Under the State Energy Program (SEP), to what extent are construction and repair costs permissible uses of SEP funds?
The SEP regulations prohibit the use of SEP funds for “construction, such as construction of mass transit systems and exclusive bus lanes, or for the construction or repair of buildings or structures.” 10 CFR 420.18(a)(1). However, the purchase and installation of equipment and materials for energy efficiency measures and renewable energy measures, including reasonable design costs, are permissible uses of SEP funds (subject to certain conditions.) 10 CFR 420.18(e). In some instances, the installation of an energy efficiency measure or a renewable energy measure may require construction or repair work to be performed. For example, installation of solar panels on a building roof may require minor repairs to or reinforcement of the roof structure. Additionally, energy retrofit efforts may require inoperative building systems to be repaired. To the extent that SEP funds are used for construction or repair that is directly related to and required by the installation of an energy efficiency
