willing to accept the possibility that its cost sharing 
percentage ultimately will be higher if the costs exceed that minimum 
amount.
    (b) To illustrate the approach, consider a project for which the 
contracting officer is confident that the recipient will have to expend 
at least $800,000 to achieve the specified outcomes. The contracting 
officer must determine, in conjunction with program officials, the 
minimum level of recipient cost sharing required to demonstrate the 
recipient's commitment to the success of the project. For purposes of 
this illustration, let that minimum recipient cost sharing be 60% of the 
total project costs. In that case, the Federal share should be no more 
than 40% and the contracting officer could set a fixed level of Federal 
support at $320,000 (40% of $800,000). With that fixed level of Federal 
support, the recipient would be responsible for the balance of the costs 
needed to complete the project.
    (c) Note, however, that the level of recipient cost sharing 
negotiated should be based solely on the level needed to demonstrate the 
recipient's commitment. The contracting officer may not use a shortage 
of Federal Government funding for the program as a reason to try to 
persuade a recipient to accept a fixed-support TIA, rather than an 
expenditure-based instrument, or to accept responsibility for a greater 
share of the total project costs than it otherwise is willing to offer. 
If there is insufficient funding to provide an appropriate Federal 
Government share for the entire project, the contracting officer should 
re-scope the effort covered by the agreement to match the available 
funding.



Sec. 603.565  Use of a hybrid instrument.

    For a RD&D project that is to be carried out by a number of 
participants, the contracting officer may award a TIA that provides for 
some participants to perform under fixed-support arrangements and others 
to perform under expenditure-based arrangements.

[[Page 220]]

This approach may be useful, for example, if a commercial firm that is a 
participant will not accept an agreement with all of the post-award 
requirements of an expenditure-based award. Before using a fixed-support 
arrangement for that firm's portion of the project, the agreement must 
meet the criteria in Sec. 603.305.

               Accounting, Payments, and Recovery of Funds



Sec. 603.570  Determining milestone payment amounts.

    (a) If the contracting officer selects the milestone payment method 
(see Sec. 603.805), the contracting officer must assess the 
reasonableness of the estimated amount for reaching each milestone. This 
assessment enables the contracting officer to set the amount of each 
milestone payment to approximate the Federal share of the anticipated 
resource needs for carrying out that phase of the RD&D effort.
    (b) The Federal share at each milestone need not be the same as the 
Federal share of the total project. For example, the contracting officer 
might deliberately set payment amounts with a larger Federal share for 
early milestones if a project involves a start-up company with limited 
resources.
    (c) For an expenditure-based TIA, if the contracting officer 
establishes minimum cost sharing percentages for each milestone, those 
percentages should be indicated in the agreement.
    (d) For a fixed-support TIA, the milestone payments should be 
associated with the well-defined, observable, and verifiable technical 
outcomes (e.g., demonstrations, tests, or data analysis) that are 
established for the project in accordance with Sec. Sec. 603.305(a) and 
603.560(a).



Sec. 603.575  Repayment of Federal cost share.

    In accordance with the Energy Policy Act of 2005 (Public Law 109-
58), section 988(e), the contracting officer may not require repayment 
of the Federal share of a cost-shared TIA as a condition of making an 
award, unless otherwise authorized by statute.



 Subpart F_Award Terms Affecting Participants' Financial, Property, and 
                           Purchasing Systems



Sec. 603.600  Administrative matters.

    This subpart addresses ``systemic'' administrative matters that 
place requirements on the operation of a participant's financial 
management, property management, or purchasing system. Each 
participant's systems are organization-wide and do not vary with each 
agreement. Therefore, a TIA should address systemic requirements in a 
uniform way for each type of participant organization.



Sec. 603.605  General policy.

    The general policy for an expenditure-based TIA is to avoid 
requirements that would force participants to use different financial 
management, property management, and purchasing systems than they 
currently use for:
    (a) Expenditure-based Federal procurement contracts and assistance 
awards in general, if they receive them; or
    (b) Commercial business, if they have no expenditure-based Federal 
procurement contracts and assistance awards.



Sec. 603.610  Flow down requirements.

    If it is an expenditure-based award, the TIA must require 
participants to provide the same financial management, property 
management, and purchasing systems requirements to a subrecipient that 
would apply if the subrecipient were a participant. For example, a for-
profit participant would require a university subrecipient to comply 
with requirements that apply to a university participant and would 
require a GOCO or FFRDC subrecipient to comply with standards that 
conform as much as practicable with the requirements in the GOCO/FFRDC 
procurement contract. Note that this policy applies to subawards for 
substantive performance of portions of the RD&D project supported by the 
TIA and not to participants' purchases of goods or services needed to 
carry out the RD&D.

[[Page 221]]

                            Financial Matters



Sec. 603.615  Financial management standards for-profit firms.

    (a) To avoid causing needless changes in participants' financial 
management systems, an expenditure-based TIA will make for-profit 
participants that currently perform under other expenditure-based 
Federal procurement contracts or assistance awards subject to the same 
standards for financial management systems that apply to those other 
awards. Therefore, if a for-profit participant has expenditure-based DOE 
assistance awards other than a TIA, the TIA must apply the standards in 
10 CFR 600.311. The contracting officer may grant an exception and allow 
a for-profit participant that has other expenditure-based Federal 
Government awards to use an alternative set of standards that meets the 
minimum criteria in paragraph (b) of this section, if there is a 
compelling programmatic or business reason to do so. For each case in 
which an exception is granted, the contracting officer must document the 
reason in the award file.
    (b) For an expenditure-based TIA, the contracting officer is to 
allow and encourage each for-profit participant that does not currently 
perform under expenditure-based Federal procurement contracts or 
assistance awards (other than a TIA) to use its existing financial 
management system as long as the system, as a minimum:
    (1) Complies with Generally Accepted Accounting Principles.
    (2) Effectively controls all project funds, including Federal funds 
and any required cost share. The system must have complete, accurate, 
and current records that document the sources of funds and the purposes 
for which they are disbursed. It also must have procedures for ensuring 
that project funds are used only for purposes permitted by the agreement 
(see Sec. 603.625).
    (3) Includes, if advance payments are authorized under Sec. 
603.805, procedures to minimize the time elapsing between the payment of 
funds by the Government and the firm's disbursement of the funds for 
program purposes.



Sec. 603.620  Financial management standards for nonprofit participants.

    So as not to force system changes for any State, local government, 
institution of higher education, or other nonprofit organization, 
expenditure-based TIA requirements for the financial management system 
of any nonprofit participant are to be the same as those that apply to 
the participant's other Federal assistance awards. Specifically, the 
requirements are those in:
    (a) 10 CFR 600.220 for State and local governments; and
    (b) 10 CFR 600.121(b) for other nonprofit organizations, with the 
exception of nonprofit Government-owned, contractor-operated (GOCO) 
facilities and Federally Funded Research and Development Centers 
(FFRDCs) that are excepted from the definition of ``recipient'' in 10 
CFR 600.101. If a GOCO or FFRDC is a participant, the contracting 
officer must specify appropriate standards that conform as much as 
practicable with requirements in their procurement contract.



Sec. 603.625  Cost principles or standards applicable to for-profit
participants.

    (a) So as not to require any firm to needlessly change its cost 
accounting system, an expenditure-based TIA is to apply the Government 
cost principles in 48 CFR part 31 to for-profit participants that 
currently perform under expenditure-based Federal procurement contracts 
or assistance awards (other than a TIA) and therefore have existing 
systems for identifying allowable costs under those principles. If there 
are programmatic or business reasons to do otherwise, the contracting 
officer may grant an exception from this requirement and use alternative 
standards as long as the alternative satisfies the conditions described 
in paragraph (b) of this section; if an exception is granted the reasons 
must be documented in the award file.
    (b) For other for-profit participants, the contracting officer may 
establish alternative standards in the agreement as long as that 
alternative provides, as a minimum, that Federal funds and funds counted 
as recipients' cost sharing will be used only for costs that:
    (1) A reasonable and prudent person would incur in carrying out the 
RD&D

[[Page 222]]

project contemplated by the agreement. Generally, elements of cost that 
appropriately are charged are those identified with RD&D activities 
under the Generally Accepted Accounting Principles (see Statement of 
Financial Accounting Standards Number 2, ``Accounting for Research and 
Development Costs,'' October 1974). Moreover, costs must be allocated to 
DOE and other projects in accordance with the relative benefits the 
projects receive. Costs charged to DOE projects must be given consistent 
treatment with costs allocated to the participants' other RD&D 
activities (e.g., activities supported by the participants themselves or 
by non-Federal sponsors).
    (2) Are consistent with the purposes stated in the governing 
Congressional authorizations and appropriations. The contracting officer 
is responsible for ensuring that provisions in the award document 
address any requirements that result from authorizations and 
appropriations.



Sec. 603.630  Use Federally approved indirect cost rates for
for-profit firms.

    In accordance with the general policy in Sec. 603.605, the 
contracting officer must require a for-profit participant that has 
federally approved indirect cost rates for its Federal procurement 
contracts to use those rates to accumulate and report costs under an 
expenditure-based TIA. This includes both provisional and final rates 
that are approved up until the time that the TIA is closed out.



Sec. 603.635  Cost principles for nonprofit participants.

    So as not to force financial system changes for any nonprofit 
participant, an expenditure-based TIA will provide that costs to be 
charged to the RD&D project by any nonprofit participant must be 
determined to be allowable in accordance with:
    (a) OMB Circular A-87, if the participant is a State or local 
governmental organization;
    (b) OMB Circular A-21, if the participant is an institution of 
higher education;
    (c) 45 CFR Part 74, Appendix E, if the participant is a hospital; or
    (d) OMB Circular A-122, if the participant is any other type of 
nonprofit organization (the cost principles in 48 CFR parts 31 and 231 
are to be used by any nonprofit organization that is identified in 
Circular A-122 as being subject to those cost principles).



Sec. 603.640  Audits of for-profit participants.

    If the TIA is an expenditure-based award, the contracting officer 
must include in it an audit provision that addresses, for each for-
profit participant:
    (a) Whether the for-profit participant must have periodic audits, in 
addition to any award-specific audits, as described in Sec. 603.645;
    (b) Whether the Defense Contract Audit Agency (DCAA) or an 
independent public accountant (IPA) will perform required audits, as 
discussed in Sec. 603.650;
    (c) How frequently any periodic audits are to be performed, 
addressed in Sec. 603.655; and
    (d) Other matters described in Sec. 603.660, such as audit 
coverage, allowability of audit costs, auditing standards, and remedies 
for noncompliance.



Sec. 603.645  Periodic audits and award-specific audits of for-profit
participants.

    The contracting officer needs to consider requirements for both 
periodic audits and award-specific audits (as defined in Sec. 603.1295 
and Sec. 603.1220, respectively). The way that an expenditure-based TIA 
addresses the two types of audits will vary, depending upon the type of 
for-profit participant.
    (a) For for-profit participants that are audited by the DCAA or 
other Federal auditors, as described in Sec. Sec. 603.650(b) and 
603.655, specific requirements for periodic audits need not be added 
because the Federal audits should be sufficient to address whatever may 
be needed. The inclusion in the TIA of the standard access-to-records 
provision for those for-profit participants, as discussed in Sec. 
603.910(a), gives the necessary access in the event that the contracting 
officer later needs to request audits to address award-specific issues 
that arise.
    (b) For each other for-profit participant, the contracting officer:

[[Page 223]]

    (1) Should require that the participant have an independent auditor 
(i.e., the DCAA or an independent public accountant (IPA)) conduct 
periodic audits of its systems if it expends $500,000 or more per year 
in TIAs and other Federal assistance awards. A prime reason for 
including this requirement is that the Federal Government, for an 
expenditure-based award, necessarily relies on amounts reported by the 
participant's systems when it sets payment amounts or adjusts 
performance outcomes. The periodic audit provides some assurance that 
the reported amounts are reliable.
    (2) Must ensure that the award provides an independent auditor the 
access needed for award-specific audits, to be performed at the request 
of the contracting officer if issues arise that require audit support. 
However, consistent with the government-wide policies on single audits 
that apply to nonprofit participants (see Sec. 603.665), the 
contracting officer should rely on periodic audits to the maximum extent 
possible to resolve any award-specific issues.



Sec. 603.650  Designation of auditor for for-profit participants.

    The auditor identified in an expenditure-based TIA to perform 
periodic and award-specific audits of a for-profit participant depends 
on the circumstances, as follows:
    (a) The Federal cognizant agency or an IPA will be the auditor for a 
for-profit participant that does not meet the criteria in paragraph (b) 
of this section. Note that the allocable portion of the costs of the 
IPA's audit may be reimbursable under the TIA, as described in Sec. 
603.660(b). The IPA should be the one that the participant uses to 
perform other audits (e.g., of its financial statement), to minimize 
added burdens and costs.
    (b) Except as provided in paragraph (c) of this section, the Federal 
cognizant agency (e.g., DCAA) must be identified as the auditor for a 
GOCO or FFRDC and for any for-profit participant that is subject to 
Federal audits because it is currently performing under a Federal award 
that is subject to the:
    (1) Cost principles in 48 CFR part 31 of the Federal Acquisition 
Regulation (FAR); or
    (2) Cost Accounting Standards in 48 CFR Chapter 99.
    (c) If there are programmatic or business reasons that justify the 
use of an auditor other than the Federal cognizant agency for a for-
profit participant that meets the criteria in paragraph (b) of this 
section, the contracting officer may provide that an IPA will be the 
auditor for that participant in which case the reasons for this decision 
must be documented in the award file.



Sec. 603.655  Frequency of periodic audits of for-profit participants.

    If an expenditure-based TIA provides for periodic audits of a for-
profit participant by an IPA, the contracting officer must specify the 
frequency for those audits. The contracting officer should consider 
having an audit performed during the first year of the award, when the 
participant has its IPA do its next financial statement audit, unless 
the participant already had a systems audit due to other Federal awards 
within the past two years. The frequency thereafter may vary depending 
upon the dollars the participant is expending annually under the award, 
but it is not unreasonable to require an updated audit every two to 
three years to verify that the participant's systems continue to be 
reliable (the audit then would cover the two or three-year period 
between audits).



Sec. 603.660  Other audit requirements.

    If an expenditure-based TIA provides for audits of a for-profit 
participant by an IPA, the contracting officer also must specify:
    (a) What periodic audits are to cover. It is important to specify 
audit coverage that is only as broad as needed to provide reasonable 
assurance of the participant's compliance with award terms that have a 
direct and material effect on the RD&D project.
    (b) Who will pay for periodic and award-specific audits. The 
allocable portion of the costs of any audits by IPAs may be reimbursable 
under the TIA. The costs may be direct charges or allocated indirect 
costs, consistent

[[Page 224]]

with the participant's accounting system and practices.
    (c) The auditing standards that the IPA will use. The contracting 
officer must provide that the IPA will perform the audits in accordance 
with the Generally Accepted Government Auditing Standards.
    (d) The available remedies for noncompliance. The agreement must 
provide that the participant may not charge costs to the award for any 
audit that the contracting officer determines was not performed in 
accordance with the Generally Accepted Government Auditing Standards or 
other terms of the agreement. It also must provide that the Government 
has the right to require the participant to have the IPA take corrective 
action and, if corrective action is not taken, that the agreements 
officer has recourse to any of the remedies for noncompliance identified 
in 10 CFR 600.352(a).
    (e) Where the IPA is to send audit reports. The agreement must 
provide that the IPA is to submit audit reports to the contracting 
officer. It also must require that the IPA report instances of fraud 
directly to the Office of Inspector General (OIG), DOE.
    (f) The retention period for the IPA's working papers. The 
contracting officer must specify that the IPA is to retain working 
papers for a period of at least three years after the final payment, 
unless the working papers relate to an audit whose findings are not 
fully resolved within that period or to an unresolved claim or dispute 
(in which case, the IPA must keep the working papers until the matter is 
resolved and final action taken).
    (g) Who will have access to the IPA's working papers. The agreement 
must provide for Government access to working papers.



Sec. 603.665  Periodic audits of nonprofit participants.

    An expenditure-based TIA is an assistance instrument subject to the 
Single Audit Act (31 U.S.C. 7501-7507), so nonprofit participants are 
subject to the requirements under that Act and OMB Circular A-133. 
Specifically, the requirements are those in:
    (a) 10 CFR 600.226 for State and local governments; and
    (b) 10 CFR 600.126 for other nonprofit organizations.



Sec. 603.670  Flow down audit requirements to subrecipients.

    (a) In accordance with Sec. 603.610, an expenditure-based TIA must 
require participants to flow down the same audit requirements to a 
subrecipient that would apply if the subrecipient were a participant.
    (b) For example, a for-profit participant that is audited by the 
DCAA:
    (1) Would flow down to a university subrecipient the Single Audit 
Act requirements that apply to a university participant;
    (2) Could enter into a subaward allowing a for-profit participant, 
under the circumstances described in Sec. 603.650(a), to use an IPA to 
do its audits.
    (c) This policy applies to subawards for substantive performance of 
portions of the RD&D project supported by the TIA, and not to 
participants' purchases of goods or services needed to carry out the 
RD&D.



Sec. 603.675  Reporting use of IPA for subawards.

    An expenditure-based TIA should require participants to report to 
the contracting officer when they enter into any subaward allowing a 
for-profit subawardee to use an IPA, as described in Sec. 
603.670(b)(2).

                                Property



Sec. 603.680  Purchase of real property and equipment by for-profit firms.

    (a) With the two exceptions described in paragraph (b) of this 
section, the contracting officer must require a for-profit firm to 
purchase real property or equipment with its own funds that are separate 
from the RD&D project. The contracting officer should allow the firm to 
charge to an expenditure-based TIA only depreciation or use charges for 
real property or equipment (and the cost estimate for a fixed-support 
TIA only would include those costs). Note that the firm must charge 
depreciation consistently with its usual accounting practice. Many firms 
treat depreciation as an indirect cost. Any firm that usually charges 
depreciation indirectly

[[Page 225]]

for a particular type of property must not charge depreciation for that 
property as a direct cost to the TIA.
    (b) In two situations, the contracting officer may grant an 
exception and allow a for-profit firm to use project funds, which 
includes both the Federal Government and recipient shares, to purchase 
real property or equipment (i.e., to charge to the project the full 
acquisition cost of the property). The two circumstances, which should 
be infrequent for equipment and extremely rare for real property, are 
those in which either:
    (1) The real property or equipment will be dedicated to the project 
and has a current fair market value that is less than $5,000 by the time 
the project ends; or
    (2) The contracting officer gives prior approval for the firm to 
include the full acquisition cost of the real property or equipment as 
part of the cost of the project (see Sec. 603.535).
    (c) If the contracting officer grants an exception in either of the 
circumstances described in paragraphs (b)(1) and (2) of this section, 
the real property or equipment must be subject to the property 
management standards in 10 CFR 600.321(b) through (e). As provided in 
those standards, the title to the real property or equipment will vest 
conditionally in the for-profit firm upon acquisition. A TIA, whether it 
is a fixed-support or expenditure-based award, must specify that any 
item of equipment that has a fair market value of $5,000 or more at the 
conclusion of the project also will be subject to the disposition 
process in 10 CFR 600.321(f), whereby the Federal Government will 
recover its interest in the property at that time.



Sec. 603.685  Management of real property and equipment by nonprofit
participants.

    For nonprofit participants, a TIA's requirements for vesting of 
title, use, management, and disposition of real property or equipment 
acquired under the award are the same as those that apply to the 
participant's other Federal assistance awards. Specifically, the 
requirements are those in:
    (a) 10 CFR 600.231 and 600.232, for participants that are States and 
local governmental organizations; and
    (b) 10 CFR 600.132 and 600.134, for other nonprofit participants, 
with the exception of nonprofit GOCOs and FFRDCs that are exempted from 
the definition of ``recipient'' in 10 CFR 600.101. If a GOCO or FFRDC is 
a participant, the contracting officer must specify appropriate 
standards that conform as much as practicable with the requirements in 
its procurement contract. Note also that:
    (1) If the TIA is a cooperative agreement, 31 U.S.C. 6306 provides 
authority to vest title to tangible personal property in a nonprofit 
institution of higher education or in a nonprofit organization whose 
primary purpose is conducting scientific research, without further 
obligation to the Federal Government; and
    (2) A TIA therefore must specify any conditions on the vesting of 
title to real property or equipment acquired by any such nonprofit 
participant.



Sec. 603.690  Requirements for Federally-owned property.

    If DOE provides Federally-owned property to any participant for the 
performance of RD&D under a TIA, the contracting officer must require 
that participant to account for, use, and dispose of the property in 
accordance with:
    (a) 10 CFR 600.322, if the participant is a for-profit firm.
    (b) 10 CFR 600.232(f), if the participant is a State or local 
governmental organization. Note that 10 CFR 600.232(f) contains 
additional requirements for managing the property.
    (c) 10 CFR 600.133(a) and 600.134(f), if the participant is a 
nonprofit organization other than a GOCO or FFRDC (requirements for 
GOCOs and FFRDCs should conform with the property standards in their 
procurement contracts).



Sec. 603.695  Requirements for supplies.

    An expenditure-based TIA's provisions should permit participants to 
use their existing procedures to account

[[Page 226]]

for and manage supplies. A fixed-support TIA should not include 
requirements to account for or manage supplies.

                               Purchasing



Sec. 603.700  Standards for purchasing systems of for-profit firms.

    (a) If the TIA is an expenditure-based award, it should require for-
profit participants that currently perform under DOE assistance 
instruments subject to the purchasing standards in 10 CFR 600.331 to use 
the same requirements for the TIA, unless there are programmatic or 
business reasons to do otherwise (in which case the reasons must be 
documented in the award file).
    (b) Other for-profit participants under an expenditure-based TIA 
should be allowed to use their existing purchasing systems, as long as 
they flow down the applicable requirements in Federal statutes, 
Executive Orders or Government-wide regulations (see Appendices A and B 
to this part for a list of those requirements).



Sec. 603.705  Standards for purchasing systems of nonprofit organizations.

    So as not to force system changes for any nonprofit participant, an 
expenditure-based TIA should provide that each nonprofit participant's 
purchasing system comply with:
    (a) 10 CFR 600.236, if the participant is a State or local 
governmental organization.
    (b) 10 CFR 600.140 through 10 CFR 600.149, if the participant is a 
nonprofit organization other than a GOCO or FFRDC that is excepted from 
the definition of ``recipient'' in 10 CFR 600.101. If a GOCO or FFRDC is 
a participant, the TIA must specify appropriate standards that conform 
as much as practicable with requirements in its procurement contract.



      Subpart G_Award Terms Related to Other Administrative Matters



Sec. 603.800  Scope.

    This subpart addresses administrative matters that do not impose 
organization-wide requirements on a participant's financial management, 
property management, or purchasing system. Because an organization does 
not have to redesign its systems to accommodate award-to-award 
variations in these requirements, TIAs may differ in the requirements 
that they specify for a given participant, based on the circumstances of 
the particular RD&D project. To eliminate needless administrative 
complexity, the contracting officer should handle some requirements, 
such as the payment method, in a uniform way for the agreement as a 
whole.

                                Payments



Sec. 603.805  Payment methods.

    A TIA may provide for:
    (a) Reimbursement, as described in 10 CFR 600.312(a)(1), if it is an 
expenditure-based award.
    (b) Advance payments, as described in 10 CFR 600.312(a)(2), subject 
to the conditions in 10 CFR 600.312(b)(2)(i) through (iii).
    (c) Payments based on payable milestones. These are payments made 
according to a schedule that is based on predetermined measures of 
technical progress or other payable milestones. This approach relies 
upon the fact that, as the RD&D progresses throughout the term of the 
agreement, observable activity will be taking place. The recipient is 
paid upon the accomplishment of a predetermined measure of progress. A 
fixed-support TIA must use this payment method (this does not preclude 
use of an initial advance payment, if there is no alternative to meeting 
immediate cash needs). Payments based on payable milestones is the 
preferred method of payment for an expenditure-based TIA if well-defined 
outcomes can be identified.



Sec. 603.810  Method and frequency of payment requests.

    The procedure and frequency for payment requests depend upon the 
payment method, as follows:
    (a) For either reimbursements or advance payments, the TIA must 
allow recipients to submit requests for payment at least monthly. The 
contracting officer may authorize the recipients to use the forms or 
formats described in 10 CFR 600.312(d).

[[Page 227]]

    (b) If the payments are based on payable milestones, the recipient 
will submit a report or other evidence of accomplishment to the program 
official at the completion of each predetermined activity. If the award 
is an expenditure-based TIA that includes minimum cost sharing 
percentages for milestones (see 10 CFR 603.570(c)), the recipient must 
certify in the report that the minimum cost sharing requirement has been 
met. The contracting officer may approve payment to the recipient after 
receiving validation from the program manager that the milestone was 
successfully reached.



Sec. 603.815  Withholding payments.

    A TIA must provide that the contracting officer may withhold 
payments in the circumstances described in 10 CFR 600.312(g), but not 
otherwise.



Sec. 603.820  Interest on advance payments.

    If an expenditure-based TIA provides for either advance payments or 
payable milestones, the agreement must require the recipient to:
    (a) Maintain in an interest-bearing account any advance payments or 
milestone payment amounts received in advance of needs to disburse the 
funds for program purposes unless:
    (1) The recipient receives less than $120,000 in Federal grants, 
cooperative agreements, and TIAs per year;
    (2) The best reasonably available interest-bearing account would not 
be expected to earn interest in excess of $1,000 per year on the advance 
or milestone payments; or
    (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 for the project.
    (b) Remit annually the interest earned to the contracting officer.

                  Revision of Budget and Program Plans



Sec. 603.825  Government approval of changes in plans.

    If it is an expenditure-based award, a TIA must require the 
recipient to obtain the contracting officer's prior approval if there is 
to be a change in plans that may result in a need for additional Federal 
funding (this is unnecessary for a fixed-support TIA because the 
recipient is responsible for additional costs of achieving the 
outcomes). Other than that, the program official's substantial 
involvement in the project should ensure that the Government has advance 
notice of changes in plans.



Sec. 603.830  Pre-award costs.

    Pre-award costs, as long as they are otherwise allowable costs of 
the project, may be charged to an expenditure-based TIA only with the 
specific approval of the contracting officer. All pre-award costs are 
incurred at the recipient's risk (e.g., DOE is not obligated to 
reimburse the costs if, for any reason, the recipient does not receive 
an award, or if the award is less than anticipated and inadequate to 
cover the costs).

                             Program Income



Sec. 603.835  Program income requirements.

    A TIA must apply the standards of 10 CFR 600.314 for program income 
that may be generated. The TIA must also specify if the recipient is to 
have any obligation to the Federal Government with respect to program 
income generated after the end of the project period (i.e., the period, 
as established in the award document, during which Federal support is 
provided).

                          Intellectual Property



Sec. 603.840  Negotiating data and patent rights.

    (a) The contracting officer must confer with program officials and 
assigned intellectual property counsel to develop an overall strategy 
for intellectual property that takes into account inventions and data 
that may result from the project and future needs the Government may 
have for rights in them. The strategy should take into account program 
mission requirements and any special circumstances that would support 
modification of standard patent and data terms, and should include 
considerations such as the extent of the recipient's contribution to the

[[Page 228]]

development of the technology; expected Government or commercial use of 
the technology; the need to provide equitable treatment among consortium 
or team members; and the need for the DOE to engage non-traditional 
Government contractors with unique capabilities.
    (b) Because a TIA entails substantial cost sharing by recipients, 
the contracting officer must use discretion in negotiating Government 
rights to data and patentable inventions resulting from the RD&D under 
the agreements. The considerations in Sec. Sec. 603.845 through 603.875 
are intended to serve as guidelines, within which there is considerable 
latitude to negotiate provisions appropriate to a wide variety of 
circumstances that may arise.



Sec. 603.845  Data rights requirements.

    (a) If the TIA is a cooperative agreement, the requirements at 10 
CFR 600.325(d), Rights in data-general rule, apply. The ``Rights in 
Data--General'' provision in Appendix A to Subpart D of 10 CFR 600 
normally applies. This provision provides the Government with unlimited 
rights in data first produced in the performance of the agreement, 
except as provided in paragraph (c) Copyright. However, in certain 
circumstances, the ``Rights in Data--Programs Covered Under Special 
Protected Data Statutes'' provision in Appendix A may apply.
    (b) If the TIA is an assistance transaction other than a cooperative 
agreement, the requirements at 10 CFR 600.325(e), Rights in data--
programs covered under special protected data statutes, normally apply. 
The ``Rights in Data--Programs Covered Under Special Data Statutes'' 
provision in Appendix A to Subpart D of 10 CFR 600 may be modified to 
accommodate particular circumstances (e.g., access to or expanded use 
rights in protected data among consortium or team members), or to list 
data or categories of data that the recipient must make available to the 
public. In unique cases, the contracting officer may negotiate special 
data rights requirements that vary from those in 10 CFR 600.325. 
Modifications to the standard data provisions must be approved by 
intellectual property counsel.



Sec. 603.850  Marking of data.

    To protect the recipient's interests in data, the TIA should require 
the recipient to mark any particular data that it wishes to protect from 
disclosure with a specific legend specified in the agreement identifying 
the data as data subject to use, release, or disclosure restrictions.



Sec. 603.855  Protected data.

    In accordance with law and regulation, the contracting officer must 
not release or disclose data marked with a restrictive legend (as 
specified in 603.850) to third parties, unless they are parties 
authorized by the award agreement or the terms of the legend to receive 
the data and are subject to a written obligation to treat the data in 
accordance with the marking.



Sec. 603.860  Rights to inventions.

    (a) The contracting officer should negotiate rights in inventions 
that represent an appropriate balance between the Government's interests 
and the recipient's interests.
    (1) The contracting officer has the flexibility to negotiate patent 
rights requirements that vary from that which the Bayh-Dole statute 
(Chapter 18 of Title 35, U.S.C.) and 42 U.S.C. 2182 and 5908 require. A 
TIA becomes an assistance transaction other than a cooperative agreement 
if its patent rights requirements vary from those required by these 
statutes.
    (2) If the TIA is a cooperative agreement, the patent rights 
provision of 10 CFR 600.325(b) or (c) or 10 CFR 600.136 applies, 
depending on the type of recipient. Unless a class waiver has been 
issued under 10 CFR 784.7, it will be necessary for a large, for-profit 
business to request a patent waiver to obtain title to subject 
inventions.
    (b) The contracting officer may negotiate Government rights that 
vary from the statutorily-required patent rights requirements described 
in paragraph (a)(2) of this section when necessary to accomplish program 
objectives and foster the Government's interests. Doing so would make 
the TIA an assistance transaction other than a cooperative agreement. 
The contracting officer must decide, with the

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help of the program manager and assigned intellectual property counsel, 
what best represents a reasonable arrangement considering the 
circumstances, including past investments and anticipated future 
investments of the recipient to the development of the technology, 
contributions under the current TIA, and potential commercial and 
Government markets. Any change to the standard patent rights provisions 
must be approved by assigned intellectual property counsel.
    (c) Taking past investments as an example, the contracting officer 
should consider whether the Government or the recipient has contributed 
more substantially to the prior RD&D that provides the foundation for 
the planned effort. If the predominant past contributor to the 
particular technology has been:
    (1) The Government, then the TIA's patent rights provision should be 
the standard provision as set forth in 10 CFR 600.325(b) or (c), or 10 
CFR 600.136, as applicable.
    (2) The recipient, then less restrictive patent requirements may be 
appropriate, which would make the TIA an assistance transaction other 
than a cooperative agreement. The contracting officer normally would, 
with the concurrence of intellectual property counsel, allow the 
recipient to retain title to subject inventions without going through 
the process of obtaining a patent waiver as required by 10 CFR 784. For 
example, with the concurrence of intellectual property counsel, the 
contracting officer also could eliminate or modify the nonexclusive 
paid-up license for practice by or on behalf of the Government to allow 
the recipient to benefit more directly from its investments.
    (d) For subawards under a TIA that is other than a cooperative 
agreement, the TIA should normally specify that subrecipients' invention 
rights are to be negotiated between recipient and subrecipient; that 
subrecipients will get title to inventions they make; or some other 
disposition of invention rights. Factors to be considered by the 
contracting officer in addressing subrecipient's invention rights 
include: the extent of cost sharing by parties at all tiers; a 
subrecipient's status as a small business, nonprofit, or FFRDC; and 
whether an appropriate field of use licensing requirement would meet the 
needs of the parties.
    (e) Consortium members may allocate invention rights in their 
collaboration agreement, subject to the review of the contracting 
officer (See Sec. 603.515). The contracting officer, in performing such 
review, should consider invention rights to be retained by the 
Government and rights that may be obtained by small business, nonprofit 
or FFRDC consortium members.



Sec. 603.865  March-in rights.

    A TIA's patent rights provision should include the Bayh-Dole march-
in rights set out in paragraph (j) of the Patent Rights (Small Business 
Firms and Nonprofit Organization) provision in Appendix A to subpart D 
of 10 CFR 600, or an equivalent clause, concerning actions that the 
Government may take to obtain the right to use subject inventions, if 
the recipient fails to take effective steps to achieve practical 
application of the subject inventions within a reasonable time. The 
march-in provision may be modified to best meet the needs of the 
program. However, only infrequently should the march-in provision be 
entirely removed (e.g., if a recipient is providing most of the funding 
for a RD&D project, with the Government providing a much smaller share).



Sec. 603.870  Marking of documents related to inventions.

    To protect the recipient's interest in inventions, the TIA should 
require the recipient to mark documents disclosing inventions it desires 
to protect by obtaining a patent. The recipient should mark the 
documents with a legend identifying them as intellectual property 
subject to public release or public disclosure restrictions, as provided 
in 35 U.S.C. 205.



Sec. 603.875  Foreign access to technology and U.S. competitiveness provisions.

    (a) Consistent with the objective of enhancing national security and 
United States competitiveness by increasing the public's reliance on the 
United States commercial technology,

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the contracting officer must include provisions in a TIA that addresses 
foreign access to technology developed under the TIA.
    (b) A provision must provide, as a minimum, that any transfer of the 
technology must be consistent with the U.S. export laws, regulations and 
the Department of Commerce Export Regulation at Chapter VII, Subchapter 
C, Title 15 of the CFR (15 CFR parts 730-774), as applicable.
    (c) A provision should also provide that any products embodying, or 
produced through the use of, any created intellectual property, will be 
manufactured substantially in the United States, and that any transfer 
of the right to use or sell the products must, unless the Government 
grants a waiver, require that the products will be manufactured 
substantially in the United States. In individual cases, the contracting 
officer, with the approval of the program official and intellectual 
property counsel, may waive or modify the requirement of substantial 
manufacture in the United States at the time of award, or subsequent 
thereto, upon a showing by the recipient that:
    (1) Alternative benefits are being secured for the United States 
taxpayer (e.g., increased domestic jobs notwithstanding foreign 
manufacture);
    (2) Reasonable but unsuccessful efforts have been made to transfer 
the technology under similar terms to those likely to manufacture 
substantially in the United States; or
    (3) Under the circumstances domestic manufacture is not commercially 
feasible.

                  Financial and Programmatic Reporting



Sec. 603.880  Reports requirements.

    A TIA must include requirements that, as a minimum, provide for 
periodic reports addressing program performance and, if it is an 
expenditure-based award, business/financial status. The contracting 
officer must require submission of the reports at least annually, and 
may require submission as frequently as quarterly (this does not 
preclude a recipient from electing to submit more frequently than 
quarterly the financial information that is required to process payment 
requests if the award is an expenditure-based TIA that uses 
reimbursement or advance payments under Sec. 603.810(a)). The 
requirements for the content of the reports are as follows:
    (a) The program portions of the reports must address progress toward 
achieving performance goals and milestones, including current issues, 
problems, or developments.
    (b) The business/financial portions of the reports, applicable only 
to expenditure-based awards, must provide summarized details on the 
status of resources (federal funds and non-federal cost sharing), 
including an accounting of expenditures for the period covered by the 
report. The report should compare the resource status with any payment 
and expenditure schedules or plans provided in the original award; 
explain any major deviations from those schedules; and discuss actions 
that will be taken to address the deviations. The contracting officer 
may require a recipient to separately identify in these reports the 
expenditures for each participant in a consortium and for each 
programmatic milestone or task, if the contracting officer, after 
consulting with the program official, judges that those additional 
details are needed for good stewardship.



Sec. 603.885  Updated program plans and budgets.

    In addition to reports on progress to date, a TIA may include a 
provision requiring the recipient to annually prepare an updated 
technical plan for future conduct of the research effort and a revised 
budget if there is a significant change from the initial budget.



Sec. 603.890  Final performance report.

    A TIA must require a final performance report that addresses all 
major accomplishments under the TIA.



Sec. 603.895  Protection of information in programmatic reports.

    If a TIA is awarded under the authority of 42 U.S.C. 7256(g) (i.e., 
it is a type of assistance transaction ``other than'' a contract, grant 
or a cooperative agreement), the contracting officer may inform a 
participant that the award is covered by a special protected

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data statute, which provides for the protection from public disclosure, 
for a period of up to 5 years after the date on which the information is 
developed, any information developed pursuant to this transaction that 
would be trade secret, or commercial or financial information that is 
privileged or confidential, if the information had been obtained from a 
non-Federal party.



Sec. 603.900  Receipt of final performance report.

    The TIA should make receipt of the final report a condition for 
final payment. If the payments are based on payable milestones, the 
submission and acceptance of the final report by the Government 
representative will be incorporated as an event that is a prerequisite 
for one of the payable milestones.

                Records Retention and Access Requirements



Sec. 603.905  Record retention requirements.

    A TIA must require participants to keep records related to the TIA 
(for which the agreement provides Government access under Sec. 603.910) 
for a period of three years after submission of the final financial 
status report for an expenditure-based TIA or final program performance 
report for a fixed-support TIA, with the following exceptions:
    (a) The participant must keep records longer than three years after 
submission of the final financial status report if the records relate to 
an audit, claim, or dispute that begins but does not reach its 
conclusion within the 3-year period. In that case, the participant must 
keep the records until the matter is resolved and final action taken.
    (b) Records for any real property or equipment acquired with project 
funds under the TIA must be kept for three years after final 
disposition.



Sec. 603.910  Access to a for-profit participant's records.

    (a) If a for-profit participant currently grants access to its 
records to the DCAA or other Federal Government auditors, the TIA must 
include for that participant the standard access-to-records requirements 
at 10 CFR 600.342(e). If the agreement is a fixed-support TIA, the 
language in 10 CFR 600.342(e) may be modified to provide access to 
records concerning the recipient's technical performance, without 
requiring access to the recipient's financial or other records. Note 
that any need to address access to technical records in this way is in 
addition to, not in lieu of, the need to address rights in data (see 
Sec. 603.845).
    (b) For other for-profit participants that do not currently give the 
Federal Government direct access to their records and are not willing to 
grant full access to records pertinent to the award, the contracting 
officer may negotiate limited access to the recipient's financial 
records. For example, if the audit provision of an expenditure-based TIA 
gives an IPA access to the recipient's financial records for audit 
purposes, the Federal Government must have access to the IPA's reports 
and working papers and the contracting officer need not include a 
provision requiring direct Government access to the recipient's 
financial records. For both fixed-support and expenditure-based TIAs, 
the TIA must include the access-to-records requirements at 10 CFR 
600.342(e) for records relating to technical performance.



Sec. 603.915  Access to a nonprofit participant's records.

    A TIA must include for any nonprofit participant the standard 
access-to-records requirement at:
    (a) 10 CFR 600.242(e), for a participant that is a State or local 
governmental organization;
    (b) 10 CFR 600.153(e), for a participant that is a nonprofit 
organization. The same requirement applies to any GOCO or FFRDC, even 
though nonprofit GOCOs and FFRDCs are exempted from the definition of 
``recipient'' in 10 CFR 600.101.

                       Termination and Enforcement



Sec. 603.920  Termination and enforcement requirements.

    (a) Termination. A TIA must include the following conditions for 
termination:

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    (1) An award may be terminated in whole or in part by the 
contracting officer, if a recipient materially fails to comply with the 
terms and conditions of the award.
    (2) Subject to a reasonable determination by either party that the 
project will not produce beneficial results commensurate with the 
expenditure of resources, that party may terminate in whole or in part 
the agreement by providing at least 30 days advance written notice to 
the other party, provided such notice is preceded by consultation 
between the parties. The two parties will negotiate the termination 
conditions, including the effective date and, in the case of partial 
termination, the portion to be terminated. If either party determines in 
the case of partial termination that the reduced or modified portion of 
the award will not accomplish the purpose for which the award was made, 
the award may be terminated in its entirety.
    (3) Unless otherwise negotiated, for terminations of an expenditure 
based TIA, DOE's maximum liability is the lesser of:
    (i) DOE's share of allowable costs incurred up to the date of 
termination, or
    (ii) The amount of DOE funds obligated to the TIA.
    (4) Unless otherwise negotiated, for terminations of a fixed-support 
based TIA, DOE shall pay the recipient a proportionate share of DOE's 
financial commitment to the project based on the percent of project 
completion as of the date of termination.
    (5) Notwithstanding paragraphs (3) and (4) of this section, if the 
award includes milestone payments, the Government has no obligation to 
pay the recipient beyond the last completed and paid milestone if the 
recipient decides to terminate.
    (b) Enforcement. The standards of 10 CFR 600.352 (for enforcement) 
and the procedures in 10 CFR 600.22 (for disputes and appeals) apply.



                      Subpart H_Executing the Award



Sec. 603.1000  Contracting officer's responsibilities at time of award.

    At the time of the award, the contracting officer must:
    (a) Ensure that the award document contains the appropriate terms 
and conditions and is signed by the appropriate parties, in accordance 
with Sec. Sec. 603.1005 through 603.1015.
    (b) Document the analysis of the agreement in the award file, as 
discussed in Sec. 603.1020.
    (c) Provide information about the award to the office responsible 
for reporting on TIAs.

                           The Award Document



Sec. 603.1005  General responsibilities.

    The contracting officer is responsible for ensuring that the award 
document is complete and accurate. The document should:
    (a) Address all issues;
    (b) State requirements directly. It is not helpful to readers to 
incorporate statutes or rules by reference, without sufficient 
explanation of the requirements. The contracting officer generally 
should not incorporate clauses from the Federal Acquisition Regulation 
(48 CFR parts 1-53) or Department of Energy Acquisition Regulation (48 
CFR parts 901-970) because those provisions are designed for procurement 
contracts that are used to acquire goods and services, rather than for a 
TIA or other assistance instruments.
    (c) Be written in clear and concise language, to minimize potential 
ambiguity.



Sec. 603.1010  Substantive issues.

    Each TIA is designed and negotiated individually to meet the 
specific requirements of the particular project, so the list of 
substantive issues that will be addressed in the award document may 
vary. Every award document must address:
    (a) Project scope. The scope is an overall vision statement for the 
project, including a discussion of the project's purpose, objectives, 
and detailed commercial goals. It is a critical provision because it 
provides a context for resolving issues that may arise during post-award 
administration. In a fixed-support TIA, the well-defined outcomes that 
reliably indicate the amount of effort expended and serve as the basis 
for the level of the fixed support must be

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clearly specified (see Sec. Sec. 603.305 and 603.560(a)).
    (b) Project management. The TIA should describe the nature of the 
relationship between the Federal Government and the recipient; the 
relationship among the participants, if the recipient is an 
unincorporated consortium; and the overall technical and administrative 
management of the project. A TIA is used to carry out collaborative 
relationships between the Federal Government and the recipient. 
Consequently, there must be substantial involvement of the DOE program 
official (see Sec. 603.220) and usually the contracting officer. The 
program official provides technical insight, which differs from the 
usual technical oversight of a project. The management provision also 
should discuss how modifications to the TIA are made.
    (c) Termination, enforcement, and disputes. A TIA must provide for 
termination, enforcement remedies, and disputes and appeals procedures, 
in accordance with Sec. 603.920.
    (d) Funding. The TIA must:
    (1) Show the total amount of the agreement and the total period of 
performance.
    (2) If the TIA is an expenditure-based award, state the Government's 
and recipient's agreed-upon cost shares for the project period and for 
each budget period. The award document should identify values for any 
in-kind contributions, determined in accordance with Sec. Sec. 603.530 
through 603.555, to preclude later disagreements about them.
    (3) Specify the amount of Federal funds obligated and the 
performance period for those obligated funds.
    (4) State, if the agreement is to be incrementally funded, that the 
Government's obligation for additional funding is contingent upon the 
availability of funds and that no legal obligation on the part of the 
Government exists until additional funds are made available and the 
agreement is amended. The TIA also must include a prior approval 
requirement for changes in plans requiring additional Government 
funding, in accordance with Sec. 603.825.
    (e) Payment. The TIA must identify the payment method and tell the 
recipient how, when, and where to submit payment requests, as discussed 
in Sec. Sec. 603.805 through 603.815. The payment method must take into 
account sound cash management practices by avoiding unwarranted cash 
advances. For an expenditure-based TIA, the payment provision must 
require the return of interest should excess cash balances occur, in 
accordance with Sec. 603.820. For any TIA using the milestone payment 
method described in Sec. 603.805(c), the TIA must include language 
notifying the recipient that the contracting officer may adjust amounts 
of future milestone payments if a project's expenditures fall too far 
below the projections that were the basis for setting the amounts (see 
Sec. 603.575(c) and Sec. 603.1105(c)).
    (f) Records retention and access to records. The TIA must include 
the records retention requirement at Sec. 603.910. The TIA also must 
provide for access to for-profit and nonprofit participants' records, in 
accordance with Sec. 603.915 and Sec. 603.920.
    (g) Patents and data rights. In designing the patents and data 
rights provision, the TIA must set forth the minimum required Federal 
Government rights in intellectual property generated under the award and 
address related matters, as provided in Sec. Sec. 603.840 through 
603.875. It is important to define all essential terms in the patent 
rights provision.
    (h) Foreign access to technology and U.S. competitiveness. The TIA 
must include provisions, in accordance with Sec. 603.875, concerning 
foreign access and domestic manufacture of products using technology 
generated under the award.
    (i) Title to, management of, and disposition of tangible property. 
The property provisions for for-profit and nonprofit participants must 
be in accordance with Sec. Sec. 603.685 through 603.700.
    (j) Financial management systems. For an expenditure-based award, 
the TIA must specify the minimum standards for financial management 
systems of both for-profit and nonprofit participants, in accordance 
with Sec. Sec. 603.615 and 603.620.
    (k) Allowable costs. If the TIA is an expenditure-based award, it 
must specify the standards that both for-profit and nonprofit 
participants are to use to determine which costs may be charged

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to the project, in accordance with Sec. Sec. 603.625 through 603.635, 
as well as Sec. 603.830.
    (l) Audits. If a TIA is an expenditure-based award, it must include 
an audit provision for both for-profit and nonprofit participants and 
subrecipients, in accordance with Sec. Sec. 603.640 through 603.670 and 
Sec. 603.675.
    (m) Purchasing system standards. The TIA should include a provision 
specifying the standards in Sec. Sec. 603.700 and 603.705 for 
purchasing systems of for-profit and nonprofit participants, 
respectively.
    (n) Program income. The TIA should specify requirements for program 
income, in accordance with Sec. 603.835.
    (o) Financial and programmatic reporting. The TIA must specify the 
reports that the recipient is required to submit and tell the recipient 
when and where to submit them, in accordance with Sec. Sec. 603.880 
through 603.900.
    (p) Assurances for applicable national policy requirements. The TIA 
must incorporate assurances of compliance with applicable requirements 
in Federal statutes, Executive Orders, or regulations (except for 
national policies that require certifications). Appendix A to this part 
contains a list of commonly applicable requirements that should be 
augmented with any specific requirements that apply to a particular TIA 
(e.g., general provisions in the appropriations act for the specific 
funds that are being obligating).
    (q) Other matters. The agreement should address any other issues 
that need clarification, including the name of the contracting officer 
who will be responsible for post-award administration and the statutory 
authority or authorities for entering into the TIA. In addition, the 
agreement must specify that it takes precedence over any inconsistent 
terms and conditions in collateral documents such as attachments to the 
TIA or the recipient's articles of collaboration.



Sec. 603.1015  Execution.

    (a) If the recipient is a consortium that is not formally 
incorporated and the consortium members prefer to have the agreement 
signed by all of them individually, the agreement may be executed in 
that manner.
    (b) If they wish to designate one consortium member to sign the 
agreement on behalf of the consortium as a whole, the determination 
whether to execute the agreement in that way should not be made until 
the contracting officer reviews the consortium's articles of 
collaboration with legal counsel.
    (1) The purposes of the review are to:
    (i) Determine whether the articles properly authorize one 
participant to sign on behalf of the other participants and are binding 
on all consortium members with respect to the RD&D project; and
    (ii) Assess the risk that otherwise could exist when entering into 
an agreement signed by a single member on behalf of a consortium that is 
not a legal entity. For example, the contracting officer should assess 
whether the articles of collaboration adequately address consortium 
members' future liabilities related to the RD&D project (e.g., whether 
they will have joint and severable liability).
    (2) After the review, in consultation with legal counsel, the 
contracting officer should determine whether it is better to have all of 
the consortium members sign the agreement individually or to allow them 
to designate one member to sign on all members' behalf.

                  Reporting Information About the Award



Sec. 603.1020  File documents.

    The award file should include an analysis which:
    (a) Briefly describes the program and details the specific 
commercial benefits that should result from the project supported by the 
TIA. If the recipient is a consortium that is not formally incorporated, 
a copy of the signed articles of collaboration should be attached.
    (b) Describes the process that led to the award of the TIA, 
including how DOE solicited and evaluated proposals and selected the one 
supported through the TIA.
    (c) Explains the basis for the decision that a TIA was the most 
appropriate instrument, in accordance with the factors in Subpart B of 
this part. The explanation must include the answers to

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the relevant questions in Sec. 603.225(a) through (d).
    (d) Explains how the recipient's cost sharing contributions was 
valued in accordance with Sec. Sec. 603.530 through 603.555. For a 
fixed-support TIA, the file must document the analysis required (see 
Sec. 603.560) to set the fixed level of Federal support; the 
documentation must explain how the recipient's minimum cost share was 
determined and how the expenditures required to achieve the project 
outcomes were estimated.
    (e) Documents the results of the negotiation, addressing all 
significant issues in the TIA's provisions.



                   Subpart I_Post-Award Administration



Sec. 603.1100  Contracting officer's post-award responsibilities.

    Generally, the contracting officer's post-award responsibilities are 
the same responsibilities as those for any cooperative agreement. 
Responsibilities for a TIA include:
    (a) Participating as the business partner to the DOE program 
official to ensure the Government's substantial involvement in the RD&D 
project. This may involve attendance with program officials at kickoff 
meetings or post-award conferences with recipients. It also may involve 
attendance at the consortium management's periodic meetings to review 
technical progress, financial status, and future program plans.
    (b) Tracking and processing of reports required by the award terms 
and conditions, including periodic business status reports, programmatic 
progress reports, and patent reports.
    (c) Handling payment requests and related matters. For a TIA using 
advance payments, that includes reviews of progress to verify that there 
is continued justification for advancing funds, as discussed in Sec. 
603.1105(b). For a TIA using milestone payments, it includes making any 
needed adjustments in future milestone payment amounts, as discussed in 
Sec. 603.1105(c).
    (d) Making continuation awards for subsequent budget periods, if the 
agreement includes separate budget periods. See 10 CFR 600.26(b). Any 
continuation award is contingent on availability of funds, satisfactory 
progress towards meeting the performance goals and milestones, submittal 
of required reports, and compliance with the terms and conditions of the 
award.
    (e) Coordinating audit requests and reviewing audit reports for both 
single audits of participants' systems and any award-specific audits 
that may be needed, as discussed in Sec. Sec. 603.1115 and 603.1120.
    (f) Responding, after coordination with program officials and 
intellectual property counsel, to recipient requests for permission to 
assign or license intellectual property to entities that do not agree to 
manufacture substantially in the United States, as described in Sec. 
603.875(b). Before granting approval for any technology, the contracting 
officer must secure assurance that any such assignment is consistent 
with license rights for Government use of the technology, and that other 
conditions for any such transfer are met.



Sec. 603.1105  Advance payments or payable milestones.

    The contracting officer must:
    (a) For any expenditure-based TIA with advance payments or payable 
milestones, forward to the responsible payment office any interest that 
the recipient remits in accordance with Sec. 603.820(b). The payment 
office will return the amounts to the Department of the Treasury's 
miscellaneous receipts account.
    (b) For any expenditure-based TIA with advance payments, consult 
with the program official and consider whether program progress reported 
in periodic reports, in relation to reported expenditures, is sufficient 
to justify the continued authorization of advance payments under Sec. 
603.805(b).
    (c) For any expenditure-based TIA using milestone payments, work 
with the program official at the completion of each payable milestone or 
upon receipt of the next business status report to:
    (1) Compare the total amount of project expenditures, as recorded in 
the payable milestone report or business status report, with the 
projected budget for completing the milestone; and

[[Page 236]]

    (2) Adjust future payable milestones, as needed, if expenditures lag 
substantially behind what was originally projected and the contracting 
officer judges that the recipient is receiving Federal funds sooner than 
necessary for program purposes. Before making adjustments, the 
contracting officer should consider how large a deviation is acceptable 
at the time of the milestone. For example, suppose that the first 
milestone payment for a TIA is $50,000, and that the awarding official 
set the amount based on a projection that the recipient would have to 
expend $100,000 to reach the milestone (i.e., the original plan was for 
the recipient's share at that milestone to be 50% of project 
expenditures). If the milestone payment report shows $90,000 in 
expenditures, the recipient's share at this point is 44% ($40,000 out of 
the total $90,000 expended, with the balance provided by the $50,000 
milestone payment of Federal funds). For this example, the contracting 
officer should adjust future milestones if a 6% difference in the 
recipient's share at the first milestone is judged to be too large, but 
not otherwise. Remember that milestone payment amounts are not meant to 
track expenditures precisely at each milestone and that a recipient's 
share will increase as it continues to perform RD&D and expend funds, 
until it completes another milestone to trigger the next Federal 
payment.



Sec. 603.1110  Other payment responsibilities.

    Regardless of the payment method, the contracting officer should 
ensure that:
    (a) The request complies with the award terms;
    (b) Available funds are adequate to pay the request;
    (c) The recipient will not have excess cash on hand, based on 
expenditure patterns; and
    (d) Payments are not withheld, except in one of the circumstances 
described in 10 CFR 600.312(g).



Sec. 603.1115  Single audits.

    For audits of for-profit participant's systems, under Sec. Sec. 
603.640 through 603.660, the contracting officer is the focal point for 
ensuring that participants submit audit reports and for resolving any 
findings in those reports. The contracting officer's responsibilities 
regarding single audits of nonprofit participant's systems are 
identified in the DOE ``Guide to Financial Assistance.''



Sec. 603.1120  Award-specific audits.

    Guidance on when and how the contracting officer should request 
additional audits for an expenditure-based TIA is identical to the 
guidance in 10 CFR 600.316(d). If the contracting officer requires an 
award-specific examination or audit of a for-profit participant's 
records related to a TIA, the contracting officer must use the auditor 
specified in the award terms and conditions, which should be the same 
auditor who performs periodic audits of the participant.



            Subpart J_Definitions of Terms Used in this Part



Sec. 603.1200  Definitions.

    The terms defined in 10 CFR 600.3 apply to all DOE financial 
assistance, including a TIA. In addition to those terms, the following 
terms are used in this part.



Sec. 603.1205  Advance.

    A payment made to a recipient before the recipient disburses the 
funds for program purposes. Advance payments may be based upon a 
recipient's request or a predetermined payment schedule.



Sec. 603.1210  Articles of collaboration.

    An agreement among the participants in a consortium that is not 
formally incorporated as a legal entity, by which they establish their 
relative rights and responsibilities (see Sec. 603.515).



Sec. 603.1215  Assistance.

    The transfer of a thing of value to a recipient to carry out a 
public purpose of support or stimulation authorized by a law of the 
United States (see 31 U.S.C. 6101(3)). Grants, cooperative

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agreements, and technology investment agreements are examples of legal 
instruments used to provide assistance.



Sec. 603.1220  Award-specific audit.

    An audit of a single TIA, usually done at the cognizant contracting 
officer's request, to help resolve issues that arise during or after the 
performance of the RD&D project. An award-specific audit of an 
individual award differs from a periodic audit of a participant (as 
defined in Sec. 603.1295).



Sec. 603.1225  Cash contributions.

    A recipient's cash expenditures made as contributions toward cost 
sharing, including expenditures of money that third parties contributed 
to the recipient.



Sec. 603.1230  Commercial firm.

    A for-profit firm or segment of a for-profit firm (e.g., a division 
or other business unit) that does a substantial portion of its business 
in the commercial marketplace.



Sec. 603.1235  Consortium.

    A group of RD&D-performing organizations that either is formally 
incorporated or that otherwise agrees to jointly carry out a RD&D 
project (see definition of ``articles of collaboration,'' in Sec. 
603.1210).



Sec. 603.1240  Cooperative agreement.

    A legal instrument which, consistent with 31 U.S.C. 6305, is used to 
enter into the same kind of relationship as a grant (see definition of 
``grant,'' in Sec. 603.1270), except that substantial involvement is 
expected between the DOE and the recipient when carrying out the 
activity contemplated by the cooperative agreement. The term does not 
include ``cooperative research and development agreements'' as defined 
in 15 U.S.C. 3710a.



Sec. 603.1245  Cost sharing.

    A portion of project costs from non-Federal sources that are borne 
by the recipient or non-Federal third parties on behalf of the 
recipient, rather than by the Federal Government.



Sec. 603.1250  Data.

    Recorded information, regardless of form or the media on which it 
may be recorded. The term includes technical data and computer software. 
It does not include information incidental to administration, such as 
financial, administrative, cost or pricing, or other management 
information related to the administration of a TIA.



Sec. 603.1255  Equipment.

    Tangible property, other than real property, that has a useful life 
of more than one year and an acquisition cost of $5,000 or more per 
unit.



Sec. 603.1260  Expenditure-based award.

    A Federal Government assistance award for which the amounts of 
interim payments or the total amount ultimately paid (i.e., the sum of 
interim payments and final payment) are subject to redetermination or 
adjustment, based on the amounts expended by the recipient in carrying 
out the purposes for which the award was made, as long as the 
redetermination or adjustment does not exceed the total Government funds 
obligated to the award. Most Federal Government grants and cooperative 
agreements are expenditure-based awards.



Sec. 603.1265  Expenditures or outlays.

    Charges made to the project or program. They may be reported either 
on a cash or accrual basis, as shown in the following table:

------------------------------------------------------------------------
If reports are prepared on a . . .
                                      Expenditures are the sum of . . .
------------------------------------------------------------------------
(a) Cash basis....................  (1) Cash disbursements for direct
                                     charges for goods and services;
                                    (2) The amount of indirect expense
                                     charge;
                                    (3) The value of third party in-kind
                                     contributions applied; and
                                    (4) The amount of cash advances and
                                     payments made to any other
                                     organizations for the performance
                                     of a part of the RD&D effort.
(b) Accrual basis.................  (1) Cash disbursements for direct
                                     charges for goods and services;
                                    (2) The amount of indirect expense
                                     incurred;
                                    (3) The value of in-kind
                                     contributions applied; and

[[Page 238]]

 
                                    (4) The net increase (or decrease)
                                     in the amounts owed by the
                                     recipient for goods and other
                                     property received, for services
                                     performed by employees,
                                     contractors, and other payees and
                                     other amounts becoming owed under
                                     programs for which no current
                                     services or performance are
                                     required.
------------------------------------------------------------------------



Sec. 603.1270  Grant.

    A legal instrument which, consistent with 31 U.S.C. 6304, is used to 
enter into a relationship:
    (a) The principal purpose of which is to transfer a thing of value 
to the recipient to carry out a public purpose of support or stimulation 
authorized by a law of the United States, rather than to acquire 
property or services for the Department of Energy's direct benefit or 
use.
    (b) In which substantial involvement is not expected between the DOE 
and the recipient when carrying out the activity contemplated by the 
grant.



Sec. 603.1275  In-kind contributions.

    The value of non-cash contributions made by a recipient or non-
Federal third parties toward cost sharing.



Sec. 603.1280  Institution of higher education.

    An educational institution that:
    (a) Meets the criteria in section 101 of the Higher Education Act of 
1965 (20 U.S.C. 1001); and
    (b) Is subject to the provisions of OMB Circular A-110, 
``Administrative Requirements for Grants and Agreements with 
Institutions of Higher Education, Hospitals, and Other Non-Profit 
Organizations,'' as implemented by the Department of Energy at 10 CFR 
600, Subpart B.



Sec. 603.1285  Intellectual property.

    Patents, trademarks, copyrights, mask works, protected data, and 
other forms of comparable property protected by Federal law and foreign 
counterparts.



Sec. 603.1290  Participant.

    A consortium member or, in the case of an agreement with a single 
for-profit entity, the recipient. Note that a for-profit participant may 
be a firm or a segment of a firm (e.g., a division or other business 
unit).



Sec. 603.1295  Periodic audit.

    An audit of a participant, performed at an agreed-upon time (usually 
a regular time interval), to determine whether the participant as a 
whole is managing its Federal awards in compliance with the terms of 
those awards. Appendix A to this part describes what such an audit may 
cover. A periodic audit of a participant differs from an award-specific 
audit of an individual award (as defined in Sec. 603.1220).



Sec. 603.1300  Procurement contract.

    A Federal Government procurement contract. It is a legal instrument 
which, consistent with 31 U.S.C. 6303, reflects a relationship between 
the Federal Government and a State, a local government, or other non-
government entity when the principal purpose of the instrument is to 
acquire property or services for the direct benefit or use of the 
Federal Government. See the more detailed definition of the term 
``contract'' at 48 CFR 2.101.



Sec. 603.1305  Program income.

    Gross income earned by the recipient or a participant that is 
generated by a supported activity or earned as a direct result of a TIA. 
Program income includes but is not limited to: income from fees for 
performing services; the use or rental of real property, equipment, or 
supplies acquired under a TIA; the sale of commodities or items 
fabricated under a TIA; and license fees and royalties on patents and 
copyrights. Interest earned on advances of Federal funds is not program 
income.



Sec. 603.1310  Program official.

    A Federal Government program manager, project officer, scientific 
officer, or other individual who is responsible for managing the 
technical program

[[Page 239]]

being carried out through the use of a TIA.



Sec. 603.1315  Property.

    Real property, equipment, supplies, and intellectual property, 
unless stated otherwise.



Sec. 603.1320  Real property.

    Land, including land improvements, structures and appurtenances 
thereto, but excluding movable machinery and equipment.



Sec. 603.1325  Recipient.

    An organization or other entity that receives a TIA from DOE. Note 
that a for-profit recipient may be a firm or a segment of a firm (e.g., 
a division or other business unit).



Sec. 603.1330  Supplies.

    Tangible property other than real property and equipment. Supplies 
have a useful life of less than one year or an acquisition cost of less 
than $5,000 per unit.



Sec. 603.1335  Termination.

    The cancellation of a TIA, in whole or in part, at any time prior to 
either:
    (a) The date on which all work under the TIA is completed; or
    (b) The date on which Federal sponsorship ends, as given in the 
award document or any supplement or amendment thereto.



Sec. 603.1340  Technology investment agreement.

    A TIA is a special type of assistance instrument used to increase 
involvement of commercial firms in the DOE research, development and 
demonstration (RD&D) programs. A TIA, like a cooperative agreement, 
requires substantial Federal involvement in the technical or management 
aspects of the project. A TIA may be either a type of cooperative 
agreement or a type of assistance transaction other than a cooperative 
agreement, depending on the intellectual property provisions. A TIA is 
either:
    (a) A type of cooperative agreement with more flexible provisions 
tailored for involving commercial firms (as distinct from a cooperative 
agreement subject to all of the requirements in 10 CFR Part 600), but 
with intellectual property provisions in full compliance with the DOE 
intellectual property statutes (i.e., Bayh-Dole statute and 42 U.S.C. 
Sec. Sec. 2182 and 5908, as implemented in 10 CFR 600.325); or
    (b) An assistance transaction other than a cooperative agreement, if 
its intellectual property provisions vary from the Bayh-Dole statute and 
42 U.S.C. Sec. Sec. 2182 and 5908, which require the Government to 
retain certain intellectual property rights, and require differing 
treatment between large businesses and nonprofit organizations or small 
businesses.



  Sec. Appendix A to Part 603--Applicable Federal Statutes, Executive 
                 Orders, and Government-wide Regulations

    Whether the TIA is a cooperative agreement or a type of assistance 
transaction other than a cooperative agreement, the terms and conditions 
of the agreement must provide for recipients' compliance with applicable 
Federal statutes, Executive Orders and Government-wide regulations. This 
appendix lists some of the more common requirements to aid in 
identifying ones that apply to a specific TIA. The list is not intended 
to be all-inclusive, however; the contracting officer may need to 
consult legal counsel to verify whether there are others that apply 
(e.g., due to a provision in the appropriations act for the specific 
funds in use or due to a statute or rule that applies to a particular 
program or type of activity).

                            A. Certifications

    All financial assistance applicants, including applicants requesting 
a TIA must comply with the prohibitions concerning lobbying in a 
Government-wide common rule that the DOE has codified at 10 CFR part 
601. The ``List of Certifications and Assurances for SF 424(R&R)'' on 
the DOE Applicant and Recipient page at http://grants.pr.doe.gov 
includes the Government-wide certification that must be provided with a 
proposal for a financial assistance award, including a TIA.

                    B. Assurances That Apply to a TIA

    Currently the DOE approach to communicating Federal statutes, 
Executive Orders and Government-wide regulations is to provide potential 
applicants a list of ``National Policies Assurances to be Incorporated 
as Award Terms'' in the program announcement (This list is available on 
the Applicant and Recipient Page at http://grants.pr.doe.gov under Award 
Terms). The contracting officer

[[Page 240]]

should follow this approach for announcements that allow for the award 
of a TIA. The contracting officer should normally incorporate by 
reference or attach the list of national policy assurances to a TIA 
award. Of these requirements, the following four assurances apply to all 
TIA:
    1. Prohibitions on discrimination on the basis of race, color, or 
national origin in Title VI of the Civil Rights Act of 1964 (42 U.S.C. 
2000d, et seq.) as implemented by DOE regulations at 10 CFR part 1040. 
These apply to all financial assistance. They require recipients to flow 
down the prohibitions to any subrecipients performing a part of the 
substantive RD&D program (as opposed to suppliers from whom recipients 
purchase goods or services).
    2. Prohibitions on discrimination on the basis of age, in the Age 
Discrimination Act of 1975 (42 U.S.C. 6101, et seq.) as implemented by 
DOE regulations at 10 CFR part 1040. They apply to all financial 
assistance and require flow down to subrecipients.
    3. Prohibitions on discrimination on the basis of handicap, in 
section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794) as 
implemented by DOE regulations at 10 CFR part 1041. They apply to all 
financial assistance and require flow down to subrecipients.
    4. Preferences for use of U.S.-flag air carriers in the 
International Air Transportation Fair Competitive Practices Act of 1974 
(49 U.S.C. 40118), which apply to uses of U.S. Government funds.

                           C. Other Assurances

    Additional assurance requirements may apply in certain 
circumstances, as follows:
    1. If construction work is to be done under a TIA or its subawards, 
it is subject to the prohibitions in Executive Order 11246 on 
discrimination on the basis of race, color, religion, sex, or national 
origin.
    2. If the RD&D involves human subjects or animals, it is subject to 
the requirements codified by the Department of Health and Human Services 
at 45 CFR part 46 and implemented by DOE at 10 CFR part 745 and rules on 
animal acquisition, transport, care, handling and use in 9 CFR parts 1 
through 4, Department of Agriculture rules and rules of the Department 
of Interior at 50 CFR parts 10 through 24 and Commerce at 50 CFR parts 
217 through 277, respectively. See item a. or b., respectively, under 
the heading ``Live organisms'' included on the DOE ``National Policy 
Assurances To Be Incorporated As Award Terms'' on the Applicant and 
Recipient Page.
    3. If the RD&D involves actions that may affect the environment, it 
is subject to the National Environmental Policy Act, and may also be 
subject to national policy requirements for flood-prone areas, coastal 
zones, coastal barriers, wild and scenic rivers, and underground sources 
of drinking water.
    4. If the project may impact a historic property, it is subject to 
the National Historic Preservation Act of 1966 (16 U.S.C. 470, et seq.).



  Sec. Appendix B to Part 603--Flow Down Requirements for Purchases of 
                           Goods and Services

    A. As discussed in Sec. 603.705, the contracting officer must 
inform recipients of any requirements that flow down to their purchases 
of goods or services (e.g., supplies or equipment) under their TIA. Note 
that purchases of goods or services differ from subawards, which are for 
substantive RD&D program performance.
    B. Appendix A to 10 CFR part 600, subpart D lists eight requirements 
that commonly apply to firms' purchases under grants or cooperative 
agreements. Of those eight, two that apply to all recipients' purchases 
under a TIA are:
    1. Byrd Anti-Lobbying Amendment (31 U.S.C. 1352). A contractor 
submitting a bid to the recipient for a contract award of $100,000 or 
more must file a certification with the recipient that it has not and 
will not use Federal appropriations for certain lobbying purposes. The 
contractor also must disclose any lobbying with non-Federal funds that 
takes place in connection with obtaining any Federal award. For further 
details, see 10 CFR part 601, the DOE's codification of the Government-
wide common rule implementing this amendment.
    2. Debarment and suspension. Recipients may not make contract awards 
that exceed the simplified acquisition threshold (currently $100,000) 
and certain other contract awards may not be made to parties listed on 
the General Services Administration (GSA) ``List of Parties Excluded 
from Federal Procurement and Nonprocurement Programs.'' The GSA list 
contains the names of parties debarred, suspended, or otherwise excluded 
by agencies, and parties declared ineligible under statutory or 
regulatory authority other than Executive Orders 12549 (3 CFR, 1986 
Comp., p. 189) and 12689 (3 CFR, 1989 Comp., p. 235). For further 
details, see subparts A through E of 10 CFR part 606, which is the DOE's 
codification of the Government-wide common rule implementing Executive 
Orders 12549 and 12689.
    C. One other requirement applies only in cases where construction 
work is to be performed under the TIA with Federal funds or recipient 
funds counted toward required cost sharing:
    1. Equal Employment Opportunity. If the TIA includes construction 
work, the contracting officer should inform the recipient that 
Department of Labor regulations at 41 CFR 60-

[[Page 241]]

1.4(b) prescribe a clause that must be incorporated into construction 
awards and subawards. Further details are provided in Appendix B to 10 
CFR 600 subpart D, item 1.



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 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,

[[Page 242]]

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.



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

[[Page 243]]

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.
    (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

[[Page 244]]

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.
    (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

[[Page 245]]

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 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.

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    (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.



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.

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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.
    (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).

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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 does not constitute an endorsement 
by DOE of the views expressed in the article.



    Sec. 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

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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 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