[Federal Register Volume 73, Number 201 (Thursday, October 16, 2008)]
[Rules and Regulations]
[Pages 61350-61352]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-24573]
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
24 CFR Part 990
[Docket Number FR-5057-I-01]
RIN 2577-AC66
Public Housing Operating Fund Program; Increased Terms of Energy
Performance Contracts
AGENCY: Office of the Assistant Secretary for Public and Indian
Housing, HUD.
ACTION: Interim rule.
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SUMMARY: This interim rule would make conforming amendments to the
regulations of the Public Housing Operating Fund Program to reflect
recent statutory amendments that allow for: The maximum term of an
energy performance contract (EPC) between a public housing authority
(PHA) and an entity other than HUD to be up to 20 years, and the
extension of an existing EPC, without reprocurement, to a period of no
more than 20 years, to allow additional energy conservation
improvements. The increase in the maximum EPC term, which is currently
limited to 12 years, is provided by statutory amendments and will
enable longer payback periods for energy conservation measures.
DATES: Effective Date: November 17, 2008. Comment Due Date: December
15, 2008.
ADDRESSES: Interested persons are invited to submit comments regarding
this proposed rule to the Regulations Division, Office of General
Counsel, Department of Housing and Urban Development, 451 7th Street,
SW., Room 10276, Washington, DC 20410-0500. Communications must refer
to the above docket number and title. There are two methods for
submitting public comments. All submissions must refer to the above
docket number and title.
1. Submission of Comments by Mail. Comments may be submitted by
mail to the Regulations Division, Office of General Counsel, Department
of Housing and Urban Development, 451 7th Street, SW., Room 10276,
Washington, DC 20410-0500.
2. Electronic Submission of Comments. Interested persons may submit
comments electronically through the Federal eRulemaking Portal at
http://www.regulations.gov. HUD strongly encourages commenters to
submit comments electronically. Electronic submission of comments
allows the commenter maximum time to prepare and submit a comment,
ensures timely receipt by HUD, and enables
[[Page 61351]]
HUD to make them immediately available to the public. Comments
submitted electronically through the http://www.regulations.gov Web
site can be viewed by other commenters and interested members of the
public. Commenters should follow the instructions provided on that site
to submit comments electronically.
Note: To receive consideration as public comments, comments must
be submitted through one of the two methods specified above. Again,
all submissions must refer to the docket number and title of the
rule.
No Facsimile Comments. Facsimile (FAX) comments are not acceptable.
FOR FURTHER INFORMATION CONTACT: Elizabeth Hanson, Deputy Assistant
Secretary, Departmental Real Estate Assessment Center, Office of Public
and Indian Housing, Department of Housing and Urban Development, 451
7th Street, SW., Room 2000, Washington, DC 20410-5000; telephone number
202-475-7949 (this is not a toll-free number). Individuals with speech
or hearing impairments may access this number through TTY by calling
the toll-free Federal Information Relay Service at 800-877-8339.
SUPPLEMENTARY INFORMATION:
I. Background
Section 9(e) of the United States Housing Act of 1937 (42 U.S.C.
1437 et seq.) (1937 Act) establishes an Operating Fund for the purpose
of making assistance available to PHAs to operate and manage public
housing. HUD's regulations implementing section 9(e) of the 1937 Act
are located at 24 CFR part 990 (entitled ``The Public Housing Operating
Fund Program''). The part 990 regulations contain the policies and
procedures governing the Operating Fund allocation formula used by HUD
to distribute operating subsidies to PHAs.
On September 19, 2005, at 70 FR 54984, HUD published a final rule
amending the regulations at 24 CFR part 990 to provide a new formula
for distributing operating subsidies to PHAs and to establish
requirements that PHAs convert to asset management. The September 19,
2005, final rule provides PHAs with incentives for energy conservation
and utility rate reduction. The energy conservation methods may
include, but are not limited to, physical improvements financed by a
loan from a bank, utility, or governmental entity; management of costs
under a performance contract; or a shared savings agreement with a
private energy company. The final rule also provided, in Sec.
990.185(a), that the term of the contract under which these energy
conservation measures are taken cannot exceed 12 years.
On August 8, 2005, President Bush signed into law the Energy Policy
Act of 2005 (Pub. L. 109-58, 119 Stat. 594) (Energy Policy Act).
Subtitle D of the Energy Policy Act amended section 9 of the 1937 Act
to promote the use in public housing of innovative approaches to
achieve programmatic efficiency and reduce utility costs. Specifically,
section 151 of the Energy Policy Act amended section 9(e)(2)(C) of the
1937 Act, which governs the treatment of waste and utility savings
under the Operating Fund allocation formula. The amendment made by
section 151 of the Energy Policy Act provides that qualifying contracts
for energy conservation improvements may have terms of not more than 20
years. (See 119 Stat. 647-648.) The Energy Policy Act also amended the
Operating Fund treatment of savings resulting from such contracts. It
allows for longer payback periods for retrofits, including windows,
heating system replacements, wall insulation, site-based generation,
advanced energy saving technologies, including renewable energy
generation, and other such retrofits.
The Consolidated Appropriations Act, 2008 (Pub. L. 110-161, 121
Stat. 1844, approved December 26, 2007), amended section 9(e)(2)(C) of
the 1937 Act (42 U.S.C. 1437g(e)(2)(C)), by adding the following
clause:
``(iv) EXISTING CONTRACTS.--The term of a contract described in
clause (i) that, as of the date of enactment of this clause, is in
repayment and has a term of not more than 12 years, may be extended to
a term of not more than 20 years to permit additional energy
conservation improvements without requiring the reprocurement of energy
performance, contractors.'' (See administrative provision, section 229,
of title II of Division K, at 121 Stat. 2438.)
II. This Interim Rule
This interim rule amends the regulations at 24 CFR 990.185 to
provide that, consistent with the amendment to the 1937 Act by section
151 of the Energy Policy Act, the term of an EPC between a PHA and an
entity other than HUD may be up to 20 years. Consistent with the
amendment made to section 9(e)(C)(2) by the Consolidated Appropriations
Act, 2008, this rule also permits the extension of executed EPCs to a
term of not more than 20 years without requiring a new competitive
procurement process.
The increased maximum contract terms provided by these statutory
amendments permit longer payback periods for energy conservation
measures. HUD encourages PHAs to utilize the extended contract terms to
achieve additional reductions in utility consumption and costs. These
statutory changes to EPC terms, as are being codified by this rule,
provide PHAs with the ability to fund additional energy measures with a
longer payback period, and also provide additional flexibility by
allowing a PHA to extend an existing contract without needing to go
through procurement.
The provision for entering into EPCs with terms greater than 12
years and for extending the terms of executed EPCs would commence to
apply on the effective date of this rule.
The 20-year contract term, consistent with statutory authority, is
the maximum term. If state or local laws or regulations restrict terms
of EPCs to a shorter period of time, PHAs would still have to comply
with the state or local government requirement.
Consistent with the statute, this rule clarifies that to qualify
for the incentives under Sec. 990.185, the financing of energy
conservation measures by a party other than HUD must be undertaken
pursuant to a contract. This rule also clarifies that the term ``energy
performance contract'' encompasses all contracts that qualify under
Sec. 990.185, regardless of the energy conservation measure involved
or the entity that is the other party to the contract with the PHA.
III. Justification for Interim Rulemaking
In accordance with its regulations on rulemaking at 24 CFR part 10,
HUD ordinarily publishes its rules for advance public comment. Notice
and public procedure are omitted, however, if HUD determines that, in a
particular case or class of cases, notice and public procedure are
``impracticable, unnecessary, or contrary to the public interest.''
(See 24 CFR 10.1.) In this case, HUD is simply conforming its existing
regulations to statutory provisions that are already legally effective.
In doing so, HUD is not exercising agency discretion, but rather simply
following the statutory mandate. Because this is a conforming
regulation, advance public notice and comment is unnecessary. However,
while HUD found the statutory language to be clear as to meaning and
intent and has incorporated the language without change, PHAs may seek
further clarification. HUD specifically welcomes comments on the
clarity of the conforming amendments, as well as on any other aspect of
the rule. HUD will consider all comments submitted by the public in the
final rule that follows this interim rule.
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IV. Findings and Certifications
Unfunded Mandates Reform Act
Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C.
1531-1538) (UMRA) establishes requirements for federal agencies to
assess the effects of their regulatory actions on state, local, and
tribal governments and the private sector. This proposed rule does not
impose any federal mandates on any state, local, or tribal government
or the private sector within the meaning of UMRA.
Executive Order 13132, Federalism
Executive Order 13132 (entitled ``Federalism'') prohibits an agency
from publishing any rule that has federalism implications if the rule
either imposes substantial direct compliance costs on state and local
governments and is not required by statute, or the rule preempts state
law, unless the agency meets the consultation and funding requirements
of section 6 of the Order. This rule does not have federalism
implications and would not impose substantial direct compliance costs
on state and local governments nor preempt state law within the meaning
of the Order.
Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.),
generally requires an agency to conduct a regulatory flexibility
analysis of any rule subject to notice and comment rulemaking
requirements, unless the agency certifies that the rule will not have a
significant economic impact on a substantial number of small entities.
This rule, consistent with recent statutory amendments, provides PHAs
with the flexibility to enter into energy performance contracts with
terms of not more than 20 years. These revisions impose no significant
economic impact on a substantial number of small entities. Therefore,
the undersigned certifies that this rule will not have a significant
impact on a substantial number of small entities.
Notwithstanding HUD's view that this rule will not have a
significant effect on a substantial number of small entities, HUD
specifically invites comments regarding any less burdensome
alternatives to this rule that will meet HUD's objectives as described
in this preamble.
Environmental Impact
This final rule does not direct, provide for assistance or loan and
mortgage insurance for, or otherwise govern or regulate real property
acquisition, disposition, leasing, rehabilitation, alteration,
demolition, or new construction; or establish, revise, or provide for
standards for construction or construction materials, manufactured
housing, or occupancy. Accordingly, under 24 CFR 50.19(c)(1), this rule
is categorically excluded from environmental review under the National
Environmental Policy Act of 1969 (42 U.S.C. 4321).
Catalog of Federal Domestic Assistance
The Catalog of Federal Domestic Assistance program number is
14.850.
List of Subjects in 24 CFR Part 990
Accounting, Grant programs--housing and community development,
Public housing, Reporting and recordkeeping requirements.
0
Accordingly, for the reasons described in the preamble, HUD amends 24
CFR part 990 as follows:
PART 990--THE PUBLIC HOUSING OPERATING FUND PROGRAM
0
1. The authority citation for part 990 continues to read as follows:
Authority: 42 U.S.C. 1437g; 42 U.S.C. 3535(d).
0
2. In Sec. 990.185, revise paragraph (a) introductory text and
paragraph (a)(3)(iv), to read as follows:
Sec. 990.185 Utilities expense level: Incentives for energy
conservation/rate reduction.
(a) General/consumption reduction. If a PHA undertakes energy
conservation measures that are financed by an entity other than HUD,
the PHA may qualify for the incentives available under this section.
For a PHA to qualify for these incentives, the PHA must enter into a
contract to finance the energy conservation measures, and must obtain
HUD approval. Such approval shall be based on a determination that
payments under a contract can be funded from reasonably anticipated
energy cost savings. The contract period shall not exceed 20 years. The
energy conservation measures may include, but are not limited to:
Physical improvements financed by a loan from a bank, utility, or
governmental entity; management of costs under the performance
contract; or a shared savings agreement with a private energy service
company. All such contracts shall be known as energy performance
contracts. PHAs may extend an executed energy performance contract with
a term of less than 20 years to a term of not more than 20 years, to
permit additional energy conservation improvements without the
reprocurement of energy performance contractors. The PHA must obtain
HUD approval to extend the term of an executed energy performance
contract.
* * * * *
(3) * * *
(iv) If energy cost savings are less than the amount necessary to
meet amortization payments specified in a contract, the contract term
may be extended (up to the 20-year limit) if HUD determines that the
shortfall is the result of changed circumstances, rather than a
miscalculation or misrepresentation of projected energy savings by the
contractor or PHA. The contract term may be extended only to
accommodate payment to the contractor and associated direct costs.
* * * * *
Dated: September 11, 2008.
Paula O. Blunt,
General Deputy Assistant Secretary for Public and Indian Housing.
[FR Doc. E8-24573 Filed 10-15-08; 8:45 am]
BILLING CODE 4210-67-P